Quick fire: February 2021
26 February 2021
Public Sector exit payments, COVID-19 workplace testing and HMRC IR35 guidance all appear in February’s edition of Quick fire.
Public Sector exit payments: cap revoked
The Government has announced that the Restriction of Public Sector Exit Payments Regulations 2020, which only came into force on 4 November 2020, are to be revoked. These Regulations introduced a cap of £95,000 on exit payments made to departing public sector employees and office holders.
According to newly published guidance, the decision to revoke the Regulations follows an “extensive review of the application of the cap” which shows that it may have “unintended consequences”. These unintended consequences are not spelt out in the guidance, but it seems likely to be related to the problems created by the imposition of the cap for pension strain payments.
The cap is disapplied with effect from 12 February 2021. For those employees who were affected by the cap between 4 November 2020 and 12 February 2021, employers are “encouraged” to pay the additional sums due to the individual that would have otherwise been paid. The guidance states “it is open to employers to do so and HM Treasury’s expectation is that they will do so”, although it appears that employers cannot be compelled to make up the shortfall.
COVID-19: workplace testing
The Government’s guidance on working safely during coronavirus was updated on 10 February 2021 to reflect the extension of rapid workplace testing (lateral flow tests) to businesses with 50 or more employees registered in England.
The guidance now includes information on how to register to order rapid lateral flow tests, if employees cannot work from home. It also clarifies that employers must continue to follow the ‘working safely’ measures appropriate to their sector, even if employees have tested negative or if they have been vaccinated.
Employers seeking to introduce a testing policy should take steps to plan it in advance and consider how to communicate the policy to staff (including consultation with unions as appropriate). Particular attention should be given to employers’ data protection obligations in the processing and recording of test results. Further guidance on workplace testing has been published by DHSC.
HMRC guidance on IR35
A new policy paper has been published by HMRC outlining how, through its compliance principles, it will support those organisations required to comply with changes to off-payroll working rules (IR35) due to take effect from 6 April 2020. It also sets out HMRC’s approach to non-compliance with the rules and includes some case studies.
The changes to the IR35 rules were originally due to take place in 2020 but were delayed to 6 April 2021 as a result of the COVID-19 pandemic. They will apply to all large and medium-sized businesses, who will be required to determine the employment status (for tax purposes) of individuals who are engaged to provide their services through an intermediary – typically a consultant engaged through his or her own personal service company (PSC). The entity responsible for paying the intermediary, known as the ‘fee-payer’, will be responsible for deducting the appropriate tax and National Insurance contributions.
HMRC has confirmed that there will be a ‘penalty holiday’ in respect of any inaccuracies for the first 12 months after the changes take effect, provided there is no evidence of any deliberate non-compliance. There will be no penalty imposed if there are genuine mistakes in applying the rules or making status determinations, provided ‘reasonable care’ is taken.
HMRC states that it will undertake ‘robust risk assessment activity’ to identify and target areas where its customers are most likely to apply the off-payroll working rules incorrectly, in order to target support where it is most needed and take action against deliberately non-compliant organisations. In certain circumstances, HMRC may publish details of deliberate defaulters. It can also prosecute anyone for deliberate non-compliance involving criminal activity.
These articles are from the February 2021 issue of Employment and Immigration Law Update, our monthly newsletter for HR professionals. To download the latest issue, please visit the newsletter section of our website. For further information please contact Liz Stevens or another member of Birketts’ Employment Law Team.
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Liz Stevens
Services
The content of this article is for general information only. It is not, and should not be taken as, legal advice. If you require any further information in relation to this article please contact the author in the first instance. Law covered as at February 2021.