Pay in Lieu of Notice (PILON) – Do you need to review your employment contracts?
Changes to the way in which termination payments are taxed came into force from 6 April 2018.
From 6 April all notice pay is to be treated as earnings and subject to tax and national insurance contributions – irrespective of whether or not there is a pay in lieu of notice clause (PILON) in the employment contract, this effectively removes the distinction between contractual and non-contractual PILON.
As a matter of best practice, we would certainly recommend that going forward all employment contracts contain a PILON clause.
In fact, in light of these recent changes, not having a PILON clause now will only leave you at a disadvantage. If you were to process a payment in lieu of notice without a contractual right to do so it could leave you at risk of not being able to rely on any post-termination restrictions such as non-competition clauses and confidentiality. Processing a PILON without a contractual right to do so would be considered a breach of contract. This is because you would be in breach of contract by making the payment and would therefore result in you not being able to rely on any of the other contractual clauses.
Contracts of employment created in Bright Contracts will contain a PILON clause by default.
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Tribunal claims up 90% since abolition of fees
The Ministry of Justice (MOJ) has published figures showing a massive 90% increase in single claims lodged at employment tribunals in the last quarter of 2017 compared to the last quarter of 2016 - the Supreme Court ruled tribunal fees to be ‘unlawful’ during last summer and abolished them going forward.
The MOJ has cited the reversal of fees as the cause of this rise in cases, as employees are no longer put off making claims and using the tribunal process.
The most recent quarter has also shown a 467% increase in multiple claims, filed by more than one complainant. Some of the major supermarkets, Tesco, Morrisons and Asda have all faced multiple pay claims in the last few months, with Tesco facing up to £4bn in fines from a single group claim.
With the abolition of the tribunal fees came a refund scheme which saw 3,337 claims processed for refunds of fee payments to the value of nearly £2.8m between October and December 2017. There is four years worth of fee payments that could be claimed for refund, adding to the growing headache that is the whole tribunal fee’s debacle.
All of this is putting significant pressure on the tribunals who had, after the fee’s were originally introduced, reduced staff numbers and had their funding cut, is now having to deal with huge backlogs and delays. The increase in employment tribunal claims since the removal of the tribunal fees indicates just how important it is for employer’s to have in place proper policies and fair procedures in relation to their employee / employer relationship.
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GDPR and employee files - What you need to know
The General Data Protection Regulation (GDPR) will come into force on 25th May 2018 changing the way we process data forever. The aim of the GDPR is to put greater protection on the way personal data is being processed for all EU citizens. Personal data can be anything from a name, an email address, PPS number, bank details etc so as you can imagine employers process a huge amount of personal data on a daily basis. So how will the GDPR affect employers in terms of processing employee data?
Consent
Data in the employment context, will include information obtained from an employee during the recruitment process (regardless of whether or not they eventually got the job), it will also include the information you hold on current employees and previous employees. All this information may be saved in hardcopy personnel files, held on HR systems or it could be information contained in emails or information obtained through employee monitoring.
Under GDPR your employee’s will have increased rights around their data.
These rights will include:
• The Right to Access. It’s not a new concept that employees will be able to request access to the data you hold on them. However, there is a new recommendation that where possible employers should provide their employees with access to a secure self-service login where they can view data stored on them. This backs-up the whole concept of transparency and ease of access to data, which underpins the new Regulations.
• The Right to Rectification. Individuals are entitled to have personal data rectified if it is inaccurate or incomplete. This is an existing right and the onus is on the employer to ensure that your employee records are kept up-to-date. To help ensure you maintain up-to-date records, employers should make it easier for employees to update their data.
• The Right to be informed. Employers must be very transparent with employees about what data you hold, why and how long it is held for. Up until now it has been the common practice for many employers to include a standard clause in the employment contract regarding the processing of HR Data, under GDPR that will no longer be sufficient. Employers need to be reviewing their Employee Data Protection Policies and possibly writing new Employee Privacy Policies that go into detail on the processing of employee data.
Employee self service
Under the GDPR legislation, where possible employers should be able to provide self-service remote access to a secure system which would allow employees view and manage their personal data online 24/7. Furthermore, the cloud functionality will improve your payroll processing with simple email distribution, safe document upload, easy leave management and improved communication with your employees. By introducing a self-service option, you will be taking steps to be GDPR ready.
For information on employee files and how long to keep them please see our support page: Record Keeping Requirements
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Bright Contracts - Employment Contracts and Handbooks
