Coronavirus Holidays, The Mini-Budget, and EU Legislation

This week has been busy with news regarding employment law! As a result, this news piece contains not one but three extremely important changes you need to be aware of in the coming weeks.

Changes to the Coronavirus Holiday Amendments

The Working Time (Coronavirus) (Amendment) Regulations 2020 were introduced as part of a packet of measures designed to protect jobs and the economy during the coronavirus pandemic. It was vital that people who were working high pressure jobs – such as emergency first responders, healthcare workers, researchers, farmers, food manufacturers, supermarket workers, transport workers and others who were in high demand during a pandemic – could take their allocated leave without leaving their respective fields dangerously understaffed.

Under these new rules, the regulations allowed up to 4 weeks of unused leave to be carried into the next 2 leave years. Specifically, it allowed 1.6 weeks of leave granted above the four weeks granted by the EU Working Time Directive to be carried forward by up to one year, giving employers and employees more flexibility to cover the higher staffing demands of the pandemic by delaying portions of leave until – hopefully – better therapies were developed, we were past the initial curves of the disease, and pressure on these industries were released by the path out of the pandemic.

Given we are reaching the end of that two-year period and there is no longer the same pressure upon employers and employees to meet pandemic demands, it will soon no longer be permissible for employees to delay parts or all of their 1.6 week extra holiday allowance into the next year. This is because there is no indication from the Government that they intend to extend this two year period. From next year, employees will be required to take all 5.6 weeks of their holiday entitlement and will not be allowed to roll their entitlement over into next year.

If you have any questions about holiday entitlement or aren’t sure what your employees are entitled to, please get in touch with us. We’re open 24/7 and available at all times to answer any questions you might have, no matter how big or small.

The Chancellor’s Mini-Budget

Chancellor of the Exchequer, the Rt Hon Kwasi Kwarteng MP, published a ‘Mini-budget’, dubbed the Growth Plan, on September 23rd 2022. The Chancellor claims that the simplified tax system will support business investment and allow more people to keep more of their own money. Previously to this budget’s announcement, the Chancellor had already announced the cancellation of the Health and Social Care Levy and the associated uplift in National Insurance contributions that were introduced in April 2022, effective November 6 2022.

Whilst there are many details which affect businesses, which we will go into, it feels remiss to not mention the reaction to the budget. The Chancellor has faced a great deal of backlash for his announced plan, including accusations of taking part in insider trading via the investment firm Odey Asset Management, of relying on trickle-down economics, and using the budget to enrich the highest earners in the UK. MPs are also accusing the Chancellor and Bank of England of being ‘at loggerheads’, wherein monetary policy issued by the Bank of England are being undermined by the fiscal policies released by the Treasury. The outlook on this budget is uncertain and it is possible that certain areas may be pushed back or scrapped.

For businesses, the most important points are:

  • For Payroll, there will be changes to process in regard to taxation and National Insurance. These will include:
    • a 1 percentage point cut of the basic rate,
    • the abolition of additional rates of Income Tax, and
    • changes to dividend tax and the repeal of the increase to National Insurance, known as the Health and Social Care Levy.
  • The Off-Payroll Working rules of 2017, also known as IR35, are due to be repealed.
  • The Annual Investment Allowance will be raised to £1mil. This was due to drop as the raise to £200,000 was a temporary measure.
  • The introduction of targeted investment zones which will offer tax reliefs for Stamp Duty, Enhanced Capital Allowances, Structures and Building Allowance, and Employer National Insurance contributions.
  • Changes to the Seed Enterprise Investment Scheme to encourage more investment in start-up businesses, doubling the annual investor limit and increasing the gross asset limit so investors can more easily claim tax reliefs.
  • Changes to the Company Share Option Plan, which increases the employee share option from £30,000 to £60,000 and removes the limitation on shares eligible for said scheme.
  • The planned increase in the Diverted Profits Tax and the reduction in the Corporate Tax Surcharge Rate.

There are also many, many changes which will be of interest to your employees, including aforementioned payroll changes. Other changes of note will be the new pressure on part-time workers to increase their hours, the introduction of new limits on unionisation power, and the way that the devaluation of the pound will intensify the cost-of-living crisis.

If you have any questions at all about how the Chancellor’s new budget may impact your business and what actions you need to take in response, please feel free to contact us.

Sunsetting EU Legislation

Since the UK has left the European Union, we have carried over some of their laws and the structure of deference to those laws. This category of law was known as Retained EU Law, and it was created to preserve continuity as we completed our withdrawal and to provide stability.

As a European nation, we gave priority to European Law – that is, we agreed to certain portions of law with other European nations. If a law was agreed upon via a vote by our MEPs (Members of European Parliament), the law would be made official, and all European Nations had to follow that law. Furthermore, member nations could not introduce laws into their own legislation that contradicted EU law, though they could build upon them. This concept is known as EU Regulation Supremacy.

To take one example, EU law makes certain that all European citizens should have four weeks of holiday per year. The UK can – and in fact did – introduce laws that increased this holiday amount (to 5.6 weeks). But we could not have legislated that UK citizens only received three weeks.

The UK government intends to sunset all laws carried over from the previous EU regulation. The Government has undergone a catalogue of all retained EU Law, and all Government departments and administrations will decide which laws can be expired and which will need to be preserved and introduced into domestic law, and whether it needs to be codified as it is preserved. It will also flip the priority of EU and UK law, ensuring UK law takes precedence over EU law. Where necessary, the UK will also preserve hierarchy by amending priorities for particular legislative effects.

The UK intends to also modify its regulatory regime. Publishing its consultation response to the ‘Reforming Better Regulation Framework’, the government intends to carry out and implementing wider reforms and repeals and replace the Business Impact Target.

The result is that all laws will, from the end of the sunset period, be UK legislation, not EU legislation that the UK has continued to use since the exit from the European Union.

The changes may be sweeping and it is understandable if the idea of changing our laws so much is daunting. We can assure all our clients that we will keep up to date with changes to employment legislation and will pass on news of those changes as they become relevant. However, if you have a particular query, please feel free to get in contact with any one of our HR advisors, and we would be more than happy to discuss and explain how UK legislation applies to your business.

Do not hesitate to contact us via email, [email protected], or phone, 0333 006 9489, for a no-obligation chat to find out whether our services are right for you.


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