Payroll Newsletter 23.06.09
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News items at - 23rd June 2009
Introduction
This week from Europe comes the prospect of improvements to the existing right to parental leave, a lesser-used family benefit that provides up to 3 months leave to care for a child up to six years of age. There is no statutory entitlement to payment during the leave and, for this reason, take up is likely very low. A new Directive may prompt a longer period of entitlement, but still no payment requirement.
A new feature this week is the inclusion of a payroll calendar for Ireland.Parental Leave
European social partners agree on extending rights for all employees
On 18 June, the European Commissioner for Employment, Social Affairs and Equal Opportunities announced the outcome of six months’ negotiations between the social partners on extending the parental leave rights already provided by a European Directive in 1996.
Social dialogue takes place routinely between six cross-industry organisations representing employers and employees, including the European Trade Union Confederation and the Confederation of European Business.
The Framework Agreement proposes the following parental leave rights:
- application to all workers, men and women, with an employment contract or employment relationship as defined by the law or collective agreements, including part-time and fixed-term contract workers
- entitlement to an individual right to parental leave on the grounds of the birth or adoption of a child, to care for the child until a given age up to eight years, as set by Member States
- period of leave of at least four months, preferably non-transferable between parents, but at least one month non-transferable
- conditions for the right decided by Member States and social partners, including how much leave may be taken at a time, qualifying service of not more than one year, circumstances in which leave may be postponed, notice periods to take leave, and special arrangements for children with disabilities or long-term illness
- the right to return to the same job or equivalent job
on returning to work, the right to request to change their working hour and patterns of work
- entitlement to time off work for urgent family reasons, with annual limits.
The European Commission is now required to submit a proposal for implementation by means of a Directive, subject to adoption by a qualified majority of the Council of Ministers.
The right to parental leave, as introduced into the UK in 1999, makes provision for
- up to 13 weeks unpaid leave, or 18 weeks in the case of a disabled child, limited to no more than four weeks in a year
- leave to be taken in whole weeks, up to the child’s 5th birthday, or 18th birthday in the case of a disabled child
- return to the original job, unless leave is for more than 4 weeks, in which case return to an equivalent job.
Existing UK employment law also provides for unpaid time off in emergency family situations.
Further information:
Parental leave: the European social partners sign the revised version of the Framework Agreement
Framework Agreement on Parental Leave http://ec.europa.eu/social/BlobServlet?docId=2999&langId=en
Employees Working in EEA Countries
New application forms for form E101
When an employer sends employees abroad for the first time to work in member countries of the European Economic Area (EEA) or a country with which the UK has a Reciprocal Agreement for NICs purposes, the employer must first complete form CA3821, a questionnaire providing information about the employer. The employer must meet certain conditions before HMRC will issue E101 certificates in respect of individual employees, allowing them to continue to pay UK NICs while abroad for an initial period of up to two years. Once approved by HMRC, the employer can submit individual forms CA3822 in order to apply for E101 certificates of continuing liability.
However, if an employee will be working in two or more EEA countries, form CA8421 must be used to apply for an E101 certificate or, in the case of “international transport workers”, form C8421(A). An “international transport worker” is a person employed in two or more EEA countries by an international transport undertaking, namely a business which, either on its own behalf or as an agent for others, carries passengers or goods by rail, air, road or inland waterway.
All of the new and updated forms are available at the link below.
Further information:
National Insurance contributions, Retirement Pension Forecasts and advice for those abroad
http://www.hmrc.gov.uk/cnr/osc.htm
GUERNSEY
Benefits in Kind
Definition of the “cost of car”
The Benefits in Kind explanatory guide has been amended to include a new definition of the “cost of car”. It is now defined as:
“the actual gross cost of acquiring the car by the employer without deducting the value of any part exchange but including the cost of all accessories, options and extras (whether fixed or otherwise) or, in the case of a car leased to the employer, the amount which in the opinion of the Director it would have cost the employer, on the basis of the above definition, to buy the car instead.”
The change is that “the value of any part exchange” may no longer be used to reduce the cost of the car. No reason appears to have been given for this adjustment – the Income Tax (Guernsey) (Valuation of Benefits in Kind) Regulations, 2008, which came into force on 1 January 2009, allow the cost of the car to be reduced by any part exchange value.
Further information:
Benefits in Kind Guide http://www.gov.gg/ccm/cms-service/download/asset/?asset_id=9909246
The Income Tax (Guernsey) (Valuation of Benefits in Kind) Regulations, 2008
http://www.gov.gg/ccm/cms-service/download/asset/?asset_id=9498048
REPUBLIC OF IRELAND
Payroll Calendar for the Next Month
June 30 – This is the final day of tax month 6. The P30 monthly PAYE/PRSI payment for June, or for the tax quarter to June, is due for payment to the Collector General by July 14, or by July 23 if paid through Revenue On-Line Service (ROS).
July 14 – This is the deadline for P30 monthly PAYE/PRSI payments to the Collector General, for June by employers who pay monthly, for April to June by employers who pay quarterly, unless they pay (and file form P30) through Revenue On-Line Service (ROS).
July 23 – For employers who make their payments (and file form P30) through Revenue On-Line Service (ROS), whether required by law to do so or not, this is the deadline for P30 monthly/quarterly PAYE/PRSI payments.
(Note: These dates also apply to RCT30 payments made by principal contractors.)
The Labour Court
New minimum rates of pay for law clerks and catering staff
An Employment Regulation Order (SI 215) has been made, fixing the statutory minimum rates of pay and statutory conditions of employment of workers within the scope of the Law Clerks Joint Labour Committee. The Order is effective from 22 June 2009 and relates to office managers, law clerks/bookkeepers, legal secretaries and office assistants.
Also, two Employment Regulation Orders (SI 217 and SI 224) have been made, fixing the statutory minimum rates pay and statutory conditions of employment of workers within the scope of the two Catering Joint Labour Committees, one representing workers in Dublin and Dun Laoghaire, the other representing workers elsewhere. The Orders are effective from 29 June 2009 and relate to chefs, cooks, waiting staff, clerks and general assistants.
At time of publication, only the new pay rates from the Law Clerks JLC had been added to the information provided on the Labour Court website. The Government Publications Office kindly provided advance copies of the Statutory Instruments for the Catering JLC changes and they are available at the PayPerShop link below until the Labour Court pages are updated.
Further information:
Iris Oifigiúil dated 16 June 2009 http://www.irisoifigiuil.ie/currentissues/Ir160609.PDF
Iris Oifigiúil dated 19 June 2009 http://www.irisoifigiuil.ie/currentissues/IR190609-NEW.PDF
List of JLCs (Rates of Pay) http://www.labourcourt.ie/Labour/Information.nsf/vwRatesOfPayJLCsDocuments?OpenView
Employment Regulation Order (Catering Joint Labour Committee (for areas other than the areas known, until 1st January, 1994, as the County Borough of Dublin and the Borough of Dun Laoghaire) S.I. No. 217 of 2009
http://www.paypershop.com/downloads/SI217_09.pdf
Employment Regulation Order (Catering Joint Labour Committee (for the areas, known, until 1st January, 1994, as the County Borough of Dublin and the Borough of Dun Laoghaire) S.I. No. 224 of 2009 http://www.paypershop.com/downloads/SI224_09.pdf
Payroll deadlines during the next month
July 5 – This is the final day of tax month 3. Tax and NICs etc for payments made in the tax month to July 5, or in the tax quarter to July 5, are due for payment to the Accounts Office by July 19, or by July 22 if paid electronically.
July 6 – This is the deadline date for filing, in paper form or electronically,
- form P9D Expenses payments and income from which tax cannot be deducted
- form P11D Expenses and Benefits
- form P11D(b) Return of Class 1A National Insurance contributions due and Return of expenses and benefits – Employer’s declaration
Copies of forms P9D and P11D must also be given to the employees concerned by this date.
July 7 – This is the deadline date by which the responsible person for an employer-financed retirement benefit scheme must provide HMRC with details of relevant benefits provided during the previous tax year.
July 17 – (July 17 is a Sunday) – This is the deadline for payment of tax and NICs to the Accounts Office, for tax month 3 by employers who pay monthly, for tax months 1 to 3 by employers who pay quarterly, unless they make their payments electronically.
July 17 – (July 17 is a Sunday) – This is the deadline for payment of Class 1A NICs to the Accounts Office in respect of benefits in kind reported by employers on forms P11D for the 2004/05 tax year, unless they make their payments electronically.
July 22 – For employers who pay their tax and NICs to the Accounts Office electronically, this is the deadline for electronic payments, including payments of Class 1A NICs to be cleared into the HMRC bank account. Payments through BACS must be initiated by July 20 at the latest.
Payroll FAQ's
Employment Status
What are the tax and NICs requirements for workers in “Umbrella Companies”?
Like Personal Service Companies (PSCs) and Managed Service Companies (MSCs), businesses known as “umbrella companies” supply the services of workers to end clients. However, unlike PCSs and MSCs, the umbrella company is not an intermediary and the workers are not directors or shareholders. Rather, the workers are engaged under a contract of employment by the umbrella company and, as the employer, the umbrella company deducts PAYE tax and Class 1 NICs from payments made to the workers. They are also entitled to full contractual and statutory employment rights.
The concept of the “umbrella company” was developed in response to the introduction of the MSC legislation in April 2007. No attempt is made to avoid or limit the amounts of PAYE tax and Class 1 NICs paid. Instead, the arrangement is intended to create circumstances in which tax is avoided on payments of travel accommodation and subsistence expenses.
The use of the term “umbrella” relates to the nature of the contracts involved in the arrangements. The employment contract is known as an “overarching” employment contract as it relates to the services that the worker provides for a number of end clients. The worker performs no work directly for the umbrella company. Each worker may source engagements directly with end clients, or may use an agency to source engagements. The contract for the worker’s services is between the end client and the umbrella company or the agency, as appropriate. The umbrella company’s sole source of income, therefore, is from contracts with a number of end clients and/or a number of agencies. From the payments received under those contracts, the umbrella company deducts administration fees and sums towards future holiday pay before paying the worker’s salary and deducting tax and NICs.
During 2008, the government consulted over what it considered to be serious exploitation by umbrella companies of the travel and subsistence expenses legislation. The “overarching” contract allows each end client’s workplace to be treated as a temporary place of work, thus allowing the worker to claim tax relief on the travel, accommodation and subsistence expenses incurred when working at those workplaces. Under the MSC legislation, all such workplaces are treated as permanent places of work and, as such, no tax relief is allowed.
However, since consulting on the issues, HMRC has taken no action to restrict the operation of umbrella companies and the tax advantages they provide.