Employment Law Solutions. Expert advice... more personal

Change change and more change

The area of employment law is constantly changing often to the detriment of the employer, not only in respect of the ever increasing procedural burden that statute puts on employers, but also financially in respect of claims that employees can bring to the Employment Tribunal.

The beginning of this year saw the introduction of an increase in compensation limits. Most notably, the maximum unfair dismissal award an employee may receive is now approximately £80,400.

The Employment Tribunal Annual Statistics for 2009-2010 reported an 8% rise in the number of unfair dismissal claims being accepted by the Employment Tribunal. Out of these 57,400 unfair dismissal claims, a greater number were more successful at the Employment Tribunal than unsuccessful. In addition to compensation payable by an employer to an employee following a successful claim, the employer will also have to cover the cost of defending such a claim.

In light of this increase in statistics and financial burden on employers in defending a claim, it has never been more important for employers to ensure that they have effective and practical policies and procedures in place. This will ensure fair and consistent staff treatment which in turn should result in greater job satisfaction and staff retention and improved performance and productivity.

In addition to the increase in compensation limits, changes have been introduced to taxation on termination payments. These changes will impact on larger payments for agreed terminations of employment under compromise agreements.

In the past, employers would usually only have to deduct tax at basic rate on compensation payments made to employees in excess of £30,000. This could benefit the employee in giving them a cash flow advantage before they account to HMRC for any balance on completing their tax return. However, the tax rules have now been changed meaning that tax must now be deducted on sums in excess of £30,000 at an employee’s marginal rate.

For further information or advice, please contact Jane Sinnamon at jane.sinnamon@collingwoodlegal.com or 01434 634 121.

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