A Guide to National Insurance

A Guide to National Insurance

What is National Insurance?

National Insurance is a form of tax which applies to your earnings for every pay period. This could be weekly or monthly according to your employer’s payment arrangements. It will be deducted from your wages along with Income Tax. If you are self-employed, you have to complete a Self Assessment tax return before paying both Income Tax and National Insurance Contributions. You must pay NIC if you are over 16 years old and in employment earning over £162 a week, or self-employment with a profit above £6,205 a year. You stop paying when you reach the State Pension age. If you don’t pay National Insurance contributions, you will not qualify to receive certain benefits. These include the State Pension, Jobseeker’s Allowance, Employment and Support Allowance, Maternity Allowance, and Bereavement Support. You need an NI number to pay.

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What Is My Maternity Leave Entitlement?

When you are pregnant and you are about to have your baby you should be eligible for statutory maternity leave, statutory maternity pay, paid time off for antenatal care as well as possibly some extra help from the government. You can discuss any of these things with the maternity allowance head office on 0843 178 4192.

How Much Maternity Leave Are Mothers Entitled To?

Statutory maternity leave is 52 weeks which consists of the first 26 weeks (ordinary maternity leave) and the last 26 weeks (additional maternity leave) although you do not have to take the full 52 weeks but after the birth of your baby you must take at least 2 weeks off or 4 weeks if you work in a factory.

The earliest start date of your maternity leave is 11 weeks before the due date of your baby. Your maternity leave will automatically start the day after the birth of your baby or if you’re off work due to a pregnancy-related illness in the 4 weeks before your babies due date (Sunday to Saturday).

To be entitled to statutory maternity leave you but be an employee (not a worker) and you must give your employer appropriate notice.

Am I Entitled To Tax Credits On Maternity Leave?

When on maternity leave you may be eligible for child tax credits as well as some other benefits to help you provide for your new baby. You can check which benefits you could be eligible for you can contact the maternity allowance head office on 0843 178 4192. If you receive working tax credits you will continue to receive working tax credits for 39 weeks after you start your maternity leave.

Bank Holiday Entitlement On Maternity Leave

If your work contract allows for paid public holidays (such as Christmas and bank holidays) these should continue during your paternity leave as a part of your holiday entitlement.

Fair and Unfair Dismissals: A Guide

Fair and Unfair Dismissals A Guide

What is Dismissal?

Dismissal is when your employer terminates your employment. The employer must provide a valid and justifiable reason for dismissal. They must be consistent with their dismissal practices and investigate fully before dismissing an employee. In some situations, employers have the right to dismiss an employee immediately.

Usually, employers must give notice. This notice period will either be agreed in your contract or the statutory minimum. Read this guide on fair and unfair dismissals to find out if your dismissal was unfair. Call ACAS (the Advisory, Conciliation and Arbitration Service) on 0844 826 8380 if you need further advice and assistance.

Fair Reasons for Dismissal

There are many reasons why an employer can dismiss their employees fairly. Most common is because you are unable to do your job properly. This might be because you aren’t keeping up with changes to the role, like new computer systems. Maybe you have problems with your co-workers. In cases like this, the employer should take disciplinary action and give you a chance to improve before dismissing you. For example, they should give you a warning about the standard of your work or behaviour. They should also offer training to help you improve in this area.

Another reason why you can no longer work well enough could be due to long-term illness. Your employer should support you and allow time for recovery before considering dismissal. They can dismiss you fairly for statutory restrictions which affect your ability to work legally, such as losing your driving licence. Employers can dismiss you for refusal to agree to employment terms, for gross misconduct, or if you go to prison. They may select employees for redundancy or cease to employ the whole workforce if it becomes impossible, perhaps due to the loss of a workplace.

Automatically Unfair Dismissal

If your dismissal is unfair, you may be able to take legal action against your employer. Dismissal is usually unfair if your employer does not have a valid reason and/or does not follow the company or statutory disciplinary and dismissal processes. If an employer dismisses an employee for any of the reasons below, it is likely that they are automatically unfair dismissals. It is unfair for your employer to end your employment as a result of you:

  • asking for more flexibility or refusing to give up your legal rest breaks
  • resigning from your job and giving the required notice period
  • joining a trade union or taking part in industrial action for less than 12 weeks
  • taking time off for jury duty
  • being on or intending to go on maternity, paternity, or adoption leave
  • enforcing your rightful receipt of Working Tax Credits
  • being a whistleblower (exposing wrongdoing in the company)
  • having to take “compulsory retirement”

Another form of dismissal is “constructive” dismissal. This occurs when an employee resigns as a result of the employer’s misconduct. There must be a serious reason for this.  Examples include sudden demotion or lack of pay, forcing you to work hours outside of your contract, or allowing harassment towards you at work. The reason can be one incident or a group of smaller incidents which are serious altogether. You must try to resolve this with your employer before resigning.

What Can I Do After Unfair Dismissal?

If an employer threatens dismissal or actually dismisses you, then you should get help to resolve the problem. If you are a member of a trade union, then speak to a representative for assistance. Go to an employment tribunal if you cannot resolve an issue between you and your employer. In Northern Ireland, this is an industrial tribunal. You must make an unfair dismissal claim to the employment tribunal within three months of the dismissal if you want compensation.

Only those who qualify can make claims for unfair dismissals at an employment tribunal. Your status must have been as an employee and not a worker. There is a minimum period you have to work for your employer before you can claim unfair dismissal. Previously, this was one year. From 6th April 2012, the minimum working period is two years. In Northern Ireland, it is still one year. You have the automatic right to go to a tribunal after dismissal for political affiliation.

Unfair Dismissals Claims

Before making a claim to an employment tribunal, contact ACAS on 0844 826 8380 to tell them you are doing this. They will offer you the chance to settle without going to court through their “Early Conciliation” service. The time this takes does not affect your three months to claim. You will need an Early Conciliation certificate before you can make your claim to the employment tribunal. Once you have this, you can make your claim online.

After you make the claim, the respondent (your employer) has 28 days to respond to it in writing. The tribunal will then decide if there should be a full hearing. If there is no reply, the tribunal might make a decision without a hearing. You may have to attend a preliminary hearing where the judge will decide which parts of your claim to pursue and when a full hearing will take place. You should organize documents and witnesses to help your case.

Normally, you will present your case at a hearing at the closest employment tribunal office to the workplace. The respondent will also present their case against you. For unfair dismissal cases, the employer will go first. The judge, the respondent, and other tribunal members can ask questions. You will receive the decision from the tribunal by post in the days or weeks after the hearing. In some cases, the tribunal may give their decision at the hearing itself.

Compensation for Unfair Dismissal

If you lose your claim, write to the Tribunal Office within 14 days asking them to reconsider. There must be a valid reason for this, such as a mistake at the tribunal or new evidence. You must write to the Tribunal Office responsible for your case. Submit a “notice of appeal” within 42 days using the related guidance. The respondent can also make an appeal against the decision if you win.

If you win your claim, the tribunal can order your employer to take certain actions. They could give your job back, give you a different job, or pay compensation to you. The amount they will have to pay you depends on your age, the length of your employment, and your salary. If they do not pay you within 28 days of the payment notice, you can get the tribunal to enforce the penalty.

The compensation for unfair dismissal will usually consist of a basic award and a compensatory award. The basic award is a statutorily fixed sum, and the compensatory award makes up for any money you lost due to losing your job. The cap for compensatory awards is currently £80,541. If you earn less than this in a year, the tribunal can only award you a maximum of one year’s gross pay. This applies to dismissals from 6th April 2017. If you receive welfare benefits between the dismissal and the tribunal hearing, they will deduct this amount from your compensatory award.

Employer Responsibilities Guide

Employer responsibilities

In the UK, employers have a responsibility to staff in relation to their health and safety, equal opportunities and equal pay. Though many responsibilities are an obligation, some are optional. Below is a guide to Employer Responsibilities here in the UK, and some information on what to do if you believe that you are being treated unfairly in the workplace. If you need to contact the Employers Helpline, you can call 0843 178 4229.

Employment Rights for Workers

To be classed as a worker, you need a contract. This doesn’t have to be written, and the employer must have work for you to do when you’re under a contract from them. As a worker, you’re entitled to the National Minimum Wage and the statutory minimum level of paid work. You are also protected against workplace discrimination and whistleblowing. Depending on whether your employer offers any of the following, you could also be entitled to:

  • Statutory Sick Pay
  • Shared Parental Pay
  • Statutory Adoption Day
  • Statutory Maternity Pay

You will be able to see in your contract if you’re entitled to these payments. When it comes to minimum notice, workers are not entitled to a notice period if they are being dismissed by their employer. You will also not be able to protest against unfair dismissal or Statutory Redundancy Pay.

If you’re unsure if you are classed as a worker or not,  take a look at your contract if you have a written one. Terms such as “freelance”, “casual work” and “zero hours” all tend to mean worker. You are also classed as a worker if you occasionally work for a specific business, and are not full time.

Employee Rights

By definition, an employee is someone who works under a contract. Unlike workers, employees have more rights, including:

  • Statutory Sick Pay
  • Flexible Working
  • Time Off – Emergencies
  • Redundancy Pay
  • Protection against Unfair Dismissal

If you are self-employed, you are not entitled to anything from an employer.

Health and Safety Responsibilities of Employers

In the UK, all employees owe their employers a range of responsibilities. These include:

  • The responsibility to pay their employees on time and with the correct amount of pay
  • The implementation of health and safety
  • A platform on which employee concerns and complaints can be heard and dealt with in a fair way
  • A contract, outlining their role in the company and their rights as an employee
  • Work for the employee to do
  • The right to a fair, accurate and true reference should the employee’s position come to an end
  • A duty of mutual trust and confidence

How Employers can Breach their Responsibilities to Employees

Just as an employee can breach the terms of their contract with an employer, an employer can breach their responsibilities and duty of care to their staff. Examples of breaches include:

  • Theft
  • Harassment
  • Violence
  • Unwilling to pay Contractual Sick Pay
  • Non-payment of wages
  • Changes to terms and conditions of contractual agreement

employment tribunals

 If you believe that an employer has breached their contract to you as an employee, you can discuss further actions with citizens advice. Alternatively, you can call ACAS, who can help you further.

Data Protection Act Employers Responsibilities

Employing new staff members can seem pretty straightforward – when you know, as an employer, what duties and responsibilities are needed when hiring them. Complying with the law surrounding new starters will make you more reliable as a company, and can be more profitable to you in the long run. When you employ people who lack the necessary skills to work for you, you may find that you encounter low morale, high absence levels and a rise in employment tribunal claims. This is why it’s important to understand the following when hiring new staff members:

  • The law – It’s important to understand the legal rights of workers and employees.
  • Employee Contracts – When hiring someone new, you have until two months into their employment to give them their contract. A contract should ideally set out information surrounding holidays, pay, time off and entitlements.
  • Pay – Make sure you’re paying your workers and employees the National Living Wage
  • Communication – Communicating with your workers is the key to a happy and pleasant starting point in their carer. Ensure they are happy, aware of their rights and responsibilities, and that they understand their role perfectly.
  • Data Protection – As an employer, you will also need to ensure that the personal data of your staff is secure under the law of the data protection act.

Employer Tax Responsibilities

Employers must provide a workplace pension for eligible staff. You can double check if you are an official employer on the government website, however, you will usually be classed as an employer if you pay National Insurance and deduct tax from employee pay. For an employee to be eligible for a pension in the workplace, they must be under the state pension age, work in the UK and earn over £10,000 per year.

If you don’t already offer a pension scheme for staff, you will need to introduce one as soon as possible. It will soon be against the law to withhold a pension scheme from those you employ. To set up a scheme, you will need to take a look at the dedicated government pensions site. Currently, employers must pay at least 1% of employees earnings into the workplace pension. In 2018, this will rise to 2%, and to 3% in 2019.

If you are an employer and need assistance with paying your staff, call the PAYE Employers Helpline.

IR35 Reform: Changes to Tax Rules for Off-Payroll Workers

IR35 New Self-Employment Tax RulesIn April 2017, HMRC reformed the rules for intermediary employment in the public sector. The aim of this reform is to ensure that freelance workers and the companies that employ their services are paying the correct amount of tax they owe to HMRC. Before this change, it was the responsibility of the worker to decide if the IR35 rules applied to their business. Now it is the responsibility of the public authority acting as the employer to make that decision and to confirm that they are both obeying the law.

Failure to comply with these rules can be considered as tax evasion, which means that severe penalties can be applied by HMRC if the rules have been intentionally ignored.  The financial secretary Mel Stride recently suggested that this reform could be extended to the private sector in the future, so it is a good idea for all self-employed freelance workers and any agencies hiring them to make sure that all such work statuses are properly disclosed to HMRC.

Check Your Employment Status for Tax

How can you find out which tax rules apply to your status as an employer or an employee? To aid you in this process, HMRC has implemented a fast and easily accessible service known as CEST (check employment status for tax).  You can use this anonymous service to check the status of public and private work engagements, and it does not store the information that is provided. CEST is the only service result that will be considered conclusive and accepted by HMRC. If your situation is too complicated for CEST to provide a conclusive status on which tax rules apply to you, you will need to contact HMRC directly with any IR35 enquiries on 0300 123 2326. Queries can also be sent to HMRC by email or post.

If you are self-employed and work for other companies through your own personal service company, you must report your employment status to HMRC. Contact the Self Employed Helpline for advice by phone on 0844 453 0165, or find the specific services you require help with on our Self Employed Helpline page (including registering a new business and queries about tax and National Insurance).Whether your services are hired in the public sector and the IR35 reform currently applies to you, or they are hired in the private sector, you should always check that the person who is responsible is obeying the rules set by HMRC to avoid any penalties.

How Does the IR35 Reform Affect Self-Employment?

The crackdown on non-compliance has caused some controversy with the people whose earnings have been impacted as a result of the updated tax rules. However, HMRC’s tax assurance commissioner Jim Harra has pointed out that contractors avoiding paying the tax they rightfully owe is detracting from funding for public services such as hospitals and schools. Millions of pounds a year are lost to tax avoidance, so it is important that people are paying the right amount of tax. Those who are paid through personal service companies will no longer be taxed more lightly than traditional employer-employee payment arrangements. The IR35 reform for self-employment in the public sector and any further reforms applied to the private sector will continue to create a fairer employment market for everyone.