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2022 Tax Year Updates & Overview in Employment Law

Case Law Update 2022 (2)

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Updates in the Tax Year

The new tax year starts tomorrow on April 6th and with it brings a few key changes important that those in HR and management need to know. At this time of year, we see the value of various benefits go up and 2022 is no different. The Consumer Prices Index states inflation is up 4.9%, resulting in a higher jump in payment than we’ve seen in recent years.

The main changes we’ll see on 6th April:

  1. The cap amount of a week’s pay when calculating redundancy is raising from £544 to £571

  2. This has a knock-on effect for the basic and compensatory awards for unfair dismissal.

    1. The maximum basic award is now £17,130 for somebody with 30 years’ service

    2. The maximum compensatory award is going up from £89,493 to £93,878.

      1. This only affects high earners – the compensatory award is capped at 12 month’s salary

  3. Statutory Sick Pay is going up from £96.35 per week to £99.53.

    1. Smaller businesses reclaiming Statutory Sick Pay in relation to COVID-Related absences came to an end on March 17th

  4. Statutory Maternity/Paternity/Adoption Pay are going up from £151.97 to £156.66.

Notable Employment Law Cases

A recent case worth bringing to the forefront of people’s minds is one in relation to holiday, Pimlico Plumbers Ltd vs Smith. Pimlico Plumbers (remember Charlie Mullins’ No Jabs No Jobs speech?), has had long-running litigation with Mr Smith who challenged his self-employed status as an independent contractor and was deemed to be a worker by the Supreme Court. As Mr Smith was found to be a worker, there now is the issue of holiday pay.

The Court of Appeal have described the different type of holiday claims in the following ways:

  1. Refusal claim – e.g., an employer didn’t let someone take their holiday

  2. Non-payment claims – where someone has been paid for their holiday but not paid the right amount

  3. Accrual claim – e.g., an employer hasn’t paid for the holiday someone had accrued while employed

The orthodoxy that had grown up around the non-payment type of claim was that someone would have to bring a claim within 3 months of their last payslip when they weren’t paid the right amount of money when they had taken holiday. Lots of employers have worked on the basis that if there has been a gap and they’ve corrected the position, people won’t claim very far backwards.

Going back to the case – Mr Smith had brought the claim within 3 months of his relationship with Pimlico Plumbers ending, however hadn’t taken holiday for the previous 8 months.

The Court of Appeal said the right to paid leave is a composite single thing – you don’t split the holiday from the pay and comes as a package. If someone has been denied any element of it, the employer is in difficulty. As Pimlico Plumbers believed Mr Smith was engaged in a self-employed basis, he hadn’t been paid for any holiday. Even though he had taken time off, he hadn’t been paid for it. As he was now classified as an employee, his entitlement to holiday payment went back from when he had first started with the business.

Lots of businesses take a use it or lose it approach in their contracts. Pimlico Plumbers Ltd v Smith casts doubt on that kind of approach and has encouraged employers to make sure employees are taking their leave. They will look for evidence that businesses have been reminding employees to take leave. Courts going forward may look for employers to evidence that they’ve been encouraging their staff to take holiday. From a legal perspective, taking holiday links directly to health & safety and wellbeing and is why the courts are going in that direction regarding holiday pay.

Things to think about:

Do you remind people on payslips about holiday? Perhaps send text alerts if that’s how you communicate with your staff? Have a think about what you can do in your business to make employees take their holidays.

This blog has been created with the assistance of Anna Denton-Jones from Refreshing Law as part of our HR Insights sessions on ESG (Environmental, Social & Governance). Listen to the full podcast here. You can also find us on Spotify, Apple Podcasts & Amazon Music.