In this month’s update we have highlighted a couple of important changes announced in the recent budget including the introduction of a new limit on the CGT relief available on employee shareholder shares and changes to the tax treatment of termination payments in excess of £30,000. We also look at the recent EAT decision in the Lock case on the need to include commission payments in the calculation of statutory holiday pay, a case on the law regarding laying workers off, dyslexia and disability discrimination as well as the introduction of new gender pay reporting legislation. There’s also a quick mention of the latest step in UNISON’s legal challenge to Tribunal fees.

From April 2018, termination payments that are subject to income tax on amounts in excess of £30,000 will be subject to employer NICs. The government has also confirmed that the £30,000 exemption will remain and that the whole termination payment will be outside the scope of employee NICs. Legislation will be introduced to ensure that all payments in lieu of notice and certain damages payments are taxed as earnings. The foreign service exemption will be abolished.

A lifetime limit of £100,000 on CGT relief available for employee shareholder shares has been introduced. The change applies to shares issued as consideration for entering into an employee shareholder agreement after midnight on 16 March 2016. When the shares are disposed of, gains up to the lifetime limit will be exempt from CGT. Gains above the lifetime limit will be chargeable to CGT in the normal way.

Laying staff off can be a way of a business coping with a dip in workloads. It’s a temporary arrangement. So where a contract allows the employer to lay an employee off indefinitely and without pay, should it be implied that the period of lay-off will be no more than is reasonable?

Mr Craig had been laid off for four weeks. The employer was hopeful that things would pick up, but before that happened Mr Craig resigned and claimed constructive dismissal. The lay-off period had been too long, it was argued.

He lost. The Employment Appeal Tribunal held that reasonableness was not to be implied into the term of the contract. And, anyway, four weeks was not considered to be unreasonable.

That’s not to say that constructive dismissal will never apply in a lay-off situation. It depends on the circumstances. If an employer had certain motives for keeping workers off work – to maximise profits at the expense of employer/employee trust and confidence, for example - then there might well be a different outcome.

Draft rules on gender pay reporting have been published.

Under The Equality Act 2010 (Gender Pay Gap Information) Regulations 2016, employers with more than 250 employees will have to publish information about the payments they make to their male and female employees. There could be a naming and shaming process, and even civil and criminal sanctions, for those that don’t comply.

It’s expected that the new rules will come into force in October this year. Although the first reporting deadline isn’t until April 2018, larger employers will need to gear up for this, which will include taking a snapshot of pay as at April 2017.

A dyslexic member of staff at Starbucks had mistakenly entered the wrong information into a duty roster. She was accused of falsifying the documents, was demoted and told to retrain.

She won her disability discrimination case. According to reports, Starbucks hadn’t seemed to properly understood equality issues, and it should have made reasonable adjustments to take account of the dyslexia.

Also in the news was an advert for a job that was open only to people with dyslexia. “We are simply looking for the best innovative thinkers and they are usually dyslexics”, the marketing firm’s founder is reported to have said.

Controversial, maybe, but favouring someone who has a disability isn’t prohibited by the Equality Act.

Employers should take note and make sure that they can recognise the characteristics. According to the British Dyslexia Association, about one in 10 people has dyslexia, and not all have been formally diagnosed. It can mean that dyslexic employees are not properly understood, not treated fairly, and their strengths are not fully played to at work. As dyslexia may amount to a disability it may give rise to a duty on the employer to make reasonable adjustments.

Well, not exactly. But we now have an Employment Appeal Tribunal (EAT) decision that upholds last year’s tribunal decision.

The tribunal had decided that Mr Lock’s results-based commission payments should form part of his holiday pay calculation. Leaving commission out of the equation had meant that he would earn less while on annual leave than he would if he were working – he wouldn’t be getting his ‘normal’ pay - and that wasn’t consistent with the rules on working time.

That position has now been reinforced by British Gas’ unsuccessful EAT appeal. But before you get too comfortable, there is going to be another appeal – this time to the Court of Appeal. So there's still a bit of 'wait and see'.

While the current state of play is that holiday pay for workers’ four weeks’ statutory holiday must include commission, some uncertainty remains. It is a difficult area for employers to navigate until there’s firm guidance on the practicalities of calculating future holiday pay, and reimbursing staff for past underpayments.

As predicted, UNISON will take its challenge to the introduction of employment tribunal fees to the Supreme Court. It comes after a failed attempt to get the Court of Appeal to decide in the union’s favour. Will this one succeed? Who knows. While Scotland has announced that it will abolish fees, the picture in England and Wales is set to remain uncertain for a little while longer.

Walbrook Law is a specialist employment law firm based in the City of London, acting for employers and senior executives.

We advise employers across a range of sectors on all employment issues affecting their businesses. We are highly experienced in advising on restructuring, redundancy, performance management and disciplinary/termination issues. We are also experts in conducting employment tribunal litigation and dealing with complex areas of employment law such as restrictive covenants and employee competition, whistleblowing, FCA and other regulatory employment issues, and the Transfer of Undertakings Regulations (TUPE).

We also have a thriving practice acting for senior executives, including board directors of both private and publicly listed companies, partners/LLP members of professional services firms and senior employees working in all industry sectors, including banking, financial services, insurance and media. We have an established reputation in the City as leading advisers on the negotiation of senior executive service agreements and exit terms, partner/LLP member appointment/retirement terms and other contractual matters such as employee bonuses, commission arrangements and restrictive covenants.

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