We are pleased to announce that as part of providing a “one stop shop” we have entered into an agreement with Edward Hands Lewis Solicitors to provide clients with access to legal services and advice. We will be sending out more information about “Wise Owl Legal Services” in the near future, but please contact me if you would like to know more.
Do I need written contracts of employment?
In most cases it is not necessary for an employment contract to be in writing to be legally binding. The contract commences as soon as the employee starts work even if it is not in writing. The terms that have been offered and accepted will be implied by the way the parties conduct the relationship.
The problem is that the employee and the employer’s understanding of those terms may differ significantly and may cause disagreements later on. Once an employee has completed their two year statutory probationary period they may be able to claim unfair dismissal if they are asked to do something which is not included in their contract. It is therefore recommended that employees be asked to sign a written contract of employment so that there is no dispute over their terms and conditions.
Where there is no contract of employment the Employment Rights Act 1996 still requires employers to provide employees with a written statement of the main terms of employment within two months of starting work. As an employee does not have to sign a statement there is no formal agreement, but the employee’s agreement to the terms will depend on whether they have acted in accordance with those terms.
Should an employee successfully take an employment tribunal case against their employer then where there is no statement or contract of employment then an additional award of two to four weeks pay may be made against the employer.
Employers should therefore ensure that they get employees to sign a written contract of employment and then keep to the terms of the contract, particularly any grievance procedures.
2013 BUDGET GIVES HELP FOR BUSINESS, BUT NOT YET
The Chancellor George Osborne made his 2013 budget statement against a background of continuing economic gloom. With no money to spend any give-aways had to be paid for by either tax increases, squeezing government spending or by reducing tax avoidance. The Chancellor was keen to trumpet the fact that employment was up and that interest rates continued at an all time low, but had to admit that the growth forecast for the coming year would be 50% lower at 0.6%. This means that tax receipts will be lower than forecast and consequently it will take longer to reduce the budget deficit.
The Chancellor therefore needs to boost the economy without increasing government borrowing. To do this he has therefore announced that additional savings in government department spending will be used to inject £3b into infrastructure spending during 2015-16. In conjunction with the “help to buy scheme” and the mortgage guarantee for home buyers he hopes to boost the construction industry, but how soon we will see the positive effects from this impetus is unknown.
He had already been announced that the full rate of corporation tax was being reduced to 21% from April 2014 and this is being further reduced to 20% from April 2015, meaning that corporation tax for small and large companies will be the same rate. This is primarily aimed at attracting multi-nationals to the UK (or from deterring them from leaving the UK), but the change will also mean that there will no longer be a disincentive from marginal corporation tax rates.
Although most of the budget provisions had been flagged in advance, George Osborne managed to spring a surprise. The new employment allowance means that from April 2014 all employers can deduct £2,000 from their employer’s national insurance liabilities. This will be welcomed by small business owners, many of which will pay no employer’s national insurance contributions. But if the Chancellor really believes that this will boost employment why is he waiting for another year?
As previously announced the income tax basic personal allowance is being increased to £9,440 from April 2013 and this will be further increased to £10,000 from April 2014. Whilst this will be advantageous to most employees and the self-employed it is being paid for by reducing the level at which you begin to pay the 40% tax rate. So if you were already close to the higher rate threshold it is unlikely to be of any advantage. Owners of small limited companies should therefore continue to take their remuneration as a mix of a salary equal to the personal allowance and the remainder as a dividend.
The Chancellor has continued his policy of reducing government spending whilst trying to boost private sector employment, but we will have to wait until at least 2014-15 to see whether the NIC employment allowance and boost to the construction industry is enough to stimulate the economy. So whilst Mr Osborne may get some good headlines why does he make the changes now to give some immediate help for small business owners?