Employment matters Update: Autumn Statement 2016 - Employment issues

01 Dec 2016
 
 
 
The Collyer Bristow LLP review of EMPLOYMENT issues
EMPLOYMENT matters
UPDATE
Collyer Bristow
 
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DECEMBER 2016
 
 
Autumn Statement 2016 - Employment issues
 
Here is our summary of some of the key issues from the Chancellor's 2016 Autumn Statement announced on 23 November 2016.

Termination Payments:

Employer's NICs
  • Under the current law, termination payments up to £30,000 are free from income tax and National Insurance Contributions ("NICs") and all termination payments (even above £30,000) are free from employer's National Insurance Contributions.
  • From April 2018 this will change. Termination payments over £30,000, which are subject to income tax, will also be subject to employer's NICs.
Payments in Lieu of Notice ("PILONs")
  • Under the current law, a payment on termination of employment made in lieu of a notice period is subject to income tax and NICs if the employee's contract of employment contains a clause permitting the employer to make such a payment (a PILON clause). If there is no such PILON clause, then in some cases the payment can be paid as damages for breach of contract and is not subject to income tax or NICs if it falls within the £30,000 threshold.
  • From April 2018, income tax and NICs will need to be paid on any termination payment in respect of the employee's basic salary that would have been received during any unworked notice period, regardless of whether there is a PILON clause in the employee's contract.
  • This is a departure from the government's original intention that payments in respect of salary or benefits which the employee would have received during their notice period would be subject to income tax and NICs.
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Tania Goodman
Partner and Head of Employment
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Partner
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