Tom Stenner-Evans
Posted on 6 Oct 2014

Employment Law Monday Update - 6 October

Anyone who works in HR will know how quickly changes come about in Employment Law, and how hard it is to keep up with them all. With that in mind, the Michelmores Employment Team has created a weekly newsletter that encapsulates the most significant Employment Law developments of the last 7 days. The Weekly Update will be sent out around midday on Monday, so be sure to keep an eye out for it!

Post-Retirement Buyout Payment Taxable as Employment Income

Forsyth v Revenue & Customs [2014] UKFTT 915 (TC)

A Tribunal has held that a buy-out payment made by Nestle to one of its former employees, in exchange for the surrender of his membership of Nestle's healthcare scheme, was a 'relevant benefit' provided under an 'employer-financed retirement benefits scheme'. As a result, the payment was taxable as employment income, under Chapter 2, Part 6 of the Income Tax (Earnings and Pensions) Act 2003. Further, the payment did not attract the benefit of the £30,000 tax exemption, as Chapter 2 took priority over the provisions of Chapter 3, which dealt with termination payments.

The Tribunal's decision highlights the wide-ranging applicability of Chapter 2, which potentially catches any lump sum (other than sums that are excluded or taxed as pension income) paid to a retiring or retired employee. Employers will be required to deduct tax and NICs under PAYE from such payments and report them to HMRC.

Conservative Party Conference: Proposals to Reform Employment Law

At the Conservative Party's Annual Conference, David Cameron proposed several reforms, including:

  • the passing of a new British Bill of Rights, which it is suggested would replace the Human Rights Act 1998;
  • the abolishment of zero hours contracts; and
  • the prevention of worker trafficking, by way of the Modern Slavery Bill.

You can find the full transcript of the proposals here.