The Queen’s Speech of 2019 was carried out against a backdrop of demonstration and uncertainty. Demonstration against the dangers of climate change, and uncertainty surrounding the future relationship of the U.K. with the European Union (EU).

Even allowing for this backdrop, the ceremony, delivered during the State Opening of Parliament on14 October, was carried out with due reverence and with the pomp that we expect. I find reassurance to be had when traditions are carried out that can trace their roots back to the 16th century, although the current ceremony as we know it first began in 1852.

Critics have observed that this year’s speech rang rather like a party political broadcast. There were, however, three key areas that were familiar to us and confirm the immediate future aspirations of the current Government (at the time of writing) for the year ahead—the Employment Bill, employment reform, and the Pension Schemes Bill.

Employment (Allocation of Tips) Bill

Tips and gratuities have been under the spotlight for a number of years since a Call for Evidence was published in 2015. This knowledge gathering sought to strengthen the Government’s evidence base relating to employer practice in this area, particularly as the practice related to the deduction of administrative charges and fees being taken from the tips before being paid over to the employee.

The Queen’s Speech announced The Employment (Allocation of Tips) Bill 2019-2020 with the purpose of creating a legal obligation on the employer to pass on all tips to workers in full, and where the tips are distributed amongst a group of workers they are distributed in a fair and transparent manner.

Government estimates suggest that almost 80% of tips are now made through card payments amid a belief that unfair tipping practices could become more entrenched if action is not taken.

Good Work Plan

While this subject predates the outcome of the Matthew Taylor review (Good Work: The Taylor Review of Modern Working Practices (July 2017)), if delivered as it is intended, it will feed into the overarching objective by the Government of ensuring that every worker is “rewarded fairly for their work” together with achieving increased transparency for both workers  and employers as to the rules relating to the distribution of tips and gratuities.

The bill will introduce a statutory code of practice that will lay out the principle to achieve consistency between employers that are responsible for the distribution of tips to workers.

No hint has yet been made that the current treatment of income tax will be impacted, so we are assuming that the aim for employers to pass on the tip “in full” relates to any deductions that are currently being made for administration or similar charges incurred by the employer when gratuities are paid by a debit or credit card rather than in cash.

The Employment (Allocation of Tips) Bill 2019-2020 will apply to England, Wales, and Scotland. Employment law is a devolved matter for Northern Ireland.

Employment Reform

Continuing with the delivery of the Good Work plans as previously identified by the Government, the Queen’s Speech confirmed the Government’s intention to deliver on the commitments set out in the Good Work Plan.

The budget, that was originally scheduled for 6 November, was expected to deliver further detail of the commitments that had previously been announced, such as the commitment to achieve a National Living Wage (NLW) at the rate of two-thirds of median hourly earnings as recommended by the Low Pay Commission and accepted by the Chancellor of the Exchequer. In addition, there is the proposal to reduce the age at which workers qualify for the National Living Wage from the current 25 to 21 years of age.

There were also hints at increased fairness for workers who enter into flexible forms of working, together with an improved enforcement system that takes account of modern working relationships and strengthens a worker’s ability to obtain redress for poor treatment—both of which are subjects that have been consulted on over the summer.

Pension Schemes Bill

More than 10 million employees are now saving, or are saving more, for their retirement as a result of automatic enrolment, but there is still increasing concern that employees are not saving in sufficient amounts. Therefore, it came as no surprise that the Pensions Scheme Bill would be laid “to help people plan for the future…to provide simpler oversight of pensions savings. To protect people’s savings for later life…will provide greater powers to tackle irresponsible management of private pension schemes.”

It is intended that the bill will give stronger powers to the Pensions Regulator (TPR) to ensure it can respond earlier against employers that fail in their pension duties.

The Pension Schemes Bill will include the following:

• Increased savings options for employers to support their employees which will see a framework being established on the operation and regulation of collective money purchase schemes, more commonly referred to as Collective Defined Contribution of Pensions
• Improved retirement savings advice
• Significantly strengthened powers of the TPR together with the introduction of new criminal offences along with increased civil penalties of up to £1 million
• Provisions for a framework that will support pensions dashboards and which will include new powers to ensure that pension schemes provide accurate information to consumers
• With an estimated 100,000 transfers out of defined contribution schemes in 2017-2018 TPR is concerned about the significant risk to pension scheme members of being the victim of a scam. As a result, it intends to create regulations that make clear in what circumstances a pension scheme member will have the right to transfer their pension savings to another scheme.

Employment Allowance Update

You may recall in a previous article, the consequences that the Employment Allowance (Excluded Persons) Regulations would have on employers that continue to be eligible to claim the Employment Allowance as from 6 April 2020 due to their Class 1 secondary National Insurance Contributions (NICs) in the preceding tax year being less than £100,000.

You may also recall that in order to continue to claim the Employment Allowance the employer would need to provide a significant amount of information within its EPS (Employer Payment Summary) declaration.

The Chartered Institute of Payroll Professionals (CIPP), together with other stakeholders, objected strongly to the added burden this would place on SME (small and medium-sized enterprise) employers that would be least able to resource this obligation—added to which we objected strongly to the use of the RTI (Real Time Information) system to gather non-pay related information.

While it came way too early to be classed as a Christmas miracle, it was with delight that we received the news that HMRC were significantly reducing the amount of information that the employer would need to submit by way of its EPS.

The employer will now need (as from 6 April 2020) to declare that it has checked its secondary Class 1 liability for the previous tax year and identify the trade sector that the employer operates, for example, one of the following:

• Agriculture
• Aquaculture and fisheries
• Road transport
• Industry or transport

The employer is no longer required to declare (in euros) the amount of de minimis state aid from the previous two years together with any allocation or receipts expected for the current year.

This is good news indeed and demonstrates the value of consultation and the power we all have to effect change where change is needed.

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Samantha Mann, MAAT, MCIPPDip, is a Chartered Institute of Payroll Professionals (CIPP) Senior Policy and Research Officer.