September 2016 Credit Management magazine

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HR MATTERS HR ROUND UP Gareth Edwards looks at cases involving Tottenham Hotspur, Brexit and its impact on employment law and data theft by an employee. TAX TREATMENT OF PAYMENTS DOES a ‘termination by mutual consent’ clause change the tax and NIC treatment of a payment made under a settlement agreement? This question was examined recently in a case involving Tottenham Hotspur Football Club. In 2011 the club wished to reduce its wage bill as its income had declined. Peter Crouch and Wilson Palacios were employed by Spurs under fixed-term contracts. The contracts contained a clause which confirmed that they could be terminated early by mutual consent. The players were contractually entitled to remain at Spurs until the expiry of their respective fixed-term contracts and be paid in full for the duration. However, in doing so, they would be unlikely to be selected to play and would consequently lose match fitness, appeal to rival clubs and the potential to be selected for their national teams. From Spurs’ perspective, they would not succeed in reducing their wage bill. The parties therefore agreed to terminate the contracts. The players received a significant payment from Spurs in exchange. If the payments were ‘earnings’, they were subject to deductions for tax and NICs. If the payments were compensation, no liability for Class 1 NICs arose and the players were able to receive £30,000 free from tax. HMRC determined that the payments were earnings because the terms of the players’ contracts provided for early termination by mutual consent and therefore any payment received in consequence of implementing those terms was from the employment. The First-Tier Tax Tribunal found, however, the payments were compensation for the surrender of rights. The tribunal pointed out that the inclusion of a mutual consent clause was irrelevant. The tribunal also found a breach of contract is not necessary in order for a payment to be regarded as compensation for the surrender of rights. Gareth Edwards is a partner in the employment team at Veale Wasbrough Vizards.gedwards@vwv.co.uk. DEALING WITH DATA THEFT BY EMPLOYEES THE Information Commissioner’s Office (ICO) has prosecuted an employee who transferred his employer’s clients’ data to his personal email address before leaving and starting a new job. Mr Lloyd worked at a waste management company and emailed the details of 957 clients to his personal account before leaving to start a new job at a rival company. The details contained personal information, contact details of customers, purchase history and commercially sensitive information. The ICO prosecuted Lloyd under s.55 of the Data Protection Act 1998, which states that a person must not knowingly or recklessly obtain or disclose personal data or the information contained in personal data, without the consent of the data controller. He was fined £300 and ordered to pay £405.98 costs and a £30 victim surcharge. BREXIT AND UK EMPLOYMENT LAW FOLLOWING the UK’s vote to leave the EU what might happen to employment law? A significant amount of the UK employment law derives from the EU. Key areas are: discrimination rights; collective consultation obligations; transfer of undertakings regulations (TUPE); family leave; working time regulations; and duties to agency workers. Most UK employment law that derives from Europe comes from directives, which – unlike regulations – are not directly applicable and automatically binding. Directives are implemented into domestic law by Acts of Parliament and secondary legislation. They will therefore continue in force unless they are specifically reformed or repealed. However, some UK employment law is purely domestic in origin and therefore will not be directly affected by the outcome of the referendum. Such legislation includes the right not to be unfairly dismissed. Many of our workplace rights, such as annual leave entitlement, go beyond the minimum standards of the EU and there is no reason to suppose that they will be reviewed or challenged. An overhaul of UK employment law stemming from the EU is very unlikely. Such legislation has become part of the UK’s workplace culture, and wholesale reform would be incredibly costly and disruptive. However, there are areas, such as the EU derived Agency Workers Regulations and some areas of the Working Time Regulations (for example, recent ECJ decisions on holiday pay), that have been the subject of significant criticism. We may therefore anticipate that these areas come under review following the UK’s exit. That being said, over the next two years, the Government will need to negotiate the terms of our exit. The UK’s stance in respect of employment law will likely be largely dependent on these terms. In order to maintain an ongoing trade relationship with the EU, the UK may find itself under significant pressure to accept EU social and employment regulation. 48 September 2016 www.cicm.com The recognised standard
CM Credit Management magazine for consumer and commercial credit professionals THE CICM'S HIGHLY ACCLAIMED MAGAZINE SPECIAL FEATURES IN DEPTH INTERVIEWS ASK THE EXPERTS GLOBAL NEWS LEGAL MATTERS INTERNATIONAL TRADE CURRENCY EXCHANGE HR MATTERS MOBILE DIGITAL EDITION EDUCATIONAL STUDIES THE LEADING JOURNAL FOR CONSUMER AND COMMERCIAL CREDIT PROFESSIONALS TO SUBSCRIBE CONTACT: T: 01780 722903| E: ANGELA.COOPER@CICM.COM THE 2016 CICM TURNER LECTURE The Law Society, London, WC2 7 October 2016 17:30 – 20:00 You are invited to the 2016 CICM Turner Lecture, an interactive debate/ question and answer session focusing primarily on the vital role Credit Management plays in running a successful business. Panel members include Toby Riley-Smith QC FCICM, Chris Sanders FCICM, Atul Vadher FCICM and Debbie Tuckwood. Additionally, you are also invited to the Brasserie Blanc for an after event meal, ticket prices for the meal are £50+VAT. For more information or to book your place; please email: Richard Seadon at Richard@tgbaynes.com or Simon Paterson of Booth White at simon.paterson@boothwhite.co.uk The recognised standard www.cicm.com September 2016 49
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September 2016 Credit Management magazine

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