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So far the details are:

It seems that these schemes would be very similar to existing Profit-sharing Share Trust Schemes but with employers allowed to give shares to employees. The new schemes are expected to be available from April 2000.

"Competence comes from skill and practice, but where does commitment come from? Where does trust, reliability, honesty and loyalty come from? Not from your skills, but from your values and beliefs."

Companies who try to integrate their pension scheme with the basic state pension by using an offset (a deduction from salary) to calculate pensionable pay, will have found themselves under some pressure recently. With some big names like Barclays Bank already caving in, and the strong possibility of it being indirect sex discrimination, the days of offset may be numbered.

What does this mean for your scheme?

It could mean that you have to pay pension contributions on an additional 20% of salary, i.e. it could be expensive.

As we live longer and interest rates fall, so annuities cost more to provide. Many retirees from money purchase plans are finding that their pension is down by up to 1/3^rd! This will translate in to increased costs for Defined Benefit plans too, in due course, but so far it has not been as marked as for the Defined Contribution plans, especially PP's and GPP's.

New rules came in to force in April which make officers of the company liable to pay the company's NI if it has failed to pay due to fraud OR NEGLECT!

One of the surprising findings was that a large proportion of the participants had chosen, or were given, car allowances rather than cars. The allowances ranged from £3000 to £9500pa. Perhaps Compensation specialists are more aware than most of the tax impact on company cars?

Though basic salaries clearly reflected management scope, the other surprise was the value placed on experience. A professional aged around 30 with a team of 5, responsible for the compensation function in a UK environment would earn around £52,000pa; with worldwide comp responsibility this might rise to £68,000pa. However, the survey showed a distinct value being placed on experience despite organisational trends towards ageism.

The survey will be run again shortly. If you are interested in participating then e.mail the address below with your name and company and we will send you the details.

The Success Foundation.

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Car fuel tax was increased as announced last year. The Scale Charges are:

<1401cc (Petrol only) £1210

1401-2000cc £1540

>2000cc £2270

The Inland Revenue Fixed Mileage Car Rates for tax-free reimbursement of mileage are unchanged.

Not only have these been brought within the NI net from 6^th April 1999, but also capital gains tax is now charged at 34% not 23% as previously.

This was raised in line with inflation to £90,600 from 6^th April 99.

The tax-free limit for Profit Related Pay is £1000 from 1^st January 1999. This is the last year of such schemes

Along with bicycles there are certain exemptions to tax for company provided, or supported, transport.

For example, Holiday Centres that provide mini-buses to collect employees from outlying districts may now be able to use this benefit, though the bus must have more than 17 seats.

Loan of company provided equipment up to £2000 in value will not be an assessable benefit, but all employees must have the opportunity to borrow it, not just Directors or Senior Staff.

It is not uncommon practice for certain skills, often in IT but elsewhere too, to be obtained through contracts of service with one-person companies. In effect the person is hired but they remain independent.

The Government is going to make employers responsible for tax and NI from 2000 as if they were employees.

The chart above shows the fixed value of fuel as determined by the Fuel Scale Charge and marginal tax rate (the horizontal lines) and the actual cost of fuel depending on mileage (at 70p per litre) and fuel consumption. So for example, the solid horizontal lines represent a Fuel Scale Charge of £2270 at tax rates of 40% and 23%. So, for a 40% taxpayer, free fuel is valuable if personal mileage exceeds 7000 miles pa but for a standard rate taxpayer it is valuable for more than 4000 miles.

Anyone doing more than 8500 private miles pa at any tax rate and with any car doing 30mpg or better, is always better off taking company paid fuel.

DO NOT DISMISS THE IMPACT OF THIS LEGISLATION. IT AFFECTS EVERYONE.

Yes, unfortunately whether or not you have employees paid less than the minimum or working longer than 48 hours, YOU ARE AFFECTED.

While most of us were concentrating on the actual limits themselves, few of us realised that the regulations include two very important words

There are many employees for whom there are no working time records, but from 1^st October this will be illegal. Both the WTD and NMW require records to be kept so that employers can defend themselves against accusations of law breaking. And remember, in a reversal of the usual judicial system, an individual can bring a claim with no evidence, and you will be deemed guilty unless you can provide proof that you are not.

The Government have followed the Low Pay Commission recommendation and announced a minimum wage from April 1999 of £3.60ph with a reduction to £3.00 for those under 22 (under 18’s are excluded). It seems that there are no regional or industry differences, though tips and accommodation may be the subject of special treatment.

An itemised pay slip may be required to show the hours worked as well as the earnings.

This requires that employees do not work more than 48 hours per week averaged over a 17 week period (in some cases longer), and there are statutory breaks and rest periods. The main impact is night working, but shift workers are also affected.

There is a minimum of 4 weeks annual holiday for all employees with more than 3 month’s service (3 weeks in 1998 only) though this includes statutory holidays. It cannot be paid in- lieu or rolled-over.

Records are required for all employees to be kept for 2 years, showing the hours actually worked over the period.

The NMW Bill and WTD Consultative Paper leave the method of recording open, but what is clear is that records will have to be kept. This is not the contractual hours worked, it is the actual hours worked. Thus it seems that clocking-on and off, or timesheets, will be required. Self-declaration may be a possibility but the spin off is the possible realisation of just how many hours people are working. One client has already estimated that their employees work 10-15% more unpaid hours than contractually required. It is also worth remembering that this could bring your actual minimum rates within the NMW!

Comment: Record keeping is going to be a big issue, involving not one but two separate pieces of legislation.

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A new Directive has now been issued that requires, within 2 years, for part-timers to be given rights to benefits pro-rata to their full-time colleagues. This means rights to bonuses, pensions, shift-pay, holidays, sick leave, staff discounts, share options, etc. There appears to be no lower hours limit, but temporary, casual and seasonal workers are excluded.

Comment: This has been coming for some time and most employers seem to be applying pro-rata benefits already.

The Government's delayed consultation document is a confusing one. Its thinking is contradictory and its direction unclear. On the one hand is the desire to have something simple and affordable whilst on the other are issues of choice, flexibility, contracting-in/out and transferability.

However one key theme appears to be compulsion. There is a growing feeling that employees may be required to join their employer’s schemes. Not only will this be unattractive to the low paid, but many employers will not relish the thought of, in some cases, perhaps a further 50% increase in their membership, and perhaps a 20% increase in funding. Added to this it appears that the Basic State Pension could easily become means tested.

Fortunately the government seem rather appalled at the can-of-worms they have opened, so progress may be slower than originally anticipated.

Car fuel tax was increased as previously announced. Gordon Brown has already stated that he intends to eliminate any tax advantages of company paid fuel, and a further review of car tax is underway.

Comment: In general the changes still make free fuel worth having this year but see Company Car Fuel Analysis table below.

Not only have these been brought within the NI net from 6^th April 1999, but capital gains tax is now charged at 34% not 23% as previously.

This was raised in line with inflation to £87,600 from 6^th April 98.

One of the biggest surprises was the abolition of the Foreign Earnings deduction. Working abroad will no longer exclude an employee from UK tax.

Comment. This has a major impact on UK expatriates who now lose their tax breaks when remaining resident in the UK. Though more comprehensive double taxation treaties will help, it is necessary to review in detail the new tax position for each affected person.

The tax free limit for PRP is now £2000 and will be reduced still further to £1000 from 1^st January 1999.

We now have a new e.mail address for those wanting to write to us this way. You can contact us at

A Web site is under investigation.

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Our last newsletter summarised the impending legislation. Here we catch up on the latest news.

The WTD is now in force and because it has been brought in under European Health & Safety legislation, the Chief Executive of your organisation is, ultimately, responsible for compliance.

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YOU ARE GUILTY

The onus of proof is on the employer not the employee. An employee can thus bring a claim for failure to honour the rest breaks, give sufficient holiday, or require voluntary working in excess of contractual hours, and in excess of 48. If the employer can provide no evidence to the contrary, they have breached the regulations; IT'S AS SIMPLE AS THAT.