2016 Budget announcement – employer update

George Osborne’s 2016 Budget announcement contained a number of issues that will be of interest to employers:-

Termination Payments   From April 2018 employers will need to pay National Insurance contributions on “pay-offs”, such as termination payments under a settlement agreement, above £30,000 where Income Tax is also due. Termination payments up to £30,000 will remain tax-free and there will be no National Insurance payment due.

Shared Parental Leave (for Grandparents) The Government is to launch a consultation this month regarding the extension of the current Shared Parental Leave provisions to include working grandparents. The consultation process will also consider how the current Shared Parental Leave system can be streamlined, including examining how the eligibility requirements can be simplified and whether the notification process can be improved.

Consideration will also be given to how the use of digital technology could improve the system.

John Hassells, Head of Employment, states “This is an interesting move, giving Grandparents new employment rights. Shared Parental Leave has had a low take-up by cash-strapped parents. Grandparents are likely to be financially more able to afford to take shared parental leave.

Grandparents will have a right to return to work at the end of Shared Parental Leave, like mothers returning from maternity leave”. “This move may encourage more women to return to work early knowing their baby will be looked after by the child’s Grandparent(s) rather than an expensive professional childcare provider”.