The latest news from Sheffield City Region businesses operating in the Legal,Corporate Hospitality, Finance and Skills & Training sectors.
Sector Focus
Pensions and furloughing
By Penny Cogher and Larisa Gordan from Irwin Mitchell.
Since the Government published details about its Coronavirus Job Retention Scheme, there have been many questions asked about what it means for pensions. While we don’t yet have the
complete picture about furloughing and its impact on pension contributions, we are expecting guidance on it from the Government, HMRC and the Pensions Regulator. In the meantime this is what we do know: The Government will only pay
the Auto Enrolment minimum employer pension contribution i.e, three per cent on the 80% or £2.5k per month if lower of the employee’s regular monthly wage (no commission, fees or bonus). If the employer pays more then the Government’s furloughing scheme only covers three per cent it won’t pay any extra. • The Government‘s scheme will not cover the employees’ auto- enrolment pension contributions at all.
• For members who are part of a pensions salary sacrifice scheme, the 80% pay is based on the employee’s reduced salary and
Penny Cogher (left) and Larisa Gordan
the Government’s scheme will only cover three per cent of the salary sacrificed amount. The information that has to be provided to HMRC is all based on what goes through PAYE and so there is no allowance for salary sacrifice.
• The three per cent itself is based on three per cent of earnings above the lower qualifying earnings threshold (£512 per month up to 5 April and £520 after that). This is the case regardless as to the definition of pensionable earnings used by the employer for auto-enrolment and regardless of which quality test is used for auto-enrolment Our view is that the legal
‘An employee must pay
the minimum
auto-enrolment contribution’
position currently is that the employer must top up any difference in contribution rates if it is furloughing. If the employer is not prepared to do so then this amounts to a listed change as it is a change to its pension contribution structure. This then requires the employer,
if it has 50 or more employees, to consult for 60 days before changing its pension contribution structure.
Law firm makes appointments
Yorkshire law firm Lupton Fawcett has appointed insolvency lawyer James Richardson as its new Managing Partner. James takes over from Corporate Specialist
Jonathan Oxley, who has vacated the managing partner’s seat to take on the role of chairman. James has more than 30 years’ experience of advising insolvency practitioners, banks, funders, asset-based lenders, directors and individuals on personal and corporate insolvency. He has an acute understanding of the stresses
and pressures that cause financial difficulties and handles both contentious and non-contentious cases. James is also a member of the R3 Yorkshire regional committee.
Jonathan Oxley specialises in buying, selling
and financing companies and heads up the firm’s ‘start up, scale up’ team. He is a former chairman of the Institute of Directors (IoD) in Yorkshire and the Humber and continues to represent the IoD on devolution and the Northern Powerhouse. James said: “The Covid-19 pandemic has
raised significant challenges for all our clients, however our fantastically skilled lawyers are supporting them in every way possible.” Jonathan Oxley, chairman of Lupton Fawcett,
said: “Following on from my two years as Managing Partner, I’m delighted to be appointed to the role of Chairman. The firm is in a strong position and is performing well across the region.”
Spring 2020 CHAMBERconnect 59
This is just a consultation – individual consents are not required. The Pensions Regulator has the
power to issue a £50k fine if the employer fails to satisfy its statutory 60 day pension consultation obligations. It is also separately a change to
an employee’s terms and conditions and so the employee could claim constructive dismissal if they do not agree to the change i.e there is the potential for a breach of contract claim. However we understand that the
Pensions Regulator is looking at relaxing the 60 day consultation obligation as this doesn’t work well with the idea of furloughing and the flexibility that this aims to bring employers. We understand that some
Guidance is expected relatively soon from the Pensions Regulator. Separately employers should not
be encouraging their employees in any way to opt out of auto- enrolment and it is a statutory offence to do so. An employee must pay the
minimum auto-enrolment contribution of five per cent on qualifying earnings unless the employer pays this. There is no flexibility on this in the auto-enrolment legislation.
James Richardson (left) and Jonathan Oxley
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