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22 Jul 2022
by Elizabeth Howlett

Top 10 stories from this week: low earners given fair shake of the pension stick

The government has intervened and rectified a long-standing pensions anomaly which saw more than a million low-paid workers on net-pay arrangements excluded from a 20% top-up from the government.

Top 10 stories from this week: low earners given fair shake of the pension stick

 

The loophole, which has been active since 2015, meant people saving through a net-pay arrangement have had less take home pay compared with those on similar wages using a relief-at-source scheme. As a result of the change, which comes into effect in the 2025/26 tax year, the people affected will receive, on average, an extra £53. 

Helen Morrissey, senior pensions and retirement analyst at Hargreaves Lansdown told the Financial Times that it was a “frustrating complexity” of the pensions system but warned the quirk will not be easily resolved. "There is no quick fix with those affected having to wait until 2025 to get their payments,” said Morrisey. 

Meanwhile, other unfair practices in pay have been rectified for part-year workers. A Supreme Court judgement issued on Wednesday 13 July means those on term-time-only contracts, such as teachers, could be entitled to claim back pay for holidays as they are now entitled to the same amount of paid holiday as those who work all year round. 

With eyes firmly on pay, pension and all things money, reward professionals will need to brush up on the upcoming legislative changes and consider what these could mean going forward. 

For more reward and employee benefits news you might have missed this week, read our top 10 snippets below.

Net-pay anomaly to be rectified by government
Corporate Advisor An anomaly that has excluded more than a million low-paid workers in net-pay arrangements from the tax relief available on relief-at-source schemes is to be rectified, the government has confirmed. Read more 

UK’s part-year workers entitled to full paid annual leave, court rules
The Guardian Workers such as teachers on term-time contracts may be able to claim back pay after supreme court judgment. Read more

What HR can learn from retailers’ recent payroll errors
People Management After the ‘heartbreaking’ impact of pay mistakes affecting Asda and Next workers hit the headlines, People Management explores the importance of getting remuneration right. Read more 

Number of fit notes issued hits record high
People Management Analysis finds more than 10 million sickness certificates were given out in the last 12 months, including more than 800,000 for stress. Read more

77% think flexible working is most important benefit
Employee Benefits More than three-quarters (77%) of employees think flexible working is the most important benefit when considering a job move in 2022, according to research by global HR and payroll firm Remote. Read more 

Muslim workers in the UK face pension gap of £11.5 billion
HR Magazine Muslim employees face a pension gap of up to £11.5 billion, according to research from pension firm Penfold. Read more

Pay rises peak in cost of living crisis
HR Magazine The median basic pay increase in the three months to the end of June 2022 has remained at 4% for the third consecutive quarter, suggesting pay rises in the UK may have reached their peak. Read more 

Proposed Neonatal Care Bill offers flexibility to working parents
HR Magazine The government's proposed Neonatal Care (Leave and Pay) Bill has undergone a second reading in parliament. Read more

Health and wellbeing support needs to adapt for hybrid workers
Corporate Advisor Around 45 per cent of employees are now working on a hybrid basis which presents challenges with communicating and accessing health and wellbeing support, according to Towergate Health & Protection. Read more 

Four day week seen as unrealistic for millions of people
Workplace Insight Interest in the four day work week is rising yet millions of UK workers are set to miss out, according to research from ClickUp. Read more

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