April 2018 - MLP Law

CARILLION – WHERE DO SUB-CONTRACTORS AND SUPPLIERS STAND?

On 15 January 2018, winding up orders were made against Carillion Plc and associated companies. The court appointed the Official Receiver as the liquidator, with PwC being appointed as special managers to assist the Official Receiver carry out his duties.

The Official Receiver and special managers have determined with customers which contracts they wish to continue purchasing.  The demise of Carillion attracted much press attention as a result of its relationship with Government.  Government contracts with Carillion included services for hospitals, schools, prisons and transport. Carillion delivered around 450 contracts with government, representing 38% of Carillion’s 2016 reported revenue.

Goods and services supplied with the Official Receiver’s agreement following the liquidation of Carillion will be paid in full.  However, sub-contractor and suppliers to Carillion who are owed monies will rank as unsecured creditors in the liquidation of Carillion and must lodge a claim in the liquidation.  Unsecured creditors will share equally any available assets or any proceeds from the sale of any of those assets, in proportion to the debts due to each creditor and will almost certainly not recover in full amounts due to them.  This will place considerable strain on the businesses of those sub-contractor and suppliers.

Further, such sub-contractors and suppliers will still be liable to make payment to their sub-sub-contractors and sub-suppliers with the result that they will be out of pocket if such sub-sub-contractors and sub-suppliers insist on payment.  Further, sub-contractors and suppliers will have the costs of wages and other costs to bear in the normal way.

The dust is still settling on the liquidation of Carillion and it remains to be seen whether there will be a barrage of claims for payment at the sub-sub-contractor and sub-supplier level and whether there will be an unfortunate ripple effect of insolvency down the contractual chain.

Any sub-contractors and/or suppliers concerned about their position should seek urgent advice as to their exposure to ensure that they are not trading whilst insolvent and to seek to protect their position.

If you would like to discuss your position or anything raised above, please contact Paul Donnelly on 0161 926 1507.

 

GDPR and the Tendering process

The new data protection regulations, or GDPR as it is most commonly known, comes into force on 25 May 2018. The new rules have introduced heightened processes which every business must undergo when handling and processing personal data.

The latest challenge for businesses is to the consider the ramification if they are not complying with the new regulations. The fines imposed and reputational damage caused by not complying are significant. As such, organisations are looking at their supply chains in order to protect themselves. Controllers are liability for their compliance with GDPR and will only appoint processors who can provide sufficient guarantees that the requirements of the GDPR will be met and the rights of data subjects protected.

Many public and private tenders are increasingly asking suppliers if they are GDPR compliant. We’re becoming more aware of scenarios such as this, especially in the construction industry. Businesses are being asked:

  1. if they are GDPR compliant;
  2. if they are maintaining Data Processing Records; and
  3. whether their standard contract terms include the new GDPR mandatory provisions.

It is not going to be satisfactory to simply answer yes. In order to get through the tender process, you need to show you are being complaint and provide evidence. Ensure your future tendering efforts don’t go to waste merely by a lack of GDPR compliance. It will be good practice to ensure your business compliant with GDPR, regardless, in the event of an ICO audit being carried out on your business.

When a data controller uses a processor, it needs to have a written contract, or a Processor Agreement, in place so that both parties understand their responsibilities and liabilities. A Processor Agreement will also help increase data subjects’ confidence in the handling of their personal data.

If you would like to contact someone from the Employment team about any of the issues in this blog, please email employment@mlplaw.co.uk. Alternatively, please call 0161 926 9969.

Don’t forget to follow us on Twitter @HRGuruUK for important updates and news.

 

 

Employers Guide to Apprenticeships

What is an Apprenticeship?

An apprenticeship benefits both employers and individuals, by boosting the skills of the workforce and in turn increasing economic benefits.

There are four different levels of apprenticeships:

  1. Intermediate (level 2) – the equivalent to 5 GCSE’s passed from A* – C.
  2. Advanced (level 3) – the equivalent to two A-levels.
  3. Higher (levels 4, 5, 6 and 7) – the equivalent to a foundation degree and above.
  4. Degree (level 6 and 7) – the equivalent to a bachelor’s or master’s degree.

Who are they for?

Individuals over the age of 16, living in England and not in full time education can apply for an apprenticeship.

Employers tend to offer them to new entrants to a business to equip them with new skills to progress and grow within the structure of the company.

Employer’s obligations

The employer must provide on-the-job training to the apprentice and ensure the following:

  • their apprentices are paid the Apprenticeship National Minimum Wage of £3.70 an hour if they are aged between 16 – 18 or in the first year of their apprenticeship, and the National Minimum Wage for anyone aged over this. For the current rates, please click here;
  • that an apprenticeship agreement is in place;
  • that the apprentice is given at least 30 hours of work a week (unless the course is extended); and
  • that the apprentices receive all the same benefits as any other employees.

How do they work?

An approved provider and assessment organisation, such as a University or training provider, will work closely with an employer to provide the best training possible for the apprentice, whilst also considering an employer’s needs.

It can include a variety of ‘on-the-job’ training, or off site training/mentoring depending on the type of apprenticeship and the wishes of the employer.

The Apprenticeship Levy

If employers have an annual wage bill of £3 million or more, they must pay the Apprenticeship Levy.

The calculation of an employer’s overall wage bill will include payments for:

  • wages;
  • bonuses;
  • commissions; and
  • pension contributions.

Employers must keep a record of the information they have used to calculate their levy payment for at least 3 years after the tax year to which they relate.

Since 6 April 2017, and if the above applies, employers will be required to disclose to HMRC how much they owe at the start of each tax year, and make payments each month. The levy is charged at 0.5% of an employer’s annual wage bill.

Payment will be collected through an employer’s normal PAYE system alongside Income Tax and National Insurance Contributions.

Once payments are made, employers have the option of claiming the contributions back as digital vouchers to pay for training apprentices internally. This creates a Digital Account with a bank of vouchers that can then be accessed. It should be noted however, that the funds in the Digital Account expire after 24 months, and the funds drawn from this cannot be used to pay wages, travel or subsidiary costs, managerial costs, work placements, traineeships, or the cost of setting up the initial apprenticeship programme.

The Government do not want the payment to be viewed as a tax for employers, as the benefits arising out of training staff through these schemes far outweigh the small contribution required. To further facilitate this, the Government also distribute a 10% top-up to the monthly contributions. This therefore means that for every £1 an employer pays in; they can draw £1.10 back through the digital vouchers.

The Apprenticeship Levy allowance

All employers, regardless of whether they are paying the levy or not, will receive an apprenticeship allowance of £15,000 in digital vouchers each tax year. This allowance can be spread across an employer’s various connected companies and charities however it chooses.

It should be noted that the Government sets funding caps on each apprenticeship programme, and the funding bands vary depending on the industry that the employer requires training in.

What if I don’t pay the Apprenticeship Levy?

If you do not pay the Apprenticeship Levy, you will use training providers paid directly by the Government using the £15,000 allowance allocated to your business.

The trainer must be on the registered list provided by the Government, and the negotiation of price must adhere to any funding caps.

Employers who do not pay the Apprenticeship Levy must also contribute 10% of funding towards the cost of their apprenticeship training scheme. This is known as ‘co-investment’.

Government support

Apprentices aged 16 – 18

  • To encourage more young individuals to start apprenticeships, the Government announced a 20% increase in the amount of funding for apprentices ages 16 – 18, which goes directly to the training provider. A training provider will also receive a £1,000 incentive if they provide training to people in this age bracket.
  • If you have below 50 employees, and take on an apprentice in this age bracket, you will not be required to pay the 10% co-investment, and therefore the training costs will be fully covered by the Government.

Apprentices in care

  • If an employer takes on an apprentice who has been in care, or has a Local Authority Education, the Government will provide £1,000 to the employer and training provider to pay for the additional support required.

If you have any questions about the content of any of this guide, please contact a member of our Employment, HR and Business Immigration team by emailing: employment@mlplaw.co.uk. Alternatively, please call 0161 926 9969.

 

Don’t forget to follow us on Twitter for important news and updates @HRGuruUK.