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A week in HR: Income tax hike for high earners

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HR weekMonday’s Pre-Budget Report included an announcement of a hike in income tax for high earners. In other news, a turkey shortage is warned as meat inspectors vote for strike action and there is a call for no further delays to the flexible working proposals. Annie Hayes reports.


The big news of the week is Monday’s Pre-Budget Report (PBR) which included an income tax increase for top earners and a hike in all National Insurance contributions from 2011. Chancellor Alastair Darling announced that a new 45% tax rate on earnings over £150,000 will be brought in, if Labour wins the next election, and National Insurance will increase by 0.5%. BBC political editor Nick Robinson said the increase in the top rate of tax was of “huge symbolic significance”, but stressed it would only raise a fraction of the sum needed to get the public finances back in order.

Albert Ellis, CEO of Harvey Nash, warned that the income tax hike will have a direct impact on the UK talent pool. “Our recent research has shown that the high cost of living is already deterring senior talent from working in the UK and this new income tax hike could penalise C-level executives even further, reducing the UK’s appeal as a place of work and commerce and ultimately denting its global competitiveness.”

Dr John Philpott, Chief Economist at the Chartered Institute of Personnel and Development (CIPD), added that there is a real danger that this budget may do as much to slow medium-term jobs growth as it does to slow short-term job cuts.

For the full story see: www.bbc.co.uk and for a full run down of the main issues to come out of the PBR, go to sister site AccountingWeb.

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Business lobby group the CBI is making its own calls for action in the wake of the PBR. It has unveiled its 10-point plan to keep business working, safeguard jobs and position the economy for recovery. The plan includes a ‘time-limited’ fiscal stimulus focused on employment through a temporary reduction in employer National Insurance contributions. The CBI is recommending a 1.8 percentage point cut to 11%, at an exchequer cost of £9bn. They say this would bring the employer rate into line with the employee rate. For the full story see: www.cbi.org.uk

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Also lobbying the government is the Chartered Management Institute, which is calling for no further delays to the implementation of flexible working proposals. In a submission to the government’s consultation on amending and extending the right to request flexible working, the institute recommends that proposals go further by extending the ‘right to request’ to all employees, not just those with children up to the age of 16.

It also calls for greater emphasis from government about the benefits of flexible working. The institute’s submission is based on new research which shows that, despite the current economic climate, only 29% of managers currently support the idea of delaying the government’s proposals to extend flexible working, while 57% support flexible working for all. A full copy of the institute’s submission is available at www.managers.org.uk/flex.

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Change has also been at the forefront of new research by Penna, the HR consulting group. It found that whilst 96% of public sector HR professionals want to take personal responsibility for making change happen, almost two thirds feel they are able to shape the future. But despite this, it seems HR is being held back with 62% saying their department is not equipped to manage change and three quarters agreeing that energy gets wasted on frustration and lack of direction or leadership. According to the release, HR departments seem to be moving in the right direction, with 63% stating that they have resourcing, capability and talent management frameworks in place and over three quarters claiming to be aware of how to drive passion and pride in their team or organisation. However, HR departments will need more support in driving change forward as a large majority (78%) believe they need to up-skill in order to deal with the challenges that change brings.

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Change is unlikely to occur in organisations with a culture of mistrust. Half of employees don’t believe that their CEOs and senior managers care about staff and 40% believe their seniors don’t say what they mean, a survey of over 5,000 UK employees reveals.

More than a quarter of employees don’t think their CEO is honest and truthful or that they deliver on their promises. Senior managers fare even worse, with 30% of employees claiming that they don’t deliver on their promises and 29% saying that they think they are not truthful. The survey by Endaba comes ahead of its Trust Conference, which takes place in central London on 28 January.

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In some good news, Semta, the sector skills council for science, engineering and manufacturing technologies, has secured £65 million-worth of funding for companies in its sector to access for skills investment, sister site <a href="https://www.trainingzone.co.uk"TrainingZone reports. The four key areas for investment include: leadership and management training, addressing technical skills gaps, increasing the number and quality of apprenticeship and adopting ‘lean manufacturing’ techniques to improve performance. Philip Whiteman, chief executive of Semta, said: “During a period of economic turbulence, one of the ways companies can invest in future success is to train staff… Using proven diagnostic tools, Semta can help employers start the journey towards improving company performance and sustaining this over the long term.”

Employers who are interested in finding out more should contact Semta Customer Services on 0845 643 9001 or visit www.semta.org.uk

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In industrial stoppage news, a strike vote by meat inspectors is threatening turkey supplies. Those hoping to buy a turkey for Christmas dinner may find it more difficult this year if a three-day strike by meat inspectors goes ahead early next month, reports The Guardian.

Unison, the union representing 1,000 workers in the government’s Meat Hygiene Service (MHS), claimed the dispute could lose the industry millions of pounds in the run-up to Christmas, when up to 9m turkeys are eaten. The union reported 2-1 backing for a strike, and 4-1 support for industrial action short of a strike, with 70% of members voting. Unison said workers objected to changes in working patterns and cuts in overtime in return for 6% pay rises and a one-off £1,000, the first pay increases in the hygiene service for more than two years. Staff currently earned on average between £20,000 and £22,000. A strike would “seriously disrupt” meat supplies to supermarkets, it said. The hygiene service thought a deal could still be reached through talks next week.

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News from the dock shows that a woman has lost an appeal against a ruling that British Airways (BA) did not discriminate against her when it told her to stop visibly wearing a cross around her neck at work. Nadia Eweida, 56, launched an appeal against the judgement of an employment tribunal made in January which decided the devout Christian had breached the airline’s regulations without good reason. For the full report see: www.yourlocalguardian.co.uk

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And finally … addressing the credit crunch in his HR blog spot, Dr Ho Law, director of Empsy Ltd and senior lecturer of UEL, looks at how psychometric tests can help businesses and HR excel in tough conditions. See HR blog.

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Annie Hayes

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