Author: Glenn

Ms Constantine had been a veterinary surgeon since 2017. Initially, she had worked every day with two half days rest, but this increased to four full days and a weekend every three weeks. Moreover, she was required to seek permission to be absent on those days she was not required to attend work. In November 2020, Ms Constantine began a sickness absence, claiming burnout, and was certified as being unfit to work from 1 December 2020 to 4 January 2021 due to anxiety. In May 2021, a ‘fit for work’ statement recommended one day a week, which was subsequently increased in June 2021 to one and a half days a week, with at least one day off between workdays. 

Following a meeting on 22 June 2022, the respondent agreed to look into issuing a new contract for a three-and-a-half-day week with two in six weekends. A proposed contract with a covering letter dated 24 August 2022 was sent to the claimant with a £23,267 gross salary per annum, which was not in alignment with the agreed basis that it should be based, pro rata, on her previous full-time salary of £44,000 p.a. The claimant contended that the revised salary calculations were severely flawed and effectively constituted a 22.4% pay cut based on a new notional denominator of 260 working days in the form of a ‘take it or leave it’ offer. 

Further, a series of unauthorised wage deductions had been made from May 2021 to 31 July 2023, and Ms Constantine ultimately resigned in 2023, lodging a formal grievance on 14 March 2023, specifically complaining about the basis of the calculations of her pro-rata pay from May 2021, asserting a breach of the Part-Time Worker (PTW) Regulations 2000 and unlawful deduction from wages.

The Tribunal ruled in favour of Ms Constantine, finding an unlawful deduction from wages, constructive unfair dismissal, and unfavourable treatment arising in consequence of disability, and she was awarded a total of £19,017.  Ms Constantine was deemed to have been a disabled person from December 2021 due to chronic fatigue, as the respondent should have known, and the act of proposing a new part-time contract in August 2022 at a disproportionately low salary constituted unfavourable treatment arising from the claimant’s need to reduce her hours due to disability (s.15 Equality Act 2010).

The claim for constructive unfair dismissal was upheld because the respondent had committed a fundamental breach of contract by withholding admitted back pay and making its payment conditional on the claimant agreeing to the proposed future salary. Finally, the Tribunal found that an unauthorised deduction from wages had occurred, applying the Apportionment Act 1870 to set the lawful deduction rate at 1/365th of the annual salary for days the claimant was rostered to work but was absent.

When seeking to reduce an employee's hours, any resulting contract must be calculated correctly on a pro-rata basis in accordance with the PTWs. Employers must prove that any proposed pay revisions are not only fair, but also "necessary and appropriate" to achieve a legitimate business aim. Above all, employers must never deliberately withhold payment in an effort to coerce an employee into agreeing to new contractual terms. Such an act risks breaching the implied term of mutual trust and confidence, creating grounds for constructive unfair dismissal.

Every successful business, no matter how innovative or fast-growing, ultimately depends on one simple measure: solvency. A solvent business is one that owns more than it owes, with sufficient assets to cover its debts and the means to continue trading. It is not just an accounting concept, but a signal of underlying financial health and resilience.

Solvency shows that a business can meet its obligations, even during difficult trading periods. When liabilities are kept under control and supported by tangible or liquid assets, a company is less vulnerable to cash flow shocks, rising interest rates or late payments from customers. It provides confidence to suppliers, lenders and investors that the firm is being managed prudently and that short-term fluctuations will not lead to crisis.

Maintaining solvency also provides flexibility. A business that operates with positive net assets can reinvest in growth, negotiate better borrowing terms and respond quickly to new opportunities. In contrast, firms that operate on the edge of insolvency often spend much of their time managing creditors, juggling payments or seeking emergency funding, which can distract from long-term strategy.

There are wider benefits too. Solvent companies tend to attract better staff and more loyal customers, as both groups are reassured by signs of stability. Regulators, insurers and trade bodies all view solvency as a key indicator of sound governance and reliability. For owner-managed firms, it can also make a significant difference when planning for succession, exit or sale, as buyers and investors typically value strong balance sheets and minimal debt exposure.

Regular financial reviews, realistic cash flow forecasts and disciplined control of borrowing are all essential to sustaining solvency. While profit is the measure most often discussed, solvency is the foundation that supports it. A business may trade at a loss for a short period and recover, but once it becomes insolvent, the options narrow rapidly. In uncertain economic conditions, staying solvent remains the clearest mark of real business strength.

The UK continues to struggle with low productivity growth, a long-running challenge that shows little sign of improvement. In the three months to June 2025, output per hour worked was around 1.5% above its pre-pandemic level, but it actually fell by almost 1% compared with the same period a year earlier. The previous quarter had seen only a marginal rise and overall, the trend is one of stagnation rather than sustained growth.

Although the figures appear slightly better than before the pandemic, they underline a deeper problem. Productivity growth has been flat for much of the past fifteen years, averaging only around 0.5% per year since the financial crisis, compared with about 2% annually in the decades before 2008. This persistent weakness limits the economy’s ability to generate higher living standards, boost wages and support stronger public finances.

What lies behind the figures

Several factors contribute to the poor results. A shift in activity towards lower-productivity industries has diluted national performance, as sectors such as retail, hospitality and parts of the public sector expanded while more productive sectors grew more slowly. The public sector itself has seen a notable rise in hours worked, particularly in health and social care, without a matching increase in measured output.

Regional disparities also continue to weigh on national averages. London and the South East maintain far higher productivity levels than many other parts of the country, particularly regions with weaker transport links and lower investment. Capital investment remains subdued overall, and many businesses have been slow to adopt new technology or digital systems that could raise efficiency.

The bigger picture

For all the political focus on growth, the UK remains trapped in what economists often call a productivity puzzle. The country is producing more than before the pandemic, but only slightly and progress is fragile. Without stronger investment, skills development and incentives to innovate, productivity gains are likely to remain modest, constraining both wage growth and the government’s ability to fund improvements in public services.

The Construction Industry Scheme (CIS) is a set of special rules for tax and National Insurance for those working in the construction industry. Businesses in the construction industry are known as 'contractors' and 'subcontractors' and should be aware of the tax implications of the scheme.

Under the scheme, contractors are required to deduct money from a subcontractor’s payments and pass it to HMRC. The deductions count as advance payments towards the subcontractor’s tax and National Insurance. Contractors are defined as those who pay subcontractors for construction work or who spent more than £3m on construction a year in the 12 months since they made their first payment.

Subcontractors do not have to register for the CIS, but contractors must deduct 30% from their payments to unregistered subcontractors. The alternative is to register as a CIS subcontractor where a 20% deduction is taken or to qualify for gross payment status whereby the contractor will not make any deductions, and the subcontractor is responsible to pay all their tax and National Insurance at the end of the tax year.

To qualify for gross payment status a subcontractor must meet certain criteria, including having paid their tax and National Insurance on time in the past and have a business that undertakes construction work (or provides labour for it) in the UK.

The subcontractor must also have a turnover of at least £30,000 for a sole trader (or higher depending on the structure of your business). An application for gross payment status can be made online or by post.

The remittance basis of taxation for non-UK domiciled individuals (non-doms) was replaced with the new Foreign Income and Gains (FIG) regime from April 2025. This new regime is based on tax residence rather than domicile. Under the new rules, nearly all UK-resident individuals must report their foreign income and gains to HMRC, regardless of whether they had previously claimed remittance basis or are claiming relief under the FIG regime.

Former remittance basis users not eligible for the new FIG relief are now taxed on newly arising foreign income and gains in the same way as other UK residents. However, they will still be taxed on any pre-6 April 2025 FIG that is remitted to the UK.

A key feature of the new regime is the 4-year FIG relief. This is available to new UK residents who have not been UK tax resident in any of the 10 preceding tax years. These individuals can opt in to receive full tax relief on their FIG for up to four years. Claims must be made via a self-assessment return, with deadlines falling on 31 January in the second tax year after the relevant claim year. The FUG relief lasts for a maximum of 4 consecutive years starting from when a person first became a UK tax resident. Claims can be made selectively in any of the four years, but any unused years cannot be rolled over.

The types of foreign income which are eligible for relief includes:

• profits of a trade carried on wholly outside the UK
• profits of an overseas property business
• dividends from non-UK resident companies
• interest, such as interest paid on a foreign bank account

An individual’s ability to qualify for the 4-year FIG regime will be determined by whether they are UK resident under the Statutory Residence Test (SRT).