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Where there is no express or implied contractual payment in lieu of notice (PILON) clause in an employee’s contract, if, as part of a settlement agreement, the employee receives a one-off PILON in the amount of that employee’s basic pay for the notice period and also continues to benefit from health insurance cover paid for by the employer for the duration of the notice period, should the value of the health insurance cover be included in the post-employment notice pay (PENP) calculation?
Q&As
Where an employment is terminated on or after 6 April 2018 and there is no express or implied contractual PILON clause in the employee’s contract, despite the PILON being non-contractual, it is still fully subject to tax and employer’s National Insurance contributions (NICs). For this purpose, the post-employment notice pay (PENP) formula is what determines what is treated as the non-contractual PILON. If the termination award is less than the amount of the PENP as determined by the PENP formula, the entire award is the non-contractual PILON that is fully taxable as earnings. If the termination award exceeds
Cabinet Office updates guidance on supplier payment approaches in major contract procurement
NEWS
The Cabinet Office has issued Procurement Policy Notes (PPNs) 015 and 018, which provide updated guidance on how to consider suppliers' payment approaches when procuring major government contracts. These new PPNs, effective from 24 February 2025 and 1 October 2025 respectively, will supersede previous PPNs on this subject for in-scope procurements and continue the government's focus on fair payment practices in public sector procurement, with updates to reflect new terminology introduced by the Procurement Act 2023 and the Procurement Regulations 2024. The guidance aims to ensure that contracting authorities can effectively evaluate and account for suppliers' payment behaviours when awarding significant contracts, promoting responsible business practices throughout the supply chain.
If a part-year worker on a continuous contract is entitled to additional contractual holiday in addition to their 5.6 weeks’ statutory holiday entitlement, (a) should their statutory holiday pay be calculated (in line with Harpur Trust v Brazel), in accordance with regulation 16 of the Working Time Regulations 1998 and sections 221–224 of the Employment Rights Act 1996 and the additional contractual holiday be pro-rated, or (b) should the entire holiday entitlement be calculated on a pro-rata and, if necessary, ‘topped up’ to the equivalent of 5.6 weeks calculated in line with Brazel?
Q&As
Statutory holiday entitlement Under the Working Time Regulations 1998 (WTR 1998), SI 1998/1833, a worker is entitled to 5.6 weeks of paid annual leave, made up of: • a ‘basic’ entitlement of four weeks’ annual leave each leave year, implementing the right under Directive 2003/88/EC, the Working Time Directive (WTD) • an ‘additional’ entitlement of 1.6 weeks’ annual leave each leave year Under WTR 1998, SI 1998/1833, reg 16, a week’s pay is calculated in accordance with sections 221, 222, 223 and 224 of the Employment Rights
In NEC4 Option A, if a contractor terminated the contract by clause 91.6 due to a default by the client (R19), the contractor is entitled to amount A1 in the Termination Table of clause 90.2. By clause 93.1, amount A1 includes ‘other defined cost reasonably incurred in expectation of completing the whole of the works’. Does this third bullet point apply only to work in the Activity Schedule or does this also entitle the contractor to payment for ANY work reasonably carried out (ie including additional work carried out outside of the scope for which no CE was raised)?
Q&As
Under the NEC4 conditions, as set out in the LexisNexis Manual of Construction Agreements, defined cost is composed of two elements: • the cost of components in the Short Schedule of Cost Components, the rates for which are stated in Part 2 of the Contract Data. These are rates for categories of personnel, equipment, labour employed in off-site manufacture or off-site fabrication and design staff (see clause 11.2(23) of NEC4 Option A) • other amounts at open market
Contractor was bound by cap in letter of intent (CLS v WJG Evans)
NEWS
Construction analysis: The Technology and Construction Court (TCC) found that the employer and contractor had failed to enter into a formal construction contract in respect of a development project, meaning that their relationship remained governed by a letter of intent (LOI). The result was that the contractor’s entitlement to payment was capped at the value of the LOI, which was lower than its valuation of the completed works.
Identifying contracts of insurance in English law—an introduction
PRACTICE NOTES
This Practice Note considers identifying contracts of insurance in English law. It considers what a contract of insurance is from the perspectives of UK legislation and the common law, and the regulatory implications of being a contract of insurance. The problem The problem of identifying exactly which commercial arrangements should properly be identified as ‘contracts of insurance’ in English law is not new. That is not least because successive lawmakers have sought to regulate insurance and insurers, in some form or other, since Elizabethan times. It is a testament to the remarkable pragmatism of the English legal tradition that to this day there is no fixed legal definition of a contract of insurance in English law, even though in 2023, the UK was estimated to have the third-largest insurance industry in the world, with total gross written premiums of £300Bn. The European interlude From the UK’s accession to the European Common Market in 1972 until ‘IP Completion Day’, at 11pm on 31 December 2020, the statutory
What is the legal status of pre-application planning advice for which a fee is paid? Is there a duty of care leading to liability in negligence or contract in the event of an officer failing to identify a constraint which turns out to be fatal to the proposed development?
Q&As
The short answer is that a local planning authority (LPA) is not liable in negligence for any shortcomings in pre-application advice it provides, even if paid for. The courts have been reluctant to impose tortious duties of care upon LPAs for conduct connected with planning applications. The floodgates argument is the justification and the burden that would be placed on the administrative procedures of local government if such duties were imposed. Even if a claim in contract could be framed, the problem is that identifying
Where a transferor is providing a gifted deposit element of the purchase price to the transferee (who is a family member) should the purchase price in the contract and transfer be stated as the price net of the gifted deposit? The transferee's mortgage institutional mortgage lender is suggesting that this is the case, despite their valuation reflecting the gross price which seems most unusual.
Q&As
The vendor is not reducing the sale price as an incentive for sale, nor they are selling at an undervalue. Instead, the vendor has decided to accept a lower figure from the purchaser than the actual deposit required as a way of gifting that difference to the purchaser. An example would be, if the property is sold for £400,000, and £300,000 is raised by way of a mortgage and the remainder comes from the deposit,
An employee, while in a personal relationship with the owner of the company that employs them, pays out a large sum of their own money on the refurbishment of a shop without asking that the money be repaid. The relationship ends, and the employee decides they want their money back. Can the employee's outlay be regarded as expenses for which they are entitled to be reimbursed?
Q&As
The question of what an employee is entitled to be paid (or repaid) will be governed by the law of contract. A contract can be made up of all or any of: • express terms • implied terms • imposed terms • incorporated terms For further information, see Practice Note: Types of contractual term
Are governing law clauses, jurisdiction clauses and other boilerplate clauses necessary in an amendment agreement?
Q&As
An amendment agreement, although having as its purpose the amendment of an existing agreement, is itself an individual contract. Therefore, the same rules of construction and contract interpretation apply to the amendment agreement in its own right. Any dispute relating to the amendment agreement
JCT contracts 2005—reference copies
PRACTICE NOTES
This document contains searchable quick links to PDF copies of the JCT 2005 standard form contracts. For other standard form contracts see: • JCT contracts 2024—reference copies • JCT contracts 2016—reference copies • JCT contracts 2011—reference copies • JCT contracts 1998—reference copies • FIDIC contracts—reference copies • CIOB contracts—reference copies Design and Build Contract • JCT Design and Build Contract 2005 Edition • JCT Design and Build Contract 2005 Edition incorporating Revision 1: 2007 • JCT Design and Build Contract 2005 Edition incorporating Revision 2: 2009 • JCT Design and Build Contract Guide 2005 Edition • JCT Design and Build Contract Guide 2005 Edition incorporating Revision 2: 2009 • JCT Design and Build Sub-Contract Agreement 2005 Edition • JCT Design and Build Sub-Contract Agreement 2005 Edition incorporating Revision 1: 2007 • JCT Design and Build Sub-Contract Agreement 2005 Edition incorporating Revision 2: 2009 • JCT Design and Build Sub-Contract Conditions 2005 Edition • JCT Design and Build Sub-Contract Conditions 2005 Edition incorporating Revision 1: 2007 • JCT Design and Build Sub-Contract Conditions 2005 Edition incorporating Revision 2: 2009 • JCT Design and Build Sub-Contract Guide 2005
If an employee gives three weeks’ notice of her resignation even though her contractual notice period is only one week, does the employer have to accept and pay her for three weeks or can it reduce the period to one week?
Q&As
Whether the employer can treat the employee as having given one week’s notice only will depend on the wording of the employee’s employment contract. In most cases, the notice provision in the employment contract will require the employee to give a minimum period of notice, eg: • clause 13.2 of Precedent: Employment contract basic version, provides ‘You may terminate your employment at any time on giving to the Employer at least [one month’s] prior written notice’ • the various options within clause 3 of Precedent: Employment contract basic version, provides that the employment may be terminated ‘by either party giving to the other