Got asked this by client recently, so i thought i’d share it here. So the question is does the apprenticeship levy constitute a compensation event under ECC?
I would suggest that it is a CE if the contract contains secondary option X2 (and the contract date is pre the date the levy was implemented) changes in law since that is how it has been enacted.
Further to the previous answer, it could also depend upon when the matter was known about and whether the details of the proposal were clearly known at the time of tender. The provisions were introduced under Part 6 of the Finance Act 2016 although the consultation period was in 2015. There was a similar issue with the changes to the CITB Levy in respect of the 3rd levy period under the 2015 Act and a further change in the calculation within the 2017 Act. There was also the treatment of agency workers under the Finance Act 2014, which again was introduced following an announcement in the preceding budget and a consultation period.
Having looked at the wording of X2, it says that a change in law is a CE if it occurs after the Contract Date. I would suggest, therefore, that the levy would be a CE if the Act that introduces it becomes law after the Contract Date, but obviously there is no additional cost until after the levy is introduced. If the levy is introduced after the Contract Date, but the Act was law before that date then the devil is in the detail - was the date of introduction stated in the Act?
I think budgets and consultations may be red herrings Andrew - surely they are only statements of intent to change the law, not changes in themselves, and therefore don’t meet the ‘test’ of X2?