Monthly Archives: September 2013

Beware the Use of Fixed Term Contracts

Many employers offer fixed term contracts which can provide certainty of employment for a specific length of time, however, it is important to remember that they come with certain strings attached. With increasing length of service comes increasing employment rights.  After two years service there is the right to claim unfair dismissal and redundancy pay.  After four years service under successive fixed term contracts, according to the Fixed Term Employees Less Favourable Treatment Regulations 2002, a worker is deemed to be a permanent employee unless that can be objectively justified.

Many organisations rely on external funding and issue successive fixed term contracts accordingly hoping that the precarious nature of the funding process can be classed as objective justification.  However the case of Ball v Aberdeen provided definitive ruling that this is not correct.  It has implications for many educational, public sector organisations and charities that tend to issue fixed term contracts.

Fixed term employees have the right to be treated the same as a permanent employee doing the same or similar work.  The regulations protect them from any detriment linked to their fixed term status.  The exception is where that treatment can be objectively justified. Fixed term workers are entitled to the same level of benefits as their permanent comparator.  If this is not possible the employer may have to increase the salary of the fixed term worker in order to compensate them for their loss.

The non renewal of a fixed term contract is a dismissal in law and requires a fair procedure to be followed ie letter, meeting, appeal. If a fair procedure is not followed there is a risk that the worker can claim unfair dismissal if they have two years service.

In a redundancy situation an employer is more likely to terminate fixed term employees.  Potentially they risk a claim of unfair dismissal that the workers have been dismissed because they are temporary.  Employers should therefore mix fixed term workers with permanent employees in the redundancy pool.

Employers should beware of giving notice early before the end of a fixed term contract ends.  The fixed term worker could claim for breach of contract if there is no clause in the contract that will allow early termination.  The worker could be awarded the full amount of the wages they would have earned had the contract remained in force by an employment tribunal.

Pension Auto Enrolment – How Are Employers Doing So Far?

The drive to implement pension auto enrolment by the government has been in place for a little while.  The inititative was lead because private pension saving declined in the UK, probably impacted by the global recession leading to a drop in people saving for their old age as well as undersaving.

The Pensions Regulator has issued 32,000 letters to organisations with staging dates from January 2013 to September 2014.  From January 2014 small to medium organisations (SMEs) will be affected and will need to commence pension auto enrolment in accordance with their staging date.

The Pensions Regulator has recently completed an analysis on progress with UK employers and provided a commentary on how they are coping with the process so far.

Most employers are now aware of their obligations in respect of pension auto enrolment in that they have to automatically enrol UK workers, provide a qualifying pension scheme and make contributions however detailed knowledge of the finer points of implementation are lacking.   The awareness of employers with their obligations has grown more and more perhaps due to the TV adverts promoted by the government where celebrities such as Nick Hewer, Karen Brady and Theo Paphitis are seen saying “I’m in”.  Awareness has grown more with micro and small businesses but percentage wise is very low compared to awareness in large organisations who seem to be very aware of their staging date.  Larger organisations are also more likely to have a more detailed knowledge of changes in pension law compared to smaller organisations.

Awareness of pension law changes has increased with intermediaries such as accountants and book keepers particularly if they advise small businesses.  Awareness with pensions consultants, pensions administrators and IFAs who advise large organisations close to their staging date is very high.

Over 3/4 of larger employers think that pension auto enrolment is a good idea in principle.  Whilst many large organisations feel they will be able to cope with the administrative burden of pension auto enrolment only 48% of micro businesses have indicated confidence in being able to do so.

Most large organisations said they would not leave things to the last minute to implement pension auto enrolment compared to 40% of small and 66% of micro businesses who said they would.

50% of large organisations and 65% of medium organisations felt it would be easy to cope with the changes compared to 57% of small and 42% of micro businesses.  Large employers have tended to be the most prepared for the changes, with most having started some form of preparation, and with more now in the implementation stage than in spring 2012. Most large employers were also confident that their organisation would have done everything it needed to by the deadline. Only 18% of micro employers have begun preparation and lack confidence that everything will be done by their deadline.

The main concern about pension auto enrolment for SMEs is the cost of implementation. Micro employers are also more concerned about the administration and communication to workers.

Many large organisations have already consulted with an external advisor to seek advice whereas many SMES plan to gain external support in future.  Many pension consultants are already getting actively involved in providing technical advice to their clients, but it is advice rather than hands on support with the expectation that their clients will undertake many of the admin activities themselves.  Many book keepers and accountants are undecided on the type of support they will provide to their clients.  Potentially many small and micro businesses may be lacking in the support available to them.

Many employers felt the penalty for non-compliance would be a fixed penalty or fine.  The Pensions Regulator has already opened 89 investigations into non-compliance with large organisations who have passed their staging date and took no action.  The investigations have focused on employer readiness and helping employers become compliant.  No one has yet been fined for not complying however, this may change in 2014 when the huge number of SMEs will be affected by the change in pension law.

To conclude it would seem that although larger organisations seem to have everything in hand, potentially SMEs may struggle to cope with the necessary burden and should seek help well in advance of their staging date if they are unsure of what to do so they avoid any investigation by the Pension Regulator for non-compliance.

For more information on the Pension Regulator’s analysis:


Tattoo or Not Tattoo – Body Art At Work

Tattoos have been growing in popularity in recent years.  In the past they have always been associated with a stereotype – the macho man often with a thuggish image – a convict, a biker, a rocker or a rebel.   Even the latin word for tattoo is stigma. Tattoos date back many thousands of years; a mummified body found in the Austrian/Italian alps dating back over 3000 years BC carried the marks of tattoos.

The sterotypical image of the tatto appears to be changing with many young people, in particular, increasingly getting their bodies covered in ornamental art encouraged by celebrity role models such as David Beckham.  It is estimated that one in five people in the UK now have a tattoo.

My own son spent over £200 last year getting his right upper arm covered in a large tattoo (I am not a fan).  He works in a professional role in an office environment and had the sense to ensure that the image is covered by a shirt sleeve even if rolled up.  His actions copy those of Winston Churchill who had an anchor on his forearm which was always well hidden (surprisingly he copied his own mother who had a snake tattooed on her wrist).

Nevertheless tattoes in the workplace can be frowned upon. Whilst they may be acceptable in creative industries, in the corporate world they remain a thorny issue.  It is freedom of choice and expression to acquire body art but it has to be balanced with the need to fit into the world of work. In 2012 the Metropolitan police banned employees from getting visible tattoos or they would face disciplinary action.

Research done by the British Sociological Association found that regardless of how intellectual and skilled a person is, if they have a visible tattoo at interview the likelihood of ruining their chances is very high with potential employers viewing them as dirty or unsavoury.  It is all about corporate image and perception which continues to fuel stereotyping more likely with the older generation of managers.  Having a tattoo does not affect a person’s ability to do a job and indeed many professionals do have tattoos, they are just well hidden.  Nevertheless at interview first impressions are vital.

Research carried out by the University of St Andrew interviewed recruiters in a bank, council,prison, university and bookseller to find out their view on job applicants with tattoos.  Opinions included a statement that a tattoo would stop an applicant being recruited to the tattoo being the first thing discussed when the applicant left the room detracting from the discussion of job ability.  Other opinions included that customers might think a tattooed member of staff as being abhorrent, repugnant, unsavoury and untidy.  The programme Tattoo Addiction aired on Channel 4 showed Paul who displayed a tattooed face discussing how difficult it was to find a job.

Having a policy on body art is not discriminatory.  Employers have the right to provide guidelines to staff on this subject and whilst a whole policy need not be dedicated to this, clauses could be inserted into a dress code.


So What Changes to TUPE Following Government Consultation?

On 5 September the government issued its response to consultation over TUPE reform. TUPE has often caused lots of problems for employers and the consultation exercise, with a view to making changes, was meant to iron out some of the difficult issues that arise. However, surprisingly, the changes to the 2006 TUPE regulations are not as significant as previously anticipated. The revised regulations are expected to be laid before parliament in December 2013.

There will be no repeal of service change provisions so that this aspect will be retained. The provisions only apply where the services involved are fundamentally or essentially the same. The wording of the 2006 regulations are to be revised.

There will be a longer time frame for employee liability information to be provided by the transferor (outgoing employer) to the transferee (incoming employer) so that there will be a 28 day timeframe for the process compared to that of 14 days with the existing regulations. The existing defence that 28 days is not reasonable practicable will continue to apply.

Contractual changes following transfer will be permitted after one year. Therefore there will be limited relaxation of post transfer harmonisation which should help the long standing current frustration of employers who are unable to harmonise terms and conditions of transferring and existing members of staff even with agreement. Contractual changes will be permitted as long as the transfer is not the main reason for the change and that the change is based on an ETO reason. There will also need to be an appropriate contractual clause to allow any changes.

Collectively agreed terms will freeze at the point of transfer and clarification on this process will be included in the new regulations.

Change of location will be an ETO reason. This change will allow redundancies to be made due to change of location and will not be automatically unfair as currently.

Pre transfer collective redundancy consultation will count as part of due process. This change will be voluntary and there will be no new obligation to consult pre-transfer. The transferor may permit access to the transferee and consultation must be meaningful. Even if redundancy is inevitable the transferee can not issue any notices of redundancies until after a notional transfer. The transferor can not make any redundancies as it can not demonstrate any ETO reason. Employers will be given guidance on what is a reasonable time to elect employee representatives.

Micro businesses of 10 or fewer employees will be removed from collective consultation therefore employers can inform and consult directly with employees.