Pension auto enrolment is looming fast for many companies in the next few years. The Pension Regulator is taking a health interest in what certain sectors are doing to meet the challenges and avoid non-compliance. Recently the Pensions Regulator http://www.thepensionsregulator.gov.uk/ has visited firms in the recruitment sector. As a result of information gathered from the visits, the Regulator will be issuing compliance guidance tailored for the recruitment sector.
The Pension Regulator wants to ensure that organisations comply as well as wishing to establish a pro compliance culture. The regulator’s automatic enrolment compliance and enforcement team visited a number of recruitment employers where they were able to have an in-depth look at how these employers are implementing automatic enrolment.
The recruitment sector faces significant compliance challenges and the Pension Regulator decided it was particularly important to target because more than 1,000 recruitment employers are due to reach their staging date between April and July 2014.
The Pension Regulator is urging the industry to make sure their chosen pension scheme and software provider can meet their needs. Employers must start communicating with providers in good time and test payroll systems ensuring they allow enough time, before their staging date to address any complications. Employers must also plan how they will best communicate with workers and leave plenty time to accurately assess their workforce.
The Pensions Regulator recommends that employers should have providers and advisers in place at least six months before their staging date. The staging date is the date when an employer’s automatic enrolment duty is switched on.
Staging date information is available on the Pension Regulator website and employers can create their own individual plan from the the timeline. The Pension Regulator recommends that preparation is started 12-18 months before the staging date.
With Christmas nearly upon us yet again this is a quick reminder of the tax treatment of seasonal gifts and benefits to staff.
Social functions for employees
There is a tax exemption for employee entertaining, but terms and conditions apply. The relief only applies to ‘annual parties’ available to all staff and is set at £150 per head. The figure is inclusive of VAT. If the cost of qualifying parties goes over £150 per head then unfortunately all the costs (not just those above £150 per head) are taxable as a benefit in kind.
Taxis home and any overnight accommodation have to be included in the calculation.
It’s important to note that the amount of £150 per head applies to all those attending the function not just employees. This will come into play if employees are allowed to bring guests.
Tax on business profits
The cost of employee entertaining, as long it’s not incidental to the entertainment of others is allowable. If you invite clients and customers to your party, it is important to consider how to apportion the costs for corporation tax purposes.
Gifts to employees
Christmas presents paid in cash to employees will always be taxable along with other earnings. The same treatment extends to vouchers that can be spent on either one or a number of different shops of the employee’s choice. The employee has to pay tax on the full value of the voucher.
If employees are given a seasonal present, such as a turkey, an ‘ordinary’ bottle of wine or a box of chocolates, as long as the cost is reasonable, HM Revenue & Customs (HMRC) won’t seek to tax it. Unfortunately, HMRC will not tell us the monetary limit it considers as ‘trivial’ but in our experience, less than £50 a head is usually acceptable. If the value of the gift is more than this, it will be taxable.
This blog has been provided by Duncan Mitchell of CED Accountancy Services Ltd.
Reverend Flowers has been big news as the disgraced chairman of the Cooperative Bank which has almost been brought to its knees with a £1.5 billion black hole. Facing a government committee he displayed a pitiful ignorance of the bank which he was in charge providing incorrect information about the balance sheet when questioned on such important matters despite having done the job for three years.
When asked about his qualifications for the role he said he had four years as a banking clerk when he left school. Key questions are now being asked how and why was he recruited for the top job where he earned £132,000 when clearly he had little or no relevant experience. He had been a church minister for forty years, a Labour councillor and a trustee and/or chair of various high profile charities which includes Lifeline . It appears that possibly the “old boys club” got him appointed to chairman of the bank to oversee the board’s directors. Ideally he should have been steering the bank to profit, but unfortunately the reverse has happened.
Clearly the bank’s recruitment process was not fit for purpose. It is important to recruit top executives carefully as they have a serious role to play in steering an organisation strategically. The starting point is a robust job description and person specification. To find candidates the use of a head hunting or executive search agency might be beneficial. They take the leg work out of creating a final shortlist provided they are provided with the right information from the organisation of what they should be looking for in accordance with the job description.
The short listed candidates can then be subjected to an executive assessment day which should contain a range of assessments designed to provide the organisation with sufficient information on each candidate to make a decision as to who should get the job. Assessments can include psychometric profiling, a group exercise to highlight team working and leadership skills, verbal and numerical reasoning together with a robust job-focused structural interview and accurate reference checking. The assessment centre can be carried out over several days.
Clearly the Reverend Flowers was guilty of performance errors. With many top jobs employees’ performance is assessed with 360 degree appraisal which is a useful tool for identifying good and bad performance. It is a less subjective process than a 1:1 appraisal. The employee is assessed by 4-5 peers who they are managed by and who they manage who all comment. The process can be carried out on paper or online. Poor performers should be dealt with quickly before they cause damage to the organisation. Unfortunately, in my experience many employers are not good at dealing with poor performance issues. It seems they don’t like to have difficult conversations with members of staff, but it is essential that they are dealt with.
Flowers, the apparent pillar of the community, has been exposed for drug taking and how he has conducted his private life. It is reported that he used his Cooperative bank email to purchase drugs and contact rent boys. He also viewed pornography on the bank’s computers. Hopefully the Cooperative bank has a robust IT and computer use policy in place whereby misuse of the system is linked to use of the disciplinary procedure.
The European Council has announced that EU data protection reforms will not be implemented until 2015. The General Data Protection Regulation, which was originally expected to be finalised by May 2014, will introduce a single data protection framework throughout the EU. It was previously anticipated that the data protection reforms would be finalised before the European Parliamentary elections in May next year.
The Data Protection Act was first introduced into the UK in 1984 and covered the use of paper records. In 1998 it was updated to include records held on computer. There are eight legal principles which organisations have to abide by when processing personal information which can include names, addresses, date of birth, bank details, etc.
Personal data shall be processed fairly and lawfully and, in particular, shall not be processed unless –(a) at least one of the conditions in Schedule 2 is met, and(b) in the case of sensitive personal data, at least one of the conditions in Schedule 3 is also met.
Personal data shall be obtained only for one or more specified and lawful purposes, and shall not be further processed in any manner incompatible with that purpose or those purposes.
Personal data shall be adequate, relevant and not excessive in relation to the purpose or purposes for which they are processed.
Personal data shall be accurate and, where necessary, kept up to date.
Personal data processed for any purpose or purposes shall not be kept for longer than is necessary for that purpose or those purposes.
Personal data shall be processed in accordance with the rights of data subjects under this Act.
Appropriate technical and organisational measures shall be taken against unauthorised or unlawful processing of personal data and against accidental loss or destruction of, or damage to, personal data.
Personal data shall not be transferred to a country or territory outside the European Economic Area unless that country or territory ensures an adequate level of protection for the rights and freedoms of data subjects in relation to the processing of personal data.
The Information Commission website http://www.ico.org.uk/ provides independent advice and guidance about data protection and freedom of information.
The plan is to modernise the data protection legislation across the EU. David Cameron has sought to avoid a deadline being brought in as the government fears the implementation of the new legislation will damage business due to increased costs, but has now agreed to the date of 2015 as a compromise. Data protection law will be implemented consistently across all member states.
Pension auto enrolment is forging ahead, a government initiative that began in October 2012 with the largest companies required to implement the statutory process. Workers will automatically be enrolled into a pension scheme organised by their employer which can be a company pension scheme provided it meets certain criteria or NEST (National Earnings Saving Trust) which is scheme set up by the government.
The government has introduced pension auto enrolment to solve the pension crisis as workers in the UK are not saving enough money for their old age. With pension auto enrolment workers are automatically enrolled into a pension scheme by their employers but have the right to opt out. Every three years they will once again be auto enrolled unless they opt out. Apparently the signs are good that many employees are taking up pension auto enrolment. Currently 3% of salary is paid into each employee’s pension pot (2% contribution by the employee topped up by 1% from their employer). This will eventually rise to a maximum of 8%.
However a recent Channel 4 Dispatches programme “What’s Your Pension Really Worth?” has questioned whether if even 8% will be sufficient to build up satisfactory contributions for a person to live on. It contained interviews with older people who consider property to be a better investment, however, for the majority of employees in the UK that is an impossible dream so their only option is to pin their hopes on saving into a pension.
However it is possible that many people, even if they have saved into a pension pot, will not be able to afford to retire and will have to continue to work. Research done recently showed that 1 in 7 workers believe they will never be able to retire. Statistics produced by the Office for National Statistics’ Labour Market Survey showed that in January to March this year almost one million pensioners are still in employment. This perhaps shows that it is important to start saving for a pension early. The trouble is young people have so much else they want to spend their money on – going out, clothes, a mortage, a family, etc.
There are many barriers to creating a healthy retirement fund. Under automatic enrolment rules, companies only need to ensure that 8% is paid in from earnings between £5,668 and £41,450. No contributions need come out of earnings above this amount.
Lower charges would also help. But the millions of workers put into the Government’s flagship auto enrolment scheme, NEST, are unlikely to see fees reduced for many years. NEST was recently hit by £1.4m of fraud and has a huge loan to pay back the government.
Time will only tell whether pension auto enrolment has hit the mark with the pensions crisis, however, in its current format, the signs may not be good.
HMRC is to crack down on unpaid internships it has recently announced. It has revealed that it is targeting 200 employers who have advertised unpaid internships recently to ensure that they are paying the minimum wage. This is part of a government initiative so that young people know their rights to pay and what they can do if they feel they are being exploited. HMRC will be sending out letters to these companies and will carry out targeted checks.
HMRC is warning to name and shame those employers who are flouting the national minimum wage legislation. They may also be liable for a £5.000 fine if they are in breach. HMRC has revealed that since April 2013 it had issued penalties to 466 employers for failing to pay the national minimum wage. Since October 2013 this is currently £6.31 for those aged 21 and over.
Employers who take on interns or individuals looking for work experience therefore need to be paid the national minimum wage at least.
The Guardian reported the contents of the letters will read “If you have got things wrong, but you put them right now, we will not charge you a penalty. If you wait, and we select you for a check and discover the problem, we may charge you a penalty of up to £5,000 and you may be publicly named and shamed by the Department of Business Innovation & Skills as an employer who isn’t paying the national minimum wage.”
The Government has announced that it is also launching a poster campaign and a video offering guidance to young would-be interns.
Frustration of contract occurs where it is impossible for that contract to continue. In employment that means that the employment contract ends. Frustration will occur only where the circumstances that lead to the consideration to terminate the contract were unforeseen and it is impossible to continue the employment relationship. Furthermore it will have not been the fault of either party. Reasons for frustration could include imprisonment, death and devasting illness. Where a contract is found to be frustrated each party is discharged from future obligations under the contract and neither party may sue for breach. Frustration automatically ends the contract. There is no dismissal in law so no need for notice to be given by either party.
Where prison is concerned an employee sentenced to fairly short terms may be able to argue that there is no frustration if the employment contract allows for other absences of a similar duration such as long term sickness absence. Indeed if the statutory or contractual notice period that the employee is entitled to is approximately as long as the prison sentence the contract would not necessarily be frustrated. Where an employee has been bailed, it will not necessarily amount to a frustrating event. It is the conviction that counts.
Also the cost of replacing the imprisoned employee would need to be considered. An employer could not be expected to incur substantial costs keeping a job open if it would be reasonable of them to stop employing an employee by reason of frustration.
If the contract contains an express clause detailing the circumstances that could lead to frustration then indeed that frustration would not occur as it would have been foreseen.
Where illness is concerned, it must be a really serious condition (permanent incapacity) with no prospect of recovery. In a ruling which clarifies the interplay between disability discrimination rules and the doctrine of frustration, Warner v Armfield Retail & Leisure Ltd [2012] the Employment Appeal Tribunal has ruled that where a worker was laid low by a serious stroke, rendering him incapable of carrying out the functions of his job, his employer was entitled to treat his contract as at an end.
The worker’s role as a construction site manager had required a high level of mobility and decision-making ability. His stroke had greatly affected his ability to get about and his dexterity, co-ordination, memory and concentration were also substantially impaired. Although his employer had initially treated him well, granting him sick pay above his contractual entitlement, he was eventually sent his P45.
The worker claimed unfair dismissal, breach of contract and disability discrimination. However, in the light of medical evidence that he was highly unlikely ever to regain a full capability to perform his former roles, an employment tribunal ruled that his employer had been entitled to treat his contract as frustrated.
Ruling on the worker’s challenge to that decision, the Employment Appeal Tribunal (EAT) found that there had been no error of law in the tribunal’s conclusion that the employer had not breached its duty to make reasonable adjustments and had been entitled to treat the purpose of the contract as unachievable.
The tribunal had also found that the contract’s termination was a proportionate means of achieving a legitimate aim. However, in allowing the worker’s appeal in part, the EAT noted that the tribunal had not dealt with his arguments that he had been treated less favourably within the meaning of the Equality Act 2010, in that the employer had failed to carry out any form of procedure, however rudimentary, to test his capabilities prior to dismissing him. That issue was remitted to the tribunal for fresh consideration.
Frustration of contract in employment is very rare due to the vast amount of legal protection available to an employee and employers should tread carefully when using this as a defence. Factors which the courts will typically take into account when determining if a contract has been frustrated in long-term ill health absence cases will be the nature of the job role itself, the employee’s length of service, the length and effect of the illness, whether any wages had been paid, whether the employee needed replacing and whether it was reasonable for the employer to wait any longer for the employee to return to work.
Research commissioned by the government has discovered that many employers are not paying out employment tribunal awards to successful claimants. The research was done by IFF Research – Payment of Tribunal Awards 2013 . It seems that currently rogue employers can get away with murder.
The research discovered many employers refused to pay. Therefore the government are considering bringing in new powers for judges to demand up front deposits from employers unwilling to pay..
If a company has stopped trading it can be difficult for claimants to get their money. At the moment with redundancy payments the Insolvency Service http://www.bis.gov.uk/insolvency can pay certain elements. The government will be looking at how such issues can be resolved.
If an employers fails to pay a claimant can pursue payment via either the county court or via the fast track scheme can access the services of a high court enforcement officer to act on their behalf. It appears that many claimants were not aware of enforcement.
According to the research 49% of claimants get paid in full with 16% being paid in part. Therefore more than a third receive no money at all and this includes even after enforcement action has been taken. Reasons for non-payment were the company was insolvent, the employer refused to pay or the employer could not be located.
The month of November has arrived and with it the worldwide campaign of Movember which raises awareness of men’s health through growing moustaches over the month to provide funds for initiatives related to prostate and testicular cancer and men’s health. My own husband is joining in the fun with his workplace which should be quite interesting! In the eighties many men had moustaches, but these days they can be a rare sight and are certainly not generally “on trend” these days.
Movember began in 2004 in Australia and is now a world-wide event during November. It encourages men (which the charity refers to as “Mo Bros”) to get involved, Movember aims to increase early cancer detection, diagnosis and effective treatments and reduce the number of preventable deaths. Besides getting an annual check-up, the Movember Foundation encourages men to be aware of any family history of cancer, and to adopt a healthier lifestyle
The Movember website promotes the benefits to employees as including fun and enjoyment in the workplace, mixing with colleagues, providing a sense of achievement, uniting departments and adding to team spirit, For employers Movember provides benefits to them which include employee engagement, adding to staff retention and providing a fun workplace. There is lots of information on the website about prostate and testicular cancer and men’s mental health which appear to be taboo subjects in the male macho world. However they need to talked about to raise awareness and men need to know what to look out for. Movember allows promotion to happen in a fun way which may appeal more to the male psyche.
Movember can be an opportunity for employers to promote men’s health and well being in the workplace. Men are notoriously bad at managing their health. They are less likely than women to go to their GP particularly regarding delicate and personal problems. Employers can therefore play a big part in helping to combat men’s shyness and reluctance to discuss what they may consider to be embarrassing matters. However the consequences of ignoring men’s health problems can lead to serious illness and even death. My son’s friend, who is only 28, was recently diagnosed with testicular cancer and is now undergoing treatment. Thankfully in this day and age the condition is 99% treatable so the outcome is good.
Employers’ can promote the fun and generate awareness through encouraging competitions – the hairiest, the biggest, the curliest moustache for example and giving a prize to the winner with a donation to the charity. Last year Movember raised £27m for prostate and testicular cancer initiatives which is fantastic news.
Whilst some employers may have policies on facial hair and its prevention, they do need to be fair, reasonable and justified. In 2000 Disney abandoned its policy of banning moustaches and allowed them provided they were grown in full away from the workplace. The ban had begun in the 1950s when Disney wanted to be distinguished from fairgrounds and despite Walt Disney himself sporting a moustache. Then in 2012 Disney allowed beards and goatees in the workplace. McDonalds currently has a policy of requiring staff to be clean shaven for hygiene reasons. They will only allow beards for religious reasons in which case a beard snood must be worn.
Does facial hair put employers off as part of the recruitment process? Well in the US in 2009 Gillette commissioned a survey of 500 HR professionals to find out. Apparently those men who are well groomed and clean shaven creates more of a good first impression than a firm handshake. A principle my son grasped on my advice when he went for an interview last year and secured the job. Unfortunately the moustache and beard quickly reappeared. The latest designer look of facial stubble does men no favours and can promote an unkempt, untidy look which may or may not be reflected in their performance. Many companies will not take the chance at interview.
Research done in the US in 2003 indicated that a having a beard did not harm a man’s job prospects. Whilst Margaret Thatcher did not allow any men with beards when she was prime minister these days there are many celebrity business figures in the UK who sport full facial hair such as Richard Branson and Alan Sugar. High profile Jeremy Paxman recently took a lot of stick from the media when he returned from holiday having grown a beard. However the US research showed that having a moustache alone did harm career prospects for men.
Whether facial hair is welcomed in the workplace or not, employers can do a lot to join in the fun of Movember and promote men’s health and wellbeing.
This November the government is introducing a two year pilot scheme designed to get people who are receiving sickness benefits back to work with regular medical interviews. Healthcare professionals will help people on sickness benefits to address the barriers to work or face losing their benefits.
The pilot will be run across the Black Country, Derbyshire, Leicestershire, Northamptonshire, Lincolnshire, Nottinghamshire, Rutland, Staffordshire and Shropshire. 3,000 people will take part all of whom have been identified as being fit to work in the next 18-24 months. These sick people will have regular medical interviews as a condition of receiving their benefit hopefully helping them move closer to getting a job. The interviews will be separate to GP appointments and will attempt individuals to engage with their GP if that relationship appears to be broken.
The results of the pilot will be compared to those of a different scheme where employment-focused support is being offered through the Jobcentre or work programme providers. The aim is to see which scheme is the most successful in getting people back to work.
The schemes are being introduced in an effort to stem the increasing benefits bill that currently comes in at almost £220 billion pounds.
