Tis the Season For Sickness Absence

sickness absence

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“Cover up your coughs and sneezes. If you don’t, you’ll spread diseases.”

Winter is upon us and so, it seems, tis the season for sickness according to some of my clients.  Most employers notice a huge increase in sickness absence in the winter months particularly December.  A few years ago a survey by BUPA found 71% of employers had a problem caused by coughs, colds and flu.

The impact on remaining staff due to increasing workloads and costs to a business due to absent staff can cause a real headache for business owners.

It is really important to have a sickness absence procedure in place which is followed by all employees.  The sickness procedure should be clearly stated in the employment contract and employee handbook.  Employees who fail to call in sick should be considered AWOL which is deemed to be either misconduct or gross misconduct depending on the company’s view and statement in the employee handbook.  There should be no excuses for calling in.  Ideally it should be the sick employee, or if they are considered to be on their “deathbed”, a friend, partner or spouse should oblige.  Compliance and adherence to the sickness absence procedure is paramount to ensure good staff morale.  if employees are allowed to “get away with it”, such an attitude will cause big problems in a company.

Return to work interviews are a useful management tool so that the spotlight is placed on the returning employee who is questioned about their sickness absence.  Managers should check if their version of events adds up.  For example, photos on Facebook where they have been partying the night before a sick day needs to be questioned or if they have been seen out, seemingly, not worse for wear.

Many companies now operate SSP instead of generous occupational sick pay schemes.  SSP can be a useful tool to prevent intermittent odd sick days with employees who are on lower wages.

An alternative can be health promotions to employees of how they can improve their health and fitness over the winter months can help eg encouragement of flu jab uptakes.

Small Business Awareness of Pension Auto Enrolment

The Pension Regulator has recently published its findings in relation to small business awareness ofauto enrolment pension auto enrolment.  Worryingly the research shows that only 29% of small businesses with a staging date in 2016 know when that is.

Awareness of the auto enrolment process is highest amongst small employers compared to micro employers.  The Pension Regulator is currently trying to raise awareness through TV advertising campaigns, radio and digital advertising and via social media,  All employers receive a letter from the Pension Regulator twelve months before their staging date.  This should be a clear prompt for that business to start preparing for the statutory process or face a large fine for non compliance.  The first task should be to decide what pension scheme to choose and this will take quite a lot of time to do research.  For those companies that do not wish to take up a private pension scheme the government has set up NEST which offers low cost compliance.  Preparation for auto enrolment is the key to success and failing to prepare will lead to failure and high costs.

Other sources of how awareness is being raised are through professional advisors such as accountants, book keepers, pension providers, business groups and, of course, savvy HR consultants.  The latter are often best placed to help small businesses with the admin burden of auto enrolment.

Information on how to comply with pension auto enrolment is readily available on the Pension Regulator website.

Unfortunately whilst many businesses do eventually get to grips with the process it appears that many forget to complete the declaration of compliance.  This has to be submitted to the Pension Regulator within five months of the staging date.

Small employers on the whole believe that auto enrolment is a good thing compared to many micro employers.  According to the research 41% of micro employers fear the cost of contributions, however, they need to ensure they do not coerce employees into opting out as such conduct can incur a hefty fine from the Pension Regulator. 14% of them believe they do not have to do anything to comply with this process – they will obviously have to think again if they have employees.

If a micro business does not have any employees and no one in the business has an employment contract, they may not need to comply.  However, they should take advice to ensure that this is the case.

Any business that is of the opinion that compliance with auto enrolment is not needed should write to the Pension Regulator giving the reasons why and await a written response that will either confirm their assumptions or not.

Consultation Launched About Trade Union Bill

The government has just launched consultation about the Trade Union Bill as they propose to reform strike ballot laws and modern trade union law.  The consultation will close in September 2015.

The main proposals are:-

  • industrial action will require a 50% turnout
  • 40% of all eligible voters must vote in favour of industrial action which affect important public services
  • the ban on using agency staff to cover striking workers will be lifted
  • a 4 month limit on a strike mandate, after which another ballot is required
  • more specific requirements for the wording of the ballot paper
  • banning automatic opt-ins to political donations from trade union subscription fees
  • increased notice to employers so they can prepare and put contingency plans in place
  • tackle intimidation of non striking workers

The government has published the draft Trade Union Bill, along with three separate consultation documents on ballot thresholds in important public services, hiring agency staff during industrial action and tackling intimidation of non-striking workers.

The Government claims that the proposed legislation,will create greater transparency around union practices and will ensure strikes are the result of a clear and positive democratic mandate from union members after all other possibilities have been explored.

This has of course angered unions as they claim it would make all legal strikes impossible.

Consultation Launched On Gender Pay Gap Reporting

The government equalities office has just launched a consultation on gender pay gap reporting whichGender pay reporting will close on 6 September 2015.  The reason for this is that the government is committed to introducing regulations that will require companies to publish their gender pay gaps clearly identifying the differences between average pay for males and females.

Research has shown that the UK falls way behind in the league table of worldwide equal pay.  Iceland, Finland, Norway and Sweden are the top ranking countries for equality.  Four decades on from the Equal Pay Act working women in the UK continue to lose out.

The regulations will only apply to companies in the UK with at least 250 employees so small and medium sized businesses will not be affected.  Furthermore public authorities will not be included as they already have broad equality obligations compared to the private sector.

The regulations will be in place by March 2016 but will not take place immediately so that employers have time to prepare for implementation.

The Government appears to be considering the following options in terms of what will be reported:

1. Reporting one overall gender pay gap figure that captures the difference between the average earnings of men and women across the organisation as a percentage of men’s earnings.

2. Reporting separate gender pay gap figures for full-time and part-time employees.

3. Showing the difference in average earnings of men and women by grade or job type.

Highlighting pay differences could expose companies to equal pay claims.  There will therefore be the need to put pay decisions in context as there may be fair reasons for these.

A failure to comply with the rules could, ultimately, be treated as an offence, attracting a fine.

In anticipation of the regulations being implement employers should consider the following actions:

• Be proactive – doing nothing is not an option. Understanding your pay arrangements will help you manage and present information meaningfully and in context.

• Review all current pay practices across your organisation in order to understand the differentials which may exist.

• Consider gender pay gaps which exist on a departmental/geographical/functional level and compare these with the composition of your workforce.

• Analyse the rationale behind your current arrangements to identify potential risk areas.

• Consider implementing a job evaluation scheme which will help provide defence for pay gaps

A link to consultation paper can be found at https://www.gov.uk/government/consultations/closing-the-gender-pay-gap

Employers will ultimately have to address gender pay gap issues.





Employee Sickness and Holiday Carry Over – 18 Month Time Limit

The Employment Appeal Tribunal (EAT) has recently clarified that where an employee has untaken Carry over holiday whilst sick - 18 month time limitleave that they have been unable to use because of long term sickness there is to be an 18 month time limit to do so.  The 18 months starts from the end of the leave year in which it should have been taken.  Workers have been able to carry over four weeks leave if they have been on long term sick as decreed by HMRC v Stringer in 2009 and was linked to the Working Time Regulations 1998.  An employee’s contract may, however, provide for additional holiday carry over.

The decision to add the 18 month time frame was linked to Plumb v Duncan Print Group Ltd.  The EAT  stated the worker doesn’t need to show that they were physically “unable” by reason of sickness to take the holiday during the leave year in which they were off sick.  Although employees can take their holiday during a period of sickness some may choose not to.

Background to the Case

Mr Plumb had been on sick leave since April 2010 due to an accident at work.  He did not take his annual leave for 2010, 2011 and 2012 leave years.  In July 2013 he was asked to take all the annual leave that he had accrued. The employer only paid him his leave for the year in which he requested it ie 2013-14 and refused to pay the leave untaken from 2010, 2011 and 2012 which amounted to 60 days.  He remained on sick leave until his termination of employment in February 2014 and put in an employment tribunal claim.

The EAT decided that a worker should not be entitled to have their holiday carried forward indefinitely as defined by the Working Time Directive and EU case law.  Therefore workers who have been absent for a number of years will not be entitled to back pay for holiday that they have accrued and not taken.

In any case wherever possible I always advocate employers should deal with long term absence issues to prevent employees being off for months and certainly not years on end.




Tips on Rolled Up Holiday Pay

In 2006 the European Court of Justice ruled that rolled up holiday pay was illegal, however, almost rolled up holiday payten years later some businesses in the UK still use this to pay casual staff on zero hours contracts.  The law in the UK remains confusing on this issue so here are some tips on rolled up holiday pay.

The decision by the ECJ decided three things:

1) it is contrary to the working time directive for holiday pay for statutory holidays to be rolled up into normal pay instead of actually being paid during the holiday.

2) Countries who are members of the EC must take ‘appropriate measures’ to ensure that the practice of rolling up ceases.

3) However sums already paid would still count towards pay for holidays.

When the decision came from the ECJ it took a year for the UK government to state that rolled up holiday pay was unlawful.  However, the focus was on the worker to approach their employer to re negotiate the contract and if the employer was unwilling to then the worker could go to an employment tribunal.  Many casual workers on zero hours contracts have precarious security with their employment as the terms are mutual no obligation.  The employer has no obligation to offer the worker work and under these circumstances an employer if challenged could arguably decide not to  provide any further work to that person.  For the worker to take a case to an employment tribunal they would need to pay a hefty fee which is arguably prohibitive for someone who has received a relatively low wage then ultimately may have no income.  These two things create a barrier for a worker trying to sort out rolled up holiday with their employer.

Nevertheless, the ideal thing is for an employer to review and amend a zero hours contract that operates rolled up holiday pay and this is what I would advocate given that the government decreed, in accordance with the Working Time Directive, that holiday pay should be paid at the time of holiday. To renegotiate the contract there should be consultation and written agreement in the form of a signed new contract.  To comply with the government’s proposal an employer should keep accurate records of hours worked and provide holiday pay when the worker actually requests holiday.

However, this can be quite onerous if a business operates with a large pool of casual workers on zero hours contracts and in many cases casual workers like to have rolled up holiday pay.  If a business wishes to continue to operate rolled up holiday pay because they find that easier there are ways to reduce the risks and costs of an employment tribunal claim.

The main principle is to operate rolled up holiday pay comprehensively and transparently.  Workers should clearly know and understand how the process will operate.  As with all things HR, written records are essential for the paper trail.  Rolled up holiday pay should be clearly stated in the contract showing the 12.07% allowance in the hourly rate.  Wage slips should also clearly show the percentage payment of rolled up holiday pay.  In addition the employer should operate a holiday booking system where workers have to book their 5.6 weeks pro rata holiday and be encouraged to take their entitlement in a twelve month period.  If that is proving difficult because a worker is doing many hours on a weekly basis that is a definite impetus for the employer to review and amend the contract to accurately reflect the working practices with an employment contract.


Seasonal Workers and Auto Enrolment

The summer time often means that many employers take on extra staff to meet increased work demands eg fruit farms, holiday parks.  Employers will have to consider the impact of seasonal workers and auto enrolment.

The first task is to assess the workers and see which category they fall into – eligible worker, non eligible worker or entitled worker.

Following on from that the employer must consider whether postponement is more beneficial rather than auto enrolling those staff particularly if the employer knows that the temporary staff will not be needed after three months.

An employer can only postpone automatic enrolment from:

  • the staging date
  • a staff member’s first day of employment
  • the date a staff member first becomes eligible for automatic enrolment.

To postpone auto enrolling a member of staff the employer must write to them within six weeks from the date postponement starts. An employer can postpone for a maximum of three months, but it can be for much less than that.  An employer can postpone as many or as few staff as is required and the postponement period does not have to be the same length for everyone.

Staff who have been postponed can choose to opt in during the postponement period.

On the last day of the postponement period, an employer needs to know whether any member of staff whose automatic enrolment who has been postponed is still eligible to be automatically enrolled. If they are, an employer must put them into a pension scheme straight away. An employer can not apply a further period of postponement even if postponement has been for less than three months.

Auto Enrolment – Challenges for Small Businesses

Auto enrolment is set to ramp up as the country heads for complete auto enrolment of all employersauto enrolment by 2018.  So far only 3% of employers have needed to comply but in the next few years the outstanding 97% will be implicated.  There are obviously challenges ahead as resources become stretched both outside and within smaller businesses.

In 2015 45,000 employers are set to enrol and in 2016 it will be 45,000 employers per month.  So far it seems that medium sized businesses have coped well however some have struggled to find a pension provider that will enrol all of the workforce and some businesses turned down completely by a private pension provider.  As with all businesses return on investment is essential and it seems that some pension providers do not think that providing a pension scheme to a small to medium sized business is worthwhile.  Others will disagree but may add hefty ongoing annual charges in order to ensure they make a profit.  This leaves the smaller business in a difficult situation with the choice of pension schemes available dramatically reduced.

Research has shown that medium sized businesses have so far taken less time to prepare for auto enrolment and have had reduced implementation costs than the larger businesses who have had to comply since October 2012.

Many small and micro businesses have no experience of implementing a pension and do not have an active scheme in place.  Many did not bother offering a stakeholder pension despite the fact that having 5+ employees this was required.  Auto enrolment, however, can not be ignored.  It seems, that awareness of the process is quite high, but action is required and early planning essential to comply with the staging date and avoid the hefty fines.

Demand for help with auto enrolment remains quite high. A high percentage of businesses will turn to their accountant.  However, many are not able to offer any support.  The IFA industry on the other hand has geared up to provide advice and guidance, but often will charge high fees to implement the process.

In 2014 the opt out rate for employees was running at 8% which is relatively low.  Research shows that only 5% of younger workers are opting out whilst 28% of older workers are doing so.  Affordability seems to be the key with these older workers as well as having an alternative means of saving for their pension.

It is thought that overall  opt out rates is because of good communication processes offered by the larger employers that have had to comply so far.  However the medium and smaller businesses that are now being affected do not have the huge resources available to provide communication processes such as seminars and workshops. Communication about the process is essential so that employees fully understand the implications of auto enrolment and saving for future retirement.  The possible lack of communication resources may impact negatively on opt out rates in future, time will tell.  There are a range of communication methods that smaller businesses could use including team meetings and newsletters.  Ideally one to one meetings is best, but is obviously time consuming and may be difficult timewise.

Employers Failing to Understand their Automatic Enrolment Duties

The Pension Regulator has recently published it latest quarterly bulletin which shows that employers are failing to understand their automatic enrolment duties.auto enrolment

It seems that the Pension Regulator has found that many employers assume their duties only relate to staff who are eligible to automatically enrol according to age and salary criteria.  This is incorrect as staff who have the right to join or opt in must be included in the automatic enrolment process.

The Pension Regulator found one employer who was using a master trust and had misunderstood the role of the scheme and had assumed that the scheme would be responsible for calculating contributions and making the correct staff deductions. This is a fundamental error and one that leads to a hefty fine for failing to comply correctly to automatic enrolment regulations and attracts the highest number of fines.

The Pension Regulator lists the various offences that employers can be fined for:

Information Notice – The power to demand information and documents under section 72 of the Pensions Act 2004.

Inspection – The power to inspect premises under section 74 of the Pensions Act 2004

Warrant – The power to search premises and take possession of content under section 78 of the Pensions Act 2004

Compliance Notice – A Compliance Notice under section 35 of the Pensions Act 2008 The power to remedy a contravention of one or more automatic enrolment employer duty provisions

Unpaid Contributions Notice – An Unpaid Contributions Notice under section 37 of the Pensions Act 2008 to remedy a late or non-payment due to a qualifying pension scheme

Fixed Penalty Notice – A Fixed Penalty Notice under section 40 of the Pensions Act 2008 of £400 for failure to comply with a statutory notice or some specific employer duties

Escalating Penalty Notice  -An escalating penalty under section 41 of the Pensions Act 2008 of between £50 and £10,000 per day (depending on size) for failure to comply with a statutory notice

Employers who don’t understand what their compliance duties fully entail should take advice from an advisor who fully understand what needs to be done.  Pension Regulator research has shown that accountants and book keepers have the lowest  level of understanding out of all the available intermediaries.

When seeking advice and support, an employer should understand exactly what they are getting for their money whether it is just advice or a full automatic enrolment service.  Both parties should be clear on the responsibilities for each task in the automatic enrolment process.



Commission and Holiday Pay – The Final Decision

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The recent case of Lock v British Gas lodged in the employment tribunal has tested the claim that commission is due on holiday pay.  The employment tribunal has now ruled on 25 March 2015 following the Court of Justice of the European Union’s judgement on this subject to give a final decision.

The Lock v British Gas claim came about being lodged by a sales consultant who was paid a basic salary plus a sales commission which made up about 60% of his earnings. He took holiday in December 2011 and was paid his salary and commission earned on sales prior to taking leave. While on leave he made no sales and earned no commission. This would potentially affect his holiday pay if he had taken annual leave later in the year. He claimed this was unlawful.

The Court of Justice of the European Union said holiday pay was meant to reflect workers’ “normal remuneration” and should put workers in a position “comparable to periods of work” with regard to salary.  In the UK commission payments had not been accounted for in holiday pay.

It has now been ruled ruled that employers must take commission payments into consideration when they calculate holiday pay.

Employers could potentially have to pay more when they offer commission schemes to enhance employees’ pay.   The employees should receive normal pay during periods of holiday that are consistent with how they are paid during working hours.  There is no reference in the ruling, however, to the correct reference period for calculating holiday pay where an employee receives commission – perhaps that will be determined by the employment contract which should clearly specify how commission payment should operate.

This will have a future cost impact to various industries that offer commission payments; this will, of course, include those employees with sales roles.  It will may provide a possible additional headache with retrospective claims.  At least 40% of the  UK workplaces receive incentive payments to boost their employees salary so the ruling has far reaching consequences.

This is a key employment tribunal ruing and an interpretation of the Working Time Regulations, however, it sets a precedent and paves the way for other employment tribunal claims to be lodged.