Outdated or non existent employment contract and employee handbook
This is one of the main reasons I am contacted by small and medium sized businesses. It is quite easy for existing documents to get out of date as the employment law changes frequently. Despite the implementation of the Employment Rights Act 1996 that requires an employer to provide a new employee with employment terms and conditions (contract) within eight weeks of starting employment, many business still do not do so. Failure to provide this document can lead to compensation equivalent to up to four weeks pay in an employment tribunal. An employee handbook sets out the guidelines and rules that all employees have to adhere to and should be drafted in accordance with current employment law. Outdated policies could lead to wrong actions being taken against an employee and a possible employment tribunal.
Lack of understanding with employment law
Since the 1990s there has been a steady stream of laws related to employment that have been implemented in the UK. Employee issues such as disability, pregnancy, discrimination, health and safety and pay can be complex to deal with. Many laws now contradict one another and it takes an employment law specialist to unpick the essentials for any given employee situation. The cost of failing to understand current employment law could lead to an employment tribunal.
A disciplinary matter needs urgent attention
From time to time a serious situation may occur in the workplace and it is important that, even if it is minor, that it is dealt with quickly. Certainly in agross misconduct situation it is often essential to suspend an employee or employees as soon as possible whilst a thorough investigation takes place. Time is of the essence to ensure that any important evidence is not hidden or destroyed. It is important to take urgent advice where you feel you are lacking experience of how to adequately handle these matters.
An employee is not performing well
So many businesses have under performing employees that they fail to deal with. Unfortunately this can impact on profits and employee morale. It is not nice for fellow employees to see a poorly performing colleague not being dealt with by management. The matter should be dealt with in a structured legal framework to try and get the employee back on track. It can be time consuming to deal with but ultimately the employee can be fairly dismissed if a performance management process fails.
You have no time to deal with employee matters
Dealing with employee issues can be very time consuming. With a problematic employee you have to meet with them and keep a paper trail of what you have done to try and manage the situation. Most business owners prefer to keep their focus on the business which is time consuming enough without have to deal with problematic employees which is where HR can help.
Since pension auto enrolment was first implemented in the UK in October 2012 as a government initiative to ensure workers have sufficient pension savings for their retirement,the process has been gradually rolled out and s now affecting millions of small businesses. So having been in place for quite a few years now the government is seeking to make changes to pension auto enrolment.
Whilst large and medium sized companies in the UK have been required to comply with due process otherwise are facing huge fines, the government has become increasingly concerned about the impact of pension auto enrolment on small businesses with their lack of the resources afforded to bigger companies.
The government has now pushed back the dates for increasing contributions to April 2018 and 2019 in an effort to stave off a potentially looming crisis of small businesses and pension providers being able to cope. There has been media coverage about concerns of NEST, the only workplace pension without fees being able to manage as probably the main pension provider small businesses will look to due to its affordability. In the next few years millions of small businesses need to comply.
The qualifying earnings band for auto enrolment minimum contributions will remain at £10,000 in any pay period from April 2016. The qualifying earnings band for 2016-17 will be £5,824 and £43,000 per annum.
The DWP is aiming to simply auto enrolment with some minor changes from April 2016. There will be no need to auto enrol/re enrol company directors and members of limited liability partnerships, a simplified method for an employer bringing forward its staging date and a simplified time scale for employers to notify the pension regulator that they maintain an auto enrolment pension scheme. Consultation on these changes closes in February 2016.
One thing is for sure, as with all government legislation, these will not be the last changes to be announced by the government about pension auto enrolment.
In a landmark case the ECHR (European Court of Human Rights) have deemed that employers can read employees’ private messages whilst they are work. This has implications for UK employees who use Facebook, Twitter and other social media platforms to communicate with family and friends during their working day and highlights the increasing blur between workplace privacy as working hours become longer.
The case was taken by a Romanian engineer who messaged his partner on a private messaging platform. His employment was terminated by his employer who had a policy in place that banned staff from its employees making use of company resources for personal use. The employer had accessed his private messages on Yahoo as he also used this medium for work-related messages.
The ECHR decision goes to the heart of the employment contract with the implied term that in exchange for wages an employee commits the whole of their time to the employment for which they are being paid.
Some legal experts have warned that even after work hours have ended an employee should not use private messaging platforms for personal use with company smartphones, tablets or laptops.
Many employees may now assume that their employer could monitor their online activities whilst in work and should seriously consider what they do in this regard, however, it is important to note that in order to undertake monitoring of online activities, a policy should be in place that clearly states that this may or will take place. If there is no policy in an employee handbook for example, employers should now consider the need to establish this. An existing policy should be reviewed in accordance with this development.
A statement referring to online activity monitoring should ideally be included in an IT and/or internet use policy. An employment practices code linked to the Data Protection Act 1998 published by the Information Commission gives useful guidance on this matter. In the light of this ruling, the Information Commission may need to review its own guidance now.
In a policy the employer should be clear about the purpose of monitoring including the nature, extent and who will be doing the monitoring. With larger companies it would expected that it would be done by the IT department but small businesses would need to identify who would undertake the activiiy. The benefits of online monitoring should be included in the policy and ideally an impact assessment done to establish the risks. Monitoring should not be excessive and should only be done to meet a clearly defined purpose otherwise employees will develop mistrust of their employers intentions which is not conducive to a harmonious working environment.
Individuals who are undertaking the monitoring should be provided with training that includes maintaining privacy and confidentiality if accessing personal information. These individuals should have clear written guidelines in this regard.
If monitoring is to enforce company rules a link to the disciplinary policy should be stated with the procedure clearly explained along with sanctions for non-compliance.
Employees should be made clearly aware that the policy is being implemented or exists and has been reviewed. New employees should be informed as part of an induction procedure. Ideally an employer should get explicit written consent to monitoring in writing by implementing a consent form.
“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.
The Pension Regulator has recently published its findings in relation to small business awareness of 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.
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.
The government equalities office has just launched a consultation on gender pay gap reporting which 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.
The Employment Appeal Tribunal (EAT) has recently clarified that where an employee has untaken leave 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.
In 2006 the European Court of Justice ruled that rolled up holiday pay was illegal, however, almost ten 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.
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.