What Type of Contract does an Apprentice Need?

Modern apprenticeships involve the worker; the employer; and a training provider. An apprentice is an employee and benefits from all related rights, such as the right to claim unfair dismissal and protection against discrimination. Apprentices are entitled to full employment rights including holidays, rest periods and sick pay. An apprentice will be entitled to basic particulars of employment just like all other employees. The parties should agree the key terms, such as the duration, pay, training aspects and any other general policies that are applicable. Basic rates of pay are set by the government on an annual basis, however, employers can pay more. Apprentices can only be made redundant in cases where the workplace completely closes. Apprenticeships will typically be for a fixed duration. This can range from a number of months to several years, depending on the time reasonably needed to acquire the skills or qualification in question.

Before April 2012 the written agreement between an employer and an apprentice was known as a contract of apprenticeship. A contract of apprenticeship is governed by common law and the primary focus is on the apprentice’s training rather than the job. It involves greater responsibilities and liabilities for employers than ordinary contracts of employment. Apprenticeships are generally for a fixed term and apprentices are protected against premature termination of the contract of apprenticeship. Termination before the apprentice is qualified can result in enhanced awards for unfair dismissal which may include compensation for loss of wages, loss of training/ trade and loss of status.

In April 2012 the implementation of the Apprenticeships, Skills, Children and Learning Act 2009 brought in the requirement for a prescribed form of contract. The relationship is now one of a contract of services rather than a contract of apprenticeship. The Act also introduces minimum hours of work and learning for apprenticeships. The apprenticeship agreement can be in the form of a written statement of particulars under the Employment Rights Act 1996; or a document in writing in the form of a contract of employment or a letter of engagement.

Existing and new contracts of employment between the apprentice and the employer must include a statement setting out the skill, trade or occupation for which the apprentice is being trained under the apprenticeship framework. Without an agreement in place the apprentice cannot be issued with an apprenticeship certificate.

Whereas previously it was very difficult to dismiss an apprentice early, under the new legislation and with a contract of employment in place, provided the employer follows a fair procedure giving appropriate notice, this will not amount to unfair dismissal and breach of contract.

It is important to get the wording of these apprentice contracts correct, if the new provisions are to apply and to avoid potential costly employment tribunal claims.

Seven Top Tips for Managing Redundancy

1. Ensure the redundancy is genuine

An Employment Tribunal can investigate whether the redundancy is genuine, ie the real reason for dismissal so do not be tempted to dress up a performance or capability dismissal as a redundancy. This could result in a finding of unfair dismissal. Assess if you could avoid making redundancies by considering whether cutting overheads or restructuring via salary cuts, shorter working weeks, job shares or unpaid sabbaticals could save jobs. You could also consider whether this is a situation where you can offer voluntary redundancies.

2. Ensure you follow your own redundancy procedures

If you have a company redundancy procedure, make sure you follow it.

3. Ensure you have you worked out your pools for selection

Ensure the proposed restructure is set out so it is clear from which departments or groups of employees redundancies are being made. Consider which jobs are at risk and identify the groups of employees where the redundancies will be made (the pool). Where there are a number of redundancies, you may need to make redundancies from several pools.

4. Ensure selection criteria for redundancy is fair and objective

The selection criteria must be capable of measurement and must be non-discriminatory. Reflect the needs of the business when selecting who is to be made redundant.

5. Ensure you consult correctly

Consultation should be meaningful and proper. Once you have identified which employees are at risk of redundancy, they should be advised of this and told the length of the consultation period; this will vary depending on the proposed number of employees possibly being made redundant. It is important to include employees on long-term sick leave or maternity leave in all consultation discussions.

Consultation is a two-way process and this is also an opportunity to explore alternatives to redundancy and discuss possible suitable alternative employment. Hold face to face meetings giving the right to be accompanied.

6. Ensure you correctly calculate redundancy payments

Don’t forget to work out the cost of contractual notice or payment in lieu of notice and redundancy payments. Statutory redundancy payments are based on length of service, age and salary, subject to a current statutory cap of £430 a week. If the employee earns less than this then you calculate the figure based on gross actual pay. Check employees’ contractual, policy and custom and practice rights to redundancy payments as there may be a right to enhanced redundancy payments. Untaken holiday also need to be calculated and paid.

7. Set up a Dismissal Meeting

If compulsory redundancy can not be avoided organise a dismissal meeting and confirm in writing giving the right to be accompanied. Confirm the decision to terminate employment during the meeting giving the right to appeal with clear instructions for doing so in accordance with your procedure. Confirm in writing.

The Rise of Home Working

Over the last few years there has been a huge growth in the numbers of people working from home or remotely. This has been caused by the increased use of high speed broadband, Skype, laptops, tablet computers and hand held devices facilitating the ability to work wherever we like. One in twelve people now work at home on either a full time or part time basis. The top 25 home office hot spots are all in the South East. The Office of National Statistics Labour Force Survey shows that 2/3 of home workers are men.

A challenging economy has also forced employers to cut back on costs, such as office expenses, and let people work remotely. There’s also evidence that others, who haven’t been able to find jobs, are earning a living by starting a home-based business. Furthermore home working contributes to the “green” economy and the carbon footprint with less polluting cars on the road.

There are many advantages to this type of working, which we can all recognise; the work-life balance is much improved without the stress of struggling to work every day on the congested road and increasingly disorganised rail systems. So much time is saved by not having to get up at the crack of dawn to get to the office on time and exhaustion is a distant memory as we leisurely wake up, eat a decent breakfast in the comfort of your kitchen then get the kids to school before sitting down to the computer to start the working day either in a spare bedroom or bespoke office in the house or garden.

As long as we meet our targets and maintain our usual output, the hours we work need not be fixed if our work (and where relevant our manager) dictates, so that by working flexibly we have the time to do that bit of shopping or attend that dentist appointment during the day.

Having set up and completed a risk assessment on the work area to comply with health and safety what could be easier than working from home?

The reality is, however, that it doesn’t suit everyone. Working from home can be very isolating. How many of us actually see our neighbours and friends during the day now – they are all out at work! Being alone day after day with no social interaction can be very lonely without that “over the photocopier” chat, gossip with the tea-lady or the office Friday pub lunch where we can look forward to the weekend.

For those individuals prone to depression working from home can become a nightmare with the distinction between work and home becoming a blur.

The saying “out of sight out of mind” might apply with a perception of being ignored by the company, if we are an employee, can set in, only getting the odd phone call to check that performance targets have been reached and to find out when the monthly figures will be sent in. In such circumstances a feeling of de-motivation and being under-valued can occur and lead to a drop in performance.

Working from home is ideal for self-starters who can discipline themselves to work set hours so that there is a clear distinction between work and home. Line managers of such individuals have to have the experience and skill to be able to manage at a distance and understand the issues that arise.

First and foremost, the type of work needs to be adaptable to home-working such as administration, freelance interviewing and sales.

The company needs to ensure there is a home working policy in place that covers issues such as health and safety, equipment safety, data protection, communication and performance management. There should be consideration to having a home working checklist. These documents should be communicated well to the workforce with clear procedures in place.

The line manager needs to be able to encourage team interaction by organising team meetings at a single location on a regular basis to provide valuable information on what is happening within the business, eg and training & promotional opportunities. Perhaps video conferencing could replace physical group meetings when these are not possible. Such get-togethers should be supplemented by phone calls and emails to keep in touch.

The line manager needs to be able to communicate clear goals and the standards expected within the home-based role and be equipped with the tools for measurement and assessment of work quality to ensure that everything is satisfactory. Training for line managers in managing home-workers should be considered.

Security of information and data protection should be a high priority. A decision should be taken whether to give remote workers full or controlled access to network links using an IT security risk assessment. The issue of company laptops with encryption software, for example, would reduce the possibility of disaster with important corporate documents getting mixed up with the children’s homework or theft from the boot of a car.

Also the installation of virus protection and guidelines on authorised use of additional software and prohibition of USB sticks and floppy discs to transport data should be essential.

Information on using secure servers and taking daily back ups should be incorporated into an IT security policy both for remote (and office) workers giving details on not sharing passwords, not opening suspicious email attachments and visiting work-related websites only. Clear instructions for not modifying any company spreadsheets and macros without authorisation can also help to provide guidelines on what is acceptable IT use.

Companies considering implementing home or remote working should think about running a pilot scheme to see if it is feasible and practical for business and individual needs before making a commitment.

Employee-Owner Employment Contracts

The Chancellor,George Osborne MP, announced on 8 October 2012 plans for a new kind of employment contract called an employee-owner.

New employee-owners will exchange some of their UK employment rights for rights of ownership in the form of shares in the business they work for, any gains on which will be exempt from capital gains tax.

Companies of any size will be able to use this new kind of contract, but it is principally intended for fast growing small and medium sized companies that want to create a flexible workforce.

Under the new type of contract, employees will be given between £2,000 and £50,000 of shares that are exempt from capital gains tax. In exchange, they will give up their UK rights on unfair dismissal, redundancy, and the right to request flexible working and time off for training, and will be required provide 16 weeks’ notice of a firm date of return from maternity leave, instead of the usual eight.

Employee-owner status will be optional for existing employees, but both established companies and new start-ups can choose to offer only this new type of contract for new hires. Companies recruiting employee-owners will continue to have the option of inserting more generous employment conditions into the employment contract if they want to.

Legislation to bring in the new employee-owner contract will come later this year so that companies can use the new type of contract from April 2013. The Government will consult on some details of the contract.

Legislation will bring in this new type of contract later this year so that it will be implemented during April 2013.

The latest employment tribunal statistics for the Tribunals Service are now out covering the period from 1 April 2011 to 31 March 2012 which show an overall fall of 15% in the number of cases lodged on the previous year.

The largest sum awarded by the Tribunal in 2011/2012 was £4,445,023 which was for a race discrimination claim. Very high awards were also made in disability and age discrimination claims. The number of discrimination claims submitted have dropped with sexual and age discrimination seeing the largest falls. Sexual discrimination continues to be the most frequently lodged claim.

The highest unfair dismissal award of £173,408 is in excess of the statutory cap of £72,300 but this cap does not apply where the unfair dismissal is for whistle blowing or for certain health and safety matters. The mean average for the unfair dismissal award is £9,133 with the median average being £4,500. Only 2% of unfair dismissal awards exceed £50,000 which show very few awards approach the existing cap of £72,300.

Role of the Fit Note in Managing Absence

On 6 April 2010 the fit note replaced the doctor’s sick note that had been in existence for sixty years. It was intended that this new system will enable employees to get back to work more quickly and reduce absence costs, which cost the UK economy 17.3 billion annually. The fit note system focuses on what employees can do rather than what they can’t do focusing on positives rather than negatives.

The fit note, a copy of which can be downloaded from www.direct.gov.uk, has advice options for completion and no need for the employee to return to the GP to be confirmed fit; the fit note merely expires.

The fit note is still required after seven consecutive days sickness and there are obligataions under the Equality Act 2010 so that any advice in that respect could be binding.

The first fit note issued by the GP can last for a maximum period of three months when hopefully the employee will be back at work. However a subsequent fit not can be issued for a longer period eg six months. There is no need for a GP to have a face to face assessment of their patient to issue a fit note, it can be done over the telephone.

The GP’s advice on the fit note is not binding; it is meant to lead to a discussion between employee and employer. If an employee or an employer do not agree with the fit note’s reasonable adjustments due to impracticalities in the workplace either can choose not to accept these and the employee can remain off sick until the expiry of the fit note.

Likewise if an employee wishes to return to work earlier than the fit note states, they may do so provided the employer is in agreement. However, in such cases, employers need to be wary of employees wishing to return to work for financial reasons and not being fully fit. To overcome potential liabilities, employers could implement a risk

assessment, discuss concerns, ask the employee to go back to the GP or use occupational health advice to back up a decision.

The role of the line manager is key in the successful operation of the fit note system. They will need to be proactive and develop a whole new set of skills with clear guidance and training provided by the organisation. Managers need to understand what they have to do.

Organisations need to develop a clear procedure for the fit note process to be incorporated into an existing absence policy. Any changes should be consulted over and clearly communicated to all members of staff.

The procedure should detail obligations for both manager and employee and how the process will work in practice. For example, the requirement for a face to face meeting called in writing to discuss suggested reasonable adjustments, if appropriate, should ideally be necessary. The discussion should include whether the adjustments are

viable, how they will work and how long they will last.

The possible use of occupational health should also be discussed and if appropriate an appointment set up, which would delay a proposed return. Also there might need to be a simple risk assessment to ensure safety on return. The impact on colleagues in relation to the employee’s reasonable adjustments could also be an issue for

discussion. A clear date should be set for the employee to return to work with hours and duties confirmed and any restrictions.

The subject of pay may need to be included particularly where there is no contractual sick pay. The procedure may need to incorporate an enhanced SSP supplement for a phased return to work for example so that it is worthwhile for the employee. Any issue related to this should be discussed with HMRC on 08457 143143.

Likewise if an employee can not be allowed back to work for impracticality reasons, they need to have these clearly explained.

Extra care should be taken with certain types of workers – home workers, shift workers, safety critical employees and those who work at heights for example.

The meeting should be documented and confirmed in writing with a copy for the employee to sign to show agreement to a proposal. To standardise company practice a pro forma for meetings could be created or a check list drawn up to help managers cover the appropriate areas.

The return to work should be monitored on a regular basis to ensure the employee and manager is both happy with the situation. This can be done by weekly 1:1s which are documented and take place until the employee is back to work as previously.

Use occupational health or an independent GP to investigate long term or difficult areas of absence for protection against any possible disability discrimination claims.

Key Points to Remember

Discuss the advice on the fit note

Consider how it affects the job

Consider the return to work options

Discuss the options with employees

Is a return to work possible?

Implementation of Employment Tribunal Fees

On 13 July In the past week the Ministry of Justice published its plans for the introduction of fees in employment tribunals following consultation. It is currently planned that these fees will be introduced in the summer of 2013 whereas currently it is free to bring an employment tribunal claim.

Two main fees will be introduced, the first payable at the issue of the claim and the second, the hearing fee, payable around four weeks prior to the hearing taking place.

These fees will based on two fee levels which apply depending on the nature of the claim.

Level 1 will include claims for unpaid wages and holiday pay. The fee will total £390 (£160 paid to lodge the claim and £230 for the hearing).

Level 2 will include unfair dismissal, discrimination and detriment claims. The fee will total £1200 (£250 to lodge a claim and £950 for the hearing).

Mediation by a judge will cost £600 rather than the £750 proposed in the consultation document.

Those on low incomes will be excused part or full payment.

Fees to use the employment tribunal will be payable in advance, and most types of fee will only apply to the person bringing the claim. The tribunal will have the power to order the unsuccessful party to reimburse the fee to the successful party. No separate fee will be charged for seeking written reasons for a tribunal’s decision. Those on low incomes can be excused full or part of the proposed payments.

There are no changes to the original proposals to apply fees to the Employment Appeals Tribunal (a £400 issue fee and £1200 hearing fee).

Analysis of Employment Tribunal Statistics 2011-12

The latest employment tribunal statistics have just been published for 2011-12. Careful analysis shows changes that buck the trends of recent years. There has been a decrease overall in claims submitted over the last couple of years and the figures show that there has been a 15% drop this year.

There has been a 19% fall in multiple claims which is probably accounted for in the reduction of collective redundancies compared to several years ago.

The number of unfair dismissal cases has dropped over the previous twelve months however the number of claims for failure to inform and consult in a TUPE situation has risen which shows employers are failing to undertaken their obligations related to this complicated piece of legislation which the government is seeking to simply.

The number of cases being disposed of during 2011-12 is 10% less than the previous year although 75% of cases have been disposed of within 32 weeks or less.

The report also sets out the number of claims received by employment tribunals under each jurisdiction in 2011-12.

Nature of claim	Number of claims
Unfair dismissal	46,300
Unauthorised deduction of wages	51,200
Breach of contract	32,100
Sex discrimination	10,800
Working Time Directive (2003/88/EC) (previously the Working Time Directive (93/104/EC)	94,700
Redundancy pay	14,700
Disability discrimination	7,700
Failure to inform and consult on redundancies	8,000
Equal pay	28,800
Race discrimination	4,800
Written statement of terms and conditions	3,600
Written statement of reasons for dismissal	960
Written pay statement	1,300
Failure to inform and consult on transfer of an undertaking	2,600
Suffered a detriment or unfairly dismissed due to pregnancy	1,900
Part-time Workers (Prevention of Less Favourable Treatment) Regulations 2000 (SI 2000/1551)	770
National minimum wage	510
Discrimination on ground of religion or belief	940
Discrimination on ground of sexual orientation	610
Age discrimination	3,700
Others	5,900
Total	321,800

Pension Auto Enrolment – Employers Are Your Ready?

In accordance with the Pensions Act 2008 from October 2012 UK companies must have a pension in place into which employees will be automatically enrolled. This could be an existing pension eg group personal pension or stakeholder pension so long as it meets the qualifying criteria. However if a company does not have a pension scheme in place or do not introduce one then they can adopt the government’s scheme, National Employment Savings Trust (NEST). There is no obligation to offer the NEST scheme to employees. Although its structure may suit some companies, it may not be suitable to others. However, it could be possible to offer a company pension scheme to some employees and NEST to others. NEST is designed to simple and easy to use. The government has decided to introduce this to make it easier for people to save for their retirement as many are not currently doing so and to alleviate the ticking time bomb of the pension burden as the population grows older.

Auto-enrolment for pensions will impact on all employers between 2012 and 2016 depending on the size of the company and the number of employees, which will be established from PAYE records. A company pension scheme must be compliant with government rules and companies must pay in contributions from both the company and their employees. UK employers will be required to contribute a minimum percentage of each employee’s eligible earnings into a pension. Employees will also need to pay a personal contribution into a pension. The total minimum percentage contribution required of both employer and employee is being phased in. In 2012 the minimum percentage is 2% rising to 8% by 2018. Contributions can exceed this amount however.

Employers have to automatically enrol workers who:

Are not already in a qualifying workplace pension scheme;

Are at least 22 years old;

Are below state pension age;

Earn more than £8,105 a year; and

Work or ordinarily work in the UK (under their contract)

These are eligible workers. There are also non-eligible workers who fall outside the age range of 22-74 earning above £5,564 and below £8,105, they have the right to opt in and entitled workers who earn below £5,564 per year who have the right to join the pension scheme. It is important to identify what category the employees fall into. Employees are able to opt out of the scheme within one month of membership. Any contributions they have made in that time must be refunded. Employees must be identified for auto enrolment once every three years.

It is important to prepare early in good time for the appropriate staging date. Companies need to nominate a key contact in the company who will be responsible for pension auto enrolment. Once the assessment stage has been completed it is important to communicate the changes to the workforce with the correct template documentation. Once implemented pension records need to be keep for at least six years.

It is against the law to coerce employees into opting out of pension auto enrolment. For companies who fail to comply with the statutory legislation the Pension Regulator has the power to impose huge fines.

Voluntary Settlement Agreements & Protected Conversations

It seems that the “fire at will” dismissals proposal put forward by the government earlier this year following Adrian Beecroft’s report has met its demise. From early analysis of the consultation exercise it seems that there was a lack of enthusiasm from small businesses to implement the no fault dismissal procedure with only 4 in 10 businesses being in favour.

This radical proposal was suggested as way to increase recruitment in the UK but it seems that firms are not convinced.

Instead the government are proposing voluntary settlement agreements (re-branded compromise agreements) following a protected conversation. This would allow companies to force underperforming staff to leave with a pay off in return for not bringing an employment tribunal claim. This would be mutually agreed between employer and employee. The government is currently consulting on whether to set pay off levels; a pay off could be capped at a year’s salary making a termination payment quite attractive. They are also consulting on model paperwork to support the new proposed settlement agreement.

Employees can decline to accept and then an employer should follow a fair dismissal procedure. An employee would have to weigh up whether they would be better off taking a case to an employment tribunal whilst declining an offer. Successful unfair dismissal claims could currently each £72,300. However, it is rarely the case that the maximum pay out is reached, with the average being only just over £9,500.

Whilst many business leaders are in favour of this change to the original proposal as it allows businesses to have more flexibility, others consider that this is undermining employment rights by allowing an employer to get rid of staff whose face does not fit.

Nevertheless the proposal was put forward as part of the Enterprise and Regulatory Reform Bill.