What’s the Safest Way to Withdraw a Job Offer?

I have been asked a lot of questions recently about withdrawing job offers based on poor references, so I thought that I would write about it in more detail here. 

Can you withdraw a job offer once it has been made? What risks do you face as an employer if you change your recruitment plans?

Sometimes you will need to withdraw an offer of a job. The hiring situation may change because of a general recruitment freeze, a restructure within your organisation or a change of management. The funding for the post might have been withdrawn or you may become aware that the selected candidate is not suitable after all.

Job offers can be withdrawn after they are made, but there are risks associated with doing this. Withdrawing an offer because circumstances have changed looks like bad planning and could affect your company’s reputation. The employee may be able to bring a tribunal claim for breach of contract.

When is the contract of employment formed?

An employment contract is formed once an unconditional job offer is made and accepted. If you withdraw an unconditional job offer once it has been accepted, you are effectively terminating the contract and could be liable for damages for the individual’s loss.

Even though the individual has not started working for you, there will be a notice period due – just as with other terminations. Damages could amount to what the individual would have received if you had given proper notice – including any pay and benefits due.

What if your recruitment plans change?

If your recruitment plans change due to business needs and you have to withdraw job offers, you should notify the recruits as soon as possible to try to limit the damage and enable them to mitigate their potential loss. The selected candidate might not have resigned from their current employer yet. If they have, they may still be able to ask for their old job back – the sooner this is done the better.

Pre-recruitment checks and job offers

Most job offers are conditional on the new recruit satisfying certain conditions. The selected candidate may need to provide references or evidence of qualifications, or they may need to demonstrate their right to work in the UK. If the individual does not satisfy one or all of those requirements, you can withdraw the job offer without being liable for damages.

If you don’t make it clear that the job offer is conditional, and then withdraw the offer because the recruit has not satisfied one of your requirements, this will amount to a breach of contract and you may be liable for damages. Offers of employment should make absolutely clear that they are conditional on certain requirements being met. Failure to do so can be costly.

If you’re considering making or withdrawing a job offer and you want to make sure that you’re doing it properly, contact us first for some advice. Call us on 0118 940 3032 or email sueferguson@optionshr.co.uk.

The Latest Legal Changes to Employment

Every year around April and October, changes are made to Employment Law that will affect some, if not all of your employees. In April we ran one of our popular Employment Law update workshops, to tell our clients and contacts what they need to know. If you missed it, here’s a summary of what we covered.

More changes will be happening later this year, so we’re running our autumn event on 18 October 2016 and we’ll send you a reminder nearer the time. In the meantime, if you have any questions about the latest changes and what you need to do about them, do get in touch.

Here are some of the issues we discussed at the recent workshop:

Statutory Rates – these usually change, but this year, statutory family-related pay and sick pay rates were frozen.

Postponing a Tribunal – under rule 30A of the Employment Tribunals Regulations 2013 for proceedings presented on or after 6 April 2016, changes have been made, in order to limit the number of postponements and adjournments that can be granted in a single case in the employment tribunal and introduce a deadline after which applications for a postponement will not be allowed. Employment tribunals must also consider making an award for costs where postponements are granted at late notice.

National Living Wage – this applies to all employees over 25 years of age. The new rate from 1 April 2016 is £7.20 per hour, and is expected to increase to £9 per hour from April 2020. Also from 1 April 2016, the penalty was set at 200% for the total underpayment, for each employee who has been underpaid. 300,000 employees will benefit from this increase, with employers needing to find an estimated £3 billion by 2020. The Government intends to align when the national minimum wage and national living wage rates are amended, to be April for both with effect from April 2017. It has asked the Low Pay Commission to recommend the rate of the national living wage and the national minimum wage for April 2017 and to provide an indicative rate of the national living wage for April 2018. The Commission is due to report back on its findings in October 2016.

Zero Hours Contracts – legislation came into force on 11 January 2016, which states that individuals on a zero hours’ contract must not be unfairly dismissed or subjected to a detriment for breaching an exclusivity clause.

National Insurance for under 25s – employer NICs have been abolished for apprentices under the age of 25. As part of the Government’s drive to encourage employers to create more apprenticeships for young people, from 6 April 2016, employers will not pay employer national insurance contributions for apprentices aged under 25.

New State Pension – a single-tier state pension was introduced on 6 April 2016, replacing the previous basic state pension and additional state pension. Employer-provided pension schemes will no longer be able to contract out of the state pension and receive a national insurance rebate. This means that, where an employer provides a previously contracted-out scheme, its employer and employee national insurance contribution liability will increase. Employers should ensure that employees are aware that there may be an impact on their pay.

The Gender Pay Gap – these new regulations will apply from 1 October 2016, for all private-sector and voluntary-sector employers with 250+ employees. Companies will be required to publish the gender pay gap as it is in the pay period in which 30 April 2017 falls.

If you think that your company and your employees will be affected by any of these changes, please do get in touch for a confidential chat. Call 0118 940 3032 or email sueferguson@optionshr.co.uk.

Reporting the Gender Pay and Gender Bonus Gap Data

The draft Equality Act 2010 (Gender Pay Gap Information) Regulations 2016 require employers, with more than 250 employees, to publish their first gender pay gap report by 30 April 2018, giving you up to 12 months from the pay period covered by the report to do this. The report must appear on your website, in English, in a manner that is accessible to all your employees and to the public. Once published it must remain there for at least three years.

Employers will have to publish the results, but not the raw data on which the calculations are based, for each of the benchmarks set out below:

  • The mean gender pay gap
  • The median gender pay gap
  • The mean bonus pay gap
  • The proportion of men and women receiving a bonus payment and
  • The number of men and women in each of the four pay bands.

Your report will have to include a written statement confirming that the information is accurate. This must be signed by a director, partner or member of your organisation’s governing body.

As an employer you will also be expected to upload the information to a government website, where the intention is to create a publicly available league table or database.

There will be no legal obligation on you to publish any form of commentary on the figures or to set out any actions that it may be taking to address the gender pay gap. However, ministers have made clear that the Government will strongly encourage you to do so.

You should be particularly aware of the potential damage to your reputation, especially among potential future employees, of failing to set the data in context or to provide an explanation. Where you can report a gender pay gap that is narrower than that generally seen in the wider economy, and/or within its industry, this could enhance your organisation in the eyes of both job applicants and existing employees. However, you cannot assume that a job applicant will automatically be aware that your gender pay gap is better than average. This needs to be spelled out.

If your company’s gender pay gap is wider that the average, additional explanation will help to protect your reputation. Is the gap wide because of the industry in which you operate or the types of roles that exist within it?  For example, women make up only 14.4% of all employees in science and technology occupations and represented just 15% of undergraduate entrants to engineering and technology courses in 2014/15. Employers with a large number of well-paid roles in these areas may struggle to recruit women to them.

Additionally, you may wish to use the opportunity to set out what you are doing to ensure that you recruit, develop, reward and promote women as well as men. This is particularly important if there are few mitigation factors to explain a wide pay gap within your organisation.

Need help with writing your first gender pay gap report? Get in touch to find out how we can help by contacting us on 0118 940 3032 or emailing sueferguson@optionshr.co.uk.

Holiday Commission Payments – The Verdict

Finally we have the decision about the calculation of commission payments.

This well publicised case was brought by Mr Lock, an employee of British Gas. He was paid a basic salary and commission based on the sales he made which represented, on average, over 60% of his take home pay.

British Gas paid holiday pay to Mr Lock based on his basic salary only, plus commission on sales he had earned prior to the holiday period. This resulted, in the weeks and months after the period of leave, in times when Mr Lock only received basic salary and not commission. This was because Mr Lock was not at work during the period of leave, did not make sales and did not generate any commission.

Mr Lock brought a claim against British Gas contending that his holiday pay should be based on basic salary and average commission.

The employment tribunal asked the European Court of Justice (ECJ) whether employers should include commission when calculating holiday pay and both decided that Mr Lock should be paid holiday pay including overtime. Since the ECJ we have been awaiting for the employment tribunal to see how to give effect to the ECJ decision.

At the hearing Leicester employment tribunal made it clear that the case was not about whether the commission received by Mr Lock should be included because the ECJ had already decided that it should. The case was about whether the Working Time Regulations could be interpreted to give effect to the ECJ decision.

The employment tribunal concluded that it could by adding wording to the Working Time Regulations which requires employers with workers who have normal working hours but who receive commission or similar payments to calculate holiday pay as if their pay varied with the amount of work done. The effect is to require employers to calculate holiday pay based on an average of the previous 12 weeks’ pay.

The Next Steps

Not all commission payments will qualify and have to be taken into account. You should reconsider how you calculate holiday pay if you operate a similar commission scheme, as you may face a claim for back pay. Legislation was introduced to limit the impact of such claims by restricting back pay for two years for cases on or after 1 July 2015.

This decision relates only to the calculation of four week’s holiday and not the entire current statutory minimum of 5.6 weeks or any enhanced holiday. You should also check any contractual provisions. If you need any help calculating holiday pay for your employees, call us on 0118 940 3032 or click here to email us.

What’s the Difference Between Informal and Formal Appraisals?

This is a question I’m often asked by managers, so I thought I would answer it here.

A performance appraisal can occur in two ways – informally or more formally (or systematically.) Informal appraisals can be carried out whenever the supervisor feels it is necessary. The day-to-day working relationship between a manager and an employee offers an opportunity for the employee’s performance to be assessed. This assessment is communicated through conversation on the job, over coffee, or by on-the-spot examination of a particular piece of work. Informal appraisals are especially appropriate when time is an issue. The longer feedback is delayed, the less likely it is to encourage a change in behaviour. Frequent informal feedback to employees can also prevent surprises when the formal evaluation is communicated. However, you should make sure that they don’t become too informal – don’t be tempted to discuss an appraisal in the pub!

Although informal appraisals are useful, they should not take the place of formal appraisals. These are used when the contact between a manager and an employee is more formal. This could be when they don’t see each other on a daily, or even weekly basis. It requires a system to be in place to report managerial impressions and observations on employee performance.

When Should You Carry out Appraisals?

Appraisals typically are conducted once or twice a year, most often annually, near the anniversary of the employee’s start date. For new employees, common timing is to conduct an appraisal 90 days after employment, again at six months and annually after that. ‘Probationary’ or new employees, or those who are new and in a trial period, should be evaluated frequently—perhaps weekly for the first month and monthly thereafter until the end of the introductory period for new employees. After that, annual reviews may be sufficient.

Some managers prefer to meet with their employees more frequently. Some companies in high-technology fields are promising accelerated appraisals— six months instead of a year—so that employees receive more frequent raises. The result for some companies has been a reduction in turnover among these very turnover-prone employees.

A regular time interval is a feature of formal, systematic appraisals that distinguishes them from informal appraisals. Both employees and managers are aware that performance will be reviewed on a regular basis and they can plan for performance discussions. In addition, informal appraisals should be conducted whenever a manager feels they are desirable.

Should We Talk About Pay As Well?

Many experts say that the timing of performance appraisals and pay discussions should be different. The major reason for this view is that employees often focus more on the pay amount than on what they have done well or need to improve. Sometimes managers may manipulate performance appraisal ratings to justify the desired pay treatment for a given individual.

However you carry out appraisals – whether informally or formally – take some time to think about the pros and cons of the different options. This will help you implement the best process for the development of your business and your employees.

Holiday Pay Judgment: What Does it Mean for Your Business?

On 4 November 2014, the Employment Appeal Tribunal (EAT) handed down its decision in three significant employment cases. It is a ground-breaking decision which gives some clarity to various European Judgments on the issue.

The key points to take from the decision are that:

  1. Holiday pay should be equivalent to a worker’s “normal” pay. What is “normal” depends on whether the payment in question has been made for a sufficient period of time to justify the label of being “normal” (the regularity / pattern of payments will be relevant in making this decision).
  2. Overtime which a worker is not permitted to refuse (i.e. guaranteed and non-guaranteed overtime) must count as part of their “normal” pay when calculating the pay they should receive on holiday.
  3. The Working Time Regulations which transposed the European Working Time Directive into UK law is incompatible with the Directive, but can be interpreted so as to give effect to these changes.
  4. The vast majority of workers will only be able to recover underpayments in the last three months.

However, there are various intricacies which employers need to appreciate:

  1. The Judgment only applies in respect to the 20 days’ annual leave guaranteed under the Working Time Directive, not the additional 8 days’ leave which is a purely domestic-driven right, set out in the Working Time Regulations. As such, workers can expect to receive a higher rate of holiday pay (that which includes overtime, commissions and various other payments) for 20 out of their 28-days’ holiday per year, with the remaining 8 days being paid at the level it previously was, unless their employer decides to pay all 28 days at the higher level.
  2. Where workers’ previous periods of holiday are separated by a gap of less than 3 months, they may be able to recover underpayments for a longer period than the 3-month limit set out above, by arguing that the underpayments form part of a “series”. Even in those cases however, it is unlikely that they will be able to go back in time to recover underpaid holiday for more than one holiday year.
  3. There is no definitive statement in the Judgment to confirm that purely voluntary overtime (that which the employer is not obliged to offer and the worker is not obliged to accept) would also be included. However, comments in the Judgment and the underlying ethos of the various European decisions could be said to lean towards the view that voluntary overtime which is regularly worked by a worker would count as part of their “normal” pay and hence should be included when calculating holiday pay.
  4. Whilst the domestic 12-week reference period for calculating average pay might be maintained going forward, there could be a change to this (brought about through case law or legislative change) due to the fact that some workers’ pay is highly variable throughout the year and a 12-week snapshot could be misleading depending on the 12-week period captured. For example, a retail worker who does far more overtime during certain periods (perhaps Christmas) would have a far higher average number of hours as their “normal pay” if they took leave in January. Similarly, a salesperson who takes leave shortly after an unusually large commission payment could receive inflated holiday pay which is not representative of “normal pay”. In such cases, a longer period may be necessary and justified. In one of the Opinions of an Advocate General, it was suggested that a 12-month reference period might be appropriate. This is not binding however, and we shall have to wait and see how this issue is resolved.

As a result of this Judgment and other employment cases we can now say with some confidence that the following elements of a worker’s pay should count when calculating their first 20 days’ statutory holiday in a holiday year:

  • Commission payments
  • Guaranteed and non-guaranteed overtime that is regularly worked
  • Incentive bonuses
  • Travel time payments (not expenses, but payments for the time spent travelling)
  • Shift premia
  • Seniority payments (payments linked to qualifications/grade/experience)
  • Stand-by payments
  • Certain other payments (such as “flying pay” and “time away pay” provided such payments are not expenses).

In Conclusion

The recent EAT decision will give some comfort to businesses that feared potential back-payments for 16 years’ holiday entitlements by their workforce. However, you must now resolve past liabilities and start paying correctly going forward. This will increase your operating costs. It is estimated to be approximately a 3-5% increase on payroll. The parties have been granted leave to appeal to the Court of Appeal, so the position on this issue may yet change.

Employee Engagement – Or How to Keep Your Staff Happy

Not everyone goes to work for the money they earn. While some people do only work to earn a living, these days, many people are motivated by things other than just money.

I believe that a more engaged workplace is a more successful workplace. What do I mean by ‘engagement’? Employee engagement can be defined as ‘An employee’s drive to use all their ingenuity and resources for the benefit of the company.’

How do you keep your employees engaged?

If you’re a manager, you need to work on four important factors – motivation (inspiring your team), consideration (recognition and support for team members), care (and understanding of their issues) and conversing (informing and listening to them). Improving each area will lead to better engagement; your staff will be happier and will work harder for you.

If you’re a leader, there are four questions that you need to ask yourself. Do people have faith in me as a leader? Are they inspired by me? Are they excited about the future of the business? How do they perceive my morality? The answers to these questions will show how engaged your team is. If you don’t like the answers you get to these questions, these are the areas that you need to work on, in order to have a more engaged workforce.

What do you do to keep your staff happy? Leave a comment here to share you tips with us.

If you’re not sure how to keep your staff engaged and happy, then come along to the half day workshop I’m running in April 2013 in Reading. Email me if you’d like me to send you the details.

How Do You Get More From Your Staff? Part Two

In a recent blog we looked at the importance of managing performance as a way of getting more from your staff, without dramatically increasing your costs.

Here are some top tips you can actually put into action, to get more from your people:

  • Provide a stimulating working environment that encourages members of staff to contribute to the progress of your business.
  • Encourage your staff to reach their full potential by providing opportunities to develop their skills through training and development, as well as coaching in the soft skills needed to be an excellent team member.
  • Carry out formal performance reviews on a regular basis, setting clear objectives and achievable targets; don’t wait for annual appraisals.
  • Build good relationships by providing regular informal feedback and guidance; allow your staff to air their concerns within an environment of trust and honesty.
  • Deal with issues as soon as they arise – don’t wait for them to become problems.
  • Offer a clear career path, to encourage employees to be the best they can be and stay with you for the long term.

How do you get more from your people? What have you done that has worked – or not worked? Leave a reply below.

If you still have questions about how to improve the performance of your team, come to our next workshop on 22 November 2012 near Henley. Places are free but limited, so click here for full details.

Why Bother with HR?

What’s the point of HR?  Do you really need someone to spend time (and money) looking at the people in your business? Surely it’s quite simple and something you can do for yourself?

Here are a few ideas to help you decide whether or not to bother with HR.

The cost of getting it wrong.  Without the right HR systems in place, you could end up on the wrong side of the law, with a hefty bill to pay. A majority of employers believe that claims to Employment Tribunals will increase following the increase in the qualifying period of service to claim unfair dismissal from 1 year to 2 years. Part of the reason for the anticipated increase is that there is no system to prevent spurious claims being made to a tribunal. There is no potential downside for a claimant and potential for a financial windfall.  No win no fee solicitors support the disgruntled employee to have a go on the basis that the business will make a settlement to avoid legal costs. The figures of employment tribunal awards in the year 2011/12 have now been released and show that the median of all wards was £4560, the average award was £9133 and the maximum award was £173408. Keeping up to date with the legal issues is vital if you want to avoid unnecessary problems and payments.

The benefits of getting it right.  In order to avoid further claims businesses are making changes to their policies and procedures and making sure their managers are well trained in these procedures because a majority of employers believe that the most important factor behind a decision going against them at tribunal has been the role played by the line manager. In most cases the decision concerns the managers failure to follow their own company’s procedure!  On a far more positive note, good HR can really help to boost the profitability of your business. By putting HR management practices into your organisation, studies have shown that you can reduce employee turnover by 7%, increase sales per employee by 5.2% and increase overall financial performance by 6%.

Do you bother with HR? Do you do it yourself, or bring someone in to help with HR issues? Is it worth it, or just another business expense? Leave a reply below and let us know what you think.

Implications of the Bribery Act 2010

Are you aware that it is an offence to offer, promise or give a bribe as well as to request, or accept one with the intention to obtain or retain business, or commercial advantage in the conduct of business?

Facilitation payments such as those made to Government officials for carrying out or speeding up routine procedures such as planning permission; gifts given to secure advantage during a tender process or to encourage customers to buy products or services; and any payment/gift given by an employee to obtain new contracts can all be considered acts of criminal bribery.  You will be pleased to hear that corporate hospitality is permitted but it is important you take a common sense approach.  If it looks too good to be allowed it probably is!  Ensure the hospitality is offered in good faith with the sole intention of establishing or maintaining good business relations and not to secure an advantage for your business or influence the impartiality of the recipient.

What prevention measures can you put in place?  Firstly, undertake a risk assessment and draft a zero tolerance anti-bribery policy, with top level commitment, that is relevant to your business operations and your employees.  Secondly, ensure your employees are trained and understand the implications of the Bribery Act 2010 and that contracts of employment are updated to include acts of bribery in the context of gross misconduct.  Finally, put in place a stringent  approval processes for any payments, gifts or hospitality requests and keep an audit trail that includes a record of any incidents where ethical standards may have been breached and how they have been dealt with.

With prison sentences of up to 10 years and confiscation proceedings the likely outcomes for getting it wrong, you really cannot afford not to be aware of the risks.