Settlement Agreements used to be called Compromise Agreements. What’s Changed?

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In the UK, a compromise agreement – now known as a Settlement Agreement – is a specific type of contract, regulated by statute, between an employer and its employee (or ex-employee) under which the employee receives payment in exchange for agreeing that he or she will have no further claim against the employer as a result of any breach of a statutory obligation by the employer.

Changes were made (other than just the name) in July 2013. What does this mean to you, as an employer?

A Settlement Agreement is a legally binding contract which can be used to end an employment relationship on agreed terms. Their main feature is that they waive an individual’s right to make a claim to a court or employment tribunal on the matters that are specifically covered in the agreement. Settlement Agreements may be proposed prior to undertaking any other formal process. They usually include some form of payment to the employee by the employer and may also include a reference.

For a settlement agreement to be legal, the following conditions must be met:

  • The agreement must be in writing
  • The agreement must relate to a particular complaint or proceedings
  • The employee must have received advice from a relevant independent adviser on the terms and effect of the proposed agreement and its effect on the employee’s ability to pursue that complaint or proceedings before an employment tribunal
  • The independent adviser must have a current contract of insurance or professional indemnity insurance covering the risk of a claim by the employee in respect of loss arising from that advice
  • The agreement must identify the adviser
  • The agreement must state that the applicable statutory conditions regulating the settlement agreement have been satisfied.

A Settlement Agreement can be proposed by both employers and employees although they will normally be proposed by the employer. A proposal can be made at any stage of an employment relationship.

Acas has produced a comprehensive Code of Practice on Settlement Agreements, which you can download for free here. It is very important to take HR advice before starting a process of discussing a Settlement Agreement with an employee so do get in touch if you have any questions.

Three Stages to Getting Recruitment Right – Part Two

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In three blog posts I’m going to cover some of the basics of getting recruitment right – especially if you’re taking on your first member of staff. Last time we looked at how to find the best person (click here if you missed that post or would like to read it again.) In Part Two we’ll look at what to do when your new recruits start working for you and in the third blog, I’ll talk about what to do at the end of their probation. This three stage process will help you find and keep hold of the best people for your business – and avoid some costly pitfalls!

Part Two – How do you make sure they get off to the best start?

Recruitment can be a long, expensive and time consuming process. After all the effort of finding the right person to join your team, you want to help them settled in as quickly and smoothly as possible. Some new staff have been known not to show up after the first weekend, or even on their second day and you don’t want that!

Particularly if you’re taking on your first member of staff, take the time to plan their induction. Make sure they have somewhere to sit and a computer to work at – if that’s part of their job!

Induction training must include the following elements:

  • General training relating to your business, including values and philosophy as well as structure and history
  • Mandatory training relating to health and safety and other essential or legal areas
  • Job training relating to the role that they will be performing
  • Training evaluation, including confirmation of understanding and feedback about the quality and response to the training.

You will also need to take up the references that they provided you with, check the qualifications they say they have and confirm they have the right to work in the UK. (The law about foreign workers has changed recently – there are more details here.)

Acas has produced a very useful Induction Checklist which will give you more ideas on what to cover during induction. You can download it here.

In Part Three of this series we’ll talk about what you need to do once your new recruit (who really is the right person and has started off well) reaches the end of their probation period.

Do I Have to Give a Reference to a Former Employee? Standard Reference Letters

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As an employer, you might be asked for a reference for a member of staff who is leaving or who has left your business. You’re not obliged to provide one in either of these cases and you can actually refuse to provide a reference. I covered all the finer points of this issue on a previous blog, which you can read here.

In this blog I thought I would give you details of Standard Reference letters than you can use, if you’re asked for a reference.

Dear Name of Person asking for reference

We refer to your letter of [date], in which you requested that we provide you with [details of information requested].

Unfortunately we are unable to comment as the organisation operates a policy of not providing written or verbal references for individuals.

Yours sincerely

Your Name

It’s a simple as that!

Whether you follow this policy or not, it is important that you take a consistent approach to this issue and treat all reference requests in the same way. If you usually respond to requests for references but do not do so on a particular occasion, you run the risk of discrimination under the Equality Act 2010, which provides protection against discrimination to employees, job applicants and former employees.

If you want to provide a basic reference, here is a sample letter you can use.

Private and confidential – for the addressee only

Dear Name of Person asking for reference

[Name of your employee] [was/has been] employed by [name of your company] from [date] to [date]/since [date] as [job title].

[His/Her] role involve[d/s] [short description of the employee’s key job duties and level of responsibility].

[Name of employee] left the organisation [insert reason for termination of employment, e.g. resignation, redundancy or the expiry of a fixed-term contract].

[Insert any other appropriate points in accordance with the organisation’s policy on giving references.]

While the information provided is, to the best of [name of our organisation]’s knowledge, completely accurate, [name of your organisation] cannot accept any liability for decisions based on it.

Yours sincerely

Your Name

If you’re unsure about any aspect of providing a reference (or not) please do contact me for a quick chat, to make sure you’re doing the right thing and so that you can avoid any future problems.

Source of letters: www.XpertHR.co.uk.

Three Stages to Getting Recruitment Right – Part One

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Three Stages to Getting Recruitment Right – Part One

In three blog posts I’m going to cover some of the basics of getting recruitment right – especially if you’re taking on your first member of staff.

First we’ll look at how to find the best person, then we’ll look at what to do when they start working for you and in the third blog, I’ll talk about what to do at the end of their probation. This three stage process will help you find and keep hold of the best people for your business – and avoid some costly pitfalls!

Part One – How do you find the right person?

So your business is growing and you’re getting busier and busier. You’re working longer hours, just to keep up with the work and the demands of your clients. You don’t want to turn business away, so you keep working all the hours you can, including evenings, weekends and holidays. Eventually, when your friends and family are really fed up of not seeing you and you’re completely exhausted, you decide it’s time to take on your first member staff.

But you’re too tired to think about it properly and you certainly don’t want to spend your hard earned cash having someone else do the recruitment. So you put the word out among your contacts and network that you need some help in your business. You’re not quite sure what the job would involve, how many hours it will be, or how long you’ll need them. But that doesn’t really matter does it? You just need someone to ease the burden – and quickly!

A number of people respond to your plea for help and you chat to a few of them. One of them seems quite nice and can start straight away, so you meet up to talk a bit more and then offer them the job.

Sounds easy doesn’t it?! Until you find out that your brand new team member doesn’t actually like doing some of the tasks you need them to do. But never mind, there’s plenty of other work to keep them busy. And then they ask about taking some time off for a holiday and one of your clients complains that some of their work hasn’t been done. Before long, you find yourself working longer hours than before you hired someone, just to check up on their work and correct their mistakes. The atmosphere in the office changes and you don’t look forward to going there in the morning.

That wasn’t supposed to happen – it’s your business and you’re supposed to enjoy what you do!

So how do you avoid all these problems? Do some planning! Think really carefully about the sort of person you want working with you and what they will do. Create a solid job description that includes the hours they will work. You can always start someone on part-time hours if you want to try them out. Most importantly, don’t leave recruitment until you’re desperate for help, as this will make you more likely to take on the first person who comes along, who you think will ‘do’. They probably won’t! If you have any doubts about a potential employee, deal with those doubts and take your time to find the best person for your business.

In Part Two of this series we’ll look at what to do when your new recruit (who really is the right person) starts working with you.

The Next Round of Employment Law Updates

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The Next Round of Employment Law Updates

Just when you thought you knew everything you needed to know about employing staff, they changed the law! Here is a summary of some of the recent changes that you need to know about.

  • Tribunal penalties for employers – from 6 April penalties can be imposed on employers who lose tribunals. This could be 50% of the award between £100 and £5000 where the employer breaches the employee’s rights and where there are aggravating factors; or where the employer has not made a genuine mistake but has made a deliberate breach of the ACAS code. If you run a small business there is some leniency, but larger employers are expected to follow the new rules.
  • ACAS Early Conciliation – from 6 May, early conciliation is compulsory before a claim can be submitted. The claimant must contact ACAS, who will issue an early conciliation certificate when the process is complete. As an employer, this now gives you opportunity to get early warning of a case or to settle.
  • Statutory pay rates – from 6 April, maternity, paternity and adoption is raised to £138.18. Sick pay rises to £87.55 and gross pay for redundancy is £464.
  • Abolition of the percentage threshold – before 6 April employers could claim back sick pay if it exceeded 13% of the employees Class 1 National Insurance in the month. That threshold has now been abolished.
  • Abolition of SSP record keeping obligations – from 6 April there will be no requirement to keep specified records of dates of sickness and SSP payments. Before this there was a requirement to keep records for three years.

There are more changes proposed for later in the year, which I’ll tell about in future blogs. If you need to know how any of the changes specifically affect your business and your employees, do get in touch and I’ll talk you through what you need to know.

Are You Ready for Pension Auto Enrolment? Part Two

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Are You Ready for Pension Auto Enrolment? Part Two

All businesses will soon have to provide a pension for their staff. The start date depends on the size of your business. But there’s a lot more to think about than just the date. Last month we brought you five tips to consider (click here to read that blog) and here are five more:

Existing joining methods may be fit for purpose. Many employers believe they will need to change the way they currently join employees to their pension scheme. However, your existing method and processes for joining may already be suitable. For example, if your employees already join the pension scheme via their contract of employment, then there may be no need to introduce a different method. This can also allow all staff to be treated the same way, regardless of their age or income. But it’s likely to mean changing processes and potentially employment contracts, to meet the new legal requirements.

Use waiting periods to fit your business. The majority of employers have used waiting periods aligned with payroll so employees join on the first day of the pay reference period. This avoids having to calculate, explain and manage part payments. But it is also possible to build in a waiting period to avoid one off events such as bonus payments or seasonal increases. Or to allow time to organise contract joining before the auto-enrolment duty kicks-in. But remember while employers can delay assessment and auto-enrolment, they cannot delay the statutory communications to their employees.

Communicate with employees early. Engaging with your employees and clearly communicating the changes in advance of auto-enrolment will make sure that when it happens, they understand why money is being deducted from their pay. This will also ensure they appreciate the value your contribution is adding while reducing employee questions.

Review existing default investment funds. You have a regulatory responsibility to make sure the auto-enrolment default investment option is suitable for your employees that will be enrolled to the scheme. Existing investment solutions may not be appropriate. Advice is crucial to getting this right. You also have a responsibility to have an on-going investment governance framework in place.

Remember to register with the Pensions Regulator. You must register your scheme with the Pensions Regulator within four months of your staging date. Details must be given of your qualifying workplace pension scheme and how you have gone about enrolling employees to the scheme.

 

There is a lot to think about and do when it comes to setting up your company pension. These five tips, combined with the five we gave you last month, give you a good starting point. In the meantime, if you have any questions about pensions, do get in touch.

What Are The Latest Employment Law Updates?

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What Are The Latest Employment Law Updates?

On 1 May 2014 we held our latest Employment Law Update workshop, when we looked at some of the recent changes that you need to know about, as an employer. Here is a summary of some of the changes.

  • Workers from overseas – from 1 January 2014, restrictions on working in EU states were lifted for Bulgarian and Romanian workers. Remember to check the right to work in the UK for all employees.
  • Employing illegal workers – from 6 April 2014, the maximum civil penalty for employing an adult subject to immigration control, who does not have the right to work in the UK, increased to £20,000 from £10,000. New guidance has been issued by the Home Office in the “Full guide for employers on preventing illegal working.”
  • Employment Allowance – from 6 April 2014 a £2000 reduction in the NIC bill for all businesses and charities has been introduced. HMRC has a calculator and information you can use here.
  • Employment tribunal fees – from 6 April 2014 some re-categorisation of claims has been done. As a reminder, Type A claims are £160 for the issue fee plus £230 for the hearing fee; Type B claims are £250 for the issue fee and £950 for the hearing fee. Type B claims include unfair dismissal. The Tribunal can order the employer to pay if the claim is successful.

These are just a few of the recent changes and we’ll cover more in future blogs. More changes will continue to be made throughout the year to Employment Law. To keep up to date, subscribe to our newsletter here, keep reading these blogs, or come to our next workshop, which will be held in the autumn.

Are You Ready for Pension Auto Enrolment? Part One

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Are You Ready for Pension Auto Enrolment? Part One

All businesses will soon have to provide a pension for their staff. The start date depends on the size of your business. But there’s a lot more to think about than just the date. Here are five tips to consider:

Don’t leave it too late. The auto-enrolment ‘to-do’ list for employers will take some time to complete; don’t leave it to the last minute. Collating data can mean sourcing information from various systems. In addition, enrolling employees to the pension scheme could involve changes to their contracts of employment, which requires a three month consultation period. An early start is ideal – 6 to 12 months ahead of your staging date is ideal.

Understand your key dates. It’s crucial that you not only understand when your staging date is, but also any key company dates such as the pay reference period and payroll cut off. Documenting these dates and then overlaying the new dates when actions need to be completed as a result of pension reform legislation will help gauge the impact on the business. It will also help decision making, such as the need for a waiting period and if so, how long it should be.

Quality of data is key. It’s easy to underestimate the complexity of the data you require. You’ll need data for employee eligibility assessment, joining, contributions and opt outs. Inevitably this will come from different sources and systems. It takes a significant amount of time to do this within payroll cycles and the frequency that this data is needed also adds a layer of complexity. The quality of the data and the processes for sourcing the data for each payment cycle will be crucial to how smoothly that works each pay period.

Choice of contribution basis. Your chosen scheme must meet a quality standard, based around a minimum level of benefit or contribution, so you need to start budgeting for any extra costs. There is more than one acceptable contribution basis and they can be mixed and matched across the workforce to suit different reward mechanisms or pay patterns. What will work best for you? The key point is that the contribution basis and definition of earnings can be chosen to suit your business.

Method of contribution. Salary Exchange should also be considered as this can offer you significant cost saving benefits. However, where salary exchange is being used, this decision should be made prior to the scheme staging, otherwise it can cause additional administration for employers.

There is a lot to think about and do when it comes to setting up your company pension. These five tips give you a good starting point and in a future blog we’ll share with you another five tips. In the meantime, if you have any questions about pensions, do get in touch.

Is Your HR Doing What it Should?

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Is Your HR Doing What it Should?

All businesses that employ staff need a way of looking after them. It’s called HR, or Human Resources. Rather than waiting for a problem to arise and then dealing with it, good HR is proactive and preventative. Here’s how to make sure that yours is doing what it should, to protect you and your employees.

    • Have in place well designed policies and procedures that cover all your business needs and eventualities, which ensure every part of your business is operating like a well-oiled machine.
    • Prepare comprehensive job descriptions for every employee and evaluate them regularly.
    • Set objectives and targets to provide focus for all your staff on what you want them to achieve. Have short and long term goals and give your employees regular feedback on how they’re doing.
    • Give praise for work well done – in public, if necessary.
    • Deal with instances of poor performance before they become a major issue.
    • Keep up to date with the latest employment legislation. Always ensure you’re exercising your duty of care towards the welfare and development of your employees.
    • Talk to your employees and keep them informed, engaged and focussed on your strategic goals. Let them have their say and voice their concerns and ideas.
    • Provide opportunities for training and career progression wherever possible.

When you spend time looking after your staff, they will become more engaged and more productive. Use HR proactively and you can build a better workforce and a more profitable business.

How Do You Make Sure Your Employees are Performing to the Best of their Ability?

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How Do You Make Sure Your Employees are Performing to the Best of their Ability?

Your people are the key to the success of your business. By investing in them you are investing in your success. But how do you make sure they are working as hard as they can, to bring about that success?

Here are our top 10 tips to help you get the most from your people:

1. Provide a vibrant and stimulating working environment and a culture that values the contribution made by each person

2. Embrace the diverse range of skills, expertise, experience, attitudes and backgrounds of all your staff

3. Encourage your staff to reach their full potential. Provide them with opportunities to develop their expertise, both in terms of technical and soft skills

4. Provide formal and informal performance reviews on a regular basis

5. Set clear objectives and achievable targets with your staff and allow them to air their concerns within an environment of trust and honesty

6. Deal with issues as soon as they arise. Don’t wait for them to become a significant problem

7. Equip your managers with the skills they need to deal with difficult situations confidently and effectively

8. Reinforce and reward good performance. Provide incentives and rewards that motivate each individual member of staff

9. Offer a clear career path to incentivise employees to be the best they can be

10.Conduct regular employee questionnaires to highlight areas for concern and ensure staff feel that you value their opinions.

Managing staff is often the hardest part of any manager’s job. Follow these simple tips and you’ll find it easier to encourage your staff to put their best efforts into working with you.