Holiday Pay – Is There a New Way to Calculate it?

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It was recently reported in the press that certain trade unions are encouraging their members to launch claims against their employers in respect of payments they may be owed as a result of the recent case of Lock v British Gas Trading Ltd. In that case, the European Court of Justice ruled that commission had to be taken into account when calculating holiday pay, rather than just basic pay.

As most UK employers only pay basic salary for holidays, the potential impact of the ECJ’s decision, and other similar cases that have been brought since, is substantial, and could include unlawful deductions claims stretching back a significant number of years.

It appears that two of the country’s biggest unions are taking steps to actively promote claims from their members. Meanwhile, employers groups are pressing the Government to introduce emergency legislation that will limit the impact of the rulings which are at odds with current UK law. Employers have warned that unless such measures are taken, the resultant legal costs could seriously threaten economic recovery.

The two main options open to employers remain unchanged. You can either:

1. Take steps to mitigate past liabilities and reduce future liabilities by introducing changes to holiday pay so that it includes all elements of normal pay (e.g. overtime and commission). The legal argument here would then be that this “breaks” the series of any unlawful deductions which an ET deems to have been made, meaning that employees have only three months from the date of the change to bring a claim (i.e. the clock would start ticking for employees). However, the success of this strategy is not guaranteed. Tribunals may determine that it was not reasonably practicable to bring a claim in time if the legal position was uncertain.

2. Wait for the outcome of the aforementioned EAT cases, and Employers’ appeals for emergency legislation to limit the impact of the rulings to date.

Whichever route you choose to take, it is advisable in the first instance to review your existing methods of calculating holiday pay and assess potential liability. It may also be worth considering establishing a fund in this regard wherever possible.

Acas Early Conciliation – What’s Involved?

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Acas Early Conciliation – What’s Involved?

If an employee is going to make a claim to an employment tribunal, they must now notify Acas first.

We discussed this new process at our last Employment Law update in the spring and the changes came into force on 6 May 2014. We’ll give you an update at our next workshop on 23 October 2014, but in the meantime, here’s what you need to know.

Before an employee can take a case to tribunal, they have to talk to Acas first, who will offer them the chance to use Early Conciliation, which is an opportunity to settle workplace disputes without going to court. They will ask your employee if they want them to contact you, their employer, about settling without going to tribunal. Some employees want their day at court, so this makes them think about it, before making a final decision. They are not obliged to take part in the conciliation process, but they must complete an Early Conciliation notification form before they can take you to a tribunal.

What this means to you, as an employer, is more waiting time. Previously, after an employee left your business, if you had not heard from them in three months about any issues, you would not have heard any more. Now the process can take longer. However, early conciliation is a good opportunity for you to either settle or get early warning of a case being brought against you.

Early Conciliation can help resolve the majority of workplace disputes which may lead to an employment tribunal, including:

  • unfair dismissal claims
  • workplace discrimination
  • redundancy payments or disputes around selection procedures
  • deductions from wages or unpaid notice/holiday pay
  • rights to time off or flexible working
  • equal pay.

Since its launch in May this year, the Early Conciliation service has been well used. According to Acas, around 1000 people have contacted them about the service every week since its launch, with 98% deciding to try the service. Even though there is an initial one month period for settling a claim, Acas’ first Early Conciliation case was settled within 24 hours.

Take a look at the Acas website for more information, where you’ll find a useful flow chart which will show you the process.

Three Stages to Getting Recruitment Right – Part Three

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In three blog posts I’m covering some of the basics of getting recruitment right – especially if you’re taking on your first member of staff. First 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 covered what to do when your new recruits start working for you, which you will find here.

In this blog, the final part of the series, 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 Three – What do you do at the end of their probation?

The first thing to do is to make sure that you have actually agreed a probationary period with your new employee. Three months is the minimum and works well for simple jobs, but this can go very quickly. A six month probationary period is a good length of time for you to decide whether or not you want to keep your new employee within your business.

The next thing to do is to book a meeting with your member of staff, once a week during their probation period. Put something in the diary at the same time every week for a few months, especially if you don’t work closely with them. If you don’t see them every day, then this is a good way to check in with them. It’s your chance to find out how they’re getting on – are they reaching their targets, or are there parts of their role that they’re struggling with?

What happens if they reach the end of their probation and you’re not happy with their progress? You need to take action! You can extend their probation period, to give them time to work the performance issues you’ve identified. If you’d been having regular meetings, you’ll know early on if there’s something wrong and be able to do something about it. Don’t leave it until the end of their probation period to tackle an issue, or spring the surprise on them!

And if you are both happy? Then you’ve got a fully fledged new member of staff on your team. But don’t think that you can just sit back and relax! Being a boss/manager of people is an ongoing job that doesn’t finish at the end of probation. We’ve talked more about useful tools like appraisals, performance plans and setting targets in other blog posts – just use the search box on the front page of this blog to find what you’re looking for.

If you have a specific question about one of your employees, do get in touch for a chat and some advice.

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.