Category: Terms and Conditions

19
Sep2017

How Robust are your Contracts of Employment?

This is the beginning of a series where we have created a simple checklist that any business can use to gauge how robust their HR is. No matter the size or complexity of your business, if you have employees you can use this checklist to self-audit your HR processes. Your responses will be kept entirely confidential.

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20
Jun2017

Cyber Security – A new world?

The words have a futuristic sense to them but the issues are real and alive today.  In our data storing and gigabyte gobbling world what does it mean to us and what should we do?

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Coming Soon – The (National) Living Wage

Coming Soon – The (National) Living Wage

Around 12 months ago I attended seminar in Edinburgh hosted by the Living Wage Foundation and subsequently wrote a Blog article detailing the Living Wage campaign and what it may mean to SMEs in the UK.

Fast forward one year and there have been some very important developments in this area and so I thought it worth writing again on this topic and detailing what those updates are.

The main headline is that as of 1st April 2016, all employees and workers aged 25 and over will be entitled to £7.20 per hour which is a 50p per hour increase to the current National Minimum Wage which will remain in place at current levels for those below 25. Employers would be well placed to carry out a review of their salaries and their employee’s ages to determine if any salary increases are required when April comes around.

The Name

I try not to give too much in the way of opinion when blogging and it is important that there is no bias present when disseminating this sort of HR related information, but I do feel there is a point to be made here. The National Living Wage (NLW) is the term being used by the Government which has been somewhat hi-jacked from the pre-existing Living Wage Foundation (LWF) who campaign for employers to pay their staff a higher amount.

The LWF’s voluntary rate (£8.25 per hour or £9.40 per hour in London), which is calculated independently, is already ahead of the new NLW which does not go live until April 2016. This hijacked term, I think, could potentially cause unnecessary confusion for employers and employees in terms of entitlements and furthermore clouds the work that the Living Wage Foundation have been carrying out for well over a decade.

The Impact

Moving away from the trivial matter around how we should refer to the Living Wage, there are more significant issues that are brought about by such a jump to the rates. Businesses who employ staff over the age of 25 will need to consider how they will cope with the higher payroll costs that an involuntary salary increase brings about.

Similarly this creates yet another continual personal details review that affected employers are required to carry out to ensure they are compliant. As with Auto-enrolment, monitoring of an employee’s age to ensure they are paid appropriately is essential.

From a positive impact perspective, employers will be hoping that this increase, although compulsory for those employees who qualify, will perhaps bring about increases to motivation and productivity however improved commitment is perhaps unlikely given any alternative role will also pay this as a minimum.

Finally, as with any increases to salary or similar changes to terms and conditions, employers should inform their staff in writing of the change and place a copy in the personnel file to ensure everything is kept up to date.

07
Jul2015

Zero-Hours Contracts: Friend or Foe?

Zero-Hours Contracts: Friend or Foe?

For this article I thought I would reflect on one of 2015’s political “hot-potatoes”, now that the dust has settled on the general election and a majority Conservative Government. The infamous ‘Zero-hour contract’ is seen as somewhat of a poisoned chalice for organisations who wish to use them, not least due to the way they have been portrayed in the media , in my opinion. So through this blog I will try to give some of my own thoughts on the matter as well as some updates from the world of employment law.

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To sacrifice or not to sacrifice?

To sacrifice or not to sacrifice?

In the current economic climate, the mere mention of a reduction in salary would give cause for concern but should this be a concern when the ‘sacrifice’ refers to a ‘salary sacrifice scheme’ offered by your employer?

What is salary sacrifice?

Salary sacrifice is becoming increasingly popular with SMEs as a way of providing a cost neutral benefit to staff whereby the employee agrees with their employer to give up part of their salary in return for a non-cash benefit. The benefit to the employee is a possible reduction in tax and National Insurance.

In the past this has often been linked to a pension scheme, where an employee agrees to a salary reduction in return for increased employer contributions to their pension fund. Today however, there are a number of different benefits linked to salary sacrifice including; cycle-to-work schemes, private medical care and childcare funding.

Good vs. bad

One of the attractions of salary sacrifice for employees is that it can push you into a lower income tax bracket as the amount sacrificed does not appear as part of your take home earnings. However, before getting into an arrangement like this, you need to investigate what sort of taxes the item will attract before you decide whether it’s a good option or not.

Without careful planning, it could also lead to the company actually being out of pocket. Once an employee benefit has been given it generally cannot be taken away again, even if the employee’s circumstances change. Long term employee absences, such as maternity or sick leave, are the most common risks for unprepared companies to come up against meaning that the scheme may actually turn out to be more expensive. Another area often overlooked is that employees need to check that the benefit has been correctly included in their tax code. It is a familiar story to find that incorrect tax is collected only for a black hole to appear which could lead to the employee having to pay back a substantial sum of money.

Is it for me?

Overall, salary sacrifice schemes can be a great benefit for both the employee and the employer however, it’s important that you analyse the potential risks before signing up to anything. Sacrificing part of your salary means you will take home less disposable income, so make sure beforehand that your budget will allow for this.

Should we be in defence of Zero Hours Contracts?

Should we be in defence of Zero Hours Contracts?

Many column inches and tweets recently have been dedicated to the debate of how “exploitive” zero-hour contracts can be and with some unscrupulous employers that can indeed be the case.

But what are “Zero Hours” Contracts?

A zero-hour contract is a contract of employment used in the United Kingdom which while meeting the terms of the Employment Rights Act 1996 by providing a written statement of the terms and conditions of employment contains provisions which create an ‘on call’ arrangement between employer and employee. It does not oblige the employer to provide work for the employee, nor does it oblige the employee to accept the work offered. The employee agrees to be available for work as and when required, so that no particular number of hours or times of work are specified

How have they been abused?

It has been brought to light under reviews by the government and CIPD research that there have been some unethical practices with regards to “Zero Hours” contracts such as allocation of shifts, being penalised for refusing work or not being offered work, not calculating the accrual of holidays etc.

To this end, it is hoped that Vince Cable’s official review will ensure that abuse of the zero hour principle is curtailed, wherever it exists. Hopefully, Mr Cable will also consider the reasons why so many people have to accept uncertain terms to do unskilled jobs that they are often over-qualified to do.

Reasonable alternative for some – when applied fairly?

Contrary to all the bad publicity that has been conjured up about zero-hours contracts, our belief is that they actually offer a reasonable alternative to SME businesses whose work is seasonal or intermittent, such as retail, property sales and hospitality/tourism or where money is tight due to trading restrictions of one type or another.

Far from sitting at home, waiting for the phone to ring, many workers are using zero-hour contracts (and juggling more than one zero-hours contract) to supplement their income while they study or train to acquire new skills, care for dependents or give their time voluntarily to charitable causes. In this scenario, the contract provides the freedom to pick and choose to work as and when convenient, planning and using time effectively to create a good work/life balance.

Zero hour contracts are not for all; that much is clear

If you are on a zero-hours contract and need to achieve full-time hours with a regular income (probably a good percentage of the population), then the lack of regular income, sickness cover and security is going to cancel out any benefits of such a flexible contract for you.

There is an obvious issue if people who should working full-time, and are doing full-time jobs, are on such contracts – not just because of the lack of security but because the cost of sickness and intermittent employment then falls upon the state rather than the firm. There is also a danger that their more widespread use would create a two-tier employment market, divided between those with protection and those without, as happens in France.

But one reason why many people have to take uncertain, unskilled jobs is because they lack the training and experience to do anything else. So, in my opinion, better opportunities to work flexibly whilst acquiring new skills will do far more to fix the problem than rigid employment practices.

We hope Mr Cable’s review, due to be published at the end of this year, will help curtail abuses where they exist but please… give our British SME’s a break! To abandon zero-hour contracts entirely and curb the flexibility that has made Britain’s employment market so robust even in the past five recessionary years may be a backwards step.

Real Time Information – Payroll has Changed

Real Time Information – Payroll has changed

We reported in the Autumn 2012 that payroll, as we currently know it, is changing.
From 6th April 2013, all employers will have to submit PAYE information online each pay period, to HMRC (Instead of complying with RTI arrangements on April 6th 2013, employers with fewer than 50 employees will have until October 5th 2013 to comply with the legislation). This replaces the requirement to complete an annual return of PAYE.
HMRC have outlined key steps which employers and payroll providers should take to prepare for this change and we have summarised practical tips below.

  • 1. Check if your payroll software is compatible and up to date to cope with the HMRC reporting requirements
  • 2. You must ensure employee data is complete and correct. If you are not sure you should check!
  • 3. Finally, you must be pro-active – there will be a need to manage & record employee events and issues as they happen. This includes changes to hours of work, overtime, bonuses, sick absences and other periods of leave.
  • 4. Review your new starts & leavers processes. Are you gathering all of the information that you need for new starts? Is this information accurate and ready on time for payroll? If not, review your processes to ensure that you do!

The Employer Charter

A solution which the government have recently announced for employers feeling trapped by red tape and threatened by tribunal claims is the ‘Employer Charter’. Published on 27th February 2011, the charter sets out 11 different actions that an employer can take with their employees, i.e. their rights as employers. Its purpose is to serve as a general guideline for employers and also form part of the Government’s employment review to reduce tribunal claims, which includes other proposals like charging individuals to make a tribunal claim and increasing the minimum service length to claim unfair dismissal to 2 years.

Is this misleading for employer’s?

However, could these ‘general statements’ be misleading to employers? The CIPD highlights the potential flaws and obscurity of the Charter, for example it fails to mention employers can dismiss employees with under a year’s service and also, the big one, discrimination. Discrimination can bear on every employment scenario and is a day one right which protects employees; moreover, there is an uncapped fine which the employer could be liable to pay. In addition, the Charter does not make it clear, even briefly, of how they can act ‘reasonably and fairly’ in their rights as employers. For example, I have noted my observations below:

  • ‘Ask an employee to take a pay cut’ This would have to be in agreement with the employee and confirmed in writing, it is not a unilateral decision. Also, the big question what happens if the employee says no?
  • ‘Dismiss an employee for poor performance’ A performance management process should be in place, within a disciplinary procedure with warnings issued accordingly. Essentially, the employee must have been given a chance to improve and dismissal would normally be the final option.

Does it set out the big picture?

Therefore, in conclusion, whilst the general statements in the Charter may be correct, they fail to set out the big picture which employers should be aware of. As for lowering tribunal claims and promoting an effective workforce, it is managing the employment relationship which is essential here – and that is where we, Gravitate HR, come in to help employers. The statements simply provide what an employer could do, but tensions, conflicts and culture lie deeper and may, in turn, be the core of the problem. In essence, the Employer Charter views employment as black and white, when, in our experience, there are many shades of grey which come into focus.

Take a break!

Work your proper hours day

Last Friday, 25th February 2011, was ‘Work your proper hours day.’ According to the TUC and Worksmart.org.uk , this is the day when the average person who does unpaid overtime finishes the unpaid days they do every year, and starts earning for themselves.

Whilst many of us are guilty of quickly finishing off our sandwiches before the post-lunch meeting, research has suggested that working through your lunch can lead to stress, and means that you are more likely to snack during the day!

The Campaign

The TUC and Worksmart launch a lighthearted campaign each year to give employers the opportunity to reward employees for overtime worked, which has been unpaid.
Scotland, on average, according to the TUC have the highest value of unpaid overtime, by worker each year.

There are serious implications of not taking a break, or creating a culture where staff are unable to take breaks, or leave on time from work. It can actually leave staff stressed, exhausted an in actual fact less productive at work.

So what are we saying? Well, we understand there are times when it will be inevitable for staff, and yourselves to work beyond the usual hours of work. Directors should be aware of creating a long hours culture, and where possible reward staff for going the extra mile.

What about me?

Why not coming along to our lunch time seminars. For one, it will get you out of the office, away from your desk. We provide a free lunch, you will get to meet and network with other business owners and professionals and learn something new!
See our schedule of seminars attached to the blog.

The Royal Wedding – a cause for celebration or a headache in the making?

The UK and Scottish Governments have announced that Friday 29th April 2011, Prince William and Kate Middleton’s wedding date, will be an extra public holiday. For many British people this is a day of celebration and an opportunity to witness a milestone in British history. But what does this mean to employers, where Fridays form part of the normal working week?

For most employers the key questions is do we need to honour this day? Each employee is entitled to a minimum of 28 days annual leave, but do not have the automatic right to public holidays. What is key for employers to consider is the wording in your contracts of employment. Contracts of employment may stipulate a specific number of days annual leave ‘plus all public holidays’, where in this instance, the extra day would need to be honoured. Other contracts of employment may stipulate a specific number of days ‘inclusive of public holidays’, or set a specific number of public holidays recognised, for example, ‘plus 4 public holidays’. In these instances, if the employer so wished, they would not need to honour the extra day.

An extra day’s holiday for all staff can be a huge cost to a company, particularly close to the Easter period, and so, as an employer, it is worth addressing now what your likely operational requirements are going to be around that time. Do you tend to open on public holidays, or do you operate a 24 / 7 service etc? Could you afford to have limited number of staff present at work? How will your part-time staff be affected should you honour that extra day holiday? Some employers may still wish to honour the extra day holiday, even if not contractually obliged to do so, with the option to allow staff to take the day off, or have the day in lieu.

Payment of this day will also need to be addressed, and again it’s what’s stipulated in the contracts of employment that will help determine this. If your staff are normally paid an enhanced rate for all public holidays then this would remain the same for 29th April 2011. Alternatively, if you do not have such an arrangement, but you want to honour the holiday, and potentially encourage some staff to come in to allow the business to keep operating, you may consider providing an enhanced payment for that day. There are a number of options available should your contracts of employment allow you for such flexibility.

If you would like to seek advice on this issue what available options there may be for you, please contact a member of Gravitate HR on 0131 225 7458.

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