New Measures for Zero-hours Contracts
Employees on zero hours contracts will have the freedom to find work with more than one employer after Business Secretary Vince Cable announced plans on 25th June 2014 to ban exclusivity clauses. This action follows a government consultation into zero hours contracts which received over 36,000 responses, with 83% were in favour of banning exclusivity clauses in zero hours contacts. Exclusivity clauses prevent an individual from working for another employer, even when no work is guaranteed.
The ban, set to benefit the 125,000 zero hours contract workers estimated to be tied to an exclusivity clause, is part of a bid to clamp down on abuses in the workplace by less scrupulous employers. As a result, it will allow workers to look for additional work to boost their income should they wish to do so.
Speaking on the subject, Business Secretary Vince Cable said "unscrupulous" firms had abused the flexibility offered by the contracts. "For many workers this is a perfectly sensible arrangement. But a lot of people on such contracts aren't sure what their rights are and we want to make them more transparent so people know what their rights are," said Mr Cable.
Despite unions and campaign groups pushing for zero-hours contracts to be banned, Mr Cable stated they do have a place in the labour market, creating work opportunities for students and older people.
Cable also revealed the Government is opening a consultation on how to stop rogue employers evading the ban through measures such as offering one-hour fixed contracts.
Bright Contracts – Employment Contracts and Handbooks.
BrightPay – Payroll & Auto Enrolment Software.
New Flexible Working Structure
On 30th June 2014, Flexible Working Regulations will be extended giving the right to request flexible working arrangements to all employees with 26 weeks service. Up until now only parents with children under 17 years, or 18 if the child is disabled, and certain carers were eligible to request flexible working.
Flexible working is a way of working that suits the employee’s needs e.g. having flexible start and finish times, working from home, part-time etc.
With the changes, the formal procedure for applying for flexible working has also been reduced to a minimum. However, some key requirements will still apply:
• Employees may only submit one written request in a 12 month period
• All requests must be dealt with in a “reasonable manner”
• All requests, including any appeals, must be fully dealt with within three months of receiving the initial application
• Any change to an employee’s terms and conditions will be a permanent change, with no right to revert to their original terms
• Employers can decline requests on eight (very wide) business grounds:
o Extra costs which will damage the business
o The business won’t be able to meet customer demand
o The work can’t be re-organised among other staff
o People can’t be recruited to do the work
o Flexible working will have an effect on quality and performance
o There’s a lack of work to do during the proposed working times
o The business is planning changes to the workforce
Generally, a tribunal will not investigate the rights and wrongs of a refusal, however they will look to see whether proper procedures have been followed. Maximum compensation for a failure to comply is eight weeks’ pay (currently capped at £464 per week).
Employers should be reviewing their internal policies and procedures to ensure that they comply with the amended legislation.
Bright Contracts – Employment Contracts and Handbooks.
BrightPay – Payroll & Auto Enrolment Software.
Thousands of underpaid workers benefit from HMRC NMW investigation 6 June 2014
More than 22,000 workers denied the National Minimum Wage (NMW) have received £4.6m in unpaid wages following an HMRC crackdown.
HMRC conducted 1,455 NMW investigations in 2013/14 and found arrears in 47% of cases – the highest strike rate since NMW was introduced.
During the period, HMRC issued 652 financial penalties worth £815,269 and recovered average arrears of around £205 per worker.
Jennie Granger, director of enforcement and compliance at HMRC, said: “Paying the National Minimum Wage is not a choice – it’s the law. HMRC will continue to ensure that workers get at least the wage to which they are legally entitled.
“Where an employer ignores these rules, we will ensure that any arrears are paid out in full and the employer is fined. Rogue employers be warned – we will find you and you will pay.”
In one case a social care provider had not paid its staff for travelling time and other hours worked and was told to repay over £600,000 to almost 3,000 workers.
And a recruitment agency was ordered to pay £167,000 to workers, including some it had classified as unpaid interns.
As a result of the investigations, TUC general secretary Frances O’Grady is calling for further action to be taken by the government and for employers that knowingly underpay their staff to be named and shamed.
“Nearly a million UK workers rely on the national minimum wage, which has become a vital lifeline. There must be no hiding places for companies who flout it.
“The action taken by HMRC is a welcome step but must be the beginning of a concerted campaign that also raises awareness about the right to a legal wage among those being exploited.”
Bright Contracts – Employment contracts and handbooks.
BrightPay – Payroll & Auto Enrolment Software.
Changes to Holiday Pay Calculations
As we enter the summer holiday season employers need to ensure that they are paying their employees correctly during annual leave.
A recent decision by the European Court of Justice (ECJ) will impact how some annual leave pay is calculated.
Do you pay employee’s commission? Is the commission calculated based on the amount of sales made or actual work carried out? If yes, according to the ECJ, holiday pay should include commission pay.
The decision was made in the case of Locke v British Gas Trading and Others. Locke was a Sales Representative whose commission made up approximately 60% of his remuneration. After taking two weeks leave in 2011, Locke suffered financially as he was unable to generate sales for the period he was on annual leave.
The ECJ ruled that the purpose of annual leave is to allow a worker to enjoy a period of rest and relaxation with sufficient pay. By not including commission payments with holiday pay, employees are less likely to take annual leave so as to avoid financial hardship.
It has been left to the national courts to determine how to calculate the commission to which a worker is entitled, however the court did suggest that taking an average amount of commission earned over a certain period, e.g. the previous 12 months.
Employers are advised to review their commission policies to establish which, if any, payments need to be included in annual leave pay.
Bright Contracts - Employment Contracts and Handbooks
How to manage new employees
The recruitment process should not simply stop when a new employee is appointed. The likely success, or failure, of the relationship often depends on how well the employee settles in.
A probation period gives you time to make sure that the selection you made was the right choice.
It's an opportunity to evaluate the new employee's performance, commitment and general suitability for the role, and to take the necessary action I they are failing to meet the requirements.
Probation periods generally last from one to six months, depending on the role, the business, and the business needs.
How to Manage the Probation Period:
- Include probation details in the contract of employment, specifically stating the right to extend the probation and/or dismissing an employee during their probation.
- Clarify any different terms and conditions of employment that apply during probation, e.g. some benefits may not be available until completion of probation, the Disciplinary and Grievance Procedures may not apply. This should generally be stated in the contract of employment.
- Provide the employee with a clear job description.
- Carry out an Induction Process. The induction process should start on the employee’s first day. Induction will give them clear guidance on their role, their role within the organisation and appropriate training where appropriate. A detailed Induction Checklist can be found here.
- Provide training. It is recommended that training be provided on in-house procedures, although they may seem straight-forward to you, they will most likely be totally foreign to your new hire.
- Hold regular update meetings with the employee. Continuously monitor their performance throughout the probation. This will allow you to detect any weakness early on and take suitable remedial action to assist the employee. Don’t leave it to the week before the probation is up to meet with the employee.
- Confirm your intentions with regard to the continuation of the probationary period before the planned expiry. The employee should never be surprised with the probation outcome, there should be regular discussions throughout the probation.
The Outcome
There will be three possible outcomes at the end of the probation period:
They’ve Passed! Congratulations, you’ve found a perfect fit!
Probation Extension! You’re still not sure whether this is the right person or not and need more time to assess them. Employee probation periods should not extend over 12 months.
Termination! After continuous monitoring, you’ve decided that it’s not going to work and that it’s best for everyone to part ways.
Whatever the outcome, a formal letter should be sent to the employee confirming the result of their probation.
For guidance on what to include in such letters, please refer to our sample template probation letters available here.
Best of luck with your new starters!
Bright Contracts – Employment Contracts and Handbooks.
BrightPay – Payroll & Auto Enrolment Software.
Bright Contracts at The Business Show 2014
We took a stand at the recent Business Show 2014 in the Excel in London's docklands.
We took this opportunity to launch our latest product Bright Contracts.
Laura Murphy MCIPD, our in house employment law expert, was thrust in front of a camera and asked to summarise the benefits of Bright Contracts and her overall impression of the Business Show.
She performed very well, given that there was no opportunity for rehearsals!
Bright Contracts – Employment contracts and handbooks.
BrightPay – Payroll & Auto Enrolment Software.
How to manage sickness absence
Managing sick leave can be a challenge for every employer. It is essential that businesses find the balance between supporting those employees who are genuinely sick and minimising unnecessary absences in order to reduce costs. Costs can include:
- Loss of productivity
- Cost of SSP and other company sick pay schemes
- Employing temporary cover
- Paying other employees additional overtime costs
The CIPD’s 2013 Absence Management report, found that absences levels had increased in 2013 from 2012, with an average of 7.6 days per employee. According to the report, the cost to employers averages at £595 per employee.
Managing Absences
Absence levels can be addressed by taking some simple steps:
- Sickness Policy: there should be a policy in place that clearly sets out the procedure that will be followed by both employees and management in cases of absence through illness. The policy should be clearly communicated and consistently implemented. The default company handbook in Bright Contracts contains such a policy.
- Record, Monitor & Measure: monitoring and measuring enable employers to identify trends and recognise points at which absence levels need to be further investigated.
Return to Work Interviews: these are informal meetings between a line manager and an employee on the first day the employee returns to work. Return to work interviews are consistently rated as one of the most effective methods of managing absenteeism levels and it is recommended that they should be included in all sickness absence policies. Templates and guidance on conducting return to work interviews can be found here.
Bright Contracts – Employment contracts and handbooks.
BrightPay – Payroll & Auto Enrolment Software.
UK Employment Law Update
The new tax year sees a number of changes in the area of employment law. These include:
Early Conciliation
From 6th April claimants should send their dispute details to ACAS first before going to a tribunal. From 6th May this step will be compulsory. ACAS will endeavour to conciliate a settlement, although both parties may opt not to participate in the process, in which case an Early Conciliation Certificate will be issued and the claim can proceed to tribunal.
Employing Illegal Immigrants
The maximum fine which can be issued to employers found employing individuals who do not have the right to work in the UK has been increased from €10,000 to €12,000.
Financial Penalties on Employers
Tribunals will now have new rights to issue penalties to employers in breach of employment rights maliciously or recklessly. Penalties will be in addition to any compensation due to the employee, they will be payable directly to the Secretary of State and may vary between £100 and £5000.
Removal of Statutory Discrimination Questionnaire
The questionnaire by which an individual can obtain information about potential discrimination from an alleged discriminator is removed.
Statutory Rates and Compensation Increase
From 6th April statutory sick pay (SSP) increased from £86.70 to £87.55. The Percentage Threshold Scheme which allows employers with relatively high levels of sickness absence to recover a percentage of statutory sick pay is also ending.
Statutory maternity pay (SMP), statutory paternity pay (SPP), and statutory adoption pay (SAP) have all increased from £136.78 to £138.18 since 6th April.
For the purpose of calculating statutory redundancy and basic award for compensation, a “weeks” pay has been increase from £450 to £464. The maximum compensatory award from unfair dismissal rose from £74,200 to £76,574.
Bright Contracts – Employment contracts and handbooks.
BrightPay – Payroll & Auto Enrolment Software
Employee arrested after payroll theft
UK supermarket giant, Morrisons have hit the headlines over the last week after it was discovered that payroll data belonging to over 100,000 of its 131,000 strong workforce had been stolen by a member of staff.
The information which includes bank details was published online and sent on a disc to a UK newspaper.
The supermarket has confirmed that the information has been removed from the internet and also that no customer details had been accessed by the thief. They’ve also reassured the affected employees that they will not be “financially disadvantaged” as a result of the crime.
The case highlights the risks employers face with regards to confidential information being leaked. It emphasises the need for employers to take proactive steps in protecting their data. It may not be possible for every employer to implement complex data security systems, but at a minimum, employers need to have confidentiality policies in place that prohibit employees from disclosing confidential data. Internet, email, social media and telecommunication policies will also clarify what is expected behaviour for employees across these mediums. Having robust policies in place will enable employers to take appropriate action where inappropriate behaviour occurs.
See also our blog “What to do if you suspect an employee of stealing”.
Bright Contracts - Employment Contracts and Handbooks
UK minimum wage to rise to £6.50 in October, government confirms
The government has approved a rise in the national minimum wage (NMW) to £6.50 an hour in October this year, as recommended by the independent Low Pay Commission (LPC).
This change is expected to boost take home pay for more than one million employees who could see their wage increase by as much as £355 a year..
From the 1st of October 2014 NMW rates will be:
- a 19p (3 per cent) increase in the adult rate (from £6.31 to £6.50 per hour)
- a 10p (2 per cent) increase in the rate for 18 to 20 year olds (from £5.03 to £5.13 per hour)
- a 7p (2 per cent) increase in the rate for 16 to 17 year olds (from £3.72 to £3.79 per hour)
- a 5p (2 per cent) increase in the rate for apprentices (from £2.68 to £2.73 per hour)
Bright Contracts – Employment contracts and handbooks.
BrightPay – Payroll & Auto Enrolment Software
