HR Updates and News

February 2012 Updates

Updates for 2012
The annual increase of maximum amounts for redundancy payments, unfair dismissal awards etc have been announced effective from 1 February 2012

With effect from 6 April 2012

With effect from 9 April 2012

Standard rate of SMP, paternity, additional paternity and adoption pay increases from £128.73 to £135.45 per week.

When are holidays not holidays?
Or alternatively you can’t have your cake and eat it perhaps….A recent case brought by oil workers tried to establish that it was illegal for them to have to take their holidays during their offshore rest periods. The case has now been to the Supreme Court which upheld a previous finding that it is legal to expect that they take their holidays during their offshore periods. The implications cover contracts for teachers, those on annualised hours contracts or some shift workers so it is not just the oil workers affected by what seems to most of us to be a common sense judgement.

Expensive Discrimination!
This case has been widely reported in the press because of the extremely high level of compensation – an eye-watering £4.5 million. What is also worth noting is that the award was also made against three individuals within the NHS Trust which employed Dr Michalak who was a hospital consultant, Dr Michalak's former head of department, the former medical director and interim chief executive and the director of human resources.

Dr Michalak was dismissed after what she claimed was an "extensive process" of sex and race discrimination. Following the discrimination and dismissal she was suffering from chronic post-traumatic stress disorder and was judged to be unlikely to be able to work again so her award was calculated on earnings up to her presumed retirement age and loss of pension.

New rules on Unfair dismissal
It is worth noting that the recently discussed intention to increase the qualifying period for claiming unfair dismissal to two years will only apply to employees who commence employment on or after 6 April 2012.

Anyone already recruited will not therefore be affected and current rules will apply. If it does not affect the business otherwise it may be worth putting off a new starter until 6 th April to benefit from this relaxation of the rules.

Recent Updates

A very happy New Year to all readers!

This month I’d like to use the newsletter to pass on some exciting news. The company is growing and from the start of the year Catherine Eve is joining Bowness HR Ltd to allow us to widen the scope of the services we can offer.

Catherine grew up in West Cumbria until going to Newcastle University to read Psychology. She spent 10 years working in senior marketing and HR roles before setting up her own training business in the north east, where she has worked since 2004, supporting private, public and Third sector businesses in people performance and  development.

She is a HR professional, qualified coach and NLP practitioner and specialises in leadership and team development.  She also runs an award winning women's development programme called the Butterfly project.

Catherine has moved back to Cumbria and is looking forward to sharing her knowledge and expertise with local businesses. I’m sure you will find her a valuable addition to Bowness HR….

Previous Updates

Pensions and auto enrolment
The government has announced that firms with fewer than 50 staff will be given extra time before they have to start auto-enrolling employees into pensions.

Auto-enrolment was due to be introduced on a staged basis in accordance with company size, with the smallest companies being included from April 2014. However, the revised timetable will see the smallest employers not beginning to have to enrol until May 2015.

As we have noted earlier on this website the actual timetable stretches over a long period and as well as relating to the size of the business depends on your PAYE reference number. You should check with the DWP site to properly confirm just when you need to enrol, although the DWP have undertaken to write to employers 12 months before their due date.

Lofstedt Review
This review was set up earlier this year to look at ways of reducing the burden of health and safety legislation on businesses in the UK

One of the outcomes currently being discussed in the media is that self-employed people should be exempt from health and safety regulations, and businesses should have the right to appeal to a new panel over decisions that affect them. The review also recommended a review of HSE approved codes of practice to make them more understandable and a ‘consolidation’ of regulations to lower the overall burden of red tape.

The TUC welcomed the conclusions of the report but took issue with the move to exempt self-employed workers, which it said would affect one million people and put many people at risk.

Unfair dismissals
The Government has confirmed that the qualifying period for unfair dismissal claims will increase to two years as from 1 April 2012, additionally, from April 2013, claimants will also be required to pay an initial fee of £250 to lodge a claim and a further £1,000 if a hearing is granted, though the fees will be refunded if the claim succeeds.

The declared aim is to reduce the number of "vexatious" claims which go through to tribunal, the Government believes that the introduction of the fees, together with the increase in the qualifying period, will result in 2,000 fewer tribunals each year, and a saving for business of £6 million.

Don’t forget that employees do not need any length of service qualifier to bring discrimination claims, this includes whistle blowing claims as recently noted on this website in a case featuring Eddie Stobart Ltd.

Changes to RIDDOR
Changes to the Reporting of Injuries, Diseases and Dangerous Occurrences Regulations 1995 (Riddor) will come into effect next April. From then employers will only need to report employee absence from work where it is for more than seven consecutive days following a work-related injury, currently this is after three consecutive days.

Reportable incidents cannot now be reported by phone and must be notified to the HSE using online forms on the HSE's website, although major incidents, serious injuries and fatalities can still be reported by phone.

In another move to cut costs the helpline telephone service ceased on 30 September.

Bribery Act
We noted earlier in the year (July) about new legislation coming into force with regard to employers responsibilities on bribery. The first case under this legislation has now come to the courts. The employee faces a charge of ‘requesting and receiving a bribe intending to improperly perform his functions’ in that he offered to leave a traffic penalty off the database for payment of £500.

Employers must show they have adequate procedures in place to prevent bribery as the Act includes a corporate offence of failure to prevent bribery by persons working on behalf of a business.

Holiday pay and allowances
For most people calculation of holiday pay is straightforward, where there is a variation in pay each week then employers can elect to pay an average of the last 12 weeks pay, this option is to try to ensure that someones holiday pay is as close as possible to the level of pay they have been earning. A recent case concerning airline pilots has highlighted the need for this comparability. The pilots earned a ‘flying allowance’ which was an allowance regularly paid to pilots as part of their duties. The ECJ has confirmed that this type of allowance must be included in holiday pay. An allowance which is paid for a specific and/or intermittent reason however would not qualify under this judgement eg payment for someone occasionally working away from home to cover inconvenience or anti social working hours.

October 2011 - A busy month!
As well as the introduction of the Agency Workers Regulations and the final full implementation of the removal of the Default Retirement Age, which we have covered in earlier updates, 1 October 2011 also sees the annual change in the National Minimum Wage. From this date the rates of pay should be:

• Aged 21 and over - £6.08
• Aged 18 to 20 - £4.98
• Aged 16 and 17 - £3.68
• Apprentices - £2.60 if aged under 19 or in their first year

Agency Workers Regulations
If you use Agency workers you should be aware of these changes which will apply once agency staff have completed 12 weeks with the hirer and you should have had contact from and discussion with your agency worker provider. The requirement to match pay, holidays and working time with a ‘comparator’ is not retrospective so the clock starts ticking from 1 October 2011 for the 12 weeks. However there is an immediate requirement that agency workers are given access to standard employee benefits attached to a business location ie canteen, vending machines, rest rooms, transport arrangements etc and also that agency workers are given information on job vacancies and are able to apply for these.

Default Retirement Age
We have raised this topic before and not surprisingly there have been a number of media articles on this item. These range from noting the problems of dealing with older employees willing to work but not perhaps as capable as they have been and in particular the wider issue of the knock on effect for employment of the younger generations. I suspect this will not be the last we will be hearing about this particular topic.

NI Card has had its day
The plastic card showing NI numbers have now been phased out. Since September last year those applying for replacement cards have been sent a letter showing their number instead of a card and as of July HMRC are only issuing new numbers to adults by letter. Sixteen year olds will get cards up to the end of this year and from then on they too will only get a letter.

Social Media Sites and Employment
For some time now Bowness Hr Ltd have been adding in reference to social media sites in its employee documentation and there is a growing awareness that businesses can be negatively affected by postings on Facebook etc by vindictive or even just thoughtless employees.

Organisations not only need to protect their business from the poor publicity these postings bring but also from any liability arising from the harassment and bullying of other employees via social networking sites.

Depending on the size and nature of the company this can be addressed via the employee handbook or the IT policy. Much, though not all of these social media postings take place outside the workplace so it is important to understand the parameters of employer concern. This should focus on potential damage to the business's reputation, of its customers, and/or other commercial partners and on the disciplinary action which may result. No doubt as the expanding media business gives more and varying possibilities you’ll need to keep revisiting these policies to keep up to date.

Simplifying tax?
HMRC is consulting on proposals to integrate income tax and NICs following the Office of Tax Simplification making recommendations aimed at simplifying small business taxation. On 11 July, the Government issued a "call for evidence" document, this is intended to look at how much of a burden it is for small businesses to operate two different systems. The deadline for responses is 19 September 2011, proposals for consultation will be published later in the year. Further information can be found on:
http://www.hm-treasury.gov.uk/consult_income_tax_national_insurance_contributions.htm

A local case
This case concerns Eddie Stobart Ltd and one of the HGV drivers. The driver was instructed to spend three rest days at his depot because he had worked too many hours over a 17-week period. (Drivers are covered by the Road Transport (Working Time) Regulations 2005, rather than the standard WT R, and a breach of these regulations may be considered a criminal offence).

The driver believed that he was not required to remain at the depot because this would still be considered 'working time' and maintained he should be able to spend the time at home.

Two weeks later he was dismissed following complaints about his language during his time at the depot and his attitude during a training course. As Mr Ross had less than a year's service, he could only bring a claim for unfair dismissal under a different criteria to normal, ie victimisation discrimination ‘whistleblowing’.

The original employment tribunal dismissed his complaint, but on appeal, the EAT ruled that time spent at the depot should be classed as working time and the employer was wrong to demand that Ross spent this time there, the appeal was therefore allowed and the matter remitted to be re-heard entirely afresh by a different Tribunal.

Dealing with additional paternity leave logistics
Employers are now considering the practical implications raised with the additional paternity leave (APL) regulations. As noted previously these allow mothers to transfer some of their statutory maternity leave entitlement and pay to fathers. Most couples will have different employers so this will normally involve one employer checking with the other. It is most likely that this would be the father’s employer checking with the mother's employer that she is their employee, has been on maternity leave and for how long and when they expect her to return or a confirmation that she has returned to work

There is some concern that such enquiries may breach the Data Protection Act so in order to avoid any breach of the DPA, employers can ask employees to use a HMRC form (SC7) which requires certain confirmations and undertakings for both the father and mother and gives consent to passing of information across to the other employer. In order to be doubly sure when receiving a request for information you should not disclose this without informing the employee and gaining her/his permission. If they refuses permission, or ignores the request, the information should not be disclosed.

Employed or Self Employed?
An EAT case, Knight v BCCP has confirmed that there is no employment if there is no mutual obligation to provide and undertake work. Mr Knight, a taxi driver only received wages when he actually worked. He claimed statutory notice pay and the original tribunal decided he was a "worker" not an "employee" as there was no obligation on him to accept work or on the taxi firm to offer him work - and therefore he was not eligible to receive statutory notice pay. This decision has now been upheld by the EAT and confirms the principle of ‘no mutual obligation’ in the classification of employment v self employment.

Extension of youth work experience
The Government is extending the period which unemployed 18-21-year-olds can spend undertaking work experience without losing their benefits. Work experience may now be offered through Jobcentre Plus for up to 8 weeks. One in five of 16- to 24-year-olds is now out of work, the highest rate since records began in 1992.

Employment restrictions removed on workers from Accession States
As from 1 May, workers from the Accession States (also called the 'A8 countries') are now free to work in the UK, without any form of registration requirements or immigration restrictions, and also to claim benefits. (The A8 countries are as follows: Czech Republic; Estonia; Hungary; Latvia; Lithuania; Poland; Slovakia and Slovenia.) When they joined the EU in 2004, workers from any of these countries who came to the UK to work had to register with the UK Border Agency - this is no longer a requirement.

Nationals from Bulgaria and Romania are, however, still required to obtain work permits and register under the Scheme as these countries entered the European Union in 2007.

Check the small print when you change terms and conditions
Changes to terms and conditions of employment must be clearly communicated to employees and agreed by them. In Morgan v Network Europe Group Limited, Mr Morgan signed a statement of terms and condition of employment which incorporated the staff handbook. At that time the handbook said nothing about the right to lay off without pay. Three years later a new staff handbook was issued which did contain a lay-off clause. However although he signed to confirm receipt of the handbook the specific change was not drawn to his attention and the signature did not specify that he had read it or agreed to its terms. When he was laid off without pay, he raised a grievance and claimed he had not read the handbook and did not know about the lay off clause and brought a claim of unauthorised deduction from wages. Although the tribunal originally found that he had accepted the change (by continuing to work without protest) the EAT disagreed. The reasoning there was that although he continued to work for a further year he had not necessarily accepted the new clause as this did not affect his day to day working life.

When changing terms and conditions, it is important to draw the employee's attention to these and ask them to sign to confirm receipt of the document and agreement to its provisions (or get a new statement/contract signed).

Bribery Act finally in force
The Bribery Act 2010 will come into force on 1 July 2011. It covers four main offences which may be committed in the UK or overseas:

• offering, promising or giving a bribe
• receiving a bribe
• bribing a foreign public official
• failure by a commercial organisation to prevent a bribe being paid for or on its behalf.

The Act does not prohibit corporate hospitality provided it is reasonable proportionate to your business. You will however need to review your business and if necessary show you have adequate procedures in place to prevent bribery though it is accepted that many businesses will not need a procedure as they would be able to show they have assessed the risk and it is negligible.

Guidance for employers has now been published and can be found at:
http://www.justice.gov.uk/guidance/docs/bribery-act-2010-quick-start-guide.pdf

Company car fuel rates
HMRC has announced new advisory fuel rates for Company cars with effect from 1 st June 2011 although until 1 July you may use either the new rates or the previous ones

Engine size (petrol /LPG):

• 1400cc or less: petrol 15p; LPG 11p
• 1401cc to 2000cc: petrol 18p; LPG 13p
• Over 2000cc: petrol 26p; LPG 18p

Petrol hybrid cars are treated as petrol cars.

Engine size (diesel):

• 1600cc or less: 12p
• 1601cc to 2000cc: 15p
• Over 2000cc: 18p

The rates will now be reviewed four times a year(1 March, 1 June, 1 September and 1 December) and published on the HMRC website http://www.hmrc.gov.uk/cars/advisory_fuel_current.htm

Agency workers
The changes to Agnecy worker rights has been trailed for a long time now. Agency workers will have the right to receive the same basic employment and working conditions (eg pay, rest periods and holidays) as ordinary workers on open-ended contracts, once the worker has been engaged for 12 weeks in a role with the same hirer. Final guidance has now been received on the Regulations which come into effect on 1 st October 2011 and these confirm that the 12 week qualifying period will only begin at 1 st October 2011 with no backdated rights.

Some recognition for small businesses!
From 1 April 2011 businesses with less than 10 employees and also any start-up businesses will be exempt from any new domestic regulations for three years, giving them more time to adjust to the changes. These exemptions were announced as part of the Government's "Growth Review", set up to encourage business growth. So some good news perhaps and a little bit of a breathing space – especially for the next three years whilst we wait for the first of the new legislation to kick in…..

Minimum wage increases announced
Due warning of the next increase in NMW which comes into effect from 1 October 2011:

• adult rate currently £5.93, will go up to £6.08 per hour
• 18-20 year olds currently £4.92 will go up to £4.98 per hour
• 16-17 year olds currently £3.64 will go up to £3.68 per hour
• apprentice rate currently £2.50 will go up to £2.60 per hour

Additionally the accommodation offset will increase from £4.61 daily rate to £4.73 per day.

Changes of statutory rates
A reminder of increases in statutory rates this month - As from 6 April 2011 statutory sick pay increases from £79.15 to £81.60 per week and statutory maternity, paternity and adoption pay increases from £124.88 to £128.73.

Unfortunately the very useful and welcome help to small employers when paying SMP (the compensation paid to cover additional administrative costs of paying SMP) has been reduced from 4.5% to 3% from 6 April 2011. The reduction applies to payments of SMP made on or after that date.

The budget also brought an increase in the mileage rates for business mileage in the driver's own vehicle up to 45p per mile for the first 10,000 miles (and 25p per mile thereafter, as before).

Reminder of possible increase in paternity leave
Fathers of babies born or due from now on (including adoption) will be entitled to take up to 26 weeks’ leave, by taking on part of their partners maternity leave. Providing their partners have returned to employment 20 weeks or more into their maternity leave fathers can take up to 26 weeks leave.

Effectively this means that each parent can potentially take six months off work. Fathers taking advantage of these new rules have the first three months of their leave paid at the statutory rate of £128.73 a week, this brings them to the 39 weeks of entitlement to paid maternity leave so the last three months will be unpaid.

Another reminder
We’ve talked about this before but it seems many people don’t appreciate just how the abolition of the default retirement age will affect how they deal with employees at the end of their working life.

Employers will no longer be able to compulsorily retire staff at the age of 65. It may be possible to retain a retirement age of 65 or some other age but it will have to be shown to be justifiable and as yet it is not clear what will be required to show this.

It is likely that many businesses will not be able to have a specified retirement age and the result of that is that unless your older employees retire gracefully when both they and you are happy to see them go you may find yourself in the difficult situation of ending the relationship by means of dismissal probably on the grounds of performance or capability.

Many small employers do not have performance or appraisal processes in place or capability procedures – the changes to the retirement age will mean that it will be more important than ever to monitor and record performance regularly and talk with staff openly and honestly about performance issues.

Drop in Tribunal cases?
The government have listened to some long standing complaints about the increasing numbers of claims going through the Employment Tribunal system and has launched its strategy to tackle this with a consultation document, ‘Resolving Work Place Disputes’. Additionally new claims must be submitted (on a shorter version of the ET1) to ACAS with a mandatory one month pre-claim conciliation period. This should help reduce the numbers going forward to Tribunal.

The proposals include:

• Introducing a fee for Claimants when they issue proceedings;
• Extending the power tostrike out or order a deposit at any stage (possibly without a hearing);
• Costs limit (in specific circumstances) to rise to from £10,000 to £20,000;
• Failure by a Claimant to accept a reasonable offer will attract financial penalties (akin to the procedure in the civil courts);
• Employers being fined up to £5,000 (on top of damages) if they lose a case;
• Possible automatic financial penalties for employers found to have breached employment rights and a review of Employment Tribunal awards and statutory redundancy payment limits.

The proposal to increase the minimum qualifying period to bring an unfair dismissal claim from the current one year’s service to two year’s service has been viewed as unwelcome by many as it could unfairly penalize employees with a genuine case without necessarily easing the overall burden on employers. In any case some claims that do not require any service, such as sex discrimination or whistle blowing claims will not be affected.

By extending the jurisdictions in which judges can hear claims alone (including unfair dismissal claims) and taking witness statements as read the actual time taken in a tribunal should be shortened. The payment of expenses for witnesses attending tribunal is to be withdrawn and introducing the use of legal officers to deal with some of the Judges’ simpler functions should also freeing up more time for judges to concentrate on dealing with claims.

NMW – naming and shaming
Employers who deliberately flout the national minimum wage law may be named and shamed in the press, as well as being prosecuted. Whilst this is not an alternative to prosecution, (employers will not be named while proceedings are underway) a press notice will be issued immediately if they are successfully prosecuted. The aim is to raise awareness and deter employers who would otherwise be tempted to flout NMW law.

New rates
As from 1 February 2011, the following rates increased:

• a 'week's pay': for the purposes of a basic award or a redundancy payment will increase to £400, bringing the maximum redundancy payment to £12,000
• unfair dismissal: the new maximum compensatory award for unfair dismissal increases to £68,400
• the maximum unfair dismissal award (basic plus compensatory award) is £80,400
• the minimum basic award for certain unfair dismissals (eg dismissals for trade union membership or activities) will increase to £5,000
• guarantee pay increases from £21.20 to £22.20 per day.

From 3 April 2011, the standard rates for Statutory Maternity Pay, Statutory Paternity Pay and Statutory Adoption Pay will increase to £128.73. The daily rate will be £18.39.

From 6 April 2011, Statutory Sick Pay will increase to £81.60 and the lower earnings threshold will rise to £102 per week.

Also new tax and NICs rates and thresholds for 2011/12

• The personal allowance for under 65 year olds will be £7,475.
• The basic rate limit increases to £35,000. There is no change to the higher rate limit ( currently £150,000).

• The higher rate tax threshold i.e. the sum of the basic rate limit and the personal allowance will therefore be £42,475, NICs upper earnings limit will be reduced to this
• The advisory fuel rates have changed with effect from 1 March 2011. The new rates are on the link below.
  http://www.hmrc.gov.uk/cars/advisory_fuel_current.htm

Support from CBI Director General
On his first day in the job John Cridland the new director-general of the CBI has said that small firms are key to growth and that a central part of his role would be to lobby for further cuts in red tape.

"Clarity from the government on employment regulations is absolutely vital for companies to take on more people and create new jobs, I will be making it my mission as head of the CBI to shine a light on how some employment laws are holding back businesses, particularly small and medium-sized ones. Nearly two-thirds of all new jobs are created by smaller firms, but these companies are disproportionately affected by decisions such as the removal of the default retirement age and by our broken tribunals system."

Confidentiality clauses
A recent case highlights the value of confidentiality clauses in contracts of employment ensuring that employees are in no doubt that they should not break any confidentiality either during or after employment.

Increase in payments
We start the back to reality process with confirmation of an increase in various statutory payments.
As from 11 April 2011 Statutory Sick Pay will increase from £79.50 to £81.60
At the same time Statutory Maternity, Paternity and Adoption Pay will increase from £124.88 to £128.73

Local case hits the news
A local case has been hitting the national HR press as it defines a useful principle when dealing with dismissal cases relating to age. As you may have seen in the press Mr Woodcock was made redundant and in order to save costs his dismissal date was brought forward to avoid him qualifying for a very much enhanced package on reaching his 50th birthday. Mr W brought an age discrimination claim but this was not successful and it was found that taking account of the increased costs was a justifiable consideration in themselves. So a useful element of common sense in the employment tribunal world and an acknowledgement that businesses do have to be financially viable to survive.

Proof of Identity changes
You will be aware that when recruiting you must ask all applicants to prove that they are entitled to work in the UK. The UK border Agency has updated its guidance – nothing major but sample images of the various documents used to prove the right to work have been updated and there is confirmation that expired passports can be accepted as proof of status. Don’t forget that you must ask for proof of identity from all candidates in order to ensue you are not discriminating against anyone with a foreign sounding name or other indication of non entitlement. The UKBA website is a useful source of information . http://www.ukba.homeoffice.gov.uk/sitecontent/documents/employersandsponsors/preventingillegalworking/

Mileage payments
The HMRC advisory rates for mileage payments for business travel in company cars increased from 1 December 2010. These apply where employers reimburse employees for business travel in their company cars, or require employees to repay the cost of fuel used for private travel.

National Minimum Wage increase?
The TUC has proposed that NMW should rise to £6.14 per hour (3.5%). At a time when Ireland have cut its minimum wage in a bid to help increase employment, paradoxically the TUC claim that this level of increase will benefit female workers, those from ethnic minority backgrounds and disabled workers and ensure that low paid workers do not drop behind the rest of the workforce. They also argue that this will boost consumer spending as low paid workers generally spend their money within the local economies as well as reducing costs through tax credits and other in-work benefits.

Bank Holiday conundrums
As though we hadn’t enough to think about with the snow and ice the Christmas bank holidays and the new public holiday promised for Will and Kate’s nuptials are causing some head scratching…Because Christmas Day and Boxing Day are weekend days the official bank holidays are Monday 27th and Tuesday 28th. This is OK for those with a five day working week but for the many who work seven day weeks often including bank holidays you need to be clear about which days count as the bank holiday. If your contracts state that you pay enhanced premiums for working on a bank holiday rather than specifically stating Christmas Day and Boxing Day this would really mean the enhanced payment should be made on the Monday or the Tuesday – probably not what your staff would feel was the fairer way which is Christmas Day and Boxing Day themselves. It is worth making sure that you and your staff understand just what is to be paid when.

So then we get to the extra holiday we’ve been promised for this year – and if your holiday year runs January to December then you need to think about this one as well….

One problem is that tacked onto Easter and the May Day Bank Holiday this extra day gives a long period off work without using much actual leave so there could be a rush on for those dates….you need to ensure you have the processes in place to organize this and that staff understand that it is ‘first come first served’ for booking this time or whatever process your handbook says is in force and get agreements up front on how this period will be organised.

To add to the complications the employment lawyers are already pointing out that under some contract wording employees do not need to be given the extra day!

The argument is that if your contracts set out holidays as ’28 days inclusive of public holidays’ the argument is that this would include the extra holiday so essentially employees would lose one of their ‘normal’ holiday days. If the contracts state ’20 days plus public holidays’ then you would have to pay for the extra day. There is no statutory right to enhanced payments or time off in lieu for public holidays so you can interpret your contracts on this basis.

Whilst no doubt legally correct my view is that the good will you would lose by depriving your staff of this extra day would more than outweigh any savings on not allowing them to have the holiday on the basis of a conveniently worded handbook!

Retirement and Pensions
You may have seen a couple of big news items recently though as usual the media headlines don’t necessarily give the full or even the correct story. You will have heard, and we have discussed here that the default retirement age is due to be scrapped from 1 October 2011. What is not necessarily so well advertised is that transitional provisions will come in from 6 April 2011 to 1 October 2011.

This means that if you have employees who are 65 or over, you should consider whether you want to retire these employees prior to the default retirement age ending so you can have a fair reason for dismissal, relying on current legislation.  If you think this is beneficial for your business you should serve the appropriate notice on the employee no later than 6 April 2011 otherwise you will not be able to rely on retirement as a fair reason for dismissal.

After 1 October 2011 you can no longer dismiss an employee simply because they had reached the age of 65, you would need to show there was some other fair reason such as performance or misconduct and of course you would have to go through the proper procedures for such a dismissal.

Before you get too hot under the collar there is a chink of light in that a recent European Court decision seemed to uphold theprinciple that retiring someone at a default agewas lawful, in that it was a proportionate mean of achieving the legitimate aim of offering workers a foreseeable retirement and preserving staff flexibility for employers.

Whether this argument can be established in UK courts remains to be seen cases heard after the DRA is scrapped will be closely watched.

Pensions
Another issue which hit the headlines this month has been the introduction of auto enrolment for pensions with headlines stating ‘All companies MUST do this by April 2012.’ As usual this was only partly true. As trailed here recently there will be a phased introduction of the requirement to provide a pension for employees starting with the largest businesses in April 2012 and then smaller firms over a timescale which goes out as far as 2016. Furthermore new businesses that are set-up between April 2012 and March 2016 will be brought in at the end of the staging period, to allow them time to establish themselves before coming under the duties.

What has been recently agreed is an optional waiting period of 3 months before they must be enrolled though employees can decide to join immediately if they wish.

It’s that time of year again… National Minimum Wage Update (October 2010)
It seems no time since last October when the annual changes to the NMW come into effect! This time there is more than just a change in rate as the age bands have changed – so be careful you don’t overlook this!

Instead of the full adult rate applying to 22 year olds staff will now only have to be aged 21 to qualify for the full adult rate of pay, so the new rates are:

(note the term ‘worker’ rather than ‘employee’ a reminder that NMW applies to causal workers or others who come under the worker definition as well as to employees – though not of course to contractors working on a self employed basis)

Also where you provide staff accommodation the daily allowance which can be offset against the NMW increases to £4.61 for each day accommodation is provided.

There is now a minimum wage rate of £2.50 per hour for apprentices under 19 years of age, or aged 19 and over but in the first year of their apprenticeship. (Other categories of apprentices already receive the National Minimum Wage appropriate to their age.)

Clarification of Worker vs Self employed
The vexed question of whether or not someone is self-employed and the attendant implications under IR35 rules has had some clarification. In Community Dental Centres Ltd v Sultan-Darmon, the EAT has ruled that a person with a contract which includes an "unfettered right of substitution" cannot be classed as a "worker". By implication this also means they cannot be classed as an employee.

Dr Sultan-Darmon's contract contained a clause which allowed him to arrange for a locum to use the surgery facilities if he was not going to use them himself for a continuous period longer than 5 days (excluding annual leave). If this occurred he would be responsible for paying the locum to take his place.

The EAT looked at a number of previous cases and decided that "the unfettered right" to appoint a substitute means that he cannot be a "worker". Dr Sultan-Darmon could freely delegate his duties and so the "personal service element" of the relationship was missing. This confirms one of the ‘tests’ of self employment - a genuine right of substitution – where this exists, there cannot be worker (or employee) status.

Good News
Just to blow my own trumpet a little I have recently been awarded SFEDI accreditation - a business award made under the auspices of the Institute of Leadership & Management. (www.sfedi.co.uk). SFEDI is the Government recognised UK Standards Setting Body for Business Support and Business Enterprise and is run by entrepreneurs for entrepreneurs. SFEDI sets the standards for business and learning support, seeks out good practice, researches and describes the competences needed to succeed in your own business so I was really please to achieve this after some scary assessments and undergoing some testing of my overall business knowledge!

This has now led to an invitation to join the IOEE (Institute of Enterprise and Entrepreneurs) a new body set up to raise the profile of small businesses and provide mutual support for members. I look forward to some discussions with like minded members… perhaps you’d like to join!

Equality Act - 1 October
The majority of the Act is to be implemented on 1 st October - one of the main areas you should be aware of is asking about a prospective employees health before offering work or carrying out shortlisting.

It will be unlawful to ask questions (verbally or in writing) about an applicant's health other than in limited circumstances. This would be where it is necessary to check that an applicant can carry out an ‘intrinsic function’ of the job – in these cases you may ask about this aspect e.g. about back problems or other skeleton muscular issues if heavy lifting is involved as a necessary part of the job. If you were to ask an unlawful question about health at interview or in carrying out shortlisting or in taking up of references prior to making a job offer and the applicant subsequently does not get the job then the applicant may bring a disability discrimination claim.

A Reduction in Future Legislation?
The new Government have announced details of a new approach to regulation.  From 1 September 2010, the Government cannot introduce regulations that will incur further costs on businesses, without removing current regulations with an equivalent cost.

This ‘One In – One Out’ rule will initially apply to domestic legislation, however, they may expand this to include European legislation in the future.  In any case it is being claimed that ministers may take a “rigorous approach” to policies and regulation from the EU in the future.

Additionally as the new Government looks at the regulatory burdens on an initial review of the right to request time off to train has resulted in a consultation process taking place with employees, businesses and other interested parties.

There will be a consultation period closing on 15 September.  Currently, employees have a legal right to make a request for unpaid time off to study or train where the employer employs 250 or more people but this was due to be extended to all employees on 6 April 2011.  In light of the consultation, the future of the scheme now looks uncertain.

Dealing with Sickness Absence
When I work with clients setting in place a staff handbook they are often surprised at how much employers can do to reduce sickness absence, they often think this is just another cross for the employer to bear. However you can put in place some quite simple measures which have been shown to reduce sickness levels.

A recent workforce survey revealed that 1 in 5 employees has admitted that their last sick day was for a non genuine reason.  Interestingly men are more likely to take a ‘duvet day’ than women and perhaps not surprisingly Mondays and Fridays are the most popular days for a ‘sickie’.

Simply having a handbook with a policy on sickness can help, making it clear that there are consequences for repeated sickness absence and reserving the right to ask for a report from a GP if warranted can be a deterrent in itself

Having a ‘Return to Work’ interview on return (even just for a one day absence) has also been shown to reduce absence. Knowing that you have to look the boss in the eye and claim ‘must have been a dodgy prawn sandwich’ face to face rather than sidling back in with a ‘Hiya I’m back!’ can make the decision to stay under the duvet not quite so attractive. From the point of view of the genuine sickness absence it also gives the employer the chance to check the employee is actually fit to come back into work and they are not trying to come back too early and whether they would benefit from any adjustments to work routines or a phased return.

Keep records for each employee so that you can refer back to patterns of sickness, often people don’t actually tot up just how much sickness absence they have had - highlighting dates of absence on an annual leave chart can be quite an eye-opener!

Provide in your handbook for the option to discipline employees who do not attend on a regular enough basis, if they cannot attend for a reasonable proportion of the year they are breaching their contract. A disciplinary hearing can make employees aware that their levels of absence are unacceptable and they can be warned of future consequences if they do not improve. Obviously you will need to be fully aware of the Disability Discrimination Act requirements.

The new fit note regime should allow you to work more closely with the medical profession to manage illness and injury absence and get employees back to work more quickly.

PAYE Deadline
Don’t miss out on your PAYE deadline – the period of grace which used to be allowed by HMRC to take account of postal delays or other reasons beyond the business’ control has been withdrawn as the majority of employers now have to file returns on-line. From March 2011 there will be no ‘grace period’ returns will be due on 19 May each year.

Retirement Age
Big news this month on retirement age and a lot of discussion has been provoked. You will no doubt have read much of it. There will be consultation up until October this year with a view to the new legislation coming into effect from October next year. There will be some phasing of the changes to cover employees and employers already within an agreed notification period.

Personally my concern is the uncertainty now facing small employers in terms of workforce planning and also on just how they will be able to part company from long serving employees. It would seem from the details trailed so far that employees who keep on working and choose not to resign even if they are perhaps not able to fully carry out the range of duties required will need to be dismissed through capability procedures.

This would mean that a previously good relationship which may have ended in mutual if slightly reluctant agreement will become confrontational and there will be an inevitable effect on other employees. Additionally of course from the employers perspective there will be a requirement to pay notice which in a performance management situation may well mean paying in lieu of working the notice period.

There will be an option where employers can choose to retain a contractual retirement age where it is a proportionate means of achieving a legitimate aim – it is unlikely however that many businesses will be able to bring sufficient proof to qualify under this, it will be expected to be the exception rather than the rule.

Equality Act 2010
After some uncertainty when the new government came to power it has now been confirmed that the Equality Act 2010 will go ahead as planned, with the first implementation taking place on 1 October 2010. As noted in previous updates the Act brings together nine discrimination laws and aims to make it easier for employers to comply with discrimination law.

The Budget
One of the big talking points from the budget is the Government announcement that it will speed up the increase in the state pension age for men to 66, possibly bringing this in by 2016 (the previous government had set the date for this as 2024 and then to 68 by 2046). They have also announced they will consult on how to stop employers forcing workers to retire.  A review chaired by Labour's former work and pensions secretary John Hutton will determine when the pension changes will come in.

The current default position on retirement age allows retirement at 65 and it is this which the new government have indicated may well change or be scrapped. The CBI continues to call for the default option to remain so that employers can better plan their business costs, however opinion polls seem to show a majority wanting the default age to be scrapped and with the speeding up of the increase in state pension age there will be an inevitable iknock on in those who wish or probably need to remain in employment until their state pension takes effect. Watch this space!

Enforcing Tribunal Awards
A new Employment Tribunal Fast Track scheme through the High Court Enforcement Officers has been introduced. This is in recognition of the high number of employers failing to pay awards. Under the new scheme, unpaid Claimants will have the support of specialist High Court enforcement procedures to assist them in getting their awards paid. The only cost will be a fee of £50 if a writ is needed to seize assets.

Disciplinary Proceedings
This is always a difficult area and recent cases don’t really help to clarify things. The Employment Appeal Tribunal has overturned the decision of an Employment Tribunal and ruled that where an employee is being investigated by the police at the same time as facing disciplinary proceedings, the employer can be allowed a ‘wide discretion’ on whether they continue proceedings or postpone the disciplinary hearing until after the police investigation has been completed. This is a difficult situation as such matters can take months to be completed and if an employee is suspended this must be on full pay, but there is a risk if employers take action prior to a resolution of the issue in the courts that they have acted prior to facts being fully established.

World Cup and the workplace
World Cup Fever seems to be exercising the minds of many employment law experts with lots of advice on what to do and not do in relation to employees trying to keep up with the matches as they are played.

As a total non sports person I do wonder how we draw the line between seemingly a pervading expectation that employees should be given special treatment for the World Cup against for instance Wimbledon or the Grand Prix or perhaps for some things closer to home, but just as important to individuals, children’s birthdays, graduation ceremonies or even, having seen a recent TV programme, time off to carefully nurture a giant onion ready for The Show!

Anyway for those who have concerns there is advice from ACAS and some current views at www.acas.org.uk/worldcup. I think my only advice would be decide well in advance how you want to deal with this and let employees know where they stand so everyone is clear.

Paternity Leave changes
These changes come into effect for children born on or after 3 April (or matched for adoption at this date). From this point fathers can take additional leave of up to 26 weeks in total where the mother has returned to work and not used up all her entitlement to leave and to SMP.

The earliest that leave can be taken is from 20 weeks after the baby is born and it must be completed by no later than 12 months after the birth. It has to be taken in complete weeks with a minimum period of two weeks. Additional paternity leave will be paid at the same rate as SMP and will be paid to the father in the same way as it is currently paid to the mother. The father has to give eight weeks notice to the employer of his intention to take this leave.

Obviously the first question employers may ask is how they will know what the other half of a partnership is doing within their employment. This is proposed to be covered by virtue of the father and mother both completing self certification forms and an agreement that the father’s employer can check with the mother’s employer.

Recruitment
Just a reminder that when you are recruiting you should ask to see the necessary ‘approved documents’ to show entitlement to work in the UK. To ensure that there is no unlawful racial discrimination you should ask for these documents as a routine part of recruitment even where the candidates are seemingly of UK or EU nationality.

The checks must be made before the employment begins and you should ensure you see the original documentation and that the information contained in them is consistent and any expiry date has note passed. You should keep a photocopy of the document signed and dated to note who saw the original and when.

Equality Bill approved
The Equality Bill was approved on 6 April in a legislation ‘wash-up’ prior to calling the election. The Bill has now been sent for Royal Assent after which it will become the Equality Act 2010 and will begin to come into force from October 2010. Key provisions for employers include:

Multiple Discrimination - The Act will consolidate and replace the 9 existing pieces of legislation covering discrimination and there will be a new concept of Multiple Discrimination where a claim can be based upon discrimination because of a combination of protected characteristics.

Positive Discrimination allowed in Recruitment - Employers will be able to apply positive discrimination by selecting candidates from under-represented groups. This will be where two or more candidates are of ‘equal suitability’.

‘Protected Belief’ - a code of practice is to be published setting out types of belief capable of being protected from discrimination consistent with that currently offered to religious groups. The current draft code of practice suggests protection for vegans and atheists, amongst others.

Gender Pay Gap Audits - From 2013, employers with more than 250 employees will have to publish an audit noting any disparity in pay between male and female employees where they have failed to show progress in closing any gender pay gaps. Public Sector bodies will be required to report on gender pay gaps (in addition to other equality data) by April 2011.

Pay discussions - Some employers have a clause in their contracts preventing employees from discussing their pay with colleagues. The Act will ban these clauses. The idea is to ensure that women check with male colleagues to establish if their pay is equal.

Health Questionnaires - Employers will no longer be able to ask any health related questions during recruitment that are not directly applicable to the job role. This means that those with a disability will not have to disclose this prior to being made an offer of employment.

Pension Changes
The Pensions Advisory Service has confirmed that the government will abolish contracting out of the State Second Pension from 6 April 2012. From then, members of defined contribution occupational pension schemes, contracted-out personal pension schemes and stakeholder pension schemes will be brought back into the State Second Pension automatically. This will only apply to future state pension benefits, it does not affect contracted-out rights already built up at 6 April 2012.

Alongside this NEST as trailed a couple of months ago is a little further along in the detail. The expected annual management charge is 0.3% of the value of the fund. Rather than paying start up costs, the government will make a loan to NEST and the initial level of charges will include a 2% additional charge on all contributions (employer and employee) to repay this.

Statutory Pay and National Minimum Wage increases
The standard rates of statutory maternity, paternity and adoption pay have increased with effect from 4 April 2010, The change takes the rate up to £124.88 per week (formerly £123.06 ). Statutory sick pay (SSP) however remains unchanged and continues at £79.15 per week.

As a heads up on future changes the National Minimum Wage will increase from 1 October 2010, there is also a change in the age bands so be careful to check these as well as the rates, the adult band now includes 21 year olds

• adult rate - aged 21 or over - £5.93 (up from £5.80)
• aged 18-20 - £4.92 (up from £4.83 per hour)
• aged 16 and 17 - £3.64 (up from £3.57)

Part-time working
A recent case has shown that you need to be very careful when looking at requests for part time working from female employees. There have been a number of past cases where this has been seen as indirect discrimination as more women than men are unable to work full-time.

In the latest of these Miller v Bellway Homes Ltd Ms Miller, who was show homes manager, worked part-time but had worked full time as a sales manager prior to going on maternity leave. Following a redundancy situation one of the sales managers volunteered for redundancy and Ms Miller was offered his role, provided she took the post on a full-time basis. Ms Miller refused to accept a change to full-time working and was made redundant.

Since a requirement to work full-time is indirectly discriminatory, Bellway had to be able to objectively justify the requirement of full-time work - it failed to do this and so Ms Miller won her claim of unfair dismissal and sex discrimination. The important part here is the need to objectively justify the need for full time working, if there is a pressing and genuine need then you can make the case but you must be very aware of the dangers.

Sick leave and holidays
A recent case seems now to show how tribunals are viewing the ongoing confusion over taking or not taking holidays whilst sick and carrying over any untaken holiday due to sickness absence. The UK Working Time Regulations state that if any employee does not take their statutory leave during the leave year, then the basic 20 days of statutory leave is lost.

We now have the first UK tribunal case on this, Shah v First West Yorkshire. Mr Shah was off work for three months between January and April 2009. He received contractual sick pay, apart from a pre booked period of annual leave, when he received full holiday pay. His holiday year ran from April to end March. He tried to claim back four weeks' holiday that he had previously booked and this was refused so he brought a claim. The tribunal found that: "Shah is entitled to take the holidays which he was prevented by ill-health from taking in March of 2009 at some subsequent time in the following leave year."

This case therefore does suggest that tribunals are prepared to comply with EU law regardless of what the UK legislation in relation to WTR says. To follow best practice and minimise risk employers should consider changing their policies to allow leave to be carried forward due to illness.

A slightly different Easter NESTegg….
The new national workplace pension scheme is to be introduced from October 2012 onwards. It will be called the "National Employment Savings Trust" (NEST) presumably to encourage us to think of it as a cosy nestegg for the future.

NEST will be phased in over five years the largest businesses from October 2012 and the smallest employers having up to 2016 to comply plus small business start-ups will have additional time. Employer contributions will also be phased in – starting from 1%, to the full 3% by 2017. It seems a long way off but it’s worth looking at what this may mean to smaller businesses.

The ‘Fit Note’ brings new responsibilities
As trailed some months ago the traditional sick note will be replaced with the ‘fit notes from 6 April 2010. Doctors can certify that an employee is unfit for work or MAY be fit for work. The second option can be supplemented with advice on helping an employee back to works such as phased return, part time work or adjustments in the work place.

The advice needs to be taken on board as if an employer fails to make reasonable adjustments they could be subject to a claim under the Disability Discrimination Act. There will be guidance issued on this but it is clear that more emphasis is now placed on employers ensuring they look carefully at the work environment and actively manage those returning from sick leave, particularly where this has been for a prolonged period.

The value of a well drawn up contract
A recent employment tribunal decision underlines the value of having a well drawn up contract to rely on. Asda introduced new terms and conditions for some staff during a process of harmonisation. Most staff accepted the new terms but a small group did not. Asda unilaterally applied the new terms relying on a clause in its contract which "reserved the right to review, revise, amend or replace the contents of this handbook, and introduce new policies from time to time reflecting the changing needs of the business". Asda relied on this clause to allow them to impose changes without the express consent of the employees, and the tribunal upheld their position. There was of course a proviso in this decision which was that this power should not be used arbitrarily, maliciously or capriciously with the expectation that all efforts are made to reach agreement prior to any unilateral imposition. It is important that it can be shown that due process has been followed or there could be a claim for breach of the implied duty of mutual trust and confidence which underlies all contracts of employment.

National Minimum Wage
Just a reminder that when an employee receives the minimum wage it must be their basic rate – if the minimum is reached by adding in a premium say for unsocial hours or carrying out an additional task this is not allowable even if this is paid for all the work carried out. Minimum wage level is the base rate of pay for the job.

Disability Discrimination
Following an earlier case coming to the Employment Appeals Tribunal it has now been decided that the Disability Discrimination Act can be interpreted to cover ‘associative discrimination’ - ie discrimination or harassment of an employee on the grounds of the disability of another person. This brings it into line with other discrimination such as race, religion or belief and sexual orientation where associative discrimination is already recognised. Employers should ensure that they do not discriminate against employees with caring responsibilities for disabled persons. Requests for flexible working should be looked at very carefully in these instances. A carer would not however qualify for the requirement of an employer to make "reasonable adjustments" in the workplace.

Self employed v employee
A recent case has again highlighted the situation of the ‘sham’ contract and tribunals have been advised to consider the actual obligations rather than the words in the contract. In Autoclenz v Belcher, contracts were in place between Autoclenz and valeters which included the right to send a substitute to carry out their work and indicating that there was no mutual obligation i.e. Autoclenz did not have to provide work to them and they did not have to do any work that was offered. This would normally be a good ‘proof’ of self-employment. In reality though the valeters could not actually send a substitute and they were expected to do the work that was offered to them. They were seen to be integrated into the company, and a degree of control was exercised where they were required to notify the company if they were not going to turn up for work. The EAT deemed this to be 'wholly inconsistent' with their express written term that there was no obligation for them to perform any work, and that the written terms did not reflect the true agreement between the parties. The Court of Appeal agreed and decided that in reality they were in fact employees. Where you have work carried out by self employed individuals you should check that the terms of the contract are actually reflected in the working practices.

Sickness absences and holidays
Two recent European Court of Justice (ECJ) cases have now resulted in rulings that mean that in some circumstances holiday entitlement should be allowed to be taken in the next annual leave year despite the UK Working Time Regulations which state that it is unlawful to carry over more than eight days per year.

Last week, in the case Pereda v Madrid Movilidad SA , the ECJ ruled that workers who fall sick while on holiday should be allowed to take their leave, even it if meant carrying it over to the next leave year. This is in addition to a ruling earlier this year as discussed on this website (see Previous Updates), Stringer v HMRC , which ruled workers can accrue holiday pay while on sick leave, and that holiday should be allowed to be carried forward.

The WTR requirement that no more than eight days can be carried forward into the next leave year, means there is a confusion in the law until UK case law clarifies the situation. Employers have to decide if they take the risk of a tribunal taking their guidance from European law or removing current terms and conditions which do not allow holiday to be carried over or which require sickness days during a holiday period to be treated as holiday. Obviously complying with the latest rulings will mean businesses are at risk from a minority of employees who claim illness during a holiday period and then take that holiday period at a later point. The best advice is to strictly enforce a requirement to have a sick certificate from a GP if employees claim they have fallen sick whilst on holiday, even if the illness is only for a few days and generally reinforcing procedures dealing with sickness absence .

Dismissal
It is worth noting that there has been a change in the definition of an effective date of termination. This may not seem to be very important but it is the date used to check if someone has the right to bring a claim for unfair dismissal. It can therefore mean the difference between a case being heard or not. In a recent case Gisda Cyf v Barratt the court of appeal has confirmed that the EDT is the date that the dismissal is communicated, ie when it is received by the employee.

If you are not dismissing someone in person and actually handing them the letter of dismissal, you should always check you have a correct, up to date address and send any letter by recorded delivery to be sure they receive and have signed for the letter.

Tel: 07834 323058      E-mail: judith@bownesshr.co.uk

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