Labour party to ban zero-hours contracts

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Labour has proposed banning zero-hour contracts for employees working regular hours for longer than 12 weeks.

This pledge revises Labour’s previously proposed policy to entitle those working regular hours for 12 consecutive months to automatically move to a regular contract.

Under this new policy, 90% of an estimated 1.8 million people in the UK on zero-hour contracts would have the right to move to a regular contract if they wanted.

Labour leader Ed Miliband said: “If you are working regularly, you have a legal right to a regular contract”.

He added: “It [the practice of zero-hours contracts] is leaving people without a reliable income, not knowing from one day to the next how much work will be coming in, unable to plan from one week to the next.”

Critics of Labour’s proposed policy say, however, that banning zero-hour contracts will give UK businesses less flexibility.

“The UK’s flexible jobs market has given us an employment rate that is the envy of other countries, so proposals to limit flexible contracts to 12 weeks are wide of the mark,” CBI director-general John Cridland told the Guardian newspaper.

“Of course action should be taken to tackle abuses, but demonising flexible contracts is playing with the jobs that many firms and many workers value and need.

“These proposals run the risk of a return to day-to-day hiring in parts of the economy, with lower stability for workers and fewer opportunities for people to break out of low pay.”

The UK has seen a 20% increase in zero-hour contracts in the last year.

Labour has also pledged that its zero-hours bill would ensure that workers on zero-hours contracts are not obliged to be available over and above their contracted hours, are allowed to work for other employers, and are entitled to compensation if shifts are cancelled at short notice.

The only exemption from Labour’s zero-hour contracts bill, the party says, would be for employees – such as nurses – who specifically requested a zero-hours contract because they wanted to work at another hospital for example as well as their usual job.

Gender imbalance in IT sector growing

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The gender imbalance in information technology is gathering pace, with 37% of women working in the sector saying they have been passed over for promotion due to their gender.

While more than half of men (53%) working in the sector believe both genders have equal opportunities, three-quarters of women think men are offered more opportunities than women, according to research conducted by global IT recruiter Spring Technology, the UK’s largest technology staffing provider.

Psychometric testing company Thomas International conducted analysis for Spring Technology, looking at the differing behavioural characteristics of men and women in the sector. Many men working in the industry displayed higher levels of dominance-associated characteristics (being assertive, inquisitive, self-starting, direct, results-driven).

However, women working in technology demonstrated a higher frequency of influence-associated characteristics (being persuasive, talkative, demonstrative, optimistic). Spring Technology concludes these latter skills may not be valued as highly by employers looking for future leaders.

Only 3.6% of IT & telecoms directors are female, according to the ONSLabour Force Survey, while just 16% of professionals in the IT and telecoms profession are female. However, three in 10 (30.6%) web design and development professionals are women, proving that in some IT roles women are better represented.

“These findings demonstrate both the significant gender imbalance that exists in the IT sector and the scale of the challenge for employers seeking to address it,” said Richard Protherough, managing director of Spring Technology.

“Employers are missing out on a huge pool of potential talent and women are missing out on highly rewarding careers in technology. Employers need to recognise they are at risk of recruiting to type and be vigilant against it in order to encourage more women into the sector.

“IT functions need to ‘normalise’ women at the top by promoting a culture that advocates and supports the development and progression of women who are working in the sector,” said Protherough.

Belinda Parmar, CEO of Lady Geek, added: “This report shows that being proactive in encouraging young women into IT & telecoms occupations is more crucial than ever. We can’t be complacent; we need to show girls that technology is the most creative career you can have.

“We need to tell our girls that if they want to change the world, technology is the best way to do it.”

Holiday Pay and Commission – Important Case Law Development

The Employment Tribunal has handed down its decision in the case of Lock v British Gas Trading Limited.

In May 2014 we reported that the European Court of Justice (“ECJ”) had considered the Lock case and had held that holiday pay must include commission. The basis for this decision was that workers should not be financially disadvantaged when taking annual leave as this may deter them from taking the leave, which would be inconsistent with the aims and objectives of the Working Time Directive. The case followed on from the ECJ’s ruling in British Airways v Williams which stated that holiday pay should include all payments which are intrinsically linked to the tasks carried out by the employee.

The ECJ referred Lock back to our domestic Tribunal to decide (i) whether our domestic legislation could be interpreted in line with the ECJ decision and (ii) if so how holiday pay should be calculated to include the commission element. The ECJ stated that the national courts should determine for themselves how the commission element should be calculated but that this should be based on average commission earned “over a reference period which is considered to be representative under national law”.

It comes as no surprise therefore that yesterday’s decision of the Employment Tribunal concludes that commission must be included in the calculation of holiday pay (for at least the 20 days holiday conferred by European law). The Tribunal decided that it was possible to re-draft existing domestic legislation to include the requirement for commission to be taken into account. This has been achieved by a judicial re-drafting of the Working Time Regulations 1998 to add a new Regulation 16(3) (e) stating “as if, in the case of the entitlement under Regulation 13, a worker with normal working hours whose remuneration includes commission or similar payment shall be deemed to have remuneration which varies with the amount of work done for the purposes of s.221”. This therefore means that workers whose pay includes commission should have holiday pay calculated based on average pay (including commission) over the previous 12 week reference period.

Yesterday’s Tribunal decision states that the question whether the correct reference period should be 12 weeks (as is currently the case) or a longer reference period (for example the 12 months suggested by the Advocate General in Lock) will be considered at a later date.

The main point for employers to take from the above is that it is now certain that there is a legal requirement that they include commission payments in holiday pay calculations. Failure to do so will allow employees to bring claims for this shortfall in pay and such claims can currently be backdated (potentially indefinitely). This backdating is set to be limited to 2 years under new legislation which takes effect from 1 July 2015 but employees could issue claims before that date to protect their position and give them a stab at a longer period of backdated pay. Unless and until the position on reference period changes it appears that a 12 week reference period should be used for the calculations, however, this is a complex issue and specific legal advice is recommended.

If you have employees or workers who earn commission then this case will have a clear financial and legal impact for your business. This impact will include existing liability for holiday pay in respect of holiday taken in the future but also potential risk of claims for backdated holiday pay where commission has not been included in calculations historically. Employers should also think about the future financial impact and consider the commission schemes that they operate and which probably do not currently take into account the commission earning potential during annual leave. It may be possible to amend schemes so that overall the employer is not paying out any more than previously, for example by adjusting the earning potential to take into account that fact that an average of this will also be paid during the holiday periods. However, employers need to be aware that changes to contractual commission arrangements will involve a change to terms and conditions of employment and appropriate legal advice should be obtained before any action is taken.

This article was written by Nina Robinson, Head of Legal Services.

Business welcomes women on boards progress

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The number of women on boards has almost doubled in the last four years since the Lord Davies target was set.

In 2011 FTSE 100 companies only had 12.5% female representation. The latest annual report from Lord Davies found a 23.5% representation of women on boards.

Lord Davies said the rate of change in the FTSE 100 companies is “remarkable” and “FTSE companies are now making real efforts to seek out and unleash the full extent of this talent.”

He added: “We now have to increase the low number of [female] chairs and executive directors on boards and address the loss of talented senior women from the executive pipeline.”

Business secretary Vince Cable, who commissioned the report, said: “I am confident we will reach our target this year, but our work is not complete. British business must keep its eye on the long game, as we strive to achieve gender parity.”

Cable expects female representation to exceed a third by 2020. He added: “We must also focus on ensuring women are rising fast enough through the pipeline and taking up executive positions.”

The representation of women on FTSE 250 boards has more than doubled – up to 18% from 7.8% in 2011 – and there are now no all-male boards in the FTSE 100.

Eversheds partner Simon Rice-Birchall said although the change is encouraging “companies cannot afford to be complacent”.

“The EU Commission and parliament have been unimpressed by the pace of change and the threat of legislation has been looming for some time.

“The Commission thinks listed companies should be aiming for at least 40% female representation among non-executive directors and has proposed a new regime that would force companies falling short of the target to select a woman for a vacancy in preference to a man, when faced with a choice between equally-qualified candidates”.

However, Norman Broadbent CEO Sue O’Brien said equality won’t come by forcing women into executive and non-executive roles as it could look like “tokenism”.

She said the progress of Lord Davies’ report “must not be put in jeopardy through artificial mechanisms.”

ICAEW commercial executive director, Sharron Gunn highlighted the gender pay gap that shows further issues with gender equality in the workforce. “You can’t just evaluate success or failure on how many women are recruited into board positions,” she said.

“We still have a gender pay gap. Men are still far more likely to hold senior posts. We must look again at how businesses are developing their pipeline of female leaders.”

She suggest companies measure the success of their leaders by how well they support diversity and inclusion “that goes beyond women”.

She said: “They must reflect how they create work environments that inspire talented people, whether male or female and from whatever background, to become business leaders. This will also give them access to a pool of talent earmarked as future leaders.”

Institute of Directors senior policy adviser for diversity Lisa Buckingham agrees that diversity should not end with women. She said: “Companies need to be looking at how to recruit from a much wider talent pool, making sure their boards represent people across a range of factors such as age, ethnicity and social background. The business case for action is clear.

Building on the progress already made on gender representation is fundamental to shaking up the boardroom.”

Pensions freedoms: what to do now

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On 6 April pensions freedoms come into force. NAPF head of policy and research Jackie Wells says employers have a big role in play in helping people understand the new freedoms, but that NAPF members are “bewildered as to what they can and should do”.

She predicts no-one will have the full range of options in place for April, as it’s still unclear what the government’s guidance service, Pension Wise, will look like and there’s still legislation to be passed. “It’s horribly complicated and not something you can design a scheme for instantly,” she adds.

Here is what the experts say employers should be doing now:

Check the details

“Employers must look at their pensions scheme and understand how the changes impact it,” says Linklaters managing associate Jacqueline Reid. “You have to bring in opportunities for people to take flexible benefits. It is a trustee decision, but in practice trustees want to do it in conjunction with employers.”

Partner with providers

Reid advises looking at different providers to partner with to ensure employees are able to access the freedoms if they wish to. “Can you send employees to another provider and help them transfer their pensions out,” she says. “You need to provide options even if you don’t want to offer them yourself. There’s a growing number of people who don’t want to offer DC flexibility but who don’t want to wash their hands of it. Be helpful and push people towards providers who can help.”

Work on your lines

Wealth at Work director Jonathan Watts-Lay predicts employers will receive calls on 6 April from people who want to take their money out. “What are you going to say?” he asks. “You can’t say: ‘I don’t know’.” “It’s all about communication and helping people weave their way through the complexity,” says Reid.

Education and more education

“Employers need to recognise that people are going to need a lot more help,” says Towers Watson senior consultant Will Aitken. “[Government] guidance is not enough.” This means financial education comes to the fore, as Ros Altmann says: “The best way to impart financial education is via the workplace.”

“Pensions education is not fit for purpose anymore because pensions have changed,” adds Darren Laverty, a partner at Secondsight, explaining that while financial advice is expensive, financial education doesn’t have to be. “Workplace financial education is about empowering employees to make their own financial decisions with their newfound knowledge,” he says.

Rethink your pensions strategy

Watts-Lay believes the new rules are a “commercial imperative” for employers to think differently about their pensions strategy. “There are big strategic issues, around areas such as managing risk and liabilities and managing an ageing workforce,” he adds. With many employers trying to manage the risk of their final salary pension schemes, for example, the news that savvy savers may choose to switch and cash in will be “music to the ears of a lot of companies”.

Now could be a good time to have a strategic rethink about pensions and retirement in your business.

Further reading

An employer perspective on pensions and savings

The retirement revolution – how pensions freedoms could affect your HR department

An employer perspective on pensions and savings

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Roger Fairhead, group head of compensation and benefits at SAB Miller, on how he views retirement and employee savings.

“In the past, you worked for one or two employers, were in a final salary pension scheme, retired and only lived for 10 more years. The concept of a job for life is completely gone now. People are working beyond 65, or leaving before then because they need or want to. We need a more flexible package of money for later life.

“There have got to be other things out there, beyond pensions, and they’ve got to be flexible. We are implementing a broader savings opportunity, which includes Save As You Earn (SAYE) and Share Incentive Plans (SIP). Those are tax efficient vehicles that allow you to save in a different way, as part of a balanced portfolio. People are coming out of higher education with a lot of debt and saving for deposits – there are other demands on their income.

“I don’t think retirement exists in the same traditional sense any more. I don’t think retirement is even the right word any more. People will move towards a period of doing less work – some voluntarily; some will be forced. There are all these wonderful pensions forecasting tools, but the most uncertain thing is your retirement date. Most of us are capable of working beyond 65, but that age is stuck in our minds.

“I didn’t see the changes coming. I welcome the changes and flexibility but I think there’s a danger employees don’t know what to do with the choice. And I do worry about the constant changes to pensions legislation, which is meant to be long term.

“If we were to start a business now, would we offer employer contributions to a DC pensions plan? I think we would offer an investment contribution instead and say: here is 12% and here is a range of vehicles – SAYE, SIP, pension, ISA – and you can choose your mix. It would give employees much more choice of what they save, and much more engagement in their savings.

“We need to do employee investment communications to all age groups and engage them throughout their career. Pensions aren’t the right option in every circumstance, even as you get nearer to retirement, when you could take advantage of tax-free savings.”

The retirement revolution – how pensions freedoms could affect your HR department

Accompaniment to Disciplinary and Grievance Hearing – Acas Code and Guidance Revised

Parliament has approved amendments to the new Acas Code of Practice on Disciplinary and Grievance Procedures which came into force on 11 March 2015.

The Employment Relations Act 1999 (ERelA) states that workers attending formal disciplinary or grievance meetings may make a reasonable request to be accompanied at the hearing by a fellow worker, trade union representative or official.

The new Code clarifies that the reference to a “reasonable” request applies to the making of the request not to the worker’s choice of companion. As such, a request made five minutes before a meeting for accompaniment by a companion located 250 miles away probably would not be reasonable. However, as long as the request is made reasonably, there is nothing stopping an employee from choosing any companion from the three statutory categories. Therefore, it appears there is little an employer can do to prevent a particularly difficult or disruptive companion attending a meeting where a request is made reasonably. However, the ERelA does limit the scope of a companion’s involvement in a meeting. The new Code also confirms that a worker may change their chosen companion if they wish.

Acas has also amended its non-statutory guidance booklet to reflect what has been best practice for some time. The guidance now confirms that employers may allow workers to be accompanied by companions who do not fall within one of the three statutory categories. The guidance goes on to say that the duty to make reasonable adjustments for disabled workers may even require this. For example, it may be reasonable for a vulnerable adult to be accompanied by a parent or a support worker.

This article has been drafted on HR Legal Service’s behalf by Penningtons Manches LLP Solicitors. Penningtons Manches LLP is one of HR Legal Service’s strategic legal advisory partners and provides certain services to our customers through a range of different Legal and HR support services offered by ourselves to the corporate market.

The content of this article does not constitute legal advice and it should not be relied upon. Specific legal advice may be required to address your specific circumstance.

 

Budget 2015 reaction: Lifetime Allowance reduction ‘unfair and unwise’

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A pensions expert has branded chancellor George Osborne’s announcement that the pensions Lifetime Allowance (LTA) will be cut from £1.25 million to £1 million “unfair, unnecessary and unwise”.

Barnett Waddingham senior consultant Malcolm McLean said: “The concept of having a lifetime limit is outdated and unnecessary.”

He added: “The existence of the LTA and the regular monitoring against it overly complicates pension saving at a time when strenuous efforts are being made through auto-enrolment and other measures to encourage saving into a private pension.”

Xerox head of trustee services at Buck Consultants David Piltz warned the reduction of the LTA risks making pension savings “unattractive to medium- to high-earners”, and could “disenfranchise those senior individuals who make decisions for UK pensions for their employees”.

In yesterday’s Budget, Osborne also announced the LTA will be indexed from 2018 and confirmed that he will be extending pensions freedoms, allowing people over 55 to trade annuities in for cash.

The National Association of Pension Funds (NAPF) director of external affairs Graham Vidler said the announcement must not “distract us from or undermine the Freedom & Choice pension reforms” coming in on 6 April.

He added: “The government must make sure this doesn’t divert focus or resource from Pension Wise, damage the broader annuity market, or slow down the development of a much-needed market in retirement solutions for those looking to make use of Freedom and Choice from next month”.

Aon Hewitt senior partner Kevin Wesbroom predicted the changes made to pension freedoms may “herald a new era for employers and the benefits packages offered to employees”.

He added: “Forward-thinking employers may find that such an approach enables them to appeal to all of the demographics in their workforce, and they can design incentives that appeal to their 25-year-olds and their 65-year-olds. With suitable technology support and member guidance and education, this need not increase costs but will redistribute the existing spend across the broader workforce.”

Tribunal claims down by 70% since introduction of fees, CIPD finds

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There has been a 70% drop in tribunal claims brought by employees since the introduction of fees in 2013, CIPD research has found.

According to the report, Conflict Management: A Shift in Direction?, employers are divided over whether or not the fees, which were introduced to deter weak or vexatious claims, have been a positive move. While 38% of the 1,000 employers surveyed said they would like fees to remain as they are, 36% said the fees should be either significantly reduced or abolished altogether.

CIPD employee relations adviser Mike Emmott called the drop in claims “unprecedented”. “Employers have long complained about the damaging effect that weak or unsubstantiated claims have on their business, but given the staggering drop in claims since, it must be the case that some perfectly valid claims have been discouraged as a result of the new fees,” he said.

“Fees may not make it impossible for claimants to pursue their case but they’ve certainly made it more difficult, which begs the question: are we putting too high a price on justice?”

He added that he believes the fees (which require employees to pay up to £1,200 to bring a claim) would be “unlikely” to “survive” the general election in their current form, as all three major parties have spoken of their plans to review them.

“Assuming that fees survive in some shape or form, it will be important to get the balance right between having a fee structure that is simple to understand and one that is proportionate to the type of claim being made,” Emmott said.

Business secretary Vince Cable called for the fees system to be reviewed “as a matter of urgency”.

Cable said: “It’s vital that the employment tribunal system strikes the right balance between employee and employer protection. The fact that employers are so split over whether the introduction of tribunal fees has been a good or a bad thing further reinforces the need for a review, despite opposition in some quarters.”

Conflict management

The CIPD research found the fastest growing methods employers are using to deal with conflict are training line managers to handle difficult conversations or manage conflict (47%) and facilitated discussions or trouble shooting by HR managers (38%).

Almost a quarter (24%) of employers have conducted internal mediation using a trained member of staff, only 9% have relied on external mediation.

Emmott said: “It’s encouraging to see how many employers are making use of alternative methods of resolving issues and it’s welcome news that more managers are getting mediation training. This will improve the quality of conversations between them and their staff and help to defuse conflict before it can escalate; prevention is better than cure.”

Disabled graduates fear discrimination

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More than three-quarters (77%) of disabled graduates fear employers will discriminate against them, a survey by Great With Disability has found.

The online platform surveyed more than 1,000 graduates with disabilities and long-term health conditions.

The resulting report – Openness: understanding why students are reluctant to be open with employers about their disability – revealed 76% of respondents were worried about disclosing their disability or condition. Almost a quarter (72%) said they were concerned about making a nuisance of themselves.

GreatWithDisability.com founder Helen Cooke said the issue of nondisclosure was of “great importance” to both graduates and employers.

“An employer is unable to make the adjustments or provide the support an individual may need to navigate the recruitment process if they are unaware of their disability or health condition,” she said.

“As a result, organisations often miss out on top talent, and individuals miss out on the opportunity to display their skills and achieve their potential.”

The research found role models to be critical, with 71% of graduates saying they would have been encouraged by seeing other disabled employees.

Seven in 10 (70%) said they would be more likely to be open about their condition if there was a dedicated member of staff they could talk to during the recruitment process.

Ama Afrifa-Kyei, diversity and inclusion manager at Bank of America Merrill Lynch, which sponsored the research, said openness was “a challenging subject”.

She added: “It [openness] is one that businesses need to understand and overcome if they wish to be successful. At Bank of America Merrill Lynch we have a saying – ‘bring your whole self to work’. This is born from an understanding that our employees are the lifeblood of the company.”

The research also found graduates were being advised not to be open about their disability by friends, family and even careers advisors. Of those who sought advice, 65% were discouraged from disclosing their disability.

Cooke said: “The problem cannot be solved by employers alone. Universities and the support networks of disabled graduates, whether they be friends or family, need to do their part too. Universities and employers need to work together so that students and graduates receive appropriate and helpful advice about the benefits of being open, and the best ways to do so.”