New ACAS Guide – Handling Pay and Wages

ACAS has issued a new guide, aimed at small and medium sized businesses, which is designed to help employers to ensure that pay issues are handled correctly.

The practical guide covers pay systems, pay during absences, overpayments and making deductions from pay.

The new guide is available on the ACAS website – www.acas.org.uk/payguide

Is an unlimited holiday policy right for your business?

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With the advances in technology in today’s society, flexible working has become easier than ever and key to the success of many businesses.

Most recently flexible working has been taken one step further, with companies such as Virgin and Netflix introducing unlimited holiday policies for their staff.

Unlimited holiday is still a fairly new concept and, from an HR perspective, is complicated. As it potentially allows employees to take limitless holidays at any given time it is vital that HR teams give careful consideration to how it will operate, and consider including specific guidelines in order to ensure a company is not vulnerable.

Culture

It’s important to review the type of culture that exists within a business before implementing the policy. Unlimited holiday is a scheme that would work in firms where there is a good degree of flexible working already, and where employees are responsible for their own workload.

However, for companies where staff are mostly required to be on site, an unlimited holiday scheme may lead to complications if employees are not present.

To be beneficial for both employers and workers there needs to be a significant amount of trust and autonomy. Employees need to be mindful and respect work priorities and deadlines. Employers will need to be confident that productivity and work output are not damaged if the number of holidays employees take increases.

Guidelines

While the intention of unlimited holiday is that it is effectively a non-policy, it is still important to set guidelines. This could include requiring staff to gain authorisation for proposed holiday dates in advance.

Communication is vital, particularly in larger companies where there are different teams, as an employee’s absence may have a knock-on effect on another team and it is crucial for everyone to be aware of this to enable effective planning.

Record

Recording holidays is advisable. The Working Time Regulations require employers to permit full-time staff to take a minimum of 28 days, including public holidays, and if holidays are not recorded it may prove difficult for the company to evidence that employees take their statutory holiday entitlement. It will also provide statistical information to enable take-up to be analysed when monitoring the effectiveness of the scheme.

Measurement

As an unlimited holiday policy allows for a significant amount of flexibility, an employer needs to be strong in other areas of the business. Employee productivity and performance should be measured to help determine whether an unlimited holiday scheme is working for everyone and not having a detrimental effect on the business.

An unlimited holiday policy can be extremely beneficial for some businesses as it can help motivate and encourage staff and it can also act as an incentive when recruiting new team members. However, for it to be effective, it is essential that a company is clear about requirements and that everyone is aware of expectations. It is important that this feeds into the recruitment process and that employees who are selected are self-motivated and thrive in an autonomous and flexible workplace.

This article is published courtesy of HR magazine and was written by Kate Matthews (pictured), HR and employment director of business advisory firm Greenaway Scott

Boris Johnson announces 100 hours of work experience for young Londoners

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Every young Londoner will have the opportunity to undertake 100 hours of work experience before the age of 16, the London Enterprise Panel (LEP) has announced.

The scheme, called London Ambitions, will include career insights, work tasters, coaching and part-time work for students. Schools will be expected to have user-friendly and up-to-date labour market intelligence, as well as an explicit, widely accessible careers policy.

Chair of the LEP and mayor of London Boris Johnson announced the scheme at City Hall, citing his varied employment history, which includes management consultancy and journalism.

“You only know what you are good at by doing it,” he said. “You cannot discover who you are or what you are going to be from a computer algorithm. I hope this will deliver happiness and fulfilment to all young people who take it up.”

The London Ambitions report produced in conjunction with the scheme states that there is a “clear moral and economic purpose to improving careers provision”.

It reveals that the proportion of young people in apprenticeships and jobs with training in London stood at half the England average in 2014, and has fallen over the past 12 months. In London only 53.8% of people aged 18 to 24 are employed, compared to a national average of 61%.

Global chairman of Deloitte David Cruickshank told HR magazine HR will be integral to the programme’s success.

“Every company I know talks about a skills shortage. It’s about getting these connections made,” he said.

Cruickshank added he was optimistic about business involvement. “I’ve not yet come across a company not interested in coming into schools,” he said. “Every time we ask people, they go out [to volunteer]. It’s also good for the employee going into the school – going into a different environment and using different skills is a learning experience.”

Immigration rules will cause ‘chaos’ in the NHS

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Changes to immigration rules will cause “chaos” in the NHS and cost the health service millions of pounds, the Royal College of Nursing (RCN) has warned.

Immigration rules are changing, meaning that people from outside the European Economic Area (EEA) must be earning £35,000 or more before they are allowed to stay in the UK after six years. The RCN says this will “force” many nurses to return to their home countries, resulting in a talent shortage.

According to RCN calculations, up to 3,365 nurses will potentially be impacted, resulting in £20.19 million of wasted recruitment costs.

It also estimates that if international recruitment stays at its current level, by 2020 6,620 nurses will be affected by the threshold, employed at a cost of £39.7 million.

The RCN says that spending “vast amounts” of money recruiting overseas nurses who will be forced to leave after only a few years is a “waste” of NHS time and resource.

It is calling on the government to add nursing to the list of exempt ‘shortage’ occupations and to reconsider the salary threshold. It is also calling on the government to increase the number of UK nurse training places, to reduce reliance on overseas recruitment.

RCN chief executive and general secretary Peter Carter said: “The immigration rules for health care workers will cause chaos for the NHS and other care services. At a time when demand is increasing, the UK is perversely making it harder to employ staff from overseas. The NHS has spent millions hiring nurses from overseas in order to provide safe staffing levels. These rules will mean that money has just been thrown down the drain.”

He called the move to send nurses away after six years “completely illogical”, adding “without a change to these immigration rules the NHS will continue to pay millions of pounds to temporarily rent nurses from overseas”.

Carter added: “The only way for the UK to regain control over its own health service workforce is by training more nurses. There are clear signs of a global nursing shortage, meaning an ongoing reliance on overseas recruitment is not just unreliable but unsustainable.”

Unlimited holiday great alternative to flexible working

Unlimited holiday could be a great alternative to flexible working for many businesses, director of EST Accountants Barry Esterhuizen told HR magazine.

He stated that unlimited holiday, where employees take as much holiday as they want when they want, offered the benefits of flexible working in terms of boosting people’s sense of wellbeing and engagement through a stronger sense of autonomy, but gave businesses more certainty.

“If you know someone’s away for a week you can work with that. If someone’s leaving at four one day and then two another for example, it becomes more difficult,” said Esterhuizen. “Unlimited holiday allows us to manage resources more effectively.”

Esterhuizen said that he believes unlimited holiday will soon start to become much more commonplace in UK business. He said it might even become more popular than flexible working in the longer term.

“Unlimited holiday won’t become more popular than flexible working in the short term future, but it might do eventually,” he said, adding that this was because: “very few people have real flexible working. It’s one of those things where they say ‘we offer flexible working’ but then can’t grant this when people make requests.”

“Finding staff will be increasingly difficult however unless companies try to make the workplace more attractive in this way,” he stated. “So this is a way of offering more flexibility and autonomy. It makes more sense to me.”

Implementing such a policy relies on a strong culture of trust, and hiring people the company can trust in the first place, said Esterhuizen. He explained unlimited holiday could also help build that culture.

“We work in an open, collaborative environment so people are aware it will have an impact on colleagues if they abuse the system.”

Esterhuizen said the policy would probably lead employees to take less than their allocated 28 days some years, as people often see 28 days as “a target” to be hit rather than a desirable amount of time off. He said he thought use would average out to around 28 days a year over several years though.

“People may want to go on safari one year, or be getting married. It doesn’t make any sense for them to take holiday they weren’t bothered about taking one year and not have enough the next,” Esterhuizen pointed out.

He added that seeing 28 days as a target is often a time-consuming preoccupation for employees, with the unlimited holiday policy designed to mitigate this. However, he warned that companies must still record holiday taken by staff to ensure they’ve taken the statutory amount.

 

Getting employment status right

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How do you tell if someone is self-employed or an employee? For HR departments this has been an eternal conundrum. Employment status has ramifications for how hirers treat each person for tax, National Insurance, employment law, and pensions, so getting it wrong can be costly.

The surge in the number of people working as freelancers and contractors since the recession has been welcomed by hirers, who have benefitted from the additional flexibility. Parliament has taken a different view, suspicious that many of the workers who now operate in this way are in fact disguised employees. Revelations of 25,000 off-payroll contracts at the BBC alone have added to the rising clamour for reform.

As a result, parliament tasked HM Revenue & Customs (HMRC) with opening at least 230 tax evasion inquiries per year into freelancers and contractors. It took only two years for HMRC to miss the target and put the future of employment status tests (known as IR35) in doubt. HMRC opened 192 IR35 inquiries into contractors in the most recent tax year (2013/14), 25% less than in 2012/13 and 81% less than in 2003/04, when it opened more than 1,000 investigations.

More worrying still, the tax yield has slumped to the lowest level in five years. HMRC netted just £2,240 per inquiry in the most recent tax year, down from a peak yield of £20,339 per IR35 inquiry in 2011/12. Employment status inquiries can take months to conclude, so at just over £2,000 extra tax per intervention it is quite possible that enforcement teams are now operating at a loss. HMRC created a number of specialist teams and vowed to strengthen its risk assessment criteria so that resources would be targeted at the highest yielding cases – a strategy that appears to have been unsuccessful.

The problem for HMRC is that IR35 inquiries involve the accumulation of evidence, such as contracts, both from personal service companies and the organisations they work for. HMRC also has to look at whether the day-to-day working reality reflects the contract. Employment status inquiries are complex and often hinge on eyewitness testimony, making it very difficult to decisively prove whether someone is an employee or not.

The Office of Tax Simplification recently issued a discussion document called Employment status report where it outlined reforms. One of these would be to make HMRC’s online Employment Status Indicator tool a mandatory requirement for organisations using freelancers or contractors. If the tool said a worker was an employee that would be the end of it.

The paper also proposes a statutory employment test. The concern here is that the rules set out in statute might deem a significant proportion of existing contractors and freelancers as employees, meaning higher costs for hirers. The so-called 80% test could be one such rule. It says that if a contractor or freelancer derives 80% or more of his/her income from a single source they should be counted as an employee of that organisation.

Another suggested rule is that an engagement lasting more than, for example, six months would automatically be deemed an employment relationship. Considering how many contractors and freelancers derive all of their income from a single source and are engaged for years by the same end user, the statutory test could have a profound impact on the UK’s flexible workforce and how HR departments engage flexible skills.

This article is published courtesy of HR magazine and was written by Darren Hayward, an employment lawyer at law firm Nockolds

 

Hot topic, part 2: Strike reform

New business secretary Sajid Javid has confirmed that the Tories will push ahead with tougher anti-strike laws. But are these stricter rules to be welcomed? Or could stronger regulation backfire?

HR magazine asked two experts for their opinion.

Barry Pirie, director of people and policy, Wiltshire District council and PPMA president, writes:

“In the past few years there have been a number of employment-related changes to the law, and if there is one common theme it is that it is virtually impossible to predict what their impact will be.

In considering the impact of any change to strike laws I think it is worth taking a step back and looking at where we have come from, where we are today with industrial relations, and the role of HR in all of this.

One success story of the past 20 years across both the private and public sectors has been reshaping HR’s approach to industrial relations. Back in the 1970s and ‘80s
the default employers-unions relationship was adversarial; characterised by walk outs, brinksmanship and an attritional approach to negotiation.

Today employers and unions still have significant differences in their interests but this plays out very differently.

What has changed is the recognition from both sides that you aren’t going to resolve those differences – however great –without dialogue and a good working relationship. It’s not uncommon for organisations to give union and employee representatives places on employee councils, which helps to forge common ground in approaching difficult changes. We are also in an environment where this collaborative dynamic is widely seen as critical in achieving objectives such as employee engagement and effectively managing change.

So in many ways alterations to strike laws change nothing for HR practitioners. Our success is still defined by our ability to take our people with us, to find a fair balance between the interests of the employer and the employee, and to identify and reduce potential areas of conflict.”

Hot topic: strike reform

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New business secretary Sajid Javid has confirmed that the Tories will push ahead with tougher anti-strike laws. But are these stricter rules to be welcomed? Or could stronger regulation backfire?

The Conservative party has barely let the dust settle on the election before confirming plans to move ahead with its strike reform proposals.

They are in response to a number of recent strikes that have caused significant disruption to business and consumers, despite not being supported by a majority of the workforce. This situation has arisen because a lawful strike needs only the support of a majority of the workers voting, meaning that low turnouts can still result in legitimate action.

Trade unions are highly opposed to reform, stating that the proposals will make legal strikes “close to impossible”. But is this really the case? There will be a significant impact on sectors that have traditionally seen low levels of turnout, for example in public and civil services – where not only a 50% turnout but also a 40% threshold of support will apply. Whether this will lead to a reduction in strikes remains to be seen.

Illegal strike activity seems unlikely but a potential side effect of the proposals is unions adopting a more militant approach in an attempt to galvanise workforces into turning out and voting. In addition, a number of sectors have historically had high levels of turnout in support of industrial action and would already meet the new thresholds. In the rail industry, the RMT just obtained a 60% turnout with an 80% vote in favour of strike action.

Where lawful strike action does take place, being able to use agency workers for cover may not be the ideal solution; this is potentially a piecemeal approach that does not meet the needs of employers or customers.

Whatever the ultimate impact going forward, it seems we can expect the changes to be brought into effect sooner rather than later.

This article was published courtesy of HR magazine and was written by Tom Kerr Williams (pictured), a partner at law firm DLA Piper

Check back tomorrow for part two of this Hot Topic.

 

What the Conservative government means for HR

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How will the first solo Tory government in 18 years address the issues facing our country? Will its policies benefit business?

The Conservative party’s surprise win in the general election, albeit by a wafer thin majority, has resulted in the first pure Tory government since 1997. Prime minister David Cameron has wasted no time building the new “blue collar Conservative” image of his latest administration.

“I want everyone around this table to remember who we’re for,” he told his newly-formed cabinet as he addressed them together for the first time. “Every decision we take, every policy we pursue, every programme we initiate, never forget: we’re here to give everyone in our country the chance to make the most of their life,” he said. “I call it being the real party for working people.”

The headline pledge in what Cameron called the “manifesto for the working people” is, of course, the EU referendum to be held by the end of 2017. While this has no immediate repercussions on business or workers, other proposals will.

Included in those are plans to exempt workers earning less than £12,500 and those working 30 hours on the minimum wage from income tax, to raise the tax threshold for those earning under £50,000 and to cap public sector redundancy payments at £95,000.

Industrial action

Taking over as business secretary from ousted Vince Cable is Sajid Javid. The former banker and confirmed Thatcherite was outlining his priorities within hours of his appointment.

Under his remit will be continued work around zero-hours contracts and the banning of exclusivity clauses, the ongoing red-tape challenge that aims to cut £10 billion of costs to business as well as a business rate review due in 2016. Most pressing, however, is legislation on industrial action making it much harder for workers to strike.

Speaking on the BBC’s Today programme, Javid said that a minimum 40% backing from eligible union members and a minimum 50% strike ballot turnout would be needed for industrial action to take place. The ban on using agency staff to cover striking workers would also be lifted, he confirmed.

Speaking to HR magazine, director of consultancy The Jobs Economist John Philpott says that a clampdown on trade union activity will weaken employee rights and drive down wages.

He adds: “In a labour market that is already heavily weighted to the employer, the likelihood is that the next five years will see the balance shift even further in that direction. The key question for HR is whether that is a good thing for the people they are employing.”

Philpott says that “progressive HR functions” could provide workers with a better deal within their organisations, but in those without an HR role, conditions will likely deteriorate.

Productivity puzzle

Philpott adds the Tory manifesto “continues in the current direction of travel” in terms of reduced business taxes, improving access to work and focus on apprenticeships. But he is disappointed, he says, with the lack of reference to helping boost productivity levels.

“There is nothing in the manifesto that suggests any initiatives. The two main drivers of productivity are investment in physical and human capital; government must provide a bedrock for that but businesses also need to invest,” he says.

The latest figures from the Office for National Statistics show that UK productivity – measured by workers’ output per hour – is slightly lower than in 2007, putting growth at its lowest since WWII.

Earlier this month Bank of England governor Mark Carney told BBC’s Today programme “this is one of the great costs of the financial crisis” but that “it’s going to start picking up over the next few years”.

Director of employment at solicitor Lupton Fawcett Denison Till Iain Jenkins says that the government’s pledge to create three million apprenticeships over the next five years “should go some way towards addressing productivity issues”.

“It should give us a good chance of attracting inward investment and further investment if we can show that we have plenty of skilled workers,” he adds.

Skills, skills, skills

CIPD chief executive Peter Cheese echoes Jenkins’ opinion but he points out that although apprenticeships are part of the answer, a more holistic approach is needed.

“Apprenticeships are an important route to work, but it’s about balancing that with further education and university education as well as an improvement in careers advice,” he says.

It is a view backed by REC chief executive Kevin Green, who says the government must take a serious look at education in order to address skills and productivity issues.

“They need to improve careers advice and incentivise people to think about studying subjects such as engineering, technology and science where we have real skills deficits,” he says. “Some of the Tory commitments go some way to addressing these things but we will be looking for more.”

Executive director of managed infrastructure at Fujitsu UK, Helen Lamb says apprenticeship schemes must add proper value.

“It’s not just about giving someone an experience. It’s about making sure you are giving them an opportunity to have a full career. That’s how we can help create long-term sustainable employment and skills,” she says.

“My concern would be if the proposed approach was just for people to get experience for a particular period of time rather than leading up to a full-time position,” she adds.

Migration issues

Green believes immigration also has a significant role to play. The government’s pledges to maintain its cap on the number of skilled non-EU immigrants entering the country while clamping down on foreign students that stay to work in the UK are bad for British businesses, he says.

“We are not saying we should have an open door policy but if businesses can’t find what they need here, they should be able to look elsewhere, certainly in the short term.” He calls it “absurd” that foreign graduates are denied the chance to work in the UK despite widespread skills shortages. “We want to see that changed,” he says.

It’s early days yet for the new government, and while some of its pledges have clearly been welcomed by the business community, it is clear there are questions still to answer.

 

What to do during a FIFA-style scandal

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The football world has been turned upside down by the revelations and scandals coming from FIFA; the criminal investigations have left a huge scar that may never heal.

Any organisation can plummet into chaos when criminal investigations are initiated against an employee as a result of an offence committed through the course of work. HR departments often find themselves at the centre of a storm and unsure of how to handle the situation.

If you find yourself in a FIFA situation here are some key steps to take.

Preserve evidence and defuse the situation

In the first instance, it is vital that you defuse the situation as quickly as possible and take a step back from the politics that run alongside it. In cases involving allegations of financial impropriety or bribery, vital evidence that needs to be protected may be present. Therefore it is often best to remove the employee from the situation immediately via suspension on full pay.

Communications strategy

In high profile cases there is the threat of exposure in both traditional and social media, presenting a risk to the organisation’s reputation and also a risk of jeopardising the internal and external investigations.

Involving your communications team from day one will create a clear point of contact for media enquiries to which all employees can direct questions. More importantly, it means minimising the risk of any spokesperson saying something that could prejudice the internal and criminal investigations.

Reasonable doubt vs. reasonable belief

There is a clear difference between internal HR investigations and criminal investigations.

The employer’s decision is best viewed as a management decision and not a verdict on criminal culpability. For a management decision to be deemed fair it needs to be based on reasonable grounds and following reasonable investigation allied with a fair process being followed, so there is a significantly lower burden of proof than in criminal investigations.

Stand by your principles and values

Occasions such as this test integrity and define what you stand for. Allowing commercial decisions to dominate the strategy for dealing with such issues can compromise the culture and values of an organisation.

Above all, the biggest mistake that employers make is in delaying the internal investigation and allowing a criminal investigation to take precedence.

The risk with FIFA is that it may defer to the investigatory process of the law enforcement agencies, which will be protracted. FIFA has an opportunity to conduct an inquiry with a less stringent burden of proof, make its decisions, and move on, and therefore expedite a return to organisational health and reputation that may otherwise be some years away.

Organisations need to recognise the value in clear, confident and timely decision-making that is within their own control and not external agencies’.

If you take one piece of advice from this, let it be this: get on with it and do it without delay.

This article is published courtesy of HR magazine and was written by Darren Maw (pictured), managing director of HR and employment law firm Vista