Research suggests that one-third of British households have less than £250 of savings and a surprising one-fifth have no savings at all. With recommendations of saving three month’s worth of income in the event of unforeseen circumstances, simply getting by can prove very difficult if you can’t work.
So what can you do to safeguard yourself?
Getting the right insurances in place definitely helps and can prove invaluable, but with money a serious worry for many households, insurances are not always at the forefront of people’s mind.
However, I urge start-ups and self-employed professionals to consider income protection insurance, because it provides a regular tax-free income if you can’t work because of illness or injury.
Here are five reasons why I believe income protection is a good financial safety net:
If you’ve decided income protection is something you need, make sure you do your research before choosing a provider. Take a look at their claim pay out rates (a good provider usually pays more than 90% of claims) and what occupations they cover to make sure your needs will be met. Independent organisations such as Which? also provide free advice, so check out their websites, too.
Financial expert David Thompson is a chartered accountant with 25 years’ experience and is chief executive of dg mutual.
If your customer has not disputed the debt, yet continues to fail to pay, you can take action in court to recover up to £5,000 with minimal costs under small claims legislation. Speed is of the essence. Chasing debts can be done politely without immediate recourse to the law (try the unpaid invoice timetable below).
If your own efforts to collect payment continue to be ignored a month after the invoice was due, consult a legal professional.
Early on, ask the debtor if they dispute the invoice. If there’s no reply, this will weaken any later argument they try to make, such as saying the work was sub-standard. The judge will wonder why they didn’t say this earlier.
If a customer refuses to pay because they say something wasn’t up to scratch, try to settle without legal proceedings. Meet up and be willing to compromise if they have a fair point.
If a debt is under £5k then you can sue in a County Court under small claims legislation. All claims must now be issued in Northampton County Court, so it’s no longer possible to get it dealt with over the counter at your local Court.
Losing parties are only very rarely ordered to pay more than fixed costs and interest. Usually the losing party is not asked to pay the winner’s legal fees. Fixed-fee arrangements can help keep costs down.
Court proceedings depend on whether the debtor defends the claim. If they do a court hearing will be set. A judge will preside over the hearing, but they are usually quite informal. Written evidence is submitted in advance. On the day both sides are given a chance to describe their case and a judgment is announced at the end.
Consider the strength of your case on paper before taking a claim to court. Make sure you’ve got what you would expect to see to prove a case (eg a purchase order document, signed delivery note, valid invoice). Anything that confirms that payment will be made such as emails from the client is also helpful. Make notes of conversations held. If your paper trail is weak, try to find a resolution outside court. The judge will decide the case on the balance of probabilities, which is different to criminal judgments that have to be beyond reasonable doubt.
If the debt is above the £5k limit for small claims take extra care deciding whether to issue legal proceedings. The court process is the same, but if you lose you may have to pay the other side’s legal fees too. You need an experienced debt recovery specialist to analyse the merits of your case upfront.
There are always risks when taking legal action against a debtor. A solicitor will usually fall short of saying you are sure to win, but ask their opinion about your chances. Balance that probability against the benefits of success.
Be extra careful with overseas debts. Unless the terms and conditions of your contract make specific reference to disputes being conducted in these shores, then you will probably have to instruct an overseas lawyer to handle the case locally in accordance with the country’s own laws. This can leave you feeling seriously out of the loop.
1 Make a polite call the day after an invoice was due to be paid.
2 Seven days later call again and ask if there are any disputes. Make a note of the date, time and contents of that call. This kind of paperwork is important should you ever need to take legal action.
3 If no payment is received after seven more days write to the client and inform them the matter will be passed to a solicitor if the invoice remains unpaid.
4 If another week elapses pass the debt to your legal advisor. It tends to be the headed paper used in a letter from a law firm, not the words, that carry the weight so ask the solicitor to use whatever wording they find most effective.
Unpaid invoices are usually best passed to a solicitor once they’re a month late, but taking polite action throughout that time will get most debts paid before that stage.
You are legally entitled to charge interest on a debt from the moment it becomes due, even if you don't mention this right in your contract. If you want to charge more than the national interest rate you must outline the percentage in your T&Cs. Around eight per cent is usually considered reasonable.
Compensation can also be sought in the sum of £40 for a debt of less than £1000, £70 for a debt of £1000 or more, but less than £10,000 and then £100 for a debt greater than £10,000. This is covered under The Late Payment of Commercial Debts (Interest) Act 1998 as amended and supplemented by the Late Payment of Commercial Debts Regulations 2002.
Neil Sorrell is the debt recovery manager at Sussex law firm Mayo Wynne Baxter Solicitors
Georgina Harris explains how lawyers will help – with no fee
Planned to launch this week, professional body the Law Society has set up a helpline that will help victims of the riots get free legal advice.
With a particular focus on helping small independent shops and businesses to restore their lives and finances, a specialist operator on the phone helpline will take details of the cases, make referrals where necessary and place cases using the current network of pro bono (free) agencies.
Law Society president John Wotton explained “We have already seen how a collaborative effort of this kind proved extremely valuable for the victims in the wake of the London bombings.”
“Over the coming months, the victims will need legal advice on insurance, contract law and a host of other issues. It is vitally important that people who need practical help to get their businesses or personal lives back on track in these very difficult circumstances should have a quick route to specialist advice.”
Find details of the helpline at the Law Society.
There is an established, but growing, trend for wealthy private individuals (known as “angels”) investing in young and small private businesses in return for shares in the company. This is a form of equity finance, as opposed to the more usual debt finance provided by lenders.
After the heads of terms have been agreed, the investor’s lawyers will be asked to conduct legal due diligence on the target company. The extent of this will depend on the trading history of the target and the investor’s appetite for information about the target. The scope of due diligence usually covers the constitution and structure of the board and shareholders, employment contracts, existing financing arrangements, existing licence, research and development and other collaboration agreements, property arrangements and key commercial contracts.
Timings and documentation
The target company is likely to require shareholder approval as part of the investment process in order for new shares to be issued to the investor, new articles of association to be adopted, the subscription and shareholders agreement (also referred to as an investment agreement) executed, the appointment of the investor director approved and the existing rights of pre-emption in relation to the issue of shares waived. These shareholder resolutions can either be passed by convening a general meeting or by passing shareholders’ written resolutions remotely.
If the target company has existing equity or debt investors, their consent may also be required as a result of any right of veto they have in any existing investment or loan agreement. This will normally become evident from the due diligence exercise, although it is more expedient if the target company obtains letters of consent beforehand.
If the incoming investor subscribes for more than 50 per cent of the share capital of the company, the share issue may result in the target company breaching any change of control clauses in its commercial contracts. If this is the case, the target company will need to seek consent to the investment round from the relevant third party before completion.
The legal advisers involved will need to agree that all conditions have been satisfied and decide on the precise mechanism for completion and the sequence of events. In practice, the execution pages are normally circulated by email and exchange will be agreed on the basis of electronic signatures, before funds are transferred.
An award-winning journalist writes…
When I was 24, after a couple of years of dismal freelancing, I got my first staff job on a small but high-profile magazine. I was unbelievably nervous and excited when I arrived on the first day but was shown to a desk and given a few tasks to get on with.
I had only been there a couple of hours when one of the other journalists came up to me and said, "What's your name?" in a rather intense way.
"I'm Angela," I said offering him my hand. "I've just started and—"
"Angela, you've got to leave the building now," he said flatly.
I was torn between conscientiousness and alarm but decided, it being my first day, to stick with conscientiousness. So I picked up the phone.
"I'll just make this call I've been asked to do," I said breezily. He grabbed my arm and pulled me out of the office — I noticed other people marching purposefully to the exit as well. Within moments, police were flooding in.
It turned out that the work experience guy sitting opposite me, who had been complaining loudly that he “wasn't "feeling well" had brought not aspirin, but a gun to work. When, indignant at not being offered the office first-aid kit, he started brandishing it, he was marched out.
As he was led away, and we inspected the bullet holes by the photocopier, I saw him looking a bit shame-faced. But in retrospect, I wonder if he didn't have the right idea. It turned out to be a really horrible place to work.
This much I know: the employee writes:
I went for a Starbucks and rang my friends for a laugh. Call a lawyer? Why? I’ve had worse from newspaper management.
What’s a hard day at work for you? As employees now launch tribunal cases because they ‘weren’t offered a seat at the right table in the canteen’, the Law Donut takes a look at the – real – world of employment.
A shooting, a strangling, a drugs ring, a fight, a hold-up and “nipple issues” with a Mafioso - even in the leafy enclaves of LawDonut HQ, our oh-so-refined editors, lawyers, and mentors produced a range of ‘workplace incidents’ to stun a tribunal in ten seconds.
So if you’re bored by a whingeing worker, or facing a conduct dispute that’s a little tiresome, our new series should cheer you up. Find a new post here every couple of days, as well as expert pronouncements from our renowned bloggers and writers that show you what the victim – or the law - did next. The first post in our series is right below.
The Prince’s Trust mentor writes….
One of my oldest friends, who is staying with me, has done annoyingly well as a tycoon. Needless to say, he’s rather competitive. So this morning, breakfast table conversation turned briefly to employment law as he and I shared (ie scrabbled for supremacy about) our managerial war stories.
I work with young people’s businesses now, but I kicked off with a few tales from my salad days as a restaurant manager. One of the high points was a phone call from the Metropolitan Police, wanting to discuss a former chef of ours, who had, they explained, been convicted of drug smuggling while on the job. The police needed to check how much I’d paid him so they could calculate how much illegal income they could seize.
At the time it was a fairly uncomfortable situation, but in hindsight it wasn’t a big deal. After all, the chef was by then an ex-employee, and in the restaurant trade this sort of thing isn’t that far out of the ordinary. Anyway, he was a good cook: well, his sauces were very more-ish.
My friend rose to the bait. He ran a far larger business, but he too had been on the receiving end of personal calls from the police. One of his employees was a junkie, in whom the boys in blue had a keen interest. Somewhat to my mate’s indignation, the employee had used his company car in a heist (then sold it for cash). Well, it showed initiative, I pointed out infuriatingly.
But my mate won. The prize for “HR Minefield of the Decade” went to one of his lady executives, who had decided to become a man. Advised to make lifestyle changes before the op, she asked to use the men’s toilets. By that stage, her female colleagues weren’t happy with her continuing to use the Ladies’. But the male staff were less than thrilled at the prospect of her hauling up her tights in the urinals.
It’s the sort of situation that could turn seriously tricky. The sex-changing employee might claim discrimination, while, whether she chose the male or female toilets, there was a good chance that other employees’ discomfort might turn into formal grievances. In the event, common sense prevailed. She would use the male facilities, but only after checking they were empty.
This much I know: the business owner writes:
What all our stories had in common was the sheer unpredictability of managing employees. Neither of us expected our employees to get involved with drugs or have a sex–change, I guess, the lesson is that you do need to be ready to cope with the consequences, whatever happens. And avoid ‘Dish of the Day’ in small restaurants.
At a time when salary increases and financial incentives aren’t always commercially viable, some employers are resorting to more entertaining techniques to keep staff’s morale high in the present economic climate.
Putting a television in the workplace is an example: in a current Law Donut post, Over-refreshed and Misbehaving: the World Cup in the workplace, Michael Scutt issued a timely reminder to those employers planning to show World Cup matches live that if a television arrives on work premises it will need a TV licence and, if live football is being streamed to the workplace through the internet, a TV licence is also required for that.
Playing music at work is another boost. Whether that music is on in the background or used after hours to create a more sociable buzz, sourced ad hoc from the radio or more strategically from a digital playlist service such as Spotify, it’s considered to be a public performance; and playing music in public requires a licence, otherwise you are likely to be infringing copyright. The simplest way to get a licence is via the PPL and the Performing Rights Society, the PRS . These organisations distribute the proceeds of the licences to the rights holders: the PPL pays the performers, record companies and other royalty rights holders; the PRS pays composers, songwriters and publishers.
The alternative to getting your licence to play music at work would be to approach each individual performer, record company and rights holder to obtain their permission - an impossible task.
If a business does not obtain the correct licence the royalty holders, but most likely the PPL or PRS, could enforce a licence against the business via a court order. A court order comes with a fine of up to £10,000 and even a prison sentence.
The PPL and PRS carry out spot-checks on businesses to ensure compliance. A recent high profile case of a hairdresser refusing to obtain a licence for music being played in the salon shows the problem in action.
And while we’re on the subject of licences, do your employees access, share or copy information published online or in the traditional hard-copy format? Or does your business receive daily press cuttings? If so, and most businesses do, then you need to make sure that you are minimising the risk of copyright infringement in your business by obtaining a licence from the CLA.
If you’re an employee, you get statutory paid leave when you give birth, but what about the self-employed? Sure, you may be able to claim maternity allowance –social security benefit paid for 39 weeks - but it’s only £124.88 a week (or 90 per cent of your gross average weekly earnings, if less), and you can't claim if you are still working.
Now the EU is proposing that we give self-employed women - and the wives or partners of the male self-employed if they help their man out at work - at least 14 weeks' maternity leave allowance.
This will be paid out of a social insurance scheme, requiring contributions from the self-employed. The EU is leaving it up to each member state to decide whether women have to join a scheme – and pay - or whether to make joining voluntary.
Will this help women? My fear with this proposal – and it’s a point I’ve made before on the LawDonut – is that here we are again, contemplating new laws designed to help women, without really knowing whether they will or not – whether they might even prejudice self-employed women - because no-one is really thinking the idea through or doing the research to find out what the real consequences will be.
We need women and men to have equal rights at work but when it comes to maternity rights, you could argue that the only law we’ve seen working properly to date is the law of unintended consequences.
For example, the anecdotal evidence is that the current rules on maternity leave and pay for women employees seem to be stopping some employers from taking women of child-bearing age on in the first place. Rather than do the research to find out if that’s true, and maybe think of other ways that women can be made equal, the (Labour) government’s reaction was to give women even more of those rights.
And my fear in relation to this new development is that, even if the government has the best of intentions, women will yet again end up suffering in the world of work – maybe having to pay for insurance that will pay out less than many would earn, but stopping them from working to supplement it – so that a measure intended to benefit them ends up doing the opposite.
And what’s with the women-only contributions scheme? Why aren’t men contributing to the payments? Women – who make up more than half the taxpayers in this country – don’t get reductions on their tax bill because they’re less likely to end up with the costly diseases many men get, or in prison and costing the taxpayer £1k a week.
Whose kids are these anyway? Shouldn’t both parents chip in towards something that indirectly contributes to the welfare of their offspring?
It will be at least two years before the UK has to bring the new rules in (though they have up to four years if they “find difficulties" in working out how to do this). The government is bound to consult, so get ready to have your say. My comment is, don’t do it until you’ve done the research that tells you it’ll work as it’s meant to work.
The quadrennial jamboree that is the World Cup is just a week away. South Africa hosts Mexico on June 11th in the opening match of the tournament, which comprises 32 teams and culminates 63 matches and one month later in Johannesburg’s final.
England qualified, of course, and we can doubtless look forward to more raised hopes, dashed expectations, broken metatarsals, penalty shootouts and sendings off (history does repeat itself, doesn’t it?). Not to mention hangovers, sickies and punch-ups – and that’s only among the players.
While the tournament may be keenly anticipated by many (and loathed by many others), there are employment law issues arising that employers ought to take into account before settling down in front of the box.
The real world of business must go on and the World Cup, like any popular sporting event, poses problems to employers when workers would like to watch their team. England’s schedule for the first round matches is fairly kind to employers; the first two matches kick off at 19.30 BST and it is only their third match that eats into the afternoon with a 15.00 kick-off.
The Chartered Institute of Personnel and Development (CIPD) recently published its World Cup and Absence Management Guide which sets out the main issues that employers might face and is well worth a read. XPert HR also published a model policy for “sporting and other special events” in Employers’ Law dealing with the same issues.
The CIPD guide suggests that shift swaps, flexible hours and unpaid leave could be utilised or, if employers want to make more of an event (and promote team building) they could screen matches in the workplace. This later suggestion would no doubt suit football fans but for those who can’t stand the game it could cause disruption and resentment if they are excluded. Do bear in mind that if a television is being used on work premises it will need a TV licence and, if live football is being screened through a feed on to employee’s PCs a TV licence is also required for that.
The CIPD’s other suggestion of having a radio or TV on in the background strikes me as unworkable – those who want to watch will feel constrained from doing so and for those who aren’t interested it will be an unwelcome background hubbub. Whatever solution is adopted, it probably pays employers to embrace the World Cup and be flexible, if only as a more constructive approach to dealing with the inevitable problem of absenteeism if no steps are taken.
However, the problems facing employers are not confined solely to how to screen the matches. Staff absenting themselves is one obvious problem, the other might be employees becoming “over-refreshed” (which could be particularly concerning if it happens in the workplace) and committing acts of misconduct and, even, criminal offences. An employer can be vicariously liable for the actions of an employee and claims could arise from one employee offended by the words or actions of another.
For instance, the recent case of May & Baker Ltd (t/a Sanofi-Aventis Pharma) v Okerago the facts of which arose from the last World Cup , demonstrated this. Ms Okerago was employed as a pharmacy inspector. She alleged that a fellow worker made a racially offensive remark to her when asked whether she would be supporting England or her own country. When she replied “her own country” she was, unhappily, told to return to that country. She sued for race discrimination when dismissed by the company, allegedly over an issue of her conduct. The Employment Tribunal held that she had been directly discriminated against. However, on appeal the decision was overturned because (for these purposes) of a technicality. The risk of inappropriate and/or offensive comments or actions occurring will be only be increased, especially if workplace screenings involve alcohol. Employers should remind staff that such conduct or comments will not be tolerated.
What happens if the employee commits a criminal offence (involving football hooliganism, for instance) whilst supporting his team? If the offence takes place outside the workplace the employer needs to consider its position very carefully before instigating disciplinary action. The case of Post Office v Liddiard  where a postman was convicted and sent to prison for being involved in football hooliganism (in France) was exceptional. The Post Office dismissed him for gross misconduct, but that was in response to the damage done to its reputation because of the public outrage that occurred in response, rather than his actual activities.
However, in 2002 another postman was caught on television kicking an opposing supporter and was dismissed by Consignia (as it then was). Although the case was not formally reported he apparently won substantial compensation at an Employment Tribunal. If an employee is alleged to have committed an act of misconduct the employer must be sure to investigate the allegation thoroughly before considering disciplinary proceedings. The employer must follow a fair procedure which complies with the ACAS Code of Practice on discipline and dismissals, or claims for unfair dismissal may arise (and be successful). An employer’s decision to dismiss an employee will be judged by an Employment Tribunal according to the “range of reasonable responses” test.
The prudent employer will remind its staff of the company’s policies on absence, alcohol consumption at work and misconduct. If an employer sets out what is and is not acceptable behaviour and treats all staff fairly in accordance with those policies, if a problem does arise it should be easier to deal with. It should probably also tell its staff to keep away from postmen at football matches as well.
The scenario is this: an employee is summoned to a disciplinary meeting with the employer to discuss an allegation of misconduct. The employee, not trusting that the employer’s minutes of the meeting will be an accurate reflection of what was said, covertly records the meeting. She is dismissed and then decides to use the recording as evidence at the hearing of her unfair dismissal claim. Can she do so? It is a tricky issue that crops up fairly regularly.
Ian Mann, barrister of 13 King’s Bench Walk, Temple, explains the case that says, more or less, yes. In a meeting with the Hertfordshire school she worked at as a teaching assistant, a Mrs Dogherty secretly recorded not just the “open” part of the meeting she attended but also the “private” session after she was asked to leave the room whilst the school governors considered her fate. Her contract of employment did not forbid covert recordings of meetings.
In court, the school argued that the governors’ rights under European Human Rights legislation had been infringed. This was rejected by the Employment Appeal Tribunal (EAT). The central issue, as far as the recording of the “open” part of the meeting was concerned, was to consider whether the evidence on the tape was relevant to Mrs Dogherty’s unfair dismissal claim. It was and so was allowed to be heard.
As Ian Mann points out, this is not new law – the EAT relied on a 2004 case as confirmation. Furthermore, English courts are normally more interested in the quality of the evidence than in how it was obtained. Put another way, does the end justify the means? In this case it did, but only as far as the “open” part of the meeting.
A different result applied to the “private” session – when Mrs Dogherty had been asked to leave the room for the governors’ private discussion. The recording of that part of the meeting was not allowed in evidence.
This is a difficult issue for employers. How should you approach it? Start by drafting or amending your contracts of employment and employment handbooks to ban any covert recording of disciplinary meetings. If, as an employer, you face conducting a disciplinary meeting, state that you do not agree to the meeting being recorded and ask if the employee is in fact doing so. If the employee does so and lies, it could affect their credibility. However, raising recording as an issue can be a double-edged sword; there is no reason why, if an employer intends to conduct proceedings fairly, they would not agree to a tape being made. And it is likely that the file will be allowed in evidence anyway.
You could also consider arranging your own recording (not covertly, of course) thus meaning that there is no need for the employee to make their own copy. Of course, this also means that you have to conduct the meeting fairly. An Employment Tribunal is likely to be impressed by an employer who tapes disciplinary meetings because it demonstrates openness and confidence in dealing with the meeting. There can also be no argument in Tribunal as to what was said at the meeting. It is of course important to ensure that whether taped or not, good notes of the meeting are taken, and that whoever is present in the meeting has taken legal advice beforehand and is aware of what ought and ought not to be discussed at such meetings.
Your business may have HR policies and procedures in place already; but are they current and relevant? Each April brings with it annual legislative changes which could result in your business missing a trick if you’re not prepared for them.
Here are the five changes that your business needs to prepare for now:
From 4 April 2010 allowances for statutory maternity pay, paternity, adoption pay and maternity pay are changing from £123.06 to £124.88 per week. Allowances for statutory sick pay of £79.15 per week remain unchanged this year.
The Government has announced that although it is committed to the principle, it will not go ahead with the planned extension of statutory maternity pay from 39 to 52 weeks this April.
2. Fit Note Scheme
From 6 April 2010, as an employer you will no longer be presented with the traditional GP sick note setting out the reason for an employee’s absence. Instead, GPs will produce “fit notes” which will focus on the work that an ill person is able to do, rather than what they are unable to do. Again, Business Link has a helpful section of information for employers on the fit note scheme and an example fit note template is available here.
There are differing opinions on whether the new system will be more or less beneficial to employers; we will have to see how it plays out. For the time being, as an employer, you will need to acquaint yourself with the new fit note form, know how to respond to it, and adjust your absence management procedures to ensure that any adjustments recommended by a GP in a fit note are considered. You should also maintain a record of the reasons for any non-implementation of recommendations.
3. Right to Train
On 6 April 2010 the new Employee Study and Training Regulations come into force and give a new right for employees to request time off from work for training or study. Initially, this right will only affect employers who have over 250 employees, but by 2011, the right will extend to all employers. Essentially, the regulations set out how an employer should respond to such requests.
My advice would be to ensure your company has a policy to reflect this new right which should include how and to whom in the company the request should be made, who will consider the request and in what timeframe. I recommend maintaining a record of requests together with the reasoning behind any approvals or rejections in order to ensure consistency of process, and to demonstrate equality and fairness in your workplace.
For more information, Business Link provides an overview of the detail which you need.
4. Paternity Leave
New laws mean babies due next spring may see more of both parents. Rules that come in on 6 April this year, but apply to families with babies due from 3 April 2011, allow dads who satisfy certain conditions up to six months’ paternity leave – provided the mother has returned to work.
The idea is to give families more choice as to how they balance work and childcare; paternity leave entitlement currently stands at just two weeks. The Government is expected to issue guidance before April 2011 as to how employers can best manage and administer these new regulations, so you do have some breathing space.
However, now is the time to take stock of your company’s current paternity leave policy and amend accordingly, consider whether you are willing to introduce additional flexibility and enhanced rights into your workplace if it is a means for you of attracting and retaining the right employees, review your existing structure and ensure managers are prepared for the new entitlement to take effect.
Don’t forget to also update your existing maternity leave policy to reflect the mother’s ability to share leave with the father.
On the horizon, but awaiting Royal Assent at the time of writing, is the Equality Bill. Royal Assent for this Bill is expected in April 2010, and the Act will then be due to take effect in October 2010. There is some discussion as to whether the impending general election will disrupt the Bill’s timetable, but there seems to be cross-party support for it and at this stage there is no indication that the Bill’s progress through Parliament is being delayed.
The purpose behind the Bill is to “modernise and streamline discrimination legislation” and “make Britain stronger, fairer and more equal”. As such, it’s a biggie and it will have an impact on your business. The scope of the Bill is very broad, and this post will not set out the detail here.
My immediate advice is that, if you haven’t already, you need to get up to speed with the Bill. As an initial introduction to this mammoth piece of legislation, the Government Equalities Office has a very helpful set of resources, links and bullet-point updates which are easy to digest. Again, with this Bill, there is some breathing space prior to its introduction, but not much, so I’d strongly recommend that you start to conduct an equality audit across the range of your HR policies to ensure compliance with the Act when it comes into force.
6. Annual Healthcheck
Alongside all the above, changes in your business over the past year and expectations of your staff in the future prompt the need for an annual review of your policies; so I always recommend an annual healthcheck of policies, processes and standard employment contracts.
The first quarter of every year is a perfect opportunity to review HR policies and practices in your business. So, to avoid showers this April, spring-clean your HR policies now.
It’s not often that you’ll find me quoting from the Daily Mail, but a recent headline caught my attention: “Headteachers are being sacked like football managers”.
The Association of School and College Leaders has just released figures which show that 163 headteachers were sacked last year, and commented that local authorities have unrealistic expectations about the speed at which results can be achieved.
For any business that employs more than a handful of people, there is likely to a structure in place in which some employees have managerial responsibility over others. Does this mean that the manager is responsible for the overall performance of their team? Is it fair to punish them for failures which could be due to circumstances under their control? On the one hand they are an easy scapegoat, as in the case of headteachers or football managers; sacking a leader is evidence of decisive action and a new beginning. If they were in charge then it must be their fault. However, this course of action often fails to deal with any underlying problems, either within the team or with procedures and working practices.
Leaving aside the reasons for last year’s sackings, the £4 million paid out to school heads who were dismissed is surely evidence that problems could have been handled more effectively. So how should you deal with a failure to meet expectations in any of your employees?
The first step is to ensure that an employee clearly knows what is expected of them. Are job descriptions up to date? Set SMART objectives (specific, measurable, agreed upon, realistic and timely) within a structured meeting, and keep meeting records.
Provide regular feedback, and deal with problems as soon as they arise.
Remember that disciplinary action, especially dismissal, should be a last resort in capability cases, and that procedures need to be spot on to avoid potentially expensive mistakes.
Jennie Horchover of The HR Dept.
2010 has come round pretty fast, and business owners are getting ready to deal with workers’ requests for time off to watch World Cup matches on TV - or even go to South Africa. Can you remember all the legal rules about holidays?
The bottom line is that workers are entitled to 28 days’ paid holiday each year (a pro-rata proportion for part-timers and temps), and entitlement starts from day one of their employment. But job contracts and policies may allow your staff to carry holiday forward in some circumstances, and new case law says sick workers have the right to carry holiday forward in some circumstances, so some employees may be entitled to more than 28 days.
Contracts or policies can limit when employees can take holiday – provided they have taken their 28 days by the end of the holiday year. For example, employers may be able to insist they take part of their holiday on bank holidays and/or during an annual summer close-down, and stop them from taking holiday during peak periods or when the firm would otherwise be short-staffed – proper, objective grounds. Think about emailing employees to remind them when you can refuse holiday requests. Some employers also set limits on how long each holiday can be - for example, that no holiday can last more than a fortnight.
Contracts or policies may set out how much notice employees must give you of their holiday plans. If not, the notice an employee gives has to be twice as long as the holiday they are asking for. So two days’ holiday requires four days’ notice.
If an employer refuses proposed holiday dates they have to do so in writing, and the length of notice of the refusal must be at least as long as the holiday requested – for example, at least two weeks before the worker’s holiday is due to start if refusing a two-week holiday.
Employers often have a system for determining priority if there are holiday clashes or if they’d otherwise be left short-staffed. This needs to be fair and non- discriminatory system, which can be as simple as ‘first come, first served’. Favouring employees with longer service could discriminate against younger employees who have not had time to build up service, and may also be sex discrimination because (on average) women have shorter periods of service than men.
That’s holidays sorted – but how do you stop workers just calling in sick on their country’s match days - a particular problem with this World Cup because South Africa and the UK are on similar time zones, so matches will be on during the working day? Answers on a World Cup ticket please!
There have been a lot of misleading headlines about holiday and absence. Here are some useful facts.
As the freeze continues, many employers have been asking snow-bound staff to take a day’s holiday if they don’t show up for work. But as well as battling with staff absence and the awful weather, bosses have been surrounded by a blizzard of headlines about holiday and absence, many of which are misleading.
Use this checklist to deal with any problems fairly and in line with the law:
Annabel Kaye of Irenicon Ltd.
Recently, an accident on a construction site in which a worker died has resulted in an £80,000 fine for the company involved, who admitted two breaches of the Health & Safety Act. The worker who died had been hit on the head while operating a digger he’d not been trained to use.
While this is an extreme case, all businesses should be aware of their health and safety responsibilities both towards their employees and anyone working in, around or visiting their premises.
A thorough risk assessment, including a fire risk assessment, is the most effective way of improving your firm’s health and safety. If you employ five or more people, you must have a written policy in place, of which all employees are aware, and you must display the poster ‘Health and safety law: what you should know’, available from HSE books, or distribute the leaflet.
The Health & Safety Executive website also has guidance and resources for small businesses.
Radio 4’s Today programme recently offered us the thought that our problem with the UK ’s workforce is that too many employment laws are driven by high-falutin’ ideology rather than evidence they achieve what we want. I don’t care what each new bit of legislation says, or why it was dreamed up, as long as it actually delivers what we want it to.
At the moment, some of our HR laws don’t. Take maternity rights as an example. I’m a liberal, so I believe that (a) the best candidate should get the job and (b) for most jobs, sex is irrelevant. That’s better for business, better for women and better for society in general. So I agree with the Government that our laws should put women and men on an equal footing. Maybe maternity rights that give mothers a significant period of leave, some of it paid, and then give them the right to their job back, are achieving that. If, as the Government proposes, increasing the mums’ period of paid leave will achieve more equality, three cheers - go for it! But are these new policies really achieving that?
I hear stories that employers sometimes reject a female applicant for a job, or fail to promote a woman when, on merit, she is the best person for the job. Bosses keep the reasons under wraps but actually it’s because she is young, in a relationship, and may go off and have babies. I hear that, if we look at how women fare in the UK workplace compared to some other countries, many other places are more meritocratic than we are. I also hear that in some of those countries women have fewer maternity rights. Does that mean that the fewer rights women have, the more likely they are to be treated better when it comes to recruitment and promotion? Or would we find that those countries are actually more meritocratic because social norms are different there, their country’s richer than ours, or because the demographics in that country mean women are bound to do better in the workplace?I, for one, don’t know.
My big worry is that our politicians don’t know either. My even bigger worry is that - policy evaluations notwithstanding - they don’t seem to want to find out. Instead, they seem hung up on the belief that to make people more equal, you just keep giving some of them more rights. Faced with possible evidence that this may be counter-productive - that, say, giving women more rights may not actually benefit them, or their employers - they don’t stop and reflect enough. They just plough on – and maybe move the goalposts so it doesn’t look so obvious that it isn’t working. Maternity rights seem a ripe candidate for a proper, rigorous evidence-based approach. Ideas anyone?
One topic has dominated conversation in homes, workplaces and pubs recently – the snow. It’s continued to fall and, while it’s beautiful to look at, it’s equally as disruptive.
Commuters on the roads and rails have suffered as accidents, closures and delays become a common occurrence. The biggest headache, though, is for small-business owners who have been left short-staffed by employees who have not been able to make it in to work.
With the arctic conditions set to continue, it may be prudent for firms without any existing procedures to consider introducing contingency plans in the event of more extreme weather.
After the blizzard that hit the UK last February, many employers did introduce plans, embracing technology to enable employees to work flexibly, from home, and on the move. These firms will have reaped the benefit of their policies over the last few weeks.
If you do allow your employees to work from home in extreme weather, or you are thinking about it, you must be aware of your responsibilities for the health and safety of the home working environment.
The Law Donut also has a great collection of FAQs on home working which should answer any additional questions you may have.
Right, that’s enough from me. I’m off to build a snowman.
Many individuals struggle bravely in to work when it snows, while others stay at home. Some work from home, whilst others have no option but to take care of their children as schools close. Some workplaces close due to bad weather, and others remain open, if not fully staffed.As the big freeze descends over the UK this week, managers must handle pay and working hours if bad weather stops staff turning up.
Many individuals struggle bravely in to work when it snows, while others stay at home. Some work from home, whilst others have no option but to take care of their children as schools close. Some workplaces close due to bad weather, and others remain open, if not fully staffed.
The UK has a remarkably flexible labour market, and the answer depends on what type of contract you have got with your staff, and whether you keep the workplace open. There is no general right for employees who don't turn up for work to be paid, and if you open your workplace and they do not turn up, you may not be obliged to pay. Many employers do pay more than they are required to, but it is important to know when you are choosing to pay more, and when you have to pay.
If the workplace remains open as usual, and the employees fail to make it in to work due to travel difficulties, they are not automatically entitled to be paid for their absence. If they turn up late and they decide to go home early, they are entitled to be paid for the hours they actually work. If you send the employee home early, this has the same effect as closing the workplace for part of the day (see below). Employees can ask you to allow them to take the day(s) as paid leave. You are not obliged to authorise paid leave retrospectively but if you do so, make sure the holiday records are kept properly up to date. You cannot decide to make this a day's leave without the employee's consent. Employees who have to take the day off to take care of their children when local schools shut are entitled to dependants’ leave, which is unpaid. They are only entitled to be paid for the time off if their contract, or one of your firm’s policies, says they are.
You are only entitled to withhold pay for a lay-off period (when the workplace is closed) if your contract with the employee gives you that right. Check your contracts carefully. If your contracts do provide for ”unpaid layoffs”, employees are still entitled to guaranteed pay at the appropriate rate for the first five days’ lay-off in any three-month period. For these purposes a day's lay-off is a day when less than 50 per cent of ordinary work was provided. Employees are entitled to half their normal basic pay subject to a maximum of £21.50 per day.
Many employers have working systems that mean employees could work from home – either as part of their normal working-from-home routine, or on an emergency basis. These individuals are working and should be paid for their time.
There is an historic tradition in the UK (fading fast) that distinguishes between staff on annual or monthly salaries, and those on an hourly rate - the old “white collar-blue collar” divide. Traditionally, salaried staff are not paid by the hour, do not receive overtime when they work more hours, nor receive a deduction when they work less. These staff are viewed as being paid for service, rather than for the particular work performed. This group of individuals is generally entitled to pay unless the contract provides otherwise. You should check your contracts carefully.
This applies even if no work is actually performed or where the employee is prevented from working due to factors beyond their control, as long as the employee remains ready and willing to serve the employer. Ready and willing would normally mean making an effort to get to work where it is safe to do so. Locally based staff who could have made it in would not be automatically entitled to pay if they did not turn up. Many organisations no longer feel comfortable about having a two-tier contract system, and increasingly have one single status contract that applies to all. So it's possible your hourly paid staff may be in the same contractual position as salaried staff. A lot depends on what your contracts say.
Check the terms of your contracts - it may be that time not worked does not count for payment, and missed work will have to be performed at another time.
Annabel Kaye is Managing Director of Irenicon Ltd, a specialist employment law consultancy.
Tel: 08452 303050 Fax: 08452 303060
Website : www.irenicon.co.uk.
You can follow Annabel on twitter – http://twitter.com/AnnabelKaye.
Talking to my dad, who isn’t many years from retirement age, the other day, I was surprised to hear him say that he expects to work past 65. Then my mum walked in smiling with brochures for a cruise and it all began to make sense!
In all seriousness, recent research from the Chartered Institute of Personnel and Development (CIPD) reveals 71 per cent of workers aged 55 and above have had to postpone their retirement plans. Up from 40 per cent two years ago, the figures come as no real shock thanks to the current economic environment. Nearly three-quarters of over 55s admitted that money worries had forced them to keep working, with pension pots, savings and investments affected by the recession.
With more employees aiming to stay working for longer, employers must be aware they need to stick to age discrimination legislation, which makes it unlawful to treat people differently on grounds of age. On a personal level, my dad is concerned that the default retirement age, which allows employers to force people to retire at 65, may mean the option to retire is taken out of his hands, even if he remains fit and healthy. I think that’s a shame, and I tend to agree with Age Concern's head of public policy, Andrew Harrop who argues; "Employers need to start seeing beyond job applicants' age and look at the skills‚ experience and commitment older workers have to offer."
But for my family, it remains a problem a few years ahead. For now my dad really needs to work on his sea sickness.
Visit the Law Donut for more advice on age discrimination.
We are moving towards the time of year when many people take on Christmas temps (or are taken on as temps), so we thought we would give you some pointers on the legal side of temp work.
As we enter the time of year when many people take on extra help for Christmas, use our top tips to help you get legal side of employing temps right:
Annabel Kaye is Managing Director of Irenicon Ltd, a specialist employment law consultancy.
Tel: 08452 303050 Fax: 08452 303060
Website : www.irenicon.co.uk.
Employers need to change their employees’ contracts for a variety of reasons – often in today’s hard times, to help a business survive.
Once you know you need to change an employment contract, you need to know how to do it properly - unfortunately, contract changes done badly could be the downfall of a business.
Visits to online business forums will find numerous employers looking for help on how to change a contract. Invariably, forum members offer an array of advice, including enthusiastic suggestions the employer just goes ahead: “You can do this because you’re the boss.” But there’s a bit more to it – such as the law.
To understand what changes you can and can’t make, start by considering what a contract means. A contract is an agreement between two parties that governs an activity – in this case, a job: and includes specifics about, among other things, what work will be done, conditions and pay. For anything to change, employer and employee both need to agree. So it’s entirely wrong to think that anyone, boss or otherwise, can simply change a contract off their own bat.
Some contracts contain a clause that provides one party with the right to make changes without the other party’s consent. But even this has to be used in the correct, and rather limited, way – bosses can’t just increase working hours or reduce pay. These clauses can only be used to clarify existing terms, and make the odd tweak, not effectively to rewrite the agreement.
If you need to modify a contract, the most sensible option is to ensure there are clear clauses in your standard employee contract that allow for changes. These could include the right to introduce a shorter working week or temporary lay-offs.
Plan in advance – by getting comprehensive contracts in place, either at the time of appointment, or via agreed changes to the contract. Employees can’t be expected to freely agree to these changes during the contract, which is why it is wiser to get it right before staff start work. However, all is not lost if you haven’t acted in advance and need to make changes now.
Consider what is typically an annual change to the contract anyway – a pay rise. As one term of the contract – the pay – will be changing, there is no reason not to make other changes at the same time. You still need agreement (as does a pay rise, but employees don’t often protest about these). But if you’re offering a pay rise you may find staff are open to other contract changes to the contract as a condition for the increase (however modest).
Done properly, it can be very easy - even for employees on minimum wage. An offer to improve pay a couple of months early won’t cost the business much more, but the improvements to the contract could more than return the extra outlay.
New technology can prove a blessing for small business owners, saving them much-needed time and money. But the arrival of shiny new machines may not be all good news. Fiddly instructions, baffling electronic signals and disruption to working patterns can often be met with resistance by even the most loyal of staff.
Tesco recently announced the opening of their first entirely self-service shop in Northampton, with self-scan tills manned by a single member of staff. The company has faced criticism. As the UK’s biggest food retailer, with 4,300 stores worldwide, the understandable concern from employees is that, along with their traditional tills, they will become obsolete themselves.
This might strike you as a problem for corporations, not small firms. Sure, the first British small firm with no humans in it may be a long way off. But every SME that uses machinery or computers faces similar decisions to a megacorp - how best to weigh up the pros of tech advances, such as time and cost savings, against the cons.
Typically, for small firms this means not mass sackings, but extra training and reorganising disgruntled employees, keeping up complex, probably expensive systems and, finally, loss of personal customer service, a precious advantage small firms have traditionally held.
If you are considering introducing new tech into your business, one way to proceed is to let your staff know about the plans for change. The right approach before you implement a new action plan can calm employee fears, motivate people and improve their performance. By law, businesses with 50 or more employees who are facing major change must set up an information and consultation agreement if a significant percentage of employees asks for one. The firm’s owners should then inform and consult their employees before implementing changes. And in a smaller firm you may be able to get useful feedback from every employee. Implementing an information and consultation policy allows you to communicate effectively with employees and meet legal requirements - proving the point that human interaction can be irreplaceable, at least in some business situations.
Read the Law Donut’s advice on information and consultation with employees.
Most new business owners are too busy to read a lot of legal jargon or ‘business best-practice’, and as a result, can make some, er, interesting decisions about hiring and firing staff. We see all kinds of queries and misconceptions on our Irenicon hotline.
Here are answers to some of the most common managers’ questions:
1. “Surely small businesses are exempt from employment legislation?”
Sorry, no. There were limited exemptions for small businesses, but they have slowly been taken away, and nowadays small businesses are no more exempt from employment law than from any other law.
2. “If I don’t have any staff I can’t have any employment law problems - can I?”
‘Fraid so. The minute you pay someone to do some work for you, whether or not you view them as an employee, you can find yourself with financial and legal obligations. For instance, under PAYE, even self-employed contractors with their own limited companies can turn out to be your responsibility when it comes to tax pay – you could find the taxman coming to you for their tax and National Insurance. Check the specifics of your firm’s arrangements with HMRC’s free employer’s helpline on 08452 6070143. See points 3 and 4 too.
3. “How can I have responsibilities to people I’ve never hired?”
All workers have rights. Even people whom you have never taken on as employees. Whoever takes on a job for you automatically gets: protected from discrimination, entitled to the minimum wage, allowed companions at disciplinary/grievance meetings, and covered by working time regulations (holiday and hours worked in a week), as well as health and safety law. Just for starters. Get free advice from ACAS on 08457 47 47 47.
4. “Can it be true that someone else’s employees can be my legal problem?”
Yes. Not only do they have potential rights against you as workers (see above), but they can become your employees (or a drain on your cheque book) even if you have never met them - if you find yourself tangled up in the Transfer of Undertakings Regulations when you change your service provider. The rules on transfers (known as TUPE regulations) are complex and can seem irrational to the uninitiated. They also affect you and your staff if you lose a contract yourself. If you are buying services (even cleaners) or selling services you should take advice before you enter into or terminate a contract to avoid expensive mistakes. Again, call ACAS on 08457 47 47 47.
5. “Don’t my people have to work for a certain time to have rights?”
Not usually. Employees’ contractual rights begin the minute you offer them a job. The law specifically prohibits discrimination against part-timers, and the days of lengthy qualification periods are long gone. Many new, “expensive” rights such as discrimination start before an interview. Contractual rights begin when you make an offer, and ordinary unfair dismissal rights begin at one year’s qualifying service (which may be earlier than you think if you had a Saturday worker, or contract worker whose pre-employee work with you service will probably count towards their first year.
6. Surely if I am trying to do the right thing and I am fair I can’t get into trouble?
Employment law is increasingly concerned with how things are done. It ain’t what you do so much as the way that you do it. When it comes to discipline, dismissal, redundancy and many other areas, it is vital to adopt the right method or you can find yourself facing an unfair dismissal. There is no exemption for small employers and no “get out of jail free card” for new businesses. Even if you have never heard of a particular law, it applies to you.
7. “All these workers’ rights’ are very depressing - what is the point of having workers and staff?”
The point of employees is to increase your profitability. Many bosses spend more time choosing their company car than they do recruiting and contracting their staff. If you don’t chose the right people and contract them in the right way, you are more likely to run into trouble - just like picking a Porsche with your eyes shut. You can manage and improve performance in people and contract sensibly for what you need - but it is far easier to do this at the beginning before you run into trouble.
8. “Staff can just do what they want these days anyway - it’s not fair.”
Once you’re produced contracts and handbooks, communication is the key to performance management. Many employers ring our hotline when they are disappointed with their staff and convinced that an employee is being deliberately unhelpful. This is sometimes the case, but as often as not, there is a problem with communication. Wherever possible, try to be clear and consistent about what you want from a worker. A large part of a contract of employment is ’custom and practice’. Employers who tolerate bad performance over time can find it extremely difficult to raise standards again - it can be done, but it is so much easier to keep things right in the first place.
Annabel Kaye is managing director of Irenicon Ltd, a specialist employment law consultancy.
Tel: 08452 303050
Fax: 08452 303060 Website: www.irenicon.co.uk.
You can follow Annabel on twitter – http://twitter.com/AnnabelKaye
Irenicon offer 20 mins free advice to new callers.
With adult minimum wage rates going to £5.80 an hour, we ought to be prepared to justify in business and social terms how it is that some people are being paid five, ten, twenty or a hundred times that amount. We have spent so much time on ‘equal pay’, and this has brought only mixed results. Perhaps we should now turn our attention to ‘unequal pay’. We need to be sure we are not simply funding a ‘people-like-us’ wage spiral that has no underlying financial or commercial objective for the organisation, or indeed the nation. Annabel Kaye is Managing Director of Irenicon Ltd, a specialist employment law consultancy. Tel: 08452 303050 Fax: 08452 303060 Website: www.irenicon.co.uk. You can follow Annabel on twitter – http://twitter.com/AnnabelKaye
Who is entitled to be paid if workers can't get to work due to strikes?
Many workers have recently been affected by local tube or rail disruptions. Technically it is their responsibility to find an alternative route into work, however in reality, many employers arrange home working (where appropriate) which reduces stress and improves productivity. If you have an established car sharing or lift sharing scheme, you can suggest this to employees as an alternative way of getting to work.
However you should be careful you don’t end up setting up liability for uninsured drivers. If you are unsure whether an employee is insured to drive, you should not be ordering or directing employees to get into a car with that person. If it is a fully insured company car that is different.
Hourly paid workers are usually paid only for the hours they work, though salaried workers may be paid on a different basis. You should check your contracts to see if you do in fact pay people on an hourly basis or in some other way.
Annabel Kaye is Managing Director of Irenicon Ltd, a specialist employment law consultancy.
Tel: 08452 303050 Fax: 08452 303060
Website : www.irenicon.co.uk.
You can follow Annabel on twitter – http://twitter.com/AnnabelKaye