Paul Moss from Buzzacott spent four hours (having planned 2!) sharing with our scalers the nitty gritty of human resources best practice in the UK. From contracts of employment to pension auto-enrolment, parental leave to TUPE we covered a huge range of topics in a short time, and the group were thoroughly engaged in the process.
Here are some of the key learnings we got from the experience:
Contracts of Employment
Employers are required to provide a written statement within two months of an employee starting work. Each statement must contain the name of the employer and employee, the location of the job, the rate of pay and frequency of the payment, the holiday entitlement and the job title and description. If the employee does not sign it, but is working to those conditions they can be deemed to have signed and accepted the terms (subject to the specific situation).
Holiday entitlement should be a minimum of 28 days including 8 bank holidays. If you have a flexible workforce who work part time or intermittently, their holiday pay should be a minimum of 12.07% of the hours they have worked. At direct.gov there is a holiday calculator to ensure that you can work it out correctly.
Although template contracts are available on the internet, Paul pointed out that regulations change frequently enough that we should not assume that these will be up to date, so checking the latest rules is important.
Often people add other matters into employment contracts, such as disciplinary procedures, pensions or sick pay arrangements. He advised us to avoid doing this, but instead to include these in an employee handbook which could be referenced in the contract. This is because the handbook can be changed easily, but a contract change requires both parties to agree to the change which can be difficult or impossible to achieve.
There are some minimum statutory requirements, which supersede a contract.
Notice Periods: the employer must give the employee 1 week notice of termination during the first two years of their employment and one additional week for each additional year’s service thereafter,up to a maximum of 12 weeks.
National Minimum Wage (NMW): until October 2016 these are £6.70 per hour for adults (21+), £5.30 per hour for 18-20 year olds and £3.87 for 16 & 17 year olds. There is also a minimum wage for apprenticeships of £30 per hour.
From April 2016 the rate for those aged 25 and older will go up to £7.20 when the government introduces the National Living Wage. This is confusing because there has been an independent body assessing a Living Wage and the London Living Wage for several years, based on the actual cost of living and at a higher rate than that set by the government (this year the London Living Wage is £9.40) – though the government does intend to move the rate higher over the next few years.
Statutory Sick Pay (SSP): You don’t have to pay your employees when they are off sick, apart from any entitlement they have to SSP. The SSP rate is currently £88.45 per week, and is payable after the three ‘qualifying days’ have passed. Once an employee has been off sick for a calendar week, they need to provide a doctor’s ‘fit note’ confirming they are not fit to work.
Statutory Maternity / Paternity / Adoption Pay: This is payable at a rate of 90% of an employees average weekly earnings for the first six weeks, and then is either £139.58 or 90% of average weekly earnings (whichever is lower) for the remaining 33 weeks. More on the amounts of time that employees can take off for these purposes below.
You can, of course, offer more than the statutory minima or offer additional employment benefits. For example, you may want to offer a health scheme (one of our scalers recommended a scheme called Simply Health, which is a health cashback scheme), better parental or leave entitlement or notice periods.
Right to Work / Background Checks
The employer is responsible for making sure that your employee is entitled to work in the UK, from the very first day they start to work for you. If you don’t, you could be fined £20k per worker, or, if you employed them knowing that they were not entitled to work in the UK it is a criminal offense and you could face imprisonment!
The checks apply to everyone – even if you think you know they are British or have the right to work for another reason, you must check. You need to obtain an original document (such as a passport from an EU country or a passport with a valid relevant visa) in the presence of the holder, then keep a clear copy and record the date that you checked it.
Some entitlements may change – for example, a visa may expire or be revoked – so you should undertake follow up checks where necessary.
Sometimes an employee will have entitlement to work a certain number of hours per week (for example some student visas allow people to work up to 20 hours a week). You can put a condition in the contract of employment that your employee should ask your permission to work elsewhere, as a protection that you are not breaking these visa conditions (or their second job is impacting the quality of the work they do for you). Bear in mind, though, that permission to take a second job should not be unreasonably withheld from your employee.
Key Policies and Procedures
These policies and procedures should be put in an employee handbook, rather than forming part of the contract of employment. This means you can change them when necessary. Sometimes government regulations change, requiring changes to these policies, so they should be reviewed regularly. Keeping these clear and up to date means that all parties know where they stand if issues arise.
Here are some of the key policies that you should include:
Equal Opportunities: the Equality Act 2010 brought together provisions from previous legislation (including Sex Discrimination, Race Relations and Disability Discrimination legislation) and updated it and included bans on discrimination on the basis of age, religion or sexuality to name a few.
Essentially, the Equality Act demands that everyone is treated fairly, that ‘reasonable adjustments’ may need to be made to ensure that an employee is able to function effectively in the workplace and that all employees should receive ‘equal pay for equal value’ work. Asking health-related questions in an interview is likely to be unlawful.
Disciplinary: Most disciplinary procedures will map out a staged process for disciplining an employee, starting with an informal conversation escalating to a formal procedure where necessary. Most employees will be given informal or formal warnings with a clear expectation of what needs to change, but occasionally the offense is so serious that it will count as gross misconduct and lead to immediate dismissal.
Employees have the ‘Right to be Accompanied’ to any hearing. This can be a trade union representative or another employee. The employer is not allowed to refuse a companion provided they fall under one of these two categories. There should also be a clear appeals process, where possible to a higher level of management within the organisation.
Grievance: A grievance is a complaint that an employee has about their employer or a colleague’s actions towards them. Like the disciplinary process, there can be informal and formal stages. You could also use mediation to resolve the issue, and if there is any possibility that the grievance might end up at an employment tribunal this will certainly be expected in advance.
Again, employees have the ‘Right to be Accompanied’ and can appeal a decision.
Health and Safety: As soon as you have five or more employees, you have a legal requirement to have a health and safety policy. The policy should cover these key areas: general responsibilities, first aid, accidents and incidents, risk assessments, manual handling, fire precautions, electricity, smoking, drugs and alcohol. You also have to display an HSE Health and Safety poster at your premises. The risk assessment section should take account of the specific issues at your workplace including any food preparation, working at height, working with specific equipment and so on.
Maternity, Paternity, Shared Parental Leave, Parental Leave:
Maternity Leave can be up to 52 weeks long, and is made up of 26 weeks Ordinary Maternity Leave and 26 weeks Additional Maternity Leave. Employees don’t have to take it all, but they must take at least 2 weeks after the baby is born, or 4 weeks if they work in a factory. They may also be entitled to take some of the leave as Shared Parental Leave (see below). The earliest maternity leave can start the leave is 11 weeks before the baby is due, or automatically the day after the baby is born if it is early or if the employee is off work for a pregnancy related illness in the four weeks before the baby is due.
An employee is entitled to Statutory Maternity Leave if they are an employee not a worker (which usually means they work regular hours) and tells the employer at least 15 weeks before the due date that they want to take SML. To be entitled to Statutory Maternity Pay, they need to have been employed continuously by this employer for 26 weeks or more by the qualifying week, which is 15 weeks before the due date.
Paternity Leave can be up to 2 weeks long, cannot be taken before the baby is born and must end within 56 days of its birth. A father can also take unpaid leave to attend up to 2 antenatal appointments with them.
Shared Parental Leave: This is a mechanism for parents to share the 52 weeks maternity or adoption leave between them, so the parent they choose to be in the childcaring role can take leave from work to do so.
Parental Leave: The parents of a child are entitled to up to 18 weeks unpaid leave for each child until the child is 18 years old, with up to 4 weeks available each year. This leave is dependent on the child, not the employer, so if a parent has used 6 weeks with one employer, they can use a further 12 weeks with their next employer. They are entitled to request this leave once they have been with the employer for a year.
Sickness: A sickness policy should clarify the difference between short-term and long-term sickness and different provisions may arise for long-term sickness. This is also important when an employee goes off sick intermittently for the same condition.
Your employee should know how to notify you if and when they are off sick, and how their absence will be handled. After a set number of days, you may require them to obtain a ‘fit note’ from a doctor and (usually for those who are off long-term sick) the employer may have the right to refer the employee to a medical practitioner.
Your sickness policy should document what the employees pay will be while off sick. Bear in mind that employees still accumulate holidays during sick leave. The sickness policy should also clarify when employment will be terminated.
All employers are being included into a scheme where they and their employees can contribute to a pension. Pension auto-enrolment took effect in 2012 and is gradually being rolled out until 2018 when it will affect all employers. Each company is given a ‘staging date’ for them to comply with the regulations. To see when an employer needs to do this, just put the employer PAYE number into the website of the pensions regulator.
A worker needs to be automatically enrolled from when they are aged 22 until state pension age, and earning over £10k per annum. However, an employee may ask to join a scheme when they earn as little as £5,824 per annum.
The minimum level of contribution is set by the government and is based on the qualifying earnings (which in 2015/16 are the earnings between £5,824 and £42,385). There are also changes in the next few years:
From the employer’s staging date until March 2018 the minimum employer contribution is 1% and the minimum total contribution is 2% (i.e. the employee has to add their own contribution if the employer contributes less than 2%)
From April 2018 to March 2019 the minimum employer contribution is 2% and the minimum total contribution is 5%
From April 2019 onwards, the minimum employer contribution is 3% and the minimum total contribution is 8%.
Some pension schemes don’t want to work with tiny employers, because it is too costly for them. If you are unable to find another suitable scheme, the government’s NEST scheme is always available as a back up.
This stands for ‘Transfer of Undertakings, Protection of Employment’ and protects employees’ rights when the organisation or service they work for transfers to a new employer. It can occur in two ways:
The entire business or part of a business is transferred
Service provision is transferred by outsourcing, insourcing or re-tendering
The employee carries their Terms and Conditions with them when they join the new employer and is protected against changes / harmonisation of these Ts and Cs for an indefinite period if the sole or principle reason for the change is the transfer. Dismissals due to a transfer are also unfair.
Employers must inform / consult with employees. Essentially, an employer should ask themselves if they could make this change to the Ts and Cs of their own employee. If the answer is ‘no’ then it also means you cannot make the same change to your new employee. If an employee believes you are breaking TUPE rules they can resign and claim constructive dismissal.
You can make someone redundant for economic, technical or organisational reasons, just as you would for any existing (non-TUPEd) employee.
Paul Moss, Manager, Buzzacott HR Consultancy
Paul has extensive experience on providing a range of tailored HR solutions to clients across a range of sectors including charities, religious orders, financial institutions and technology/media companies. Paul specialises in advising clients on HR and Employee Relations issues including employment law, recruitment, performance management and HR policies and procedures.
Buzzacott’s HR Consultancy team offers two core areas of business: HR Services and Development Solutions. The team’s goal is to provide practical, commercial and cost effective results to its clients. As such its work is broad and varied and the team advise on all people related issues both strategic and operational. The HR Consultancy Team believe in maintaining open lines of communication with the objective of improving business performance through people in a legally compliant, best practice way.