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Employment rights changes on the horizon

Written by admin on . Posted in Employment Law, Employment Rights. No Comments on Employment rights changes on the horizon

The Employment Rights Bill working its way through parliament will have serious implications for employers once finally enacted. Along with the loss of options for offering more flexible working arrangements, the changes are likely to cost businesses several billion pounds a year to implement.

Businesses operating in the hospitality sector will take a significant hit from implementing and complying with the package of improved workers’ rights.

Day one rights

Some employment rights are currently only available after an employee works for a qualifying period:

  • Protection from unfair dismissal requires two years of continuous employment.
  • Paternity leave is only available after 26 weeks of employment, with unpaid parental leave requiring a year.

The Bill will see these rights available from day one of employment. Not surprisingly, employers are concerned that in future they will be unable to easily dismiss those employees whose performance is not up to par. However, the Bill does provide for an initial period during which the rules for fair dismissal will be less onerous.

The Bill also removes the three-day waiting period before an employee is entitled to statutory sick pay and the minimum earnings level, potentially increasing employer costs.

Zero-hours contract

Under current zero-hours contracts, workers are not guaranteed how many hours they will work, simply working when requested. However, the Bill will mean that workers must be offered a contract with guaranteed hours based on the hours worked over a 12-week period. Workers must also be paid for any shifts that are cancelled, moved at short notice or curtailed.

Although the Bill will not abolish zero-hours contracts as such, this change will be problematic for employers that make extensive use of seasonal workers. Their period of work will probably be curtailed to less than 12 weeks.

As yet, there are no specific start dates for the proposed changes, although employers need to review their employment practices and start preparing well in advance.

Factsheets covering the various measures included in the Employment Rights Bill can be found here.

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New carer’s leave in effect

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Employers need to be aware that since 6 April 2024, employees are entitled to take a week’s unpaid leave each year if they need to fulfil caring responsibilities for a dependant. An important consideration is when an employer is entitled to postpone a request for carer’s leave.

The basics:

Employees are entitled to carer’s leave from their first day of employment. The provision means:

  • A dependant can be anyone who relies on the employee for care, not just family members. Dependency could be because of old age, a disability, illness or injury.
  • One week of unpaid leave can be taken every 12 months, with a week being the length of time normally worked over seven days.
  • An employee can take a whole week or take the leave in individual days or half days.
  • The minimum notice period to be given to the employer depends on the number of days leave to be taken.

Apart from more obvious examples, carer’s leave could be used to care for an elderly neighbour when their main carer is unavailable, or to accompany a housebound relative on a day trip.

As an alternative to carer’s leave, an employee might be able to instead take time off for dependants, parental leave or holiday entitlement.

Postponement

A request for carer’s leave cannot be refused, but an employer can ask for it to be taken at a different time if the employee’s absence would cause serious disruption. The request can be postponed for up to one month. Options to consider include:

  • Could an employee from another team or branch be temporarily reallocated to cover for the employee taking carer’s leave?
  • Is the employee open to taking a shorter period of carer’s leave, such as a half day rather than a full day, if this overcomes the serious disruption issue?

The Acas guide to carer’s leave can be found here.

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Employment Law: Request flexible working rights from day one

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From 6 April, employees now have the right to request flexible working from their first day at work. However, the right is still only to make a request and employers are under no obligation to approve it.

Flexible working is not just limited to working from home. For example, an older employee may request to gradually reduce their hours as they approach retirement, or those with child or elder care responsibilities may request to vary their hours.

What the changes mean:

The changes that have come in from 6 April 2024 include:

  • Day one request: flexible working can be requested from the first day in a new job (previously 26 weeks employment was required);
  • Two requests: flexible working requests can be made twice within a 12-month period (previously it was one request a year);
  • Two-month decision: employers must decide whether or not to approve a request within two months of receiving a request (previously three months); and
  • No employee statement: employees are no longer required to state the impact of their flexible working request upon the business (previously this was a difficult requirement for new employees).

Unless the employer agrees with the request for flexible working, they must consult with the employee before making a decision. The meeting can be used to explore alternatives or variations to the original request, and maybe consider whether there should be an initial trial period to see how the new arrangements pan out.

Rejecting a request

No changes have been made to the reasons that employers can give to turn down a flexible working request, although a valid business reason is required. Some of those reasons could be, for example:

  • unacceptable additional costs due to a request;
  • it’s not possible to re-organise work among other employees;
  • detrimental impact on performance while working from home; or
  • insufficient work to accommodate a change in an employee’s working pattern.

The latest Acas code of practice on requests for flexible working can be found on their website: https://www.acas.org.uk/acas-code-of-practice-on-flexible-working-requests/html

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Another lesson learned in equal pay

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Having already paid out over £1 billion in equal pay claims, and now facing claims for further millions, Birmingham City Council’s financial crisis is a stark reminder of why it is so important to get equal pay right.

All employers will undoubtably know the basic principle that men and women must receive equal pay for doing equal work. However, it is possible for employers to be caught out by some complications of the rules:

  • Associated employers: equal pay applies across associated employers. This is not about overall control, but also where one organisation sets the pay and benefits for both entities.
  • Pay: equality extends to payment for holidays, overtime, redundancy, sickness and performance. Entitlement to benefits, such as company cars, must also be on an equal basis, along with pension funding and entitlement.
  • Terms and conditions: the whole employment package needs to be equal – not only salaries. For example, working hours and annual leave allowance must be equivalent.
  • Right to equal pay: it does not matter whether employees are full-time or part-time when considering equal pay; apprentices and agency workers are also included.

Equal work

Where equal pay rules become less black and white is in the arena of equal work. This is where Birmingham City Council came unstuck. The original dispute in 2012 arose because bonuses given to staff in traditionally male-dominated roles discriminated against female workers working in roles such as cleaners, teaching assistants and catering staff.

Comparisons are not necessarily on an exact like-for-like basis. It might be that the level of skill, responsibility and effort needed to do work are equivalent, or work might simply be of equal value, even if the roles seem different, such as comparing warehouse and clerical jobs.

Differences in pay

Although differences in pay terms and conditions are permitted, this must have nothing to do with gender identity. For example, someone in a similar role could be paid more if they are better qualified or are employed in a location where recruitment is difficult.

One way for employers to avoid equal pay disputes is to be transparent in regard to pay and grading systems. Job descriptions should be up-to-date and accurate.

The Advisory, Conciliation and Arbitration Service (Acas) has published guidance for employers on equal pay on its website.

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Planes, trains and automobiles – managing employees’ transport challenges

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With strikes and cancellations affecting trains, the underground and flights, employers need to decide how they are going to treat employees who cannot get into work or are stuck overseas.

Commuting

Although inconvenient, there is generally plenty of notice when it comes to train, tube and tram strikes, and therefore the chance to make contingency plans. With hybrid and homeworking now commonplace for many offices, this will be the simple and obvious answer to discuss with employees on affected days.

Employees who are required to attend work in person may face a longer and/or more expensive journeys than normal – especially if an alternative mode of transport is required. So employers should consider offering help with some financial assistance. Some absences may be avoided by rearranging work patterns or promoting car-pooling for instance.

Stuck overseas

The treatment of employees who cannot return to work after a holiday because they are stuck overseas due to a cancelled flight is somewhat more problematic.

  • If an employee can resume work as usual while abroad then they should obviously be paid as normal. It is unrealistic, however, to expect most employees – especially if not in a senior position – to have travelled with their work laptops.
  • Assuming sufficient annual leave is available, extending a holiday may be an answer where an employee is unable to work remotely. Or the employee may be happy to take unpaid leave.
  • Although there is no requirement to otherwise pay an employee who is stranded overseas, the employer might consider treating it the same as an emergency situation and remunerating on a similar basis to other emergencies, especially if the employee is taking all reasonable steps to return home.

Employees may not be able to leave the UK for their holiday in the first place and so need to rearrange their dates. Employers do not have to agree to this, especially given short notice, but a flexible approach is advisable where possible.

The Government’s guide to holiday entitlement for employers and employees can be found here.

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Off-payroll mistakes now penalised

Written by admin on . Posted in Employment Law, Employment Tax, Income Tax, IR35, Litigation & Dispute Resolution. No Comments on Off-payroll mistakes now penalised

The private sector off-payroll working rules have been in place since April 2021, but for the first 12 months businesses have benefitted from HMRC’s relaxed stance on penalties. HMRC will now, however, penalise mistakes made in applying the rules.

HMRC will charge penalties for any inaccuracies relating to the operation of the off-payroll working rules that occur from 6 April 2022 onwards.

Medium and large-sized private sector contracting companies are responsible for determining the employment status for any contractors they use.

Size check

Small private sector contractor companies are not subject to the new off-payroll working rules. Size classification is based on the Companies Act definition and should be checked each year.

  • This is particularly the case if a business has grown in size or been bought by another organisation.
  • It is good idea to confirm small company status with contractors as they will be responsible for determining their employment status.

Compliance

There would be no problem complying with the rules if there was a clear definition of employment as opposed to self-employment. Unfortunately, HMRC’s Check Employment Status for Tax (CEST) tool falls well short of what is required, and even government departments have found themselves liable for millions in additional tax after erroneously relying on the CEST tool.

Two recent Court of Appeal cases (both pre-dating the change in rules) show how difficult determining employment status can be:

  • Paul Hawksbee, a regular presenter for TalkSport Radio, prevailed at the First-Tier Tribunal, but HMRC was successful at the Upper Tribunal. This has been confirmed by the Court of Appeal, resulting in a tax cost of over £140,000.
  • Kaye Adams, a presenter for BBC Radio Scotland, was successful at both the First-Tier Tribunal and Upper Tribunal, but the Court of Appeal felt the Upper Tribunal had erred in making its decision. The case has therefore been sent back to the Upper Tribunal to be reheard. Tax of over £124,000 is at stake, with Adams’s legal costs outweighing this amount.

Guidance on the off-payroll working rules for contractor companies, along with some useful links, can be found here.

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Temporary changes to sickness absence rules…………

Written by admin on . Posted in COVID-19, Employment Law. No Comments on Temporary changes to sickness absence rules…………

The government has introduced temporary sickness absence rules, effective 10 December 2021 until January 26th 2022.

The new rules provide an exemption the provision of proof of sickness until 28 days of being off work. Guidance for employees, employers and line managers.

The new rules are introduced to provide relief from GPs having to provide fit notes during the period so they can concentrate on working on the Covid booster programme.

For further information on this, click here

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‘No jab, no job?’ and other workplace challenges

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Now that more employees have been returning to the workplace, employers face several potentially challenging issues. Vaccination is one of the most problematic – businesses may wish to insist on employees being vaccinated, but there is concern that such policies could leave employers open to a legal claim of unfair dismissal or discrimination.

Reluctance to return

If workers feel they are not able to return to the workplace, this cannot be treated as a redundancy situation because the employee’s job still exists. Where an employee has been successfully working from home, it will be quite difficult for the employer to then reject a request to make home or flexible working permanent. Developing a clear and sustainable hybrid working model, where suitable for the position, may be the sensible way forward.

Safeguarding

Over the last 18 months most businesses have already invested in safeguarding measures for employees – from additional sanitising precautions to barriers in the workplace between desks and workstations. As more people return, additional measures may be required, including testing.

There is no reason why an employer cannot implement a policy requiring regular Covid-19 testing as a condition for workplace attendance. This could be achieved by:

  • the employer buying tests and setting up workplace testing;
  • paying an approved provider; or
  • asking employees to arrange their own testing.

Employers should draw up a clear plan on how positive test results are to be managed. Other issues to iron out may be around how testing will apply to everyone attending the workplace, such as visitors, or only employees.

 Vaccination policy

Insisting on employees being vaccinated as a condition of workplace attendance is a more contentious issue, especially if it’s just one or two employees who are opposed to immunisation. UK employment rights mean that employers are expected to tread carefully.

Although there is no legal reason why an employer cannot adopt a full vaccination policy, this is a risky approach to take. Along with potential legal claims, it could also mean the resignation of key personnel. A more practical approach is for employers to encourage employees to get vaccinated support this by offering time off during working hours to do so and where possible discuss concerns. Homeworking might be the easiest way to deal with the issue of an employee who does not wish to be vaccinated and handling their colleagues’ expectations.

The employment service ACAS has produced a guide to workplace testing for Covid-19.

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Managing the end of furlough

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After playing a crucial part in managing the impact of Covid-19, the Coronavirus Job Retention Scheme (CJRS) is set to end on 30 September. Although some business sectors, such as hospitality, are currently seeing severe staff shortages, other employers may struggle when furlough is phased out.

For September, the CJRS only covers 60% of an employee’s wages, up to a cap of £1,875, with the employer having to top this up to at least 80%. All claims must be made by 14 October.

Redundancies

If you find you do need to restructure your staffing levels, any furloughed staff who are to be made redundant have the same legal rights as any other employees. So any decisions need to be mindful of unlawful discrimination or unfair dismissal.

A business may select staff for redundancy based purely on the fact that they were the ones to be furloughed. The level of risk to this approach will depend on the reasons why staff were chosen for furlough, the selection process used to do this, and whether these were fair. Large groups of 20 or more redundancies will require collective as well as individual consultation.

Alternatives

There are a few alternatives to redundancies to consider:

  • A hiring freeze;
  • Redeployment of staff to different areas of your business;
  • Postponing salary increases; or
  • A temporary reduction in hours across the workforce.

A temporary reduction in hours could be run on a similar basis to flexible furlough, just without the government support. Experienced employees are retained, and employees should be better off compared to being made redundant and having to claim universal credit. Employee consent is required to alter contractual terms.

Payments and support

If you do have to make employees redundant then they are entitled to statutory redundancy payment (after two years of employment) and untaken holiday pay. There may also be notice pay depending on circumstances.

the main form of support for most employees until they find alternative employment will be universal credit. This is a very different animal to furlough, and for many there will be a big drop in income.

This will certainly be the case for higher earners because universal credit doesn’t take account of previous income levels. Anyone with a high earning partner or significant savings may not be entitled to universal credit at all.

Guidance to making staff redundant can be found here. Let me know if you need bespoke advice in this area. I can be reached on 01691 655 060 x Ext.7 or by email at femi.ogunshakin@nexa.law

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“Hear it Not, Duncan……..

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….for it is knell that summons thee to heaven or to hell.”

I know: not quite the cheerful entry to a blog, however, those immortal words from my favourite Shakespeare play: uttered by Macbeth on his way to his dastardly deed, the murder of King Duncan, seems an appropriate proclamation to make regarding the introduction in less than a fortnight, of the new Off Payroll rules.

The cause of much debate, the controversial rules will see a marked change in the approach adopted by both business and HM Revenue and Customs, and not wanting to add to the massive body of arguments published and circulated to date, I thought I’d merely summarise the new rules for those who’ve recently arrived from Pluto (is it or isn’t it a planet: I forget!?), so here goes:

From 6 April 2021, any medium or large-sized organisation engaging a worker operating through an intermediary will be responsible for determining the worker’s employment status. This status must then be communicated to the worker and to any party contracted with for the supply of the worker, such as an agency.

Although the client (the medium or large-sized organisation) is responsible for determining employment status, it is the fee-payer who will have to operate PAYE if the determination means the worker falls within the off-payroll working (IR35) rules. The fee-payer, as the name implies, is the organisation paying the intermediary, and will often be different to the client. The intermediary will typically be a personal service company, but could also be a partnership, LLP, a managed service company or even an individual.

Status determination statement

Regardless of the outcome of the status determination, the client must provide a status determination statement (SDS) confirming the conclusion and the reasons behind it.

If there is a labour supply chain involved, the SDS must be passed down each stage of the chain until it reaches the fee-payer. This is extremely important, because if an agency receives the SDS but then doesn’t pass it on down the supply chain, the agency will be treated as the fee-payer, with responsibility for deducting taxes and paying them over to HMRC. The same for the client, who will be treated as the fee-payer until the SDS is carried out and communicated.

There are other situations where the client can end up being treated as the fee-payer:

  • Failure to take reasonable care when making a determination; and
  • Failure to respond within 45 days to a disagreement regarding a determination.

The issue of status will have to be re-checked if the working practices of the engagement change or a new contract is negotiated with a worker.

HMRC’s guidance to off-payroll working for clients changes in April 2021. Details, along with several useful links, can be found here.

So, as we march towards the end of the current tax year and into the change to current IR35 arrangements, it remains to be seen whether or not Macbeth’s knell will apply to the critical and valuable contribution made by Personal Service Companies to the UK economy.

As for me, it’s Friday, so “I go and it is done” – this piece that is!

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