New Employment Rules

There are a host of new employment related regulations coming into force on 6 April 2010. This is a brief summary of the regulations that are most likely to affect you or your business.

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Fit notes – these replace sick notes issued by GPs and will state what the worker can do, rather t
han what he or she is prevented from doing.
Pension date – the date from which the individual can draw the state retirement pension will not necessarily fall exactly on a woman’s 60th birthday. For example, a women who reaches age 60 between 6 April 2010 and 5 May 2010 will have a state pension date of 6 May 2010. This date also affects the payment of the employee’s NI contributions.
NI contribution years – individuals who reach state retirement age only have to accumulate 30 full years of NI contributions or credits to gain a full state pension.
A single year of NI contributions will count towards the state pension. Until now a person had to accrue at least one quarter of their working life (about 11 years for a man, 10 for a woman) to be entitled to any state retirement pension. Each year of NI contributions will be worth roughly £3.20 of weekly pension at current rates. It will be essential to accurately record the NI number for every employee, so that each individual can collect their pension entitlement when they retire.
Home responsibility protection credits (HRP) will be given on a weekly basis. This will allow the HRP credit to be combined with actual NI contributions to make up a full year of NI credits. HRP credits are given where a person stays at home to look after a child and claims child benefit.

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Taking on an apprentice

The CBI has called on the government to provide extra subsidies to help apprenticeship schemes.

The employers’ group wants to see a portion of the government’s £500 million recruitment subsidy fund re-directed towards supporting new apprenticeships. Under the CBI scheme, some £125 million would go towards supporting an additional 50,000 apprentices.

Employers would receive £2,500 in order to supplement the cost of taking on each extra apprentice.

Benefits of apprenticeships
As well as helping to combat unemployment amongst young people, there are good business reasons for considering employing an apprentice.

There is a well-documented shortage of skilled labour in the UK, which can make recruitment difficult. It may make more sense to take on someone young or under-skilled and to train them in the skills your business needs.

The real advantage of an apprenticeship is that it allows an employer to do just this while at the same time providing them with administrative help, financial support and, most importantly of all, a disciplined, measured approach to training.

Apprenticeships are as suited to small as they are to large businesses. Most apprentices are young people, but courses are open to older workers.

Earn and learn
The way that apprentices learn their trade is through a combination of both on-the-job experience and externally structured training. Not only does an apprentice get to understand the needs of the firm, the external training system means they can also bring new ideas to their work and to the business.

There are plans to make apprenticeships integral to UK business. Some 500,000 places should be available within the next decade. Even by 2013, it is hoped to have an extra 90,000 apprenticeships open to 16 to 18 year olds.

At the moment, there are 180 apprenticeship courses, ranging from construction to IT, from catering to manufacture. Recruits and employers have a choice of two types of apprenticeship: a standard course that lasts a year and leads to a level 2 NVQ and a two-year course that leads to a level 3 NVQ.

For the employer’s part, they are required to organise the training and manage the apprentice while they are at work. Apprentices must be paid a wage of no less than £95 a week, although the UK average is £170, and given time off work to study (normally a day a week).

In return, the Learning and Skills Council (LSC) will foot the bill for the whole cost of training 16 to 18 year olds and half the cost of training someone over the age of 18. Additionally, grants from the LSC can help to offset the cost of employing an apprentice.

There is an online service that matches employer vacancies with people seeking employment as apprentices in a variety of sectors and areas of the country.

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Any business interested in taking on an employee, and making good the skills gaps they may be experiencing, can visit the LSC apprenticeship website at http://www.lsc.gov.uk/Vacancies/Apprenticeship/

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Health and safety on the road

Hands up all those employers who take a fairly relaxed approach to health and safety, because they think their work place is really quite a safe place, maybe an office?

Well consider this……

Car Crash - Stourbridge
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It is estimated that one third of all road traffic accidents involve someone who is ‘at work’!

Maybe you are thinking that providing all vehicles have a valid MOT certificate and the driver has a valid licence, then as employer you have done all you need to do – think again!

Health and safety law applies to ‘on the road’ working activities just as it applies to other work activities. If you send employees out onto the road, even if its only occassionally, then you have a legal duty to consider the risks they face as part of your health and safety system. Guidance is available from the HSE website.

Update

17/11/2009

By Jeremy Scott, Head of Regulatory and Corporate Defence at Langleys

Leading Lincoln law firm Langleys is alerting employers to the ruling in a recent case in which a company was fined £30,000 for breaches of health and safety legislation relating to the death of an employee who fell asleep at the wheel.

The driver was involved in an accident whilst driving home following a third consecutive shift of nearly 20 hours. The case is thought to be the first of its kind in the UK where the company in question was convicted even though their employee died outside working hours, on his commute home.

The Court in the ‘Produce Connection’ case found that the potato company had failed to monitor their employees’ working hours. The court heard that the driver was thought to be suffering from “chronic fatigue” and had subsequently fallen asleep at the wheel. The company was ordered to pay the fine, together with costs of £24,000, after admitting two breaches of health and safety law.

This case demonstrates the need for employers to seriously think about the impact of driver fatigue, during both working hours and also on the commute home. A number of recent and current investigations show that the police and HSE will be jointly investigating accidents with a view to including not only the employee who was driving, but also the employer, in any subsequent prosecution. Company directors and other senior employees could find themselves in the dock facing not only large fines but also a prison sentence following the increase in penalties under the Health and Safety (Offences) Act 2008, which has only recently come into force.

Langleys would advise employers to carry out appropriate risk assessments both in relation to employees and also in respect of each vehicle used and each journey undertaken. Thereafter they need to set up policies relating to driving, making it clear that any breach constitutes a disciplinary offence, provide ongoing training and back this up with relevant training records

The guiding principle here has to be that employers should periodically review driver fatigue, both during ‘at work’ driving, and during commuting, and develop measures to guard against it.

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Chilcare and Child Tax Credits

In order to qualify for Child Tax Credits (CTC’s) the person responsible for taking care of your children (child) had to be registered with the Childcare Approval Scheme.

Sandbox

From 18 July 2009 the Childcare Approval Scheme ceased to exist and all childcare providers approved under this scheme (for example a nanny or foster carer working as a childminder) must either become registered with Ofsted or they will become unregistered providers.

Taxpayers who are affected by this change are advised to check with their childcare provider to see what they have done or plan to do.

It is no longer possible to claim tax credits unless the childcare provider is registered with Ofsted from 18 July 2009.

If a childcare provider does not intend to register with Ofsted, an alternative registered provider would need to be used in order to be able to claim or continue claiming the childcare element of tax credits.

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Employment Law – new vetting scheme

Changes to employment law are underway. From the 12 October 2009 new measures are being introduced to vet the suitability of persons working with children or vulnerable adults.

It is to be called the Vetting and Barring Scheme (VBS) and will be

School children singing, Pie Town, New Mexico ...

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administered by a new public body to be called the Independent Safeguarding Authority (ISA).

From July 2010 all new employees can register with the ISA.

From November 2010 all new employees and volunteers must register before they start work. Until they have registered they cannot be legally employed.

Failure to comply with the new registration demands could possibly result in custodial sentences for the employee and the employer!

A range of useful online tools, posters and leaflets can be downloaded from the ISA web site at www.isa-gov.org.uk/toolkit .

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Paternity leave plans go on ice

Dad and children  on the tour
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The Government has bowed to pressure from business and proposals to extend paternity leave to six months from April 2010 have been put on hold as a result of the recession.

The Work and Families Act 2006 allows for regulations to be made which would permit working fathers to take up to 26 weeks of additional paternity leave, some of which can be paid, if the mother returns to work before the end of the one-year maternity leave period to which she is entitled.  The new provision would be available during the second six months of the child’s life, so in effect, fathers would be able to ‘share’ some of the maternity leave which is currently only preserved for the mother.  The entitlement would also extend to couples who are adopting and to partners and civil partners of mothers.

The Government had stated some time ago that the earliest date additional paternity leave and pay would be implemented was for babies due in April 2010.  However, a Government spokesman has now said that the Department for Business Enterprise and Regulatory Reform is continuing to review the appropriateness of all new regulations due to come into force in the current economic climate and, as a result, a date has not yet been announced for extending paternity rights.

At the same time, the Government had proposed to extend statutory maternity pay and statutory adoption pay from nine to 12 months (to coincide with the period of maternity and adoption leave) and it looks as if this is also on hold.

Under the current law, working fathers are only entitled to two weeks’ paid paternity leave, which is usually taken immediately after the baby is born.

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Disputes at work – the new rules

The regulations that govern how employers handle discipline, dismissal and grievance issues in the workplace change as from 6 April 2009.

The new system is designed to be more straightforward and flexible, the aim being to help employers resolve disputes before they reach the point of an employment tribunal.

The hope is the new rules will cut down on the time, money and stress that disputes can mean for employers. Which is why the emphasis is now being placed on dispute resolution mechanisms.

The Employment Act 2008 has implemented a number of changes.

The existing statutory procedures for dealing with discipline, dismissal and grievance issues, as established by the 2002 Act, are repealed.

A revised Acas Code of Practice is introduced, and Acas, the employment relations body, is to provide a free, early conciliation service.

Employment tribunals will have discretionary powers to adjust awards by up to 25 per cent if employers or employees fail unreasonably to comply with the Acas Code.

Tribunals will be allowed to award compensation for financial loss in certain types of claims.

The Acas Code of Practice

The new code replaces the previous Acas code, which was issued in 2004, and it establishes fair and transparent procedures that need to be observed in disputes. Adopting this sort of approach will be less time consuming and less likely to harm working relations.

Employees should be involved in the drawing up of these procedures, which should then be put in writing.

It is important that employees understand them, know where they can be found and know how they are to be used.

The code covers a number of principles that need to be followed to ensure that the process is fair, efficient and straightforward.

Issues should be raised and dealt with promptly. Meetings and decisions should not be delayed unreasonably.

Employers should always behave consistently. The facts of a particular case should be established through any necessary investigations.

Employees should be told of the problem and provided with an opportunity to set out their case before any decisions are made.

Employees should also be allowed to bring someone with them to formal disciplinary or grievance meetings, and they should be entitled to appeal against any formal decision made.

In instances of grievances only, the employee should explain the cause of the grievance to the employer at a formal meeting which both the employer and employee must make every effort to attend.

The employer should decide what is an appropriate course of action and inform the employee of this in writing. If the problem is not resolved, the employee should be permitted to take grievance further.

If an employee raises a grievance during a disciplinary process, the disciplinary may be suspended temporarily in order to deal with the grievance. If the two are related, it may be appropriate to deal with both at once.

Whereas the old code was mandatory in the procedures that had to be followed, the revised code is not. That means that failing to observe the code does not necessarily make a person or business liable.

However, employment tribunals will take the code into account when considering relevant cases. The tribunal will consider whether any failure to follow the code was unreasonable, while also recognising specific factors such as the size and resources of the business. Should the tribunal judge the failure to follow the code, by employer or employee, as unreasonable, it may adjust any awards up or down by 25 per cent.

Grievances

The code defines grievances as “concerns, problems or complaints that employees raise with their employers”. The word “grievance” does not need to be used in the complaint.

When the complaint is presented in writing, it is probable that it will qualify as a grievance, which means the employer should†treat it as such.

Employers should acknowledge the complaint and invite the employee to a formal meeting. By following the code and with guidance from Acas or a legal adviser, an employer should be able to handle problems before an employment tribunal is the only remaining option.

Disciplinaries

Acas defines disciplinary situations as those that include “misconduct and/or poor performance” on the part of the employee.

If businesses that have a procedure in place for dealing with the performances of an employees, this can be used; but the principles of ‘fairness’ set out in the code need to be observed.

Mediation

When the internal procedures of a business can’t solve a particular problem, employers should consider using an independent third party. A mediator may be someone who works within the same organisation, provided they are properly trained and not involved in the dispute, or may come from outside the business.

A list of registered workplace mediation providers can be found at www.civilmediation.org (England and Wales) and at www.scottishmediationregister.org (Scotland).

Employment disputes in 2009

With the change in regulation, employers may want to know how they should deal with disputes that straddle the 6 April dateline.

If the trigger event occurs on or after 6 April 2009, they should follow the new procedures based on the 2008 Act. If the trigger event occurs on or before 5 April 2009, they should follow the old procedures based on the 2002 Act.

In the case of a disciplinary or dismissal case, the date of the trigger event will be that on which the employer starts action against the employee. That is, the date the employee receives the letter that explains a disciplinary action is being contemplated.

Where no letter is sent, the date of the meeting at which the issue is raised will be the trigger point. In the absence of both, the trigger point is the date on which the disciplinary action is taken.

In the case of a grievance, the trigger date is the date of the action about which the employee complains.

More information on whether the new or old system applies can be found at www.berr.gov.uk/resolvingdisputes

Preparing for the new legislation

If your procedures for dealing with grievance, dismissal and disciplinary issues comply with current legislation (pre-6 April 2009), you may not have to change them to comply with the new code.

However, it does present the opportunity to review those procedures to make them easier to understand and apply. For example, you could draw up a more relaxed and informal approach to dealing with problems at work and consider including a mediation stage in your internal processes.

The Acas Helpline, on 08457 47 47 47, is open 8am-8pm Monday to Friday and 9am-1pm on Saturdays.

A copy of the new code can be downloaded at www.acas.org.uk/dgcode2009

This is only a brief outline of the new rules, and any employer who is unsure about the effects on their employment policies should seek professional advice.

National Minimum Wage changes April 2009

All employers should be aware that changes have been introduced to the penalties that will automatically be levied after 6 April 2009 if you fail to observe your obligations regarding payment of National Minimum Wage rates.

From 6 April 2009, a new automatic penalty will be levied where HMRC compliance officers find arrears of the National Minimum Wage (NMW).

Penalties will range from £100 to £5,000 and those employers who settle within 14 days of notification will receive a 50 per cent discount of the penalty for prompt payment. The penalty must be paid in addition to any arrears owed to the workers. The most serious cases of non compliance may be tried in a Crown Court and subject to an unlimited fine.

To reflect this change, the current system of separate NMW enforcement and penalty notices will be replaced by a combined notice of underpayment and penalty. This will be issued whenever HMRC discover that arrears were outstanding at the start of their enquiries.

The notice will detail the amounts due to workers and any penalty due on those arrears. For PAYE reference periods starting on or after 6 April 2009 the penalty will be half the total underpayments shown on the notice. HMRC can pursue arrears claims for workers going back up to six years.

You will be able to appeal both the amount of the arrears and the penalty to an Employment Tribunal (an Industrial Tribunal in Northern Ireland) under new appeal rights. You can call the National Minimum Wage Help line in confidence on Tel 0845 6000 678.

The rates are as follows:

The rates set are based on the recommendations of the independent Low Pay Commission. The rates change on 1st October each year.

National Minimum Wage rates applicable from 1 October 2008

  • Workers aged 22 and over – £5.73 per hour
  • Workers aged 18-21 –         £4.77 per hour
  • Workers aged 16-17 –         £3.53 per hour
  • Accommodation offset –      £4.46 per day (£31.22 per week)

Tips for new employers

The basic rules for employers with new employees are important for any business.

There is no ‘Casual Labour’ exemption, if you take an employee on with intention of keeping them for just a couple of weeks on a temporary basis – the rules still apply.

If the correct PAYE and NIC is not deducted off employees, then the Employer will be held liable for any shortfall discovered.

If a new employee does not have a P45 from their previous job, then they must sign a P46 (or if they are students working only in the holidays, a P38S).

If they tick Boxes A or B – they will be on the emergency PAYE code (of 647L in 2009/10)

Employees on the basic code of 647L will pay no tax on earnings up to £125 a week, above that tax is deducted at 20%.

National Insurance Contributions are paid by the employee (11%) and employer (12.8%) on earnings above £110 per week.

If the week’s earnings are between £95.01 and £110.00 per week there are no contributions deducted but the employee is still credited with a basic National Insurance contribution. For this reason a form P11 (deduction sheet) must be maintained throughout the year for the employee.

If the employer does not pay an employee more than the NIC LEL (Lower Earnings Level) (of £95 a week in 2009/10), they do not have to prepare a P11 deductions sheet for them or include them on the year end P35. However, the employer must still have a record of wages paid to each employee in each week or month.

Long service awards

Any salaried employee of a business can be paid a long service award. The way in which the award is given can radically influence the tax treatment!

All cash awards are taxable. They will be treated as part of your remuneration and subject to deduction of tax and National Insurance. Cash awards include:

* a payment including a cheque (This also rules out National Savings Certificates, premium bonds and so on.)
* a cash voucher
* a credit token
* shares other than those issued by the company employing the person who receives the award
* an interest or rights over securities or shares

Non cash awards are tax free if certain conditions are met. The conditions are:

1. The award must be made to mark a period of not less than 20 years service with the same employer.
2. It must not be a cash payment.
3. The taxable value of the award must not be more than £50 for each completed year of service.

For most employees the amount of the award is determined as the cost to the employer. For lower paid employees it is the second hand value of the award.

If the award exceeds the £50 for each year of service limit, only the excess is taxable.

If an employer makes multiple awards to the same individual, say after 20 years and then again after 30 years; each award qualifies as a separate award – this further concession does not apply unless there is a gap of at least 10 years between the awards.

If you have clocked up 20 years service you could receive goods to the value of £1,000 and pay no tax or National Insurance – that buys a lot of golf equipment!