The UK not such a great place to come and work?
April 30, 2008
On the radio this morning it was reported that a new report out claims that half of the migrant workers that have come to the UK to work from Eastern Europe since 2004 have gone back to their home country, which accounts for half a million workers. This has been attributed to improved economic conditions in countries such as the Czech Republic, Hungary and of course the most widely reported, Poland. According to the Institute for Public Policy Research (IPPR), the number of incoming workers from these countries is likely to fall as well in the coming months. One lady interviewed on the radio said that she came to the UK to save money to send home but this option is no longer more financially attractive than living and working in Poland.
So what will this mean for our labour market and economy? A number of UK industries, particularly at the low pay end of the market, rely heavily on migrant workers who, if you believe all the media stories, work longer hours and are more reliable than their UK born colleagues. According to recent documentaries on TV, our economy would collapse if we didn’t have so many migrant workers – so should we start panicking now? Or are we being subjected to the usual spin and storytelling of our country’s leaders and the media? We will just have to wait and see.
No ‘room for improvement’ in footie anymore
April 29, 2008
Times have changed in top flight football these days, and I really feel for the managers at the top of the game (well I would do if they didn’t earn the salaries they do!). Gone are the days where you can build a wining team from youngsters coming through the youth team, or gradually build a squad that takes you into Europe after a few seasons. Now that many of the clubs are being bought out by billionaire businessmen, there’s no time allowed for managers to ‘bed in’ and develop the team ethos and competence that’s required for the major tournaments. The latest manager that looks like he’s next for the chop is Sven-Goran Eriksson, who has apparently been told he will get the sack at the end of the season, due to recent poor performances, in particular throwing away a 2-0 lead at home against struggling Fulham at the weekend. This to me is absolute madness, City have had a relatively fantastic season in comparison to the last couple, and I think it’s unreasonable to expect anything more than what has been achieved in the time Eriksson’s been there. The target set out last summer was to finish in the top ten and currently they’re ninth, so the goalposts (excuse the pun) have been moved somewhat if the Thai owner, Shinawatra’s expectations have been raised because of City’s early good form, which happens often with clubs when there is new management in place. Other managers have had similar experiences, where they are expected to hit the ground running and have a miniscule amount of time to deliver results, Sam Allardyce’s experience at Newcastle being another example. I know it’s all about money now and clubs have to perform big to bring in the profits expected of the new owners, but to me this approach just seems to put teams back through a lack of consistent leadership. It can’t be very motivational for the players who have been getting used to the style of a manager, only to read in the papers they may soon be having another, and it’s not brilliant for the fans either.
Does this type of thing happen in business as well? I think so. Business is so competitive now that senior managers need to be able to deliver new and increasing requirements at a much quicker pace than before. Expectations are really high, especially for companies that are moving into larger competitive arenas from small scale operations. But it’s no good reacting in the way of the major football clubs: perform soon or you’re out. Because the next person will also need to have time to develop in their role, settle into the organisation and learn what it is that needs to be done. The role of HR in all this needs to be to help to manage the expectations of owners / senior managers in terms of what can be achieved, and to assess what is needed by the individuals in the high pressured roles to help them to get up to speed and delivering as soon as possible. And this is not an easy job!
Petrol Panic!
April 28, 2008
Industrial action is a hot topic at the moment, what with teachers staging walkouts and similar threats from postal workers (again) and pilots. Now it’s workers at the Grangemouth oil refinery in Scotland, and, as has been widely reported in the media, this is now affecting petrol supplies to areas of Scotland and the North East of England.
The dispute is over the final salary pension scheme which the employer, Ineos, wishes to close to new workers. A series of talks between Ineos and Unite, the Union representing the workers, failed at the end of last week, leading to the two day walkout which began on Sunday. This has led to the close down of the plant and the pipeline which apparently supplies around 30% of Britain’s daily oil output. The public have been encouraged to carry on as normal and not run straight off to the pumps to fill up, but we all love a bit of drama don’t we and it looks like panic buying has occurred all over the place, ignoring the fact that there’s plenty to go around if we’re all sensible! (Although by chance I filled up the day before it was all announced so I would say that wouldn’t I…). According to reports, there has been little public support for the strike, and I’m not really surprised with so few companies now offering a final salary pension scheme, and also the high value we place on petrol in terms of our basic needs.
I’m not sure if it’s just me, but it appears that the amount of industrial action taking place is on the increase. Whether it’s a sign of the times with less financial stability all around us, or whether I’m just more attuned to these things than I used to be, I don’t know, but it seems that employee relations is moving up the agenda in terms of the key roles for HR professionals in the current climate of the world of employment.
Staff motivation
April 25, 2008
According to a new survey carried out by YouGov on behalf of Investors in People UK, 30% of workers are de-motivated in their current role, and the main reasons for this are lack of development and career progression opportunities. The research found that people who had been in their role for one to two years are most likely to want to leave. This is because their employer focussed all of their efforts on the induction period, where a lot of development and progression took place, but once the employee was settled in the role the focus on development tailed off. I was speaking to a colleague of mine the other day and he said that personal development had always been more important to him than his salary prospects, and I suspect that for a lot of other people this is also the case.
The research also highlighted the important link in making this happen – line managers. 28% of survey respondents to the survey who had a line manager felt unsupported by them. I can’t express enough the impact of the line manager’s actions and management style on the morale, motivation and job satisfaction of employees. No matter what great policies and procedures are in place, an employee will still be de-motivated if they do not feel that their manager takes an interest in their work and their future career path. Staff who do not feel this connection with their manager will be those who lose track of their goals, lack commitment through low motivation and will probably eventually leave after one or two years.
The UK supposedly has one of the lowest productivity rates in the world, even though we work longer hours than most other countries, so there has to be something in staff motivation levels. From the findings of this research, it looks like many companies have a lot more to do in terms of staff development and career planning; something that’s probably quite obvious if you think about it.
When is an employee an employee? (2)
April 24, 2008
Yesterday’s article looked at the differences between workers and employees, and two of the factors that are used by ETs to try to determine which one a person is in a case where there is a dispute. Two other important factors are financial indications and ‘mutuality of obligation’.
Financial Factors
How the employee is paid, how dependent they are on the company for money and whether they provide their own equipment can indicate whether a person is employed by the company or self employed. If they do not ‘risk their own capital’ as, say, a building contractor would do, they are more likely to be employed by the company. An example is someone who works on a temporary or ‘contract’ basis for the company, but whose sole income relies on this work. People who provide their own tools or equipment, as in the case of an independent electrician for example, are more likely to be self-employed. The way payments are made can also indicate the employment status: if the person is paid directly by the company, and the company makes tax and national insurance deductions on their behalf, then this indicates a relationship of employment. If the person invoices for their payments and carries out their own taxation then they are probably self employed.
Mutuality of obligation
This is a really important factor in determining whether someone is an employee, and was the main factor in the famous case of Carmichael mentioned yesterday. For an employment relationship to exist, there needs to be an obligation on the company to provide work and an obligation on the person to carry out the work when asked to do so. It is easy to see how this area could be so important in many cases. In Carmichael, this mutual obligation did not exist, and the key factor was that on some occasions the worker had declined offers of work. In a number of other cases, there had been times when the worker had sent a substitute to do the work for them, and this had been critical in the decision of the ET. So the need for that actual person to be doing the work appears to be a crucial factor.
There are other factors that an ET would consider – in one case the ET used 17 different factors to determine whether a contract of employment existed - however these four from today and yesterday are some of the more common and important areas to consider. Each factor will be weighed up against the others and the overriding opinion of the person’s status will be determined from this balanced view. In one area the person could be considered an employee, but another factor could overrule this if it appeared to be more important, so it’s a bit of a minefield really.
This isn’t something that HR people will be faced with on a day to day basis, but the fact that there are many cases that have looked at this area of the law means that it is something to have a general awareness about. As usual, an employment lawyer or advisory service would be able to give good advice when an issue arose with someone who was perhaps borderline between contractor and employee.
When is an employee an employee?
April 23, 2008
Whilst the terms ‘employee’ and ‘worker’ may mean the same for many people, employment law distinguishes between the terms, and there are different rights relating to the two groups. An example of a major difference is that ‘employees’ may make a claim to an employment tribunal for unfair dismissal, whereas a worker may not. Employees also have a right to a contract of employment, parental rights such as statutory maternity leave and pay, rights connected with belonging to a Trade Union, and many other rights that workers do not have. It is important to understand how the two can be distinguished, and that simply saying that someone is not an employee, or even denying the fact by failing to provide a contract of employment, may not be enough to prove to a tribunal that the person was ‘self employed’ and not employed by you. This is a particularly common issue with companies using specialists on a consultancy basis, or contractors, for example on a building site, and the topic is quite closely related to the recent developments in the laws relating to agency worker rights.
There have been many cases that have had to determine a person’s status within a company, in order for them to be allowed or restricted from making claims relating to employment rights, one of the most famous being Carmichael v National Power in 2000, which went all the way to the House of Lords. This case looked at whether employees who worked on a casual basis as and when required were ‘employees’ and therefore entitled to a contract of employment (they eventually lost). Whilst it is perhaps not something for the HR Team to consider every day, it is nevertheless an important aspect of employment law that can bring expensive and time consuming consequences for the unprepared organisation.
To determine whether a person has ‘employee’ status in a case where this is being argued by either party, an Employment Tribunal (ET) would need to determine if the claimant works under a contract of service (employee) or a contract for services (self employed contractor), if this is not specifically stated in writing. This would be done by applying a number of tests, looking at different areas of the employment/working relationship to determine exactly how the company and person were contractually bound. The rest of this article will look at aspects of control and integration, and the next one will look at financial factors and what is called ‘mutuality of obligation’.
Control
This looks at how much the employee is under the direction of somebody at the company. This is the oldest way the courts tested for employee status and was used in a case in 1880. Normally, the more skill a person has in their role, the less likely they are to be under the instruction of someone else, although this isn’t one of the strongest ways to test the relationship.
Integration
An individual who is integrated into the business is more likely to be an employee. The ET would consider how integrated the claimant was/is, which could look at the length of service between the parties and the level of work provided. In one case (Franks v Reuters) the claimant indirectly worked for the defendant through an employment agency for over four years on a permanent basis and was therefore considered fully integrated. A key aspect of this test is whether the employee’s work is integrated into the organisation’s work, or is an accessory to it; so if an employee is only used as and when required, e.g. to fill in during holiday time, then they’re more likely to be an accessory to the business (but if they did this on a regular basis for a long time then they would probably be considered integrated).
Record breaking claim for sex discrimination
April 22, 2008
Yesterday I commented that claims under the Sex Discrimination Act have no upper limit on the compensation that can be awarded, and what better way to demonstrate this than with the recent record breaking claim by Gill Switalski, formerly a lawyer for City firm F&C Asset Management. Switalski won her claim last month, and was awarded £13.4 million, but is has now emerged that she is more likely to be awarded £19 million, which will be the biggest ever sex discrimination payout. The figure is based on loss of earnings, pension payments, career opportunities and the psychiatric damage she suffered as a result of the bullying she was subjected to.
It was found that Switalski had been subjected to an 18 month period of harassment by Senior Management in her £140,000 per year job. She had been treated less favourably than her male colleague, and “bullied, harassed and belittled” by her manager Marrack Tonkin, apparently because he felt threatened by her.
The company is now set to appeal against the decision: so the case looks set to become a historical benchmark, and one that will probably appear in future employment law textbooks. It just goes to show how crucial the area of equality and fair treatment of all staff is in an organisation, and the consequences that can be faced when the behaviour of a manager is not dealt with properly.
Third Party Harassment
April 21, 2008
On 6th April an amendment to the Sex Discrimination Act came into place which means that employers can now be found to be liable for the sexual harassment of staff by another person who is not an employee of the company. This law was already in place for harassment by colleagues in the same organisation, but now employers need to be aware of ‘third party’ harassment, and need to take measures to prevent it in the workplace. Third party harassment could come from customers, suppliers, or any other people encountered during work time.
This obviously poses some difficult questions for some employers. An employer will be liable if the complainant can show they were subject to sexual harassment on three separate occasions, however this does not have to be from the same person each time. So measures to stop the harassment on the first or second occasion, such as banning the customer from the establishment (for example in a shop or hotel situation) wouldn’t necessarily save the company from liability the third time. Of course, it is much more difficult for employers to exert any authority over people outside the organisation, and with a large proportion of UK workplaces now being in the service sector, it will be difficult for many organisations to move away from the ‘customer is always right’ attitude. However, for claims under the Sex Discrimination Act, there is no upper limit to the amount of compensation that can be awarded, and therefore employers need to take note of this new requirement of the legislation.
Employment lawyers recommend revisiting harassment policies to ensure the law is covered, and taking measures to reduce the risks such as putting up signage to warn customers that harassment of staff is not tolerated and taking employees out of high risk situations.
I think this is a piece of legislation that will be tested in case law quite quickly, and it will be interesting to see exactly how the tribunals expect employers to deal with sexual harassment by a third party. This will hopefully give more clarity on what preventative measures employers are expected to take, and where the limits lie on what realistically can and cannot be achieved.
The problems of providing references
April 18, 2008
In a recent case, a social worker, Hazel Merriott-Brown lost her opportunity to work as a Family Court Advisor due to an unfair reference from her previous employer, South Tyneside Council. She was eventually awarded an out of court settlement of £36,000 due to her loss and subsequent ill health from stress caused by the incident.
Providing a reference from a former employee gives the referee significant responsibility in relation to all parties. Employers can incur liability to the employee in question as a result of a misleading or incorrect statement, as in the case above. Another example of this kind of situation is in TSB v Harris (2000), where a reference was provided that contained information about a number of customer complaints about Harris that had never been discussed with her. This action was deemed a breach of the common law duty to maintain mutual trust and confidence, and Harris was able to successfully resign and claim constructive dismissal. Employers can also incur liability to the new company that is taking on the employee, for example for financial losses suffered as a result of a negligent reference. If an employer fails to give a reference, or gives a negative reference, with a reason connected to the employee’s race, sex, age, sexual orientation, disability or religious belief, then the employee could make a claim for discrimination. It is therefore highly important that information provided in a reference is both accurate and fair, and that you are able to provide evidence of the facts.
Employers are under no obligation to provide a reference, unless they have been contractually bound to, for example as a contractual clause or as part of a compromise agreement, or where there is a statutory requirement to do so. Many employment lawyers advise companies to only provide a standard reference that provides employee start and finish dates, and the role they were employed to do. This helps to avoid risks of liability for that company, but leaves the other company without much information to make a decision on. Additionally, some information needs to be restricted due to data protection issues: for example you should not provide sensitive personal information about an employee (such as reasons for sickness absence) without their prior permission.
Personally, I’m not a big fan of the employment reference, I think the amount of companies willing to make truthful statements about an employee is diminishing due to the legal risks, and this is reducing the worth of the information provided.
Help staff benefit from cheaper childcare
April 17, 2008
I’ve been thinking about staff benefits recently, and a really good scheme that I set up and ran in my previous position was a childcare voucher scheme. The great thing about this scheme is that it can actually save the company money and effectively pay for itself as well as being a fantastic money saving benefit for those employees with a young family but a tight budget.
The way the scheme works is that employees buy childcare vouchers through their salary. This scheme is one of the few remaining tax free benefits available, and works through ‘salary sacrifice’, i.e. the voucher payment is taken out of their gross salary, before any other deductions have been made. Therefore the remaining salary that is taxable is lower and attracts lower tax and NI deductions; so the employee pays the same for their childcare but sees the saving in a higher salary payment. The saving for the employer works in the same way: they save money by paying lower NI contributions on the remaining salary after the voucher payment has been taken. Many providers charge a percentage based administration fee for each employee in the scheme rather than a flat fee – so running the scheme is cost neutral as the NI savings pay for the administration charge. There is a maximum amount that can be purchased through the scheme (currently £243 per month), but this is applicable per person, therefore if an employee’s partner is also in a voucher scheme, both parents can use the system and make double the savings.
The vouchers are redeemable in any Ofsted registered childcare facility or with a registered childminder. If the establishment doesn’t already accept vouchers it is very easy for them to be set up to receive the payments: most voucher providers can now do everything through the internet so it’s really straightforward.
There are a few considerations when considering the scheme: minimum wage calculations are based on salary after the cost of the vouchers is deducted, so employees who are near this salary rate before purchasing vouchers may be restricted to how much they can purchase in a month. Also, the voucher scheme can affect the maternity pay companies are able to claim back from the government, as the claim system is based on actual salary paid, so this would need to be considered in the context of the organisation. The best thing to do is ask a few providers to come and deliver presentations, to give you an idea of what they are offering and so that you can ask as many questions as you need. When I set up the scheme in my previous company, I used Leapfrog, who also have nurseries all over the country that people in the scheme can use at a discount, but there’s loads of other providers as well: just Google childcare vouchers and away you go.
Where I work at the moment there are very few employees who have childcare needs, but I think in many organisations, it’s a no-brainer for staff benefits when the scheme is so straightforward, saves people money and doesn’t cost the company anything.