Tips and the minimum wage
June 16, 2008
I’ve just found out about a case in the High Court regarding the payment of minimum wage and whether tips given to waiters and bar staff in bars and restaurants count towards it. Annabel’s restaurant thinks that having an independent ‘tronc’ system in place, which distributes tips received on credit cards outside of the normal payroll system, means that tips paid in this way count as part of the minimum wage and therefore the standard hourly rate can be less. However the High court has said that Annabel’s should pay the minimum wage regardless of any tips paid in this way. As the High Court is quite a high ruling, the decision has more weight than an employment tribunal decision. Employers need to check that they are paying at least minimum wage for their staff as their basic salary and keeping tips completely separate.
I can’t even believe this situation has arisen to be honest. Call me naive but I can’t believe there’s employers out there trying to avoid paying the basic salary at the rate the Government has deemed reasonable. Tips, as far as I’m concerned, are the equivalent of a performance related bonus – you do a good job and provide good service, and you get that little bit more money. You wouldn’t pay someone less than the minimum wage in an office based job, even if a bonus would increase it to the statutory level. As I understand, this decision means that tips will still be able to count towards the minimum wage if paid through the same payroll system as the salary, which in my opinion is not right. What do you think?
Developing engagement
June 14, 2008
Yesterday I was considering the meaning of the term employee engagement, and concluded that it is the way employers develop the employee experience so that they feel highly motivated and committed to doing a great job for the company. So what sorts of practices produce high engagement? Well of course there’s no magic answer and employers must remember that every single person they employ is unique. The UK workforce is made up of a wide variety of people with different ages, genders, cultures and backgrounds, and different people will respond to different situations. Examples of work aspects that may influence engagement include flexibility, feeling fairly rewarded for the job, acceptable working methods, opportunities for development and progression, and probably most importantly, fair and effective management.
Managing engagement centrally means developing ways to measure engagement levels, or ‘taking the temperature’ as it is sometimes referred to. You need to find out how engaged employees are and what will make them more engaged. Using surveys and other consultative methods such as focus groups or performance management systems are good ways of collecting valuable information on this. But as always, this information is useless if it is only used in a positive way and not left lying around to gather dust or used against an employee who has been bold enough to honestly give their opinion.
Information from engagement measurement exercises needs to be used strategically at management level; as I said yesterday engagement will drive business performance so it should be high on the agenda for all managers. Management meetings or development sessions can be constructively used to analyse the information collected and strategies developed to tackle some of the key big themes that arise. The hard part will be making time to concentrate on this on top of the day to day operational issues that always take preference in such meetings. This is where HR needs to do its job as a driver of this issue – to keep pushing the subject up the agenda and highlighting as much as possible the reasons why this is such an important business objective for all of the company, not just the HR team.
Lets get engaged!
June 13, 2008
Are congratulations in order? Well, no, as much as I’d like to be celebrating a lovely proposal from my other half, I’m not talking about a diamond ring… I’m talking about staff engagement, one of the favourite HR buzzwords of the century. HR gurus and managers go on about engagement all the time, so I’ve been considering what it is and what we have to do to get it.
Wikipedia describes employee engagement in the following way: “an engaged employee is a person who is fully involved in, and enthusiastic about, his or her work”. Obviously this has become such a big thing in recent years because of the increasing competitiveness in business, and the need for companies to ensure that they are delivering to better standards than their competitors. This, more often than not, means having better performing employees. Engagement can be seen therefore to be a key driver of business performance.
I don’t think the idea of engagement is new really – it stems from age old theories of motivation from the likes of Maslow and Hertzberg – what do you need to do or provide to make sure your employees have what they need, in order for them to be satisfied with their working experience and therefore motivated and committed to performing well for the company. Engaged employees are the ones who are proud to work for the organisation, will strive to perform above expectations and go the extra mile, and will stay with the company, even through challenging situations.
In the next article I’ll discuss what sorts of things employers can do to develop high levels of engagement.
Increase in industrial action
June 12, 2008
I’ve been discussing a lot of instances of industrial disputes and strikes in the last couple of months, and recently commented that it appears to me that this is on the increase, although I wasn’t sure if I was just becoming more aware of these sorts of situations. Well now it seems the figures are there to show that my observations were correct – information collated by the Office for National Statistics has shown that the number of working days lost to strikes increased from just over 750,000 in 2006 to just over a million in 2007. If the news so far this year is anything to go by, I bet that increases again in 2008. The figures also showed that there are now more days lost than the average figure for the nineties (although unsurprisingly it’s no where near the figures of the 70s and 80s).
I wonder what the reason is for this increase? It could be due to the fact that the laws have changed slightly on the processes relating to industrial action since the 90s, when it was quite difficult to gain protection from legal action or dismissal for organising or taking part in industrial action. For example workers are now protected from unfair dismissal in the first 12 weeks of industrial action as long as it is official, which they did not have in the 90s. However I’m not sure how much of a difference to the amount of industrial action these relaxations of the law and additional protections to workers will have made.
Maybe it’s the fact that the economic climate is changing, and the more insecure workers feel and the tighter the pinch on their living costs they experience, the more workplace disputes are likely to occur. This is clearly the case with the current issue over the Shell delivery drivers, where it feels like a kick in the teeth to employees delivering for a company that has publicly enjoyed record profits whilst motorists around the country experience enormous price hikes. In these instances, issues such as pay, which is very high on most people’s agenda anyway, become more heightened.
I think that HR has an important job to do in managing the employee relations of the organisations they support, in terms of reassuring staff where possible of the financial stability of the company or handling unstable situations carefully and compassionately. Communication is the most important aspect of this job, and ensuring the right messages are being sent out consistently both internally and externally to avoid the kind of stress and anger that can ultimately result in some sort of industrial action.
More fuel strikes
June 11, 2008
After the recent strikes at Grangemouth oil refinery which put motorists across the UK into a panic buying frenzy, another strike is imminent in the fuel industry. Around 500 oil tanker drivers that indirectly work for Shell are set to carry out a four day walk out due to an unresolved dispute over pay. The workers are represented by Unite, and work for Hoyer UK, a haulage company that is contracted by Shell to deliver fuel to petrol stations.
The employees voted at the end of May to strike after being offered a 6% increase, an offer which has subsequently been improved upon to 6.8%. The union and employer are in disagreement about the current average salary of a driver, which Unite claims is around £32,000 basic pay for a 48 hour week, and the employer says is actually more than £36,000. The union says the employer is probably including overtime pay in this figure, and is looking for a 13% increase. Shell is hoping that Unite and Hoyer can find a way to resolve their differences, but the union feels that Shell should intervene as the company achieved record profits of £14.2billion in 2007 and petrol prices are still rising.
The whole fuel issue at the moment just seems to be a total mess. Costs are rising literally once a week, and the problems are escalating due to the failure to resolve these major employment disputes. I can’t see it improving either. You can already see the effect these problems are having on the amount of fuel efficient and alternative energy cars on the market, and I can imagine us seeing a significant growth in the number of companies that provide these alternatives in the coming years. If I was an entrepreneur or businesswoman, that’s where I would be focussing my attentions right now!
Agreement reached on opt out of working time directive
June 10, 2008
After lots of debate and negotiation, the UK Government has finally agreed a deal with the EU that allows UK workers to retain the right to opt out of the working time directive, which limits the number of working hours per week to 48. This agreement was reached after the UK compromised on the agency workers rights legislation last month, which will give temporary agency workers the same employment rights as their permanent colleagues after 12 weeks’ service. Many workers will no doubt breathe a sigh of relief after today’s news, as they are able to retain their overtime hours in excess of 48 hours per week which many people rely on for their income.
After many businesses feeling angry at the UK giving in on agency worker rights last month, this news might be a welcome silver lining as the right to opt out provides them with more flexibility at different times of the year. The rights for agency workers could have been agreed at a much earlier stage than 12 weeks’ service, so it could have been worse.
Financial participation schemes
June 9, 2008
I’ve just read in the news that Asda are to issue a £37.5 million pay out to the 20,000 employees who participate in their save-as-you-earn share plan. Employees can save up to £250 per month, with the average being £43.
Financial participation schemes are quite common with large organisations such as Asda, and include other arrangements such as performance or profit related reward schemes. In one of my previous organisations, salary increases were related to the outcome of employees’ appraisals (there were four levels) and an overall ‘pot’ of money was made available relating to the financial performance of the organisation, which was then shared fairly across the workforce depending on numbers of employees with scores at each level. At the highest level an employee could receive around a 7% increase and a bonus of £1000, so it was worth the additional input to achieve the best appraisal outcome. Of course, the better the company did, the bigger the salary review pot was so again it was worth everyone’s contribution throughout the year. The only downside to this method was that some employees believed their managers made biased or inaccurate judgements on performance, so the system needed to be closely monitored and was updated to try to make it fairer year on year, with the help of employee feedback gathered using an evaluation exercise.
Another example of a financial participation scheme is the John Lewis Partnership, which is owned by its 69,000 permanent employees (“partners”). Early last year each employee received an 18 percent bonus as their share in the record profits made. The idea behind this arrangement is that by giving all employees a stake in the business and a voice, they will contribute more to the company and its customers, and to be honest, I’ve always had a great customer experience when shopping in John Lewis.
The purpose of financial participation is that employees gain a vested interest in the profitability of the company which encourages greater commitment and reinforces the aims of the organisation. Additionally, schemes such as shared ownership provide a means of disseminating important information to members through reports, updates and marketing material, so there are benefits for improved communication as well. Whilst it may not be something that many companies would wish to look into in the current economic climate, I think that some sort of financial participation scheme is certainly something to consider when looking for ways to involve employees more in the business. If the scheme is transparent and clear, it should motivate staff and give them a sense of value and importance as their contribution can be directly measured in one of the most important places – in their pay packet.
Responding to a grievance
June 8, 2008
A recent case has highlighted the need for employers to respond to any written complaints by following the correct grievance procedures, even if the complainant does not specifically state that they are submitting a grievance or does not follow the correct procedures.
Tanya Oliver, a factory worker from Houghton in the North East region, sent a letter to her employers prior to her return from maternity leave claiming that she had been bullied at work, and explaining her fear of returning to work. The company failed to respond to the complaint and three weeks later, Oliver sent a letter of resignation. Now she is claiming constructive dismissal, sexual discrimination and disability discrimination.
The HR manager at TRW Systems has stated that her failure to respond to the letter was an oversight, and that she could not speak to Oliver’s supervisor due to shift patterns and holidays, but I don’t think this is going to excuse the company’s failure to follow the grievance procedure.
Employers need to be very aware of different types of communication that can be considered a grievance, as there has been more case law concerning whether the grievance procedure has been initiated than other aspects of discipline and grievance legislation. If an employer does not follow the grievance procedure for a written complaint that is subsequently deemed a grievance, any compensation the employee may be entitled to in a tribunal can be increased by between 10% and 50%.
Whistleblowing
June 7, 2008
A current case has highlighted the important issue of whistleblowing. This is where an employee provides information about an act by another person or about a company (usually an illegal act) when this has come to their attention in the course of their work. The legislation covering whistleblowing is the Public Interest Disclosure Act 1998 (PIDA).
The case concerns Lesley Gray, a former manager at Hugo Boss, who claims she was dismissed for blowing the whistle on a colleague who she reported for allegedly stealing shirts and ties from the company. The company argues that she was in fact dismissed for her aggressive management style, following complaints from staff that she shouted at them and behaved in an unprofessional way. Gray had been employed by Hugo Boss for less than one year, and this is significant in this case because normally an employee is not able to claim unfair dismissal unless they have a year’s service. However dismissal for whistleblowing is automatically unfair under the Employment Rights Act, and there is no qualifying period required in this instance, nor is there an upper limit on the amount of compensation that can be rewarded (as there is in usual unfair dismissal cases). However there are a number of conditions that need to be met in order for the employee to be protected under whistleblowing legislation, so this tribunal will need to determine if Gray followed the correct process when she informed her employers of her concerns, and also if the dismissal was actually related to the whistleblowing or the reason that was given by the employer.
Employers are strongly encouraged to have a clear whistleblowing policy to ensure there are no discrepancies in the handling of any employee concerns in this area. This should be communicated effectively to employees so that they understand their rights and protection available, and also so they will know what to do if they find themselves in the position of knowing about illegal or dishonest actions that worry them in terms of their job security if they tell.
Virtual offices
June 6, 2008
After my colleague’s recent article about hot desking, I’ve been thinking about the concept of the virtual office. This is an initiative that was born in the 90’s with the arrival of the digital age and the technology that allows people more flexibility in where and how they want to work. The virtual office describes the ability to work in a business environment without having to physically be in the office. The concept can work for most employees with the right technology, but is particularly useful for staff who are out on the road a lot such as consultants, account managers or business development employees. It is now possible for staff to access exactly the same network and communication systems from anywhere as long as they have an internet connection, through a virtual private network (VPN) connection.
So why do many companies such as Hewlett-Packard and IBM use virtual offices ? Well of course, there’s the cost cutting element; with office space becoming more expensive and the mounting energy costs that are all over the news. Also, the savings in time and money spent on petrol from not having to commute to the office can be beneficial for both employees and companies. Certainly the opportunity to work partially or fully at home or locations that are nearer to customers appeals to many job seekers when looking for new employment. The ability for employees who travel extensively or have a wide spread customer base to work virtually anywhere and operate as if they were in the office has benefits in time and cost saving, and means that all customers receive the same level of service, no matter where they are based.
For companies that have customers in a wide geographical area, and perhaps employees who need to have the flexibility to work in various locations, there are specialist providers of virtual office and hot desking facilities all over the country. These providers offer a number of different services that can vary to meet the needs of the individual or organisation, from making a desk and internet connection available for those on-the-road employees who need to catch up on paperwork, to a personal assistant and postal service, where calls are screened, messages are taken and a business address in an attractive location is provided. (The latter, more specialist services are normally more suited to sole traders or self employed consultants who work from home but wish to portray a certain image).
The virtual office can be an excellent arrangement for both employees and the organisation, providing savings, flexibility and better customer service. Ensuring the process is managed effectively is extremely important however, as managers need to be able to manage and support their employees who they may not see from one week to the next if one or both are based predominantly in a virtual office. This is where HR needs to provide advice and support, as well as clear policies on how the arrangement should work.