Voluntary benefits
March 7, 2009
Many employers are currently reviewing their employee benefits packages in light of the recession, and a few have started to reduce spending on benefits - for example reducing or ceasing employer contributions to company pension schemes – in order to make financial cuts, often in order to avoid redundancies. However there are opportunities to maintain some employee benefits with little or no cost to the company; through the provision of voluntary benefits.
Voluntary benefits are those that employees can purchase through their own salary, either before or after tax and NI deductions are taken, depending on the scheme. By purchasing the product or service this way, the employee gains a discount and therefore a ‘benefit’. Voluntary benefits that are purchased out of an employee’s pre-tax salary payment are called ‘salary sacrifice’ benefits and include childcare vouchers – which are a great way for parents to save a lot of money on their childcare, provided it is through a registered childminder, nursery, after school club etc. (For more information on childcare vouchers see my post ‘Help staff benefit from cheaper childcare’ (April 17th, 2008)). Another good option is the cycle to work scheme – a government initiative to encourage more people to travel to work via a more environmentally friendly and healthy method. This benefits the employee in two ways: firstly, the bike is bought out of the employee’s gross salary, meaning that less tax and NI is deducted on the remaining amount; secondly, there are larger providers of this scheme so they usually provide a discounted price for the bike in the first place. Both the childcare vouchers and cycle to work schemes are really easy to set up and don’t cost anything to run.
There is a massive range of discounted voluntary benefits that can be purchased out of an employee’s net salary – including healthcare options such as medical or life insurance, gym membership, discount vouchers for retail outlets or supermarkets (good if you know you spend a couple of hundred pounds a month on food in one particular store), season ticket loans for public transport (this works by the company purchasing an annual ticket – which is cheaper than shorter tickets – and then the employee pays the company back over a year), and loads of others. Very large companies often run their own scheme and use their size to negotiate really good discounts from leading outlets, and this way they can tailor their scheme to the exact needs and desires of their workforce. Smaller companies however will not have this kind of leverage and will often have to join generic schemes that are run by larger outsourced benefit providers, which there are many of.
There are other potential issues with voluntary benefits schemes, such as monitoring the quality of discounts and services provided (as a poor experience of an organisation that an employee gained through the benefits scheme could reflect badly on the employer), however in these difficult economic times voluntary benefits could offer a valuable alternative to costly existing schemes whilst maintaining some kind of benefit to employees.
Decision reached by ECJ in Heyday/mandatory retirement case
March 6, 2009
Last month I wrote about the case of Heyday and the mandatory retirement age (9th Feb), which is a dispute that has been ongoing for a long time. Heyday, which is part of age charity Age Concern, brought a case to the High Court arguing that the mandatory retirement age of 65 in the UK, and the fact that employers can lawfully dismiss an employee for this reason, is against the Age Discrimination Regulations; which is derived from the EU Equal Treatment Directive. The High Court referred this question to the European Court of Justice (ECJ), which has now delivered its decision.
The decision supports that of the Advocate-General’s decision in November last year (which is usually the case in ECJ rulings), stating that:
“the age limit was legal if it was directed towards fulfilling a legitimate aim in employment or social policy”
This means that, for the time being at least, the mandatory retirement age of 65 will remain, and employers can continue to use retirement as a lawful reason for dismissal as long as they follow the statutory retirement procedures in doing so.
The decision has been unpopular with a number of organisations, including the CIPD which feels that the UK is acting unfairly and also losing out on a lot of potential talent by automatically assuming people should not work after 65.
This is a really big decision in current employment law terms; as it still means that the Age Discrimination Regulations, which were introduced in 2006, are slightly contradictory in their application. Of course, the decision to keep the mandatory retirement age will make things easier for employers needing to cut down on the workforce in difficult financial circumstances, and I wonder if a different decision might have been reached if the economic climate had been different at the time of the ECJ ruling? What do you think?
Invite to disciplinary – make the potential outcome clear
March 5, 2009
A recent case has highlighted the importance of outlining the possible consequences of a disciplinary hearing in the invitation letter. The letter that invites an employee to a disciplinary is called a ‘step one letter’ under the current Statutory Dispute Resolution Regulations as it is the first step in a three step procedure (invite, meeting/decision, appeal) and must set out clearly not only the allegations made against the employee but the action the employer is considering taking if the allegations are found to be correct.
In Zimmer v Brezan, the Employment Tribunal found that the statutory procedure had not been followed because Brezan had no idea the meeting he had been invited to could result in dismissal. The case went to the Employment Appeals Tribunal which recently upheld the ET’s decision. The Company had investigated Brezan’s mileage claims after he had complained about his mileage payment, and then invited him by email to a meeting in which the disciplinary procedure was included but there was no mention of gross misconduct or even misconduct. He was eventually dismissed.
The EAT actually said that what is important is that the employee should at least be aware that a dismissal is possible – and that in some cases this might not necessarily have to have been stated in the letter if they knew some other way. However in this case Brezan had no idea he could be dismissed and therefore it was unfair.
So the message to employers is clear: one simple sentence in an invitation letter could be the difference between a fair and unfair process. When the Statutory Dispute Resolution Regulations are repealed and replaced with the new ACAS Code of Practice in April, the part of the law that currently finds dismissals are automatically unfair if the exact procedure is not followed may be relaxed as long as the process followed is fair and reasonable. However the need to inform an employee of the possible consequences of a disciplinary meeting is a big part of how the Code specifies this ‘reasonableness’ and ‘fairness’ is measured, therefore the important element of the process that has been highlighted by this case will still be relevant.
25 years after the miners’ strike (2)
March 4, 2009
… continued from yesterday’s post 25 years after the miners’ strike (1)
We often see footage from the time of violent clashes between strikers and the police, or depictions of this in TV programmes and Film. This violence was initially between the workers picketing at pits and local police forces, such as the clash at Orgreave in South Yorkshire in June 1984, where 5,000 miners intending to stop lorries carrying coke leaving the site (they did not succeed), met 5,000 police officers carrying batons and riot shields. Later on in the year-long strike there were clashes on the picket line when miners started to return to work at the end of 1984 because of the hardship caused by not earning a wage for months on end. Soup kitchens were opened to help many families who could not afford to feed themselves, and food donations became commonplace.
In March 1985 the strike finally ended as the NUM gave in and voted to call it off, and history was made:
“From 1985 onwards the pit closure programme picked up speed. Margaret Thatcher had taken on the strongest union in the land and won” (BBC)
These days Trade Unionism has a very different face, with many of the traditionally unionised industries in decline, and the majority of union members are now in the public sector. Whilst we have seen quite a lot of industrial action in the last year or so, gone are the days of flying pickets, although we did recently see ‘sympathetic’ industrial action with a number of oil refineries staging unofficial strikes in support of the Lindsey Refinery’s foreign worker dispute; although this support action (i.e. not directly related to the workplace where it takes place) is not lawful under current legislation.
25 years after the miners’ strike (1)
March 3, 2009
There’s a lot in the media at the moment about the 25 year anniversary of one of the most memorable events in the history of industrial action in the UK. The national miners’ strike began in March 1984 and lasted for a whole year. The strike started after the Government announced plans to close around 20 pits across the country, because they were no longer considered economical. This would see the loss of 20,000 miners’ jobs. The first pit to see a walkout was Cortonwood near Barnsley, followed by many more and by the middle of March half the 187,000 miners in the country had joined the strike.
The miners strike turned into a bitter battle between Margaret Thatcher’s Government, which was changing the economic outlook of the country and taking a more hands-off approach to industry, and the National Union of Mineworkers (NUM), led by the infamous Arthur Scargill; described as:
a ‘fiery Marxist Yorskshireman’
The aim of the miners’ strike was to bring the country’s energy supply to a standstill in order to gain bargaining power with the Government, but this could not happen as anticipated because Thatcher had ensured large stocks of coal were kept aside at sites across the country before the strike took place.
This was in the years before the 1992 legislation on lawful industrial action: the Trade Union and Labour Relations (consolidation) Act, and there were different rules relating to industrial action which meant that ‘flying pickets’ were sent all over the country to different collieries, to persuade miners to not go to work. Another key factor in the events was that a ballot had been taken in 1981 in Yorkshire, where NUM members voted to walk out in support of any pit that was threatened with closure. This meant that when the strikes started in 1984, the NUM could argue that the decision for national walkouts in support of the mines under threat of closure had already been balloted.
… continues tomorrow.