Editorial
Spring is here and so is our new website. A new fresh image, so take a look and tell me what you think.
Our regular employment updates are now appearing under our “Blog” heading in a timeline which includes previous updates, newsletters and blogs. Tags should make it easier for you to find subjects of interest. If there are any problems with the new site or things you would like us to add, just let me know.
April is of course one of those months when employment law changes are usually made so there is a review of what’s happened and a note about what’s in the pipeline. In our October 2016 update we looked at whether you would pick Donald or Hilary as a new employee or work colleague. Just as I was writing about how you might follow up on a new employee in a probationary period lo and behold Theresa calls a snap election. I won’t be asking who you would pick as an employee this time Theresa or Jeremy or Tim or…. but it is still interesting to think about the issues that relate to new employees.
Well they chose Donald –
The USA decided to employ Donald as their new president. How’s that working out? Every employer has to make a final choice when appointing a new employee or even deciding on a business partner. Other employees also have to live with that decision good or bad so are there any lessons to be learned?
Probation
The appointment is just the beginning of the story. But it’s important to remember the time, cost and effort that process involved for employee and employer alike, particularly if you don’t want to have to do it all again in the near future.
One thing that should have been included in the employment contract (yes there should be a written contract) is a probationary period. A probationary clause will usually last 3 or 6 months. A good clause may also provide for probation to be extended if particular circumstances warrant it, however, that power should be used sparingly.
Does such a clause really have much value particularly if an employer only ever gives all employees the minimum notice period? Many employers will also say that an employee can be fired at any time in their first 2 years so don’t bother with a probationary clause. There are a number of reasons why that’s not really a good idea.
No protection from unfair dismissal
I usually explain it like this.
- After the first two years of employment there are only 5 fair reasons for ending employment. The employer has to prove the dismissal was for one of those reasons, that they followed the correct procedure and they acted reasonably in all the circumstances.
- During the first two years an employer can dismiss for any reason provided it’s not one of around 20 unlawful reasons. An employee may well argue that their dismissal falls in one of these categories so it’s wise for an employer to make sure that they can prove that it wasn’t.
Positive Probation
Having a probationary clause can help. It’s a reminder to employer and employee alike that the situation should be monitored. Issues should be sorted out and if things don’t improve in a fairly short time maybe the employee isn’t in the right job. That doesn’t mean both sides shouldn’t work on the issues, in fact it can help them focus on them. What is the problem? Perhaps the employee exaggerated their qualifications or experience. Does that justify dismissal or is it something that can be put right with training and are they willing to learn? Issues with other employees could be the problem. Is the new person rocking the boat or do other employees resent the new person?
Time Goes By
It’s all too easy to appoint a person and then move on to other projects. However careful observation and then discussion can avoid a lot of problems. But remember time passes very quickly. It’s easy to let probation periods drift past. Even the first two years of employment can go by all too quickly. Employers should keep dated notes, record problems and deal with them at the time or employees may justifiably argue that there couldn’t have been any problem. Give us a call if you have questions about how to deal with potential issues.
Employees shouldn’t sit back either. The excitement or relief of getting the job can wear off very quickly. It may not be the job of your dreams but if it looks like becoming a nightmare don’t let it drift. Talk to your employer. There may be a solution even if you can’t see one. If it does come down to a claim evidence of your efforts to make the job work may help your case.
Employers may also choose to increase an employee’s benefits after the probationary period. For example more notice or holidays, participation in a bonus schemes etc. Sometimes these things are promised when the job is offered so employers need to be careful about whether they have contractually agreed to this, particularly if they are thinking of extending the probationary period.
Where an employee is doing a good job, marking the end of a successful probationary period can be very positive. Even if they can’t afford to pay more a genuine and justifiable “thank you” or “great job” ranks high in most employees’ list of benefits.
Talking of benefits
I’ve talked before (and will again) about employee status and the gig economy, Uber is one of the companies in the forefront of these developments. Interestingly this BBC article (admittedly looking at the USA) discusses how Uber is pledging to make its drivers happier. It looks at issues their drivers have with complaints and allegations of harassment.
April Changes
Two changes for big employers
For those with more than 250 employees there will be a requirement to report annually on gender pay differences. In the private sector a snap shot must be taken on 5 April each year. Will some employers decide when to take on staff, dismiss or give rises etc. to manipulate the figures? Although smaller employers aren’t required to do this it’s worth thinking about whether there is a lesson to be learned. Are you treating staff fairly and if so is that a positive feature you can use to your advantage? At the same time employers with large pay bills (over £3 million) will be required to pay a levy to fund apprenticeships. For those that don’t pay the levy there is funding available to cover some or all of the costs of an apprentices training.
IR35
Always a thorny subject. If you are supplying your services through your own company you may be caught by these rules. In principle if your role with your “client” would be that of employee if you didn’t work through your company, then IR35 applies. That means that your company has to deduct tax and NI on what it pays you just as though you were an employee. Now if you supply services this way to a public authority they will have responsibility for checking that these rules apply and making the deduction.
Benefits again – Allowances in and out.
The rules are changing on salary sacrifice. Many tax benefits related to salary sacrifice have gone or are on their way out. Those the government thinks have social benefits will remain e.g. child care. Others will be phased out e.g. relating to accommodation. However in line with the focus on pensions people can now have up to three lots of £500 tax free out of some schemes to take pension advice. Similarly there is an increase in the tax and NIC relief available for employer-arranged pension’s advice from £150 to £500. As with all things you need to meet certain conditions for these allowances to apply.
Also remember employer contributions for pensions will increase to 2% from April 2018 and to 3% in April 2019.
Rate Changes from 1 April 2017
National Minimum Wage
| Worker | Old rate £ | New rate £ |
| 16-17 (past compulsory school leaving age) | 4.00 | 4.05 |
| 18-20 | 5.55 | 5.60 |
| 21-24 | 6.95 | 7.05 |
| 25 plus | 7.20 | 7.50 |
| 1st year apprentice or under 19 | 3.40 | 3.50 |
| Apprentice after 1st year and over 19 pay is based on age |
Redundancy and Unfair dismissal rates
| Statutory | Old rate £ | New rate £ |
| Maximum weekly figure | 479.00 | 489.00 |
| Maximum compensatory award (in most circumstances) a years’ pay not exceeding | 78,962.00 | 80,541.00 |
| Guarantee payments for lay off/short term working per day | 26.00 | 27.00 |
| Statutory Maternity Pay 90% of the employee’s average weekly earnings up to a maximum weekly sum of | 139.58 | 140.98 |
| Statutory Sick Pay | 88.45 | 89.35 |
The Maternity Pay rates mentioned also apply to statutory adoption, paternity and shared parental pay.
A couple of the things on the horizon
The General Data Protection Regulations (GDPR). Even though this is EU law it’s directly applicable in member states and so doesn’t require new legislation here and will come into effect in May 2018. Last autumn the government also confirmed that it will be implementing the GDPR. So whatever happens with Brexit and the general election we will have to deal with these changes. Over the next few weeks employers should be reviewing what steps to take. Even though the GDPR is consistent with the principles of the DPA it replaces there are differences. In essence individuals will have more rights and businesses and employers more responsibilities. So it will be a good idea in the next few weeks to review what you need to think about. Look out for a further update from us on the subject.
Slightly earlier, in April 2018, we will see some changes to tax on payments to employees when they leave a job. Where the payment is non contractual e.g. for redundancy or unfair dismissal payments up to £30,000 will remain tax free as now. However all payments in lieu of notice payments will become taxable. Further if any payment is over £30,000 employers will have to pay NIC contributions.