HR Breakfast Seminar Employment Law Update

1. HR Breakfast SeminarEmployment Law Update March 2012 By Julie Fewtrell, HR Consultant

2. RECENT LEGISLATION • Bribery Act • Agency Worker Regulations • Changes to weekly redundancy pay calculator • Changes to unfair dismissal award limit • National Minimum Wage rates

3. Bribery Act • Came into force on 1 July 2011 • Aimed at boosting UK anti-corruption law • Creates four new offences • Practical implications for employers • Already had a very public case

4. Four new offences • Bribing another person – offering, promising or giving a reward to induce a person to perform a relevant function or activity improperly. • Being bribed – the accepting of, agreeing to accept or requesting of a reward in return for performing a relevant function or activity improperly.

5. 3. Bribing a foreign public official – trying to influence a foreign public official with the intention of obtaining or retaining business in a situation where the public official was not permitted or required by law to be influenced.

6. 4. Failure to prevent bribery – the ‘corporate offence’ where an organisation fails to stop people who are operating on its behalf from being involved in bribery.

7. Implications for employers Government has made it clear that bona fide hospitality, promotion or expenditure seeking to improve a company’s image/products or establish cordial relations, is a legitimate and important part of doing business. This behaviour is not intended to be criminalised.

8. Policy areas to review Contract of employment/Consultancy agreements: • Inserting specific prohibition on the offering or accepting of bribes. If there is involvement with foreign countries that have poor reputation for anti-corruption, these terms will need to be more specific and robust • Obliging them to report concerns or suspicions

9. Whistleblowing policy: • Clarity that suspicion of bribery must be reported but also that confidential support is offered for those who do report it Expenses claiming policy: • Ensuring expenses are properly incurred • Introducing prohibition, limit or system of sign off for hospitality proposals or corporate gifts received or intended to be given

10. Depending on sector or nature of business, this may even extend to sponsorship. Disciplinary procedures: • Adding bribery and/or breach of related offences set out in other policies to any examples of gross misconduct

11. Training/staff communication: • Ensuring organisation’s approach to bribery is clearly communicated to all relevant people • Reviewing related policies from time to time to ensure they are relevant and appropriate • Training or briefing, as appropriate

12. First case • Administrative Officer at a Magistrates’ Court • Guilty of requesting and accepting a £500 bribe for offering to “get rid of” a speeding charge for somebody • Sentenced to 6 years in prison: 3 years under the Bribery Act and 6 years for misconduct in public office, running concurrently

13. Agency Worker Regulations • Effective from 1 October 2011 – not retrospective • Day 1 rights: access to collective facilities (canteens, transport service, creche), and to vacancies – but cannot jump the queue re facilities. Can tell them that all vacancies are advertised on website – this is sufficient.

14. “Equal treatment” after 12 weeks in the job, ie basic pay and working conditions. Different types of absence either reset the clock, pause it, pause it for up to 28 weeks, or allow it to keep ticking.

15. Absence that resets the clock: • Agency worker begins new assignment with new hirer • Agency worker remains with same hirer but is no longer in same role • Break between assignments of 6 weeks or more (which is not a break that pauses clock or keeps it ticking – see below)

16. Absence that pauses the clock: • Any reason where break is less than 6 weeks • Annual leave • Shut downs eg factory closure, school hols • Industrial action

17. Absence that pauses clock for up to 28 weeks: • Jury service • Sickness absence Absence that keeps clock ticking: • Pregnancy and maternity-related absence • Statutory maternity, paternity or adoption leave

18. Anti-avoidance and Liabilities • Fine of up to £5,000 for wrongdoing • Day 1 rights – liability with hirer only • 12 week rights – can be hirer and agency, depending on what right has been breached • Claims must be brought within 3 months of breach

19. Maternity – after 12 weeks, entitled to time off for: • Medical appointments • Ante-natal classes With health and safety risks – worker has to tell hirer they are pregnant. If not safe for them to continue, agency has to find similar role elsewhere for them; if they can’t, have to suspend them on full pay.

20. What is “equal treatment”? • With working time, breaks and holiday – as per directly employed staff • With pay – includes: - basic pay - holiday pay - overtime pay - shift allowance - unsocial hours premiums or bonus - bonuses related to individual performance - vouchers or stamps with a monetary value

21. The following do not count as “pay”: - advances or loans - notice pay - redundancy pay - company cars and car allowance - occupational sick pay - payment for time off for TU duties - occupational maternity, paternity, adoption leave pay - occupational pensions - expenses - pay via salary sacrifice

22. Employee consultation: Requirement to inform about “suitable information” on collective redundancies and TUPE transfers. “Suitable information” is: • Total number of agency workers working for the employer • Where those agency workers are working • Type of work done by those agency workers

23. Minimising the impact • Limit the use of agency workers to 12 weeks • Change workers between hirers and roles • Use only agency workers for certain roles, outside existing pay scales • Use of an in-house staffing bank • Use self-employed contractors/outsource • Increase overtime offered to existing staff • Reduce the number of agencies used – build strong relationship with one or two

24. Swedish derogation, ie agency employs worker directly • Permitted exemption from principle of equal treatment with regards to pay only • Agency has to provide permanent contract of employment to individual, specifying expected hours of work, location and nature of work

25. Contract must be entered into before assignments begin • Provides certain minimum payments between assignments • Gives individual various rights eg right to claim unfair dismissal • Suits larger organisations • Not a “silver bullet”

26. Changes to pay/awards • Weekly redundancy pay increased from £400 to £430, effective from 1 February 2012 • Unfair dismissal award limit increased from £68,400 to £72,300, effective from 1 February 2012

27. National Minimum Wage rates 1 October 2011 Adult rate (workers aged 21 and over): £6.08 Development rate (aged 18-20): £4.98 Young workers (aged 16-17 and not apprentices): £3.68 Apprentices under 19 (or 19+ but in first year of apprenticeship): £2.60

28. FUTURE LEGISLATION • Pension auto-enrolment • Changes to maternity/paternity/adoption weekly pay • Changes to Statutory Sick Pay • Tribunal changes/reforms • Qualification period for unfair dismissal extended • New apprenticeship system introduced

29. Auto-enrolment - pensions www.thepensionsregulator.gov.uk The website is very comprehensive and has tools to help you work through the process of auto-enrolment. You can also be added to their mailing list for email alerts on any changes.

30. What is this? Employers have to enrol eligible employees automatically, and make mandatory employer contributions, into a qualifying workplace pension scheme or the National Employment Savings Trust (NEST).

31. What do employers need to do? • Find out when the new automatic enrolment duty will apply • Must be ready to comply on their ‘staging date’ • Staging dates are on the regulator’s website and the size of the organisation sets the date eg: 250+ PAYE scheme must enrol from 1 Oct 2012-1 Feb 2014, 50-249 from 1 Apr 2014-1 Apr 2015, 30-49 from 1 Aug 2015-1 Oct 2015, less than 30 from 1 Jan 2016-1 Apr 2017

32. Level of pension contributions will be phased in over time to help employers and individuals adjust. • Full contributions will have to be paid from 1 October 2018.

33. Assess the workforce Workers will fall into one of three categories: Eligible jobholders: need to be automatically enrolled (but can opt out) Non-eligible jobholders: can choose to opt in and receive minimum employer contributions Entitled workers:have right to join company pension scheme but not to receive employer contributions

34. Eligible jobholder • Working or ordinarily working in the UK • At least 22 years of age and below state pension age • Earning more than £7,475 per annum

35. Non-eligible jobholder • Earning more than £5,035 and less than £7,475 per annum and is above 16 years of age and below state pension age Entitled worker • An employee who is neither of the above (See Regulator website for details) NB Implications for workers who do not work fixed hours

36. Put in place administrative systems and payroll processes to cope with automatic enrolment and re-enrolment • Automatically enrol eligible jobholders within one month of becoming eligible, although the Bill contains provisions for employers to operate a 3-month waiting period

37. Provision of information to these employees including information about the pension scheme and their right to opt out, within this one month window • Give non-eligible jobholders the opportunity to opt in to a qualifying scheme • Minimum contributions must be paid in on behalf of jobholders

38. Automatically re-enrol eligible jobholders who opt out or leave the scheme approximately every three years

39. Decide which scheme to use to meet the automatic enrolment duty Qualifying pension scheme must meet certain minimum quality requirements. If an employer has an existing scheme, this will need to be reviewed to ensure it meets the qualifying criteria.

40. Assign compliance duties Employers will be required to monitor their employees’ eligibility for automatic enrolment and re-enrolment, and to process opt outs. Also, to provide correct information within certain timescales. Failure to do so can lead to enforcement action including a fine.

41. Consider the impact of increased costs on the business • Aim of this legislation is to increase the number of people saving for a pension • Even with fairly high opt out rates, most employers are likely to see an increase in numbers of employees participating in their pension scheme • By completion, minimum employer contribution will be 3%

42. Communicate these changes to employees Legislation sets out certain prescribed information that employers will be required to provide to their employees. It varies depending on the particular category that an employee falls into. See NEST phrasebook and DWP’s automatic enrolment language guide for help when preparing employee communications.

43. Other points • Employers can go beyond the requirements by offering their pension scheme to jobholders who are not eligible, eg earnings are below required minimum • Employers can opt their staff in before the required dates if they wish

44. Employees cannot opt to simply have the employer contribution of 3%, without paying their own employee amount of 4%. This is because a minimum of 8% must go into the scheme: 3% employer 4% employee 1% tax relief

45. If an employer puts at least 8% into a scheme, this will probably count as an eligible scheme, and the employees will not have to make a contribution – but all schemes need to be reviewed • If an employee opts out of their employer’s scheme, the employer can then put a contribution into a pension scheme of the employee’s choice if they wish

46. Maternity/Paternity/Adoption pay • For all three areas, weekly statutory pay will rise from £128.73 to £135.45 • Effective from 1 April 2012

47. Statutory Sick Pay • Weekly Statutory Sick Pay increases from £81.60 to £85.85 • Effective from 6 April 2012

48. Tribunal changes/reforms Effective from 6 April 2012: • Maximum amount of a deposit order (ET can order a party to pay this if judge considers case has little or no chance of success but party still wishes to go ahead) increases from £500 to £1,000 • Maximum amount of a costs order (which ET may award in favour of a legally represented party) increases from £10,000 to £20,000.

49. Witness statements “taken as read” and no longer need to be read aloud, unless directed otherwise • Tribunals can direct that parties to a dispute are responsible for paying witnesses’ expenses, and whoever loses, reimburses the other • Judges will hear all cases alone unless they direct otherwise

50. Qualification period for unfair dismissal • This relates to the length of employment needed in order to make a claim to tribunal for unfair or constructive dismissal • This is currently one year • From 6 April 2012, this is extended to two years • It relates to those joining from 6 April 2012 • Those who joined before that date will retain their right to make a claim after one year of employment