Employer Compensation ICESR 2 August 2013

1. Employer CompensationICESR2 August 2013 Lieutenant Colonel Steve Caldwell Reserve Forces and Cadets GBR Ministry of Defence

2. Main Themes Not debate payment to reservists • Employer should not be disadvantaged • Defence must get value for money • Compensation for employer ranges from • Nothing • Compensation on production of receipts • Flat rate payment, irrespective of actual costs • Less employers claim than expected

3. Main Issues/Difficulties • Overcoming ignorance of employers • Reducing bureaucracy • Capturing expended costs • Keep it simple - implementing tax relief complicated • Looking ahead: • The move from pre-planned to contingent mobilisation • Uncertain or early demobilisation date

4. Main Challenges • Discussion to be continued within the Workshop • Affordability • Fairness to employer • Return to less certain mobilisation profile • Presentations to facilitate debate • Australia • Netherland • Poland • United Kingdom + input from Canada

5. GBR Perspective Financial assistance for Employer only activated when reservist mobilised for operations

6. No Compensation for Non-Mobilised Service Man Training Days – all Volunteer Reservists • Pro rata pay for 19 – 90 days per year. • Tax-free Annual Training Bounty - Max £1674 (after 5 years). • Paid annual leave. • No pension, medical, or housing assistance. Additional Duties Commitment(c500 reservists) • Maximum 180 days per year. • Pro rata pay and benefits, includes pension and leave. • No medical or housing allowance. Full Time Reserve Service (c2,000 reservist) – 3 forms: • Work as a regular (active duty) service person • Not mobilised.

7. FR20 Better Balance Financial Proposition Easier to make financial claims FR20 proposes extra £500 per month per mobilised reservist for employers with less than 250 employees

8. Current Financial Assistance Supported by legislation The Reserve Forces (Call-out and Recall) (Financial Assistance) Regulations 2005 Money available for reservist - Reservist Award Money available for employer – Employer Award and Training Award

9. Employer’s Award An employer’s award shall, subject to a cap of £110 per day, be the amount by which the replacement costs incurred by the employer exceed the relevant earnings of the reservist. Replacement Costs Daily rate of: (a) pay to any replacement of the reservist (b) any – • overtime payments to existing employees • increases in salary of existing employees where an adjudication officer is satisfied that they are attributable to the absence of the reservist

10. Example • Reservist normally paid £100 per day • Additional overtime for 4 men is £20 each per day. • Therefore replacement cost = £80 per day. • It is less than cost of reservist, so no employer award • If total overtime cost = £150 per day • Then employer award is £50 per day • If replacement worker hired costs £180 per day • Then employer award is £80 per day. • If replacement worker hired costs £250 per day • Then employer award is capped at £110 per day.

11. In addition… • Employer can claim for certain non-recurring costs incurred in replacing the reservist. These are: • Agency fees • Advertising costs • Training Award • Where training required on return from mobilisation • Complete within 6 or exceptionally 12 months of return

12. Payment • Employer award paid monthly in arrears end of each month • Calculated as the daily rate multiplied by the number of days that month that the reservist is absent by virtue of mobilised service • Training award must be claimed within 8 weeks of returned reservist completing the training

13. Employer Claims • No clear link between numbers mobilised and number of claims from employers.   • If the replacement employee is on same or lower wage then no replacement award can be claimed.   • Employers can use the current labour market situation to their advantage. • Historical numbers of claimants are low. • In last ten years annual numbers of employers submitting a claim range is 30-60 employers claimed from 2000-2500 mobilised reservists. Equals 2.4%. • In FY 11-12 there were 117 payments made to 67 employers.

14. Difficult to put a figure on an ‘average’ claim as claims can vary depending on whether they are for replacement costs or for agency fees and advertising. • Amount paid to employersreduced for the last 3 years. • FY 10-11 = £421,000 • FY 11-12 = £376,000 • FY 12-13 = £279, 000 = £70 per mobilisation • Evidence suggests that claims are made by smaller employers (SMEs) who feel the loss and associated administrative burden greatest.

15. Areas to Address • Less certainty when reservists will be mobilised for contingent operations • No additional payment for employees accepting reservists being on High Readiness Reserve • Earlier than expected demobilisation and associated cost of releasing replacement workers