A report by the government adviser and venture capitalist, Adrian Beecroft was leaked last week.

It follows on from recent government proposals to reform the current laws on unfair dismissal, in particular, increasing the qualifying period from one year’s continuous employment to two years.

The Report

The report highlights the government’s concern about the amount of ‘red tape’, which is said to burden small and medium sized businesses, particularly those who do not have the expertise to deal with complex employment matters.

Amongst those targeted are lazy workers. The report centres on workers who are allowed to “coast along” by employers fearful of the legal consequences for taking any action.

The current law already allows employers to dismiss lazy workers. The employer is required to show that the employee is underperforming and acts fairly in response by giving the employee an opportunity to rectify the situation. In practice, the process can be lengthy and cumbersome for an employer of a small business to manage. The employer also runs the risk of an Employment Tribunal claim and significant compensation. 

In contrast, the leaked Beecroft report recommends that employers should be given the right to sack underperforming workers without reason, and find more capable replacements.

Proposed reforms

The report advocates a replacement for incapability dismissal, namely, the Compensated No Fault Dismissal. This would enable employers to sack unproductive staff with basic redundancy pay and notice. One “downside” admitted by Mr Beecroft in relation to the proposed new scheme is that employers would be able to fire staff because they “did not like them”.

Mr Beecroft believes that this is a price worth paying in exchange for all the benefits that would result from his proposed reforms such as an increase in business growth which would prove a major boost for the job market.

Reaction

The proposed reforms have met strong resistance, in particular from trade unions. There is the feeling that if Mr Beecroft’s proposals are implemented, employees would be deprived of basic protection. Every single employee would be in a position where their employer could arbitrarily terminate their employment. Norman Lamb, chief advisor to Nick Clegg, said that “the impact that could have on consumer confidence and the fear of losing ones job, would be potentially very damaging”.

Comment

In my view, the Beecroft report is somewhat short sighted to single out workers for the inefficiency of business productivity. Other factors are likely to include poor investment, poor training and poor management.

There is nothing to suggest watering down employee rights would create any more jobs and it could be argued the job insecurity it would create would be bad for the economy. Whilst, the report focuses on lazy and underperforming employees, in practice, the proposed changes could also affect hardworking and competent employees.

Potentially, any employee could be dismissed and unless they could prove an element of discrimination (as legislation in this area is being left untouched) employees would have no entitlement to receive compensation for loss of earnings.

On the other hand, the Report recommends that an employer is obliged to pay a basic award (the equivalent of a statutory redundancy payment) for those employees who under current law it could fairly dismiss in certain circumstances. 

By removing the traditional route for unfair dismissal claims, we could see a trend developing whereby employees file increasing numbers of discrimination claims through the backdoor.

There is also a risk that the proposed changes could encourage bad and lazy management. The proposed changes do not allow for the possibility that the employer may be at fault. Under the Compensated No Fault Dismissal, a manager or employer could shift the blame to its employee and recruit someone else.

Perhaps there are better ways to meet the Report’s aims, such as introducing fees (and / or costs penalties) for lodging Employment Tribunal claims, which should deter those claimants with weak claims.

It would be interesting to hear the comments of local businesses on the leaked report. Would you welcome the proposed changes?

Mark McKeating, solicitor at Hill Dickinson LLP, 0151 236 5400 or mark.mckeating@hilldickinson.com.

A leading Merseyside accountancy firm is warning the region’s small firms that HM Revenue & Customs (HMRC) is starting to turn down Time to Pay (TTP) applications from companies that use dividends as a form of remuneration.

Liverpool Chamber member Mitchell Charlesworth’s Liverpool-based partner Tim Adcock said the TTP arrangements allow companies to defer the money they owe HMRC to aid their cash flow situation. HMRC has historically agreed to around 95% of applications and turns down first time applicants on a rare basis.

However, Mr Adcock said the attitude of HMRC has been hardening since Christmas and he understands this tougher line is part of a new policy.

A HMRC spokesman has confirmed: “Where a company asks us for a TTP arrangement and we have information or see that they recently paid out a dividend while they were running up a tax debt, we would refuse a TTP on the grounds that they have preferred to use the money elsewhere and the shareholders should support their company. It is a routine question our staff ask to establish that we are not be used to fund other creditors.

“In essence, if a company has spare cash to make non-contractual payments to shareholders, then it can pay at least part of its debts.”

Mr Adcock urged worried owner managers to seek professional finance advice to ensure their business finances are prepared for the new policy.

“This new hard line is no surprise,” he said. “We have seen a distinct change in attitude in HMRC since December on TTP. Before Christmas HMRC was flexible and relaxed on TTP which was incredibly helpful for many firms. However, this year has seen a less sympathetic less flexible approach and, as we can see from this new policy, it is not sabre rattling. HMRC will start coming down harder and refuse applications.

“The key advice, as always, is to see a professional financial adviser who has a real feel for enterprise and small business. They can then take proactive approach to managing your cash acting like a virtual finance director ensuring you are properly prepared for these and other changes at HMRC.”

For further information Email: tim.adcock@mitchellcharlesworth.co.uk or call any member of the Mitchell Charlesworth tax team in Liverpool: 0151 255 2300

7 July, Racquet Club

Join Equality Minister Lynne Featherstone MP for a lunchtime discussion on Employment Law and difficulties for small businesses.

From April 2011 until April 2013 the government aims to review over 21,000 statutory rules and regulations that are active in the UK today. The priority will be to focus on regulations that place the biggest burdens on businesses and society.

Regulation can be reviewed on the Red Tape Challenge website http://www.redtapechallenge.cabinetoffice.gov.uk

In addition to the feedback received via the website, Ministers are also conducting some visits with businesses to further their understanding of how these regulations impact on business activity.

On the 7 July 2011 we will be hosting a lunchtime (12.30-1.30) event with Lynne Featherstone MP – Equality Minister at the Racquet Club, 5 Chapel Street, L3 9AG. 

We would be delighted if you could join us.  We will host the meeting over a buffet lunch and some areas for discussion include the following:

Points for discussion:

• How aware are you of your equality law obligations?
• What is your view on employment regulation in general?
• Have you ever faced a Tribunal claim? How did you deal with this?

This event is aimed at owner managers, HR managers or legal profession only.

If you would like to attend, please email policy@liverpoolchamber.org.uk or call the Policy Team on 0151 227 1234

The Ministry of Justice has confirmed that the Bribery Act 2010 will come into force on 1st July 2011. The Act will replace the UK’s existing anti-bribery and corruption legislation, which has been criticised for being overly complex and, until recently, rarely enforced.

The Act will give the UK some of the toughest anti-bribery legislation in the world and any multinational business with a UK presence will have to make significant changes to the way they operate in order to avoid criminal corporate liability, potentially ruinous fines and possible damage to reputation and share price.

The Act creates four new offences which in broad terms are; a general offence of paying a bribe (section 1), a general offence of accepting a bribe (section 2), a specific offence prohibiting the bribery of foreign pubic officials (section 6) and a corporate offence of failing to prevent bribery (section 7).

In a recent justice case in the UK, Lord Justice Thomas (Deputy Head of Criminal Justice) made it clear that corruption is at the top end of serious corporate offending. It’s therefore no surprise that the Act will raise the maximum jail term for an individual from 7 years to 10. Further, a company convicted of failing to prevent bribery under the Act will face unlimited fines.

In the light of the UK Government’s commitment to tackling international corporate corruption, it is likely that we will see more cases of international corruption in the UK criminal courts. As a result, it is recommended that all corporations, especially those that operate in high risk jurisdictions, understand the Act, the recent guidance and take appropriate action to update their systems, controls and business practises to ensure compliance.

Lesley Batchelor from Trade International Digest gives some suggestions as to what businesses can do about the Act.
It is essential that every level of the organisation, contractors and suppliers are made aware of the policy and its contents. The policy should not only clearly restrict any form of bribery, but also give guidance on the appropriate levels of gifts and hospitality that can be given ( or received) and make clear the route for whistle-blowers to make their concerns known.
As regards to gifts and hospitality, the guidance highlights that “reasonable, proportionate” hospitality and promotional expenditure “made in good faith [as] an established and important part of doing that business” will not be considered a breach of the Act.
The 45-page guidance document can be downloaded from http://www.justice.gov.uk/guidance/making-and-reviewing-the-law/bribery.htm
If interested in learning more about the Act the Chamber may be able to offer a workshop covering it in more detail, looking at how it will affect you and your company.

Thursday 17th February 2011

A free advice seminar from Kirwans Solicitors for anyone involved in HR or employment issues.

Venue:
The Boardroom
8th Floor Martins Building
Water Street
Liverpool
L2  3SX

Agenda
12.00pm Registration and refreshments

12.30pm Introduction by David Jones Head of Employment Law at Kirwans
  Solicitors

12.40pm David Jones (Kirwans Solicitors) Employment Legislation for 2011
An update on employment legislation covering the Equality Act and its effect on discrimination.

Plus what’s new for 2011 including interesting cases on the disciplinary front, the impact of claimants lying, auto-enrolment and the rising costs of employing staff.

1.00pm Blaise Davies  (Powell Financial Management) Auto-Enrolment The Facts. The forthcoming changes in pension legislation and employers’ responsibilities under the new rules.

A must for any employer as the changes affect all businesses. Blaise will also cover the NEST scheme including costs and other issues.

1.20pm Alan Woods (Woods Squared) Performance Management and KPIs
 Breaking down targets and goals for each team member and how this can make delegation more effective.

Also covering how this gives true ownership to each team member for their own career development.

1.40pm Q & A and Networking

If you would like to attend this event call Alison Scragg on 0151 703 1911 or email ascragg@kirwanssolicitors.co.uk

Here’s some info about a change to the extra amount small employers can recover in addition to the full reimbursement made to them of  Statutory Maternity, Adoption and Paternity Pay.

As you know small employers, those whose gross national insurance contribution payments are £45,000 or less in the previous tax year can get back 100 per cent of the Statutory Maternity Pay (SMP) they pay out plus an additional amount as compensation for the employers share of National Insurance contributions paid on SMP. The same reimbursement arrangements apply to Statutory Adoption and Paternity Pay.

That additional amount – currently 4.5% of the SMP paid by an employer – has to be reviewed each year in line with a formula set out in regulations which compares the total amount of SMP paid by all employers in the tax year with the estimated total of the employers share of national insurance contributions due on those SMP payments.

From April 2011 the threshold at which employers start to pay national insurance contributions goes up to £136 a week (from £110) and, as a result, no national insurance will be payable on the £128.73 standard rate of SMP,SAP and SPP.

The reduction in employers national insurance payments is therefore reflected in the amount of the additional payment due from April 2011.

From 6 April 2011 the additional payment will be 3 per cent so that small employers will be able to recover 103 per cent of the Statutory Maternity Pay, Adoption or Paternity Pay paid out. It will continue to be the case that this rate applies regardless of whether any national insurance contributions are actually due or not.

Information about the new rate can be found on the “What’s new” pages of the HMRC website www.dwp.gov.uk/healthandwork

Employment Law 2011

Mark McKeating of Hill Dickinson provides us with our first Employment Law update of 2011

Goodbye to 2010….

A change in Government…. Anti- discrimination laws were given a new lease of life when the Equality Act came into force…. the proposed abolition of the default retirement age of 65…companies continued to struggle to avoid redundancies in the workplace…claims to Employment Tribunals increased significantly.. .. we also learnt that a worker who is on sick leave does not mean that he has been denied the opportunity to take holiday leave and ‘serial litigants’ are likely to get their ‘comeuppance’ at Tribunal. 

And so to 2011…..what to expect?

February

First up… on 1 February 2011, the maximum compensatory award for unfair dismissal claims will rise from £65,300 to £68,400.  In addition, the amount of a week’s pay, used to calculate statutory redundancy pay (amongst other things) will rise from £380 to £400. 

Spring

Spring brings the Bribery Act 2010.  The Act will come into force on 1 April 2011.  The Act will introduce a new strict liability corporate offence of failing to prevent bribery by individuals acting on behalf of an organisation.  A defence is open to employers who are able to show that they have “adequate procedures” in place to prevent bribery and corruption.  What exactly amounts to “adequate procedures” is likely to be clarified in early 2011 by the Government. 

April also welcomes the remaining provisions of the Equality Act 2010.  The noteworthy provisions include positive action in relation to recruitment and promotion. Employers will be allowed “to apply voluntary positive action in recruitment and promotion processes when faced with two or more candidates of equal merit, to address under representation of the workforce”. 

The Government will also encourage gender pay reporting in the private and voluntary sectors.  This will be aimed in particular at those employers with 150 or more employees. 

There will also be an extension of the right to request flexible working to parents with children under 18.  The Government estimate that the new right will benefit some 300,000 people in the UK. 

There will be further increases in statutory payment rates from 11 April 2011. 

• Statutory maternity pay, statutory paternity pay and statutory adoption pay will increase from £124.88 to £128.73. 
• Statutory sick pay will increase from £79.15 to £81.60 and the maternity allowance will increase from £124.88 to £128.73. 

Fast forward to October….

The Government will finally implement the Agency Worker Regulations.  The broad aim of the Regulations is to ensure equal treatment is afforded to agency workers. This will apply to those workers with a qualifying period of 13 weeks.  Any agency workers who are engaged beyond the 13 week period will enjoy any assignment on the same terms and conditions relating to working time, overtime, breaks and rest periods, night working, holidays and pay, as if they are being employed directly by the employer. 

There are also anti avoidance provisions preventing an employer from using loopholes to avoid compliance under the Regulations. Employers will incur fines for flouting the rules. 

There has also been much publicity surrounding the Government’s decision to abolish the default retirement age on 1 October 2011.  Please be aware that the changes effectively begin on 30 March 2011, as this will be the last day on which employers can give 6 months notice of an enforced retirement.  After this date, employers will no longer be able to rely on the default retirement age for dismissing an employee.

Some other areas to look out for….

• Will the qualifying period for “ordinary” unfair dismissal claims rise from 1 to 2 years?  As part of the Government’s effort to support small businesses, the Government is considering implementing a 2 year qualifying period for unfair dismissal claims.  To date, this proposal has attracted significant criticism, many of those in opposition see this proposal as increasing claims by the back door (eg whistleblowing and discrimination claims) which is likely to cost businesses more to defend in an Employment Tribunal.
• As controversial as ever, immigration will remain on the agenda for discussion in 2011.  In September 2010, the Immigration Minister, Damian Green confirmed that an official Government review will take place into the immigration system.  There are plans to limit the number of non-EU economic migrants entering the UK.  It is expected that this cap will apply from non-EU migrants from April 2011. 
• It is expected that the right to request time off for training may apply to all businesses with effect from 6 April 2011.  It already applies to those with 250 employees or more. 
• We also await news of how Tribunals will interpret the new provisions on the Equality Act 2010, and the uplift in compensation in relation to the ACAS Code of Practice.
• The Government has published details of its scheme to name and shame employers who flout the national minimum wage legislation. Although the scheme, which came into force on 1 January 2011, is intended to allow the public to make informed choices about who they work for, or do business with, there will be no register of ‘named’ employers, or those who fail to pay the NMW. Instead, employers will be named in a BIS press release. Exceptions will be made where there a real risk of personal harm to an individual or their family or where other factors outweigh the public interest in naming the employer.
• In these difficult financial times, we anticipate that employers will do more to protect their business. We expect the courts to see a rise in injunctive proceedings preventing employees from breaching restrictive covenants in their contract of employment.

Wishing you a very prosperous 2011.

Should you have any queries about forthcoming legislation or any general queries then please contact Mark McKeating on 0151 236 5400 or mark.mckeating@hilldickinson.com.

Mark will also be presenting at the Chambers forthcoming HR Forum on 25 January 2011. For further details please visit the Liverpool Chamber website.

Forget Wagner’s swagger in the X-Factor, McKeith fainting in the jungle and Widdecombe’s ‘cha-cha-chas’ in Strictly, Mark McKeating of Hill Dickinson Solicitors considers this month’s employment law highlights.

Two years service required for an unfair dismissal claim?

Laura Young, the Government’s Enterprise Tsar has announced that the Government is considering increasing the qualifying period for bringing a claim for unfair dismissal from one year to two years.  This measure is aimed at protecting small businesses. 

However, there is a concern that the increase in the unfair dismissal qualifying period could lead to other claims which do not require a qualifying period of service.  For example, an employee could claim whistleblowing or complain that they have been discriminated against.  Invariably, these claims are more complicated to defend and expensive. 

We anticipate that this measure will be met with substantial opposition from trade union organisations.  The Government are consulting on this in the next twelve weeks and a proposal could come into effect as early as April 2011. 

Payback for ‘Serial Litigants’

Also this week, serial litigants have been taught a salutary tale in the Employment Appeal Tribunal.  The EAT has dismissed four appeals by alleged serial litigant, John Berry.  Mr Berry was exposed earlier in the year by The Times as scouring the internet for job adverts, some calling for a “recent school leaver”. He then submitted his application and being unsuccessful, Mr Berry resorted to bring claims of age discrimination.  Allegedly, he became the beneficiary of settlement payouts as employers looked to avoid the expense of a defending a claim in the Employment Tribunal. 

The present appeal concerned Mr Berry’s claims against four recruitment agencies.  It is noteworthy that Mr Berry did not attend the hearing and the Tribunal commented that it was not in the position to assess his motivation for bringing the claims.  However, President Underhill commented that those who seek to exploit discrimination legislation for financial gain are liable to find themselves facing liability for costs.  This will hopefully deter future claimants from similar behaviour.

And finally…Christmas parties

With the Christmas season nearly upon us, employees will be gearing up for their Christmas parties. Over the years, I have heard everything from workers setting their colleagues on fire, fighting, sexual harassment to the public display of body parts.

Without sounding like too much of a killjoy, it is advisable to remind your staff before the party of behaviour that is and is not acceptable. It is also sensible to refer your staff to any workplace policies on discrimination and harassment.

Mark McKeating
Hill Dickinson LLP
mark.mckeating@hilldickinson.com
Tel:  0151 236 5400

Wednesday 20th October 2010, 12pm - 2pm

Liverpool Chamber member Smith, Law and Shepherds IFA for this free event that could save you thousands.

• Are you a business owner in the Northwest?
• Do you employ more than 5 people (including directors)?

You can not afford to miss this seminar…

Employer Responsibilities under the Pension Act 2008

Do you comply with the current legislation surrounding stakeholder pension schemes your employees?

Are you aware of the new reforms to the Private Pension system to be launched in 2012?

All employers need to be aware of how these changes will affect them and their company.

Failure to comply with the new reforms could lead to stringent fines or even imprisonment.

Join, Smith, Law and Shepherds IFA to find out the main requirements and
responsibilities that employers currently face, and will face from 2012.

Venue:
Hard Days Night Hotel
41 North John St
Liverpool
L2 6RR

Cost: FREE
Date: Wednesday 20th October 2010, 12pm - 2pm

Complimentary refreshments including lunch will be provided.

Click here to register your free place

Chamber member Hill Dickinson have once again provided us with a timely update on employment laws and regulations:

Following our evaluation of the proposals of the new government (read this post here), this week has put into context the sizeable task facing businesses in the year ahead.

Increase in Employment Tribunal claims

First comes the news from the Tribunals Service that the number of claims has risen by 56%.

In the 12 months to the end of March 2010, 236,100 claims were brought in the employment tribunals, a dramatic rise from the 151,000 claims last year.

The above figure is probably not surprising following business necessity to consider redundancies during the recession, however claims associated with the Working Time Regulations also saw a steep increase from 10,600 to 95,200.

National Minimum Wage increases

The government has further announced new NMW rates, taking effect from 1 October 2010:

• £5.93 per hour for low paid workers aged 21 and over, increased from £5.80;
• £4.92 per hour for 18-20 year olds, increased from £4.83; and
• £3.64 per hour for 16-17 year olds, increased from £3.57.

For the first time there will also be an apprentice minimum wage of £2.50 per hour.

Fake Fit Notes

And finally….ever been offered some counterfeit DVDs in a pub?!  Well, spare a thought for some employers who according to an recent investigation have received fake fit notes.

BBC news has reported a number of instances of employees using fake “fit notes”. A web-site Doctorsnotestore.com has been advertising a “buy one and get one free” offer for fake versions of fit notes. The fake fit notes come with a guaranteed 48-hour delivery, and employees can choose to have their notes stamped by doctors from medical centres in any UK city. There is a significant risk that employers could be fooled by these fake notes because the fit note is a new concept and has not been seen by many employers, to date.

Our advice to employers is to check fit notes carefully and to conduct a robust return to work interview process at the end of the absence. Employers do not have to accept a fit note at face value. If they have any doubts as to a fit note’s authenticity, it is important that the employer handles the matter legally and promptly.

We recommend that employers review their sickness absence policy in order to ensure that it gives them the right to refer an employee they feel may be only pretending to be sick, to an independent doctor. If the employer finds that an employee has submitted a fake fit note is also likely to form grounds for disciplinary action.

Should have any further questions on any of the above issues or other employment law queries you can contact Mark McKeating on 0151 600 8000 or mark.mckeating@hilldickinson.com .