Auto enrolment

Employer fined £350,000 for workplace pension failures

Employers are being warned not to put their head in the sand after one business ended up with a £350,000 fine for failing to fully comply with its pension duties.

The anonymous case study is included in the most recent quarterly compliance and enforcement bulletin from The Pension Regulator (TPR).

Despite warnings from TPR, the employer, which has 5,000 staff, allowed an Escalating Penalty Notice to grow before correctly re-enrolling staff into the company pension scheme and paying the right contributions.

TPR director of automatic enrolment Darren Ryder said:

“This size of the fine is rare as the vast majority of employers now consider automatic enrolment to be an everyday part of running their business and helping workers to save. However, this case is a stark warning that failing to address problems early can lead to hefty fines which could be avoided…”

Following TPR’s intervention, the London-based company has now re-enrolled more than 40 staff and paid more than £100,000 of backdated pension contributions, as well as ensuring ongoing contributions are correctly calculated and paid. The backdated payments, which are in addition to the fine, cover both the re-enrolment failure and incorrect contributions affecting more than 2,000 staff.

Darren Ryder also highlighted how vital it is to carry out both ongoing duties and re-enrolment correctly. TPR will take action to ensure that not only are staff put into a pension, but they continue to receive the correct contributions on an ongoing basis and that those who opt out are re-enrolled correctly and given their right to start saving.

The quarterly compliance and enforcement bulletin, which reports on TPR’s use of powers between April and June 2019, also highlights how:

  • As part of TPR’s new supervision approach, its relationship supervision teams are finding high standards and well-run schemes
  • TPR authorised seven master trust schemes in the period under section 13 of the Pensions Act 2017
  • TPR published a Determinations Notice detailing the first time it used its power to appoint a trustee primarily because of a lack of competence of the existing trustee board
  • More than 200,000 employers have met their re-enrolment responsibilities and tens of thousands of small employers (those with fewer than 50 staff) are approaching the third anniversary of their staging date

Source: cipp 23-08-2019

Employment Law

Government consult on flexible workers receiving compensation if shifts are cancelled

The government has opened a consultation on proposed new measures for flexible workers which will give them more rights as well as compensation if their shifts are cancelled at a short notice.

This will advance the government’s Good Work Plan, “the largest upgrade to workers’ rights in a generation.” The Good Work Plan was announced in December 2018 and formed the Government’s response to Matthew Taylor’s independent Taylor Review of modern working practices (2017).

The new measures the Government will consult on for flexible workers will include:

  • compensation for workers when shifts are cancelled at short notice
    entitlement to a reasonable period of notice for their allocated shifts
    additional protections for individuals who are penalised if they do not accept shifts last minute

Mr Taylor’s review found that zero hours contracts work for the majority of these workers as it gives them the flexibility they need, however, he said that the Low Pay Commission should look in to the issue of one-sided flexibility.

In December 2018 the Low Pay Commission researched this issue and found that parts of the labour market where employers are misusing flexible working arrangements leading to unpredictability in working hours, income insecurity and a reluctance among workers to assert basic employment rights.

The Low Pay Commission also found that 1.7 million flexible workers feel “anxious” that their working hours can change unexpectedly. As well as under half (40 per cent) saying their hours “tend to vary from week to week”.

Ben Willmott, head of public policy for the CIPD said:

If we want to create fairer, more inclusive workplaces we must address one-sided flexibility that benefits businesses but puts individuals at a disadvantage. Zero hours contracts can offer people flexibility they need but it’s been far too easy for some employers to cancel shifts with very little or no short notice. Workers not only lose out on pay but also suffer unnecessary travel costs and disruption. It’s absolutely right to make companies pay reasonable compensation if this happens and we welcome this, and other measures proposed to protect workers on variable hours.

The introduction of a right to switch to a more predictable work pattern should give workers more choice over their working arrangements. However, circumstances in which employers can refuse this will need to be clear. A right to reasonable notice of work schedules is also a proposal that will be welcomed by atypical workers and good employers as long as there is flexibility over what is ‘reasonable’ given the nature of the work.

Greg Clarke, business secretary said:

Innovative entrepreneurs and new business models have opened up a whole new world of working patterns and opportunities, providing people with freedom to decide when and where they work that best suits them.

It’s vital that workers’ rights keep pace with these changes, reflect the modern working environment and tackle the small number of firms that do not treat their staff fairly.

We are the first country in the world to address modern working practices and these protections will cement the UK’s status as a world-leader in workers’ rights.

Bryan Sanderson, chair of the Low Pay Commission said:

We are delighted to see the government taking forward our recommendation to consult on these measures.

Last year we looked at the data on one-sided flexibility and talked to workers and businesses across the UK. Our report, published in December, found that shift cancellations and short notice of work schedules were significant problems, especially for low-paid workers.

The proposed changes, part of a package of policies we suggested, have the potential to improve work and life for hundreds of thousands of people.

These new proposals follow the announcement that the government is consulting on whether or not to create single labour market enforcement body which will have the power to make sure minimum wage and holiday payments are offered to employees.

The government is inviting views on flexible working and the consultation will be open for 12 weeks.

Source HRreview 22-07-2019

Employment Law

UK employees are not receiving the right amount of holiday leave

Deck chairs on Brighton beach

Two million UK workers are not receiving their legal holiday entitlement.

According to new research by TUC, it has been revealed that roughly two million UK employees are not getting their minimum legal holiday entitlement. In addition to this, it has been calculated that around one million workers in the UK are not receiving any paid leave at all.

TUC found the leading reasons for this were unreasonably heavy workloads, employers denying requests for holiday leave and employers following outdated laws.

The Working Time Regulations Act 1998 states that UK workers are entitled to a minimum of 5.6 weeks, or 28 days, of paid leave.

However, around 7 per cent of UK employees are getting fewer holidays. The statistics also shows that 8.3 per cent of female employees are not receiving the correct amount of holiday leave. This is in contrast to 5.9 per cent of male employees.

Additionally, Northern Ireland has the highest number of employees not receiving their legal holiday entitlement with almost 10 per cent (9.2) missing out. This is followed by Eastern England and London, with 7.7 and 7.5 per cent of employees respectively.

The region least affected is the North West of England where only 5.6 per cent of employees are not receiving the correct holiday entitlement.

Additionally, tombola, an online bingo website, conducted a survey concerning work life-balance as it proved to be one of the most prevalent topics of interest amongst its community members.

This research actually uncovered that even when workers are given the correct amount of time off, half (50 per cent) of UK employees were made to feel uncomfortable when they requested time off.

Furthermore, 28 per cent of workers in the UK have more than five days of holiday allowance unspent in a year, revealing that around one in three employees work an extra full working week for free.

Malcolm Gregory, a partner in the employment law team at Royds Withy King, said:

The law has prescribed minimum paid holiday since 1998 and workers’ rights in this connection are reasonably well known. This issue is not just about employers flouting the law but also about workers taking responsibility for their wellbeing and understanding the health implications of not taking a reasonable amount of time off.

Workers who wish to compain can do so and will be in strong position to enforce their legal rights. Provided the Tribunal system remains free to use, there is no barrier to justice.

A more effective solution for this issue might be to consider how the health and wellbeing agenda can be publicised to greater effect. If the message is heard widely by all workers, it will be difficult for employers to seek to avoid or turn a blind eye to the existing law.

TUC said:

Minimum holiday entitlements are a vital part of reducing overwork. People who work excessive hours are at risk of developing heart disease, stress, mental illness, strokes, and diabetes, which also impacts on co-workers, friends, and relatives.

Research by the TUC came from the Labour Force Survey whereas research by tombola was collated from the results of a survey of 300 people.

Source HRreview  22-07-2019

Employment Law

Tribunal compensation limits increase

Although the annual April increases to employment tribunal compensation awards are expected, the ever-increasing monetary awards highlights the significant financial costs of ending up in front of a tribunal.

For dismissals effective on, or after, the 6th April 2019, the total compensatory award in an unfair dismissal claim has breached the £100,000 barrier for the first time. An unfair dismissal award payable by an employer is made up of the basic award and the compensatory award. The basic unfair dismissal award is calculated using the claimant’s age, length of service and weekly pay; with the maximum amount payable capped at 30 weeks’ pay. With the maximum amount of a week’s pay shooting up from £508 to £525 per week, the highest unfair dismissal basic award will be £15,750. If you add the new maximum unfair dismissal compensatory award of £86,444 to this amount, the total maximum cost of an unfair dismissal claim reaches £102,194. It is important to remember that there is an additional limit on the unfair dismissal compensatory award which is based on 52 weeks’ pay, i.e. if an employee is paid £30,000 each year their maximum compensatory award for unfair dismissal is £30,000, but higher paid employees will be on track for a significant pay out if they are unfairly dismissed.

For employers, these figures are a stark reminder of how much an incorrect dismissal could cost their business. Whilst many employers feel confident in relying on a potentially fair reason for dismissal, there are those who fail to take into account the importance of following a fair and reasonable procedure when ending employment. Not only could a failure to follow the ACAS Code of Practice on Disciplinary Procedures lead to a finding of unfair dismissal, it could also any compensation award increased by a further 25%. Snap dismissals decided without examining all the relevant information, or considering any evidence that mitigates the employee, will likely lead to an employment judge deciding that this decision was not within the ‘range of reasonable responses’ also.

With the importance of getting dismissals right making good financial sense, employers are encouraged to become familiar with dismissal processes and the procedure that is outlined within the ACAS Code, and their internal policy. As a minimum, a full and thorough investigation should be carried out before a meeting, with the right to appeal any decisions afforded to the employee. Any relevant information that supports, or goes against, the dismissal needs to be considered, with the employee provided with the opportunity to review this in advance and comment on it at the meeting. Employers may need to evidence that their decision to dismiss was fair and reasonable, taking into account all the circumstances, therefore notes should be taken and a record kept of the reason for the dismissal.

Source: Aphrodite Papadatou – HRreview 27-02-2019

Employment Law

Are employers responsible for what happens at the Christmas party?

As we approach the festive season many companies are likely to have planned their annual Christmas party. Whilst festive social gatherings are usually very popular with the workforce, and can offer the chance to reward and engage with employees, they can also give rise to instances of poor behaviour from staff.

Alcohol consumption, coupled with a relaxed social atmosphere, can foster situations which may not occur in the every-day office, ranging from aggressive behaviour to more serious cases of discrimination and harassment. Although Christmas parties are fundamentally a social and fun occasion they are also, as official company-organised events, an extension of the working environment. In other words, if employees behave in an inappropriate, aggressive or dangerous manner whilst at the party, their employer may be responsible for their actions.

Legally, an employer has a duty to protect the health, safety and welfare of their employees. By extension, they can be liable for actions committed by employees in the course of their employment if they cannot demonstrate they took ‘reasonable steps’ to prevent it. For example, companies should have policies in place which set out the type of behaviour expected from employees and that which will be considered unacceptable. If an employee claims they are being harassed by a colleague the company is expected to take swift action to deal with it in line with their policy. An employee who is harassed may be able to seek compensation from their employer if it can be shown that the employer took no steps to try to prevent this behaviour. This is known as ‘vicarious liability’ and also extends to work-related social gatherings.

The rise of the ‘MeToo’ movement, which originated in October 2017 when Hollywood producer Harvey Weinstein was accused of multiple counts of sexual misconduct, has seen a significant number of women across the globe come forward claiming to have been sexually harassed within a professional environment. If this was to occur within at a Christmas party, and is not properly managed or responded to by the employer, they could face claims of vicarious liability.

An employer should remember that this level of responsibility can also extend to ‘after party’ drinks. Although these are technically not officially organised by the company, it may still be liable for the actions of its employees if it can be established that their conduct is sufficiently connected to their position. An example of this is seen in the recent case of Bellman v Northampton Recruitment Limited, where a manager had punched one of his employees in the face. The Court of Appeal found that the company was liable for the actions of the manager as, although this occurred in an after party, all drinks and taxis had been paid for by the company and the manager was acting within his management capacity.

Although Christmas parties are usually a positive way of motivating a workforce and a fun occasion for everyone involved, companies must ensure that their workers maintain certain standards of behaviour. A key element for employers to demonstrate that they are not vicariously liable for the behaviour of an employee is to have a robust anti-harassment and bullying stance including policies and training for employees on the effect of the policy.

Source: Kate Palmer HR Review