Osprey HRC Blog

Organisational Re-Design: Downsizing and Redundancy Post Pandemic

24th May '21

Author: Paul Middlemast, Chartered HR Practitioner

 

Organisational Re-Design: Downsizing and Redundancy Post Pandemic

 

The government’s job retention scheme offered some immediate help to organisations during the Covid-19 pandemic. However, from 1 July 2021, the level of grant will be reduced and employers will be asked to contribute towards the cost of your furloughed employees’ wages and come to an end September 30th.. Businesses are already starting to look at how to manage the longer-term economic impacts of Covid-19. Which is why having access to advice is so beneficial for many a small and medium business (SME’s).

Meeting the cash flow challenge in light of the Pandemic in the employment context, is not straightforward, but must be faced by many businesses quickly and effectively.

To help address the most pressing of some of these emerging themes this article; is the second of three exploring the new world of work from a people management and compliance perspective in jurisdictions of the UK and Ireland.

Where thousands of businesses during the pandemic have experienced a burst of acceleration: fast-forwarding into the future of work in ways that stress-tested their ability to blend people and technology in the most dynamic business environment many of us have ever seen.

The three articles are:
  1. Management Strategies: Organisational Change in a (Post-) Pandemic World
  2. Organisational Re-Design: Downsizing and Redundancy: Post Pandemic
  3. Remote and Flexible Working: Post COVID-19

The vast majority of companies affected are otherwise good solid businesses, but because of the pandemic, are facing supply chain challenges and/or a reduction in demand.  In order to manage their cash flow, businesses need to consider every way in which they can manage their costs in the short to medium term.  One major cost in many businesses is the cost of employees.

Reducing employee cost is not easy and companies would be unwise to wait until they are in financial difficulties before addressing the matter.  Changes cannot be achieved quickly, without significant risks and the potential to irreparably damage the business, so that it is not in a position to flourish when the difficulties associated with Covid-19 lift, is real and significant.

The choices facing businesses generally boil down to the following:
  1. Dismissal on the grounds of redundancy
  2. Reducing employee’s pay; and/or
  3. Laying off employees or moving to short time working

Redundancy due to coronavirus

Where a business is struggling to make ends meet, it may be forced to make some of its employees redundant. For a redundancy to be lawful there must first be a “redundancy situation”, such as a business or workplace closure or a diminished requirement for employees doing a particular kind of work.

Coronavirus is likely to reduce demand for services and may also restrict important suppliers or force workplaces to close entirely for a time. Each of these could potentially give rise to a redundancy situation.

Mitigating against redundancy

Organisations could consider to ‘pivot the business’ this where for example, in retailing, the low footfall; caused by the pandemic and the general decline in people shopping in the ‘high-street’ business have come to realise there’s enormous traffic online not only locality also wider afield.

So, diversifying with the appointment of a new role of a Sales and Social Media Associate whose primary remit is at first through a basic retail website, combined with astute use of social media to draw attention to both our online and offline in-store presence. While many customers may prefer to buy online, a business can also use an online presence to drive in-store footfall.

Redundancy – what do you need to consider?

During these unprecedented times of a national pandemic which have crippled the economy, many businesses are facing tough decisions ahead, one of which may be to consider redundancies.

Not surprisingly, a large number of my queries are currently related to making redundancies due to the current pandemic.  Some clients are wanting to rush through the process as they are really struggling to stay afloat and survive during the current times.  We understand wanting to get through the process quickly but as nothing has changed in terms of redundancy process, is it worth the risk of a possible claim which could actually cost you more money in the long term?

It is important to note at this point that redundancies should be the last point of call for businesses even during these exceptional times.  Businesses may expose themselves to the risk of unfair dismissal claims being brought against them if they do not follow the correct procedure or indeed, it may be argued in the current situation, if they have not placed employees on furlough leave prior to considering redundancies.  This is especially bearing in mind that the concept of furlough leave was introduced in order to keep people in work.

If a business is considering making redundancies, it must be mindful that this will have an impact on the rest of the workforce and should expect to experience a drop in workplace morale.

Redundancy Dismissal

Almost the last resort that an employer will consider for managing a short-term impact on its business, which the Covid-19 pandemic may prove to be, will be dismissal on the grounds of redundancy.

An employee with 2 years’ service or more can challenge the fairness of their dismissal.  Such a challenge will be successful if the employer has not followed a fair and proper procedure and where the selection process, determining which employees are made redundant, is not sufficiently robust and reasonable.

Employees with 2 years’ service or more are entitled to a statutory redundancy payment (and possibly an enhanced payment if their employer has a contractual obligation to make such a payment).

As already set out above, a dismissal on the grounds of ‘redundancy’ falling within Section 195 of TULRCA will trigger the onerous obligations to inform and consult collectively under TULRCA, if the employer is proposing to dismiss 20 or more employees in a 90-day period.  A failure to do so could land them with the liability for 90 days’ pay for each employee dismissed.

Redundancy defined

Redundancy is defined in section 139(1) of the Employment Rights Act (ERA) 1996.  Redundancy is where the dismissal of the employee is “wholly or mainly attributable to” the employer:

  • Ceasing or intending to cease to carry on the business for the purposes of which the employee was employed by it (business closure); or
  • Ceasing or intending to cease to carry on that business in the place where the employee was so employed (workplace closure); or
  • Having a reduced requirement for employees to carry out work of a particular kind or to do so at the place where the employee was employed to work (reduced requirement for employees). Note that this particular situation means that the business does not necessarily having to be experiencing a downturn in work.

So, what is the true meaning of redundancy?

A redundancy occurs in three situations:

  1. Where there is an actual or intended closure of the whole business.
  2. Where there is an actual or intended closure of the business at a particular workplace.
  3. Where there is a reduction in the need for employees to carry out work of a particular kind.
  4. To dismiss fairly for redundancy an employer must establish that the role is genuinely redundant, follow a fair consultation procedure and consider whether there is suitable alternative employment.

What is a genuine redundancy?

A genuine redundancy could be where the work is no longer needed due to a downturn of business, a new line of work which requires a different skill set, or a new process being introduced.  It could also be where the job no longer exists because the work is being done by other employees.  A common reason in the current pandemic is where there is a need to cut costs resulting in a reduction in staff numbers.  The workplace could be closing because the business is ceasing trading or has become insolvent.  The employer’s business and the work might be moving to another location or the employer’s business is transferred to a different employer.

The redundancy process

It is imperative that a business follows the correct procedure when considering redundancies in order to reduce the risk of an employee pursuing an unfair dismissal claim against them.

An employer should first identify the pool for selection of whom may be subject to redundancy, discuss voluntary redundancies with applicable employees (if deemed appropriate) and then proceed with consultations.

Consultation should be meaningful and for under 20 employees can be completed within 1-2 weeks.  If you have employees on furlough, you can still consultant with those employees who are ‘At-Risk’ of redundancy.

Minimum consultation length

There is a legal minimum length of time consultation for redundancies must follow, the process can take longer if the company wants but it must be at least:

  1. 30 Days – If there are between 20 and 99 redundancies, the process must start at least 30 days before the first dismissals take place.
  2. 45 Days – If there are 100 or more redundancies planned, or the company ends up dismissing more than 100, then the consultation must start at least 45 days before any dismissals.

These rules do not apply to fixed term contracts or for those who are self-employed or where there are less than 19 redundancies proposed. These groups should be consulted in a timescale that is deemed to be fair and reasonable to avoid the employee claiming unfair dismissal e.g., 1-2 weeks.

After selecting those individuals who are at risk of redundancy the employer should conduct a least one further consultation with the relevant individuals.  The employee’s viewpoint should be carefully considered and any suggestions that the employee makes should be noted.  Employers should also consider whether they are able to offer alternative employment in another area of the business.

If after consultation there are not any employees willing to take voluntary redundancy (if it was deemed appropriate to seek volunteers), then an employer must make a selection from the pool of individuals who may be made redundant after applying objective selection criteria.  The employer must write to the employees concerned and inform them they are at risk of being made redundant.

If after following all of the above procedures an employer decides to make an employee redundant then they should inform the employee in writing, allowing for the sufficient redundancy notice and detail any redundancy payment.

It is good practice to give an employee the right to appeal the decision in accordance with the ACAS Code of Practice although there is not a statutory right to an appeal.

What process should you follow?

For employees with under 2 years’ service, you can terminate their employment without following a redundancy process with no risk of an unfair dismissal claim as long as you pay the correct notice and accrued holiday pay, however, this does come with a large health warning, particularly if you are making others redundant with over 2 years’ service.

The only time you not want to risk this is if there is a risk of a discrimination (no length of service required) claim due to a protected characteristic (age, disability, gender reassignment, race, religion or belief, sex, sexual orientation, marriage and civil partnership and pregnancy and maternity).  If there is a risk of a discrimination claim, then you will want to follow the process so that you demonstrate their protected characteristic was not the reason for making them redundant.  If you are making others redundant with over 2 years’ service, you may want to still include them in the redundancy process you are carrying out with others.

For employees with over 2 years’ service, you should warn employees of proposed redundancies, you should meet those employees affected explain they are at risk of redundancy, give each employee a letter explaining and informing they are at-risk of redundancy, confirming the length of consultation and the number of posts affected. Consult with them (and collectively via union reps or employee reps if you are making over 20 employees redundant in one location), choose objective selection criteria and consider other solutions, including alternative employment opportunities.

It may seem pointless consulting when you know that there aren’t any alternatives to the redundancy or any alternative roles but to ensure that you have followed a fair process this is required.

Reductions in Pay

In the majority of cases, employers are contractually obliged to make payments to employees on terms that have been agreed and often in place for many years.  A reduction in that rate of pay can only be achieved either through an agreement with the employee or, in extreme circumstances, dismissing the employee under their existing terms and conditions and offering to re-employ them on the same conditions, but with a reduced rate of pay.

Dismissals in those circumstances will likely amount to a ‘redundancy’ within the terms of Section 195 of the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA).  Although an employee will not be entitled to a redundancy payment, if dismissed in these circumstances, where an employer proposes that 20 or more employees are at risk of dismissal within a 90-day period, reasonably onerous legal obligations are placed on the employer.  These entail the employer in obligations to collectively inform and consult, either with the recognised trade union or works council or, in the absence of either, specifically elected representatives.

Consequently, employers should be incredibly careful if they are seeking to embark upon dismissal and re-engagement, to achieve pay reductions.  If collective consultation is engaged, there will be a minimum consultation period imposed by TULRCA of 30 days if fewer than 100 employees are at risk of dismissal or 45 days if more than 100.

Employees dismissed in this way will be entitled to their contractual or statutory notice, whichever is the longer and consequently, they will be entitled to be paid their contractual rate of pay throughout that notice period.  This means that it can take many months for an employer to achieve a pay reduction of this nature, something which in the context of Covid-19, is not helpful and may not achieve the results quickly enough.

Many employees, of course, will agree to a reduction in pay, if it means that their employment can be continued, and employers should talk to their staff as soon as possible to see if such pay reductions can be agreed.  Any agreement should be recorded in writing for the sake of good order and to protect the employer in the future if there is a challenge.

If an employer unilaterally imposes a pay reduction, it runs the risk of employees resigning and claiming constructive unfair dismissal and/or bringing claims for breach of contract and/or unlawful deductions from wages.  This would also most likely render any post-termination non-compete clauses void, which leaves the employer vulnerable to arguably unfair competition from ex-employees.

An employer, in extreme circumstances, might choose to take the risk of facing such claims rather than go out of business, but it is not the ideal choice.

Who is eligible to receive statutory redundancy pay?

The rules for statutory redundancy pay are fairly strict. To qualify, the employee must:
  • have worked continuously for your employer for at least two years.
  • have lost your job because your employer genuinely needed to make redundancies.
  • have been an employee.
There are many workers who will not qualify for statutory redundancy pay. These won’t receive this kind of pay-out if:
  • The employee has worked in the job for less than two years.
  • are not an employee, e.g., a casual worker.
  • self-employed.
  • a police officer or in the armed forces.
  • a Crown servant, parliamentary staff, or holder of public office.
  • are domestic staff working for the immediate family.
  • an employee of a foreign government.

Even if an employee fall’s into the categories above, their contract may still include a right to receive a ‘redundancy’ payment.

Redundancy pay for an employee on a fixed term contract

The two-year rule also counts if an employee is on a fixed-term contract. If the employer doesn’t renew your fixed-term contract because the job doesn’t exist anymore, the employee will only be eligible for statutory redundancy pay if either:

  • The contract was for two years or more even where the employee worked shorter contracts that followed on from each other, i.e., without a break in service, adding up to two years or more.

Can an employee lose their right to statutory redundancy pay?

Even if the employee is entitled to redundancy pay, that doesn’t mean they will always receive it. There are three main reasons why the employee may lose out on the money when they leave their job:

  • The employee leaves before the end of your notice period: If they found another job, for instance, and you choose to leave their current position before the end of the notice period, the employee will no longer be eligible for a redundancy pay-out. The employee is only officially made redundant once the notice period has ended.
  • The employee is fired for misconduct before their job finishes: As redundancy won’t be the reason the employee leaving and won’t receive redundancy pay.
  • The employee turns down a suitable alternative job the employer offers: Before making them redundant, employers must attempt to find any ‘suitable alternatives’ and offer them to the employee. A suitable alternative will usually be of similar pay and require similar skills to their previous role. If the employee unreasonably decide to turn it down, they won’t be entitled to redundancy pay.

Lay-Off and Short-Time Working

The term “lay-off” is often confused with redundancy.  Lay-off is different from redundancy in that it is a temporary measure whereby an employer provides employees with no work (and therefore no pay) for a period while still retaining them as employees, generally, as a temporary solution to a problem such as a shortage of work or in this context the impact of a pandemic.

Short time working means providing the employees with less work and therefore lower pay for a period, whilst also still retaining them as employees.  Like lay-off, it is a short-term measure often designed to deal with a short-term shortfall of work.

This is different from dismissal, a short-term measure, which can, at first sight, seem attractive. Whilst this route may seem attractive to employees, it is fraught with a number of difficulties, including:

  1. Without the express contractual right to lay-off or place on short-time working, an employer is in breach of contract if it does not provide work and therefore pay for employees. They may claim constructive unfair dismissal in such circumstances.
  2. It is possible for an employer to argue that there is an implied contractual right to lay-off or to introduce short-time working, but it would need to demonstrate that this was a regular practice in its business (or industry) and well known to its employees; something which it may struggle to demonstrate.
  3. Even if the employer has the contractual right to lay-off or introduce short-time working, where the employee has more than 2 years’ service and has been laid off or kept on short-time working for at least 4 or more consecutive weeks (or a total of 6 weeks, of which no more than 3 are consecutive, in any period of 13 weeks) they can claim an entitlement to statutory redundancy pay. An employer can serve counter-notice to an employee’s claim for statutory redundancy pay, but they would need to demonstrate that there was a likely need for future employment in the not-too-distant future.

Frustration

There is a concept within common law of ‘frustration’, which if triggered, automatically discharges a contract where there is a significant change of circumstances which renders it physically or commercial impossible to perform the contract or would render contractual performance radically different from the obligations to which the parties originally agreed.

Frustration is a common law concept and does not generally find favour with the courts in an employment setting.

There is some speculation in the context of the Covid-19 pandemic over whether an employer might claim no longer to be obliged to make payment or indeed employ employees where the employment contract has been frustrated by the intervention of the pandemic.  There is a case from 1945 in which the intervention of the Second World War, and the conscription of an employee, was found to have frustrated the contract and thereby discharged the employer’s obligation to make payment.

Employers should be slow to see this as an easy and quick route to solve the headache caused by current commercial difficulties, but in extreme circumstances, no doubt many employers will try to run that argument.  Only time will tell whether that is something which employers can rely upon in these straitened times.

Osprey HR Practice can help

The pandemic presented a multifaceted challenge to employers and employees alike. With business closures likely, and the potential for business to radically slow down, many employers will be seeking to cut costs to keep their businesses afloat. But reducing staff numbers without following the proper procedures can expose employers to liabilities for breach of contract and unfair dismissal.

We at Osprey human resources consultancy practice are very experienced in business re-organisation and the difficulties associated with the short-term challenges to business in these contexts.  If we can assist in any way with the challenges that your business is facing, then please do not hesitate to contact me or one of my colleagues:

Paul Middlemast, Senior Partner by email at or call 07831 427234. Please visit our website www.opsreyhrc.com to see how we can help.
Follow the government guidelines

There is fake news and propaganda in plenitude.  Employers should follow the guidelines set out by the government but are not required to do more in the vast majority of cases –  https://www.hse.gov.uk/news/coronavirus.htm

The content of this blog is for general information only. Please don’t rely on it as legal or other professional advice as that is not what we intend. You can find more detail on this in our Term of our website use. If you require professional advice, please get in touch.

 

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Management Strategies: Organisational Change in a (Post-) Pandemic World

24th May '21

 

 

Author: Paul Middlemast, Chartered HR Practitioner

 

Management Strategies: Organisational Change in a (Post-) Pandemic World

 

There is no returning to normal post-pandemic. But there is a path forward: by embedding new ways of working post-pandemic.

 

After some 18 months of the spread of the COVID-19 pandemic and widespread lockdown, we must now take stock of how the crisis has disrupted the strategic decision-making framework for organisations and try to build a new one and to look beyond the immediate crisis.

Focusing on the return to work alone is not a viable option, as it will not allow organisations to capitalise on all that they have experienced and learned over the past few months. Instead, we believe organisations should embrace the perspective that humans who want to adapt in an age of acceleration must develop “dynamic stability.” Rather than trying to stop an inevitable storm of change, draw energy from it, but creates a platform of dynamic stability within it.”

New possibilities:

The return to work and the emerging themes; organisations should seize this opportunity to step back and make sure that they are creating clear connections across individual jobs, team objectives, and the organisation’s mission. To strengthen the link between belonging and organisational performance, organisations need to do more than treat their workers fairly and respectfully; they must enable a deeper connection by drawing visible linkages as to how their contributions are making an impact on the organisation and society as a whole.

To help address the most pressing of some of these emerging themes this article; is one of three exploring the new world of work from a people management and compliance perspective in jurisdictions of the UK and Ireland.

Where thousands of businesses during the pandemic have experienced a burst of acceleration: fast-forwarding into the future of work in ways that stress-tested their ability to blend people and technology in the most dynamic business environment many of us have ever seen.

The three articles are:
  1. Management Strategies: Organisational Change in a (Post-) Pandemic World
  2. Organisational Re-Design: Downsizing and Redundancy: Post Covid-19
  3. Remote and Flexible Working: Post COVID-19
The COVID-19 shift:

The pandemic reminded us that people are motivated at the highest levels when they can connect their work contributions to a greater purpose and mission. Consider, for instance, how workers at some consumer products companies have found meaning and inspiration in their jobs as their companies increased production of (or in some cases, pivoted to start developing) disinfectants and sanitizers. People want to contribute to their organisations when they understand how their unique talents, strengths, and contributions are making an impact on larger goals.

Effective strategic positioning enables an organisation to respond quickly and effectively to continuing changes in the marketplace to achieve its strategic intent. Therefore, change must be considered in two contexts:

  • the organisation’s ability to deal with change on an ongoing basis and
  • managing change separately as each change comes along.

Managing change implies managing the move from one status quo to another–the “unfreeze, transition, refreeze” paradigm. In today’s environment of post pandemic, however, there is no status quo for most organisations. There is only continuing change.

The management of change

The management of change is an overarching approach taken in an organisation to move from the current to a future desirable state using a coordinated and structured approach in collaboration with stakeholders and employees.

Below, we provide a view on how to start that process by leveraging — a set of reflections, recommendations, and frameworks which we believe are more critical than ever as organisations head toward recovery from the COVID-19 crisis.

COVID-19 has challenged business leaders to do three things at once:

  1. stage the return to work.
  2. understand and leverage the advancements they enacted during the crisis and
  3. chart a new path forward.

What is Change Management?

Change management addresses the people side of change. Creating a new organisation, designing new work processes, and implementing new technologies may never see their full potential if you don’t bring your people along. That’s because financial success depends on how thoroughly individuals in the organisation embrace the change.

Change management comprises the processes, tools and techniques used to manage the people side of change and achieve desired business outcomes. Ultimately, change management focuses on how to help employees embrace, adopt, and utilise a change in their day-to-day work. Change management is both a process and a competency.

Embracing Change

The new definition of the organisation has to be its strategic intent and that picture of the future has to include an organisation that is not anchored in procedures and processes but anchored in concepts, such as a common understanding of what the organisation is and how it adds value and common values in the way it does business.

One of the defining concepts in today’s environment must be embracing change, and the organisation structure and supporting processes must be flexible enough to allow that necessary response to a changing environment.

The new relationship with employees has to be one in which everyone understands there is no guarantee of lifetime employment, but at the same time, everyone’s success is tied to the success of the organisation. While an organisation cannot guarantee lifetime employment, it can guarantee to help those employees who are willing to invest their energy in staying highly employable by helping them maintain and enhance their skills.

Employees, individually and in teams, need to develop a vendor mentality. They must view the organisation as a marketplace within which they must compete, determining the needs of customers and providing quality service in order to get repeat business and stay in business; that is, to stay employed.

However, as of the change management process an organisation must prepare to ‘pivot’, make organisational and structural changes, and downsize where needed.

The reality of today’s environment, particularly in an organisation that has undergone downsizing, is that employees’ primary loyalty may well be to their work groups and professions. Blind loyalty to an all-knowing and all-wise employer is a thing of the past. People will commit to their work when they have invested themselves and have a stake in the outcome. The needed commitment will be more likely where there is significant employee involvement and the common purpose, commitment, and trust of empowered, high-performing teams.

Five Issues

Preparing the organisation for change involves working through five issues:

  • The definition of the new anchors and boundaries that are needed as the organisation redefines itself to effectively deal with change.
  • The extent to which the existing organisation structure and supporting processes are compatible with the new definitions.
  • The extent to which the organisation’s culture, including the messages management sends by its actions is constant with the new definitions.
  • The extent to which HR policies and programs, from reward systems to supervisory training, are congruent with the new definitions.
  • The steps that must be taken for the organisational structure, supporting processes, culture and HR policies and programs to provide the support necessary to help employees succeed in dealing with change.
Defining New Anchors and Boundaries

Successful change is about letting go and moving on. Employees have to let go of some of the things they wanted to be constants in their work lives. This is hard to do. But without some idea of what is to replace the old idea of where they are going, it will be particularly hard to get people to move on.

Concepts and Values as Anchors

If an organisation has not given considerable thought to its strategic intent and defined itself in terms of its vision and values and therefore has not created a picture that everyone understands, it will be difficult to identify new anchors for members of the organisation to embrace.

On the other hand, if the organisation has gone through this process, it will be much easier. The key is to introduce the ideas that concepts and values, rather than cast-in-concrete procedures and policies, are the anchors on which members of the organisation can rely.

This is an excellent area for employee involvement. If the strategic analysis work wasn’t previously done, do it now. Communicate the objective to all employees–which the organisation wants to define it and what it stands for.

All “givens” should be clearly laid out in advance. For example, lifetime employment is not an option, dealing effectively with continuing change is a must and so on. It is critical to find out what is really important to all employees in this regard.

It isn’t necessary to ask employees to write beautiful statements worthy of the public relations department. It is necessary to find out what concepts they think are important. This can be done through questionnaires, focus groups, etc. The results of this effort can be used to create a “straw man” redefinition of the organisation and the employment relationship that can then be tested with focus groups, arriving at a final set of concepts.

Boundaries

Some believe that in the new world of flat organisations and self-managed work teams, boundaries are no longer needed. In fact, some will advocate that they be torn down and eliminated. This approach has a certain appeal, since boundaries that keep out information that might challenge the status quo are one of the major barriers to change. Likewise, there is clearly a need to break down those boundaries within organisations–the strict functional “silos”–that inhibit communication across functional lines and contribute to rigid hierarchies.

However, as attractive as eliminating boundaries sounds, boundaries are still needed. The key is that the organisation needs different kinds of boundaries. The organisation must move from authoritarian boundaries discussed above to authority boundaries, so that individuals and groups can establish a protocol for their decision-making and have a context for their daily work relationships with others. Without these boundaries, everything would have to be negotiated.

Defining Authority Boundaries

Authority boundaries need to be defined in these four areas that can be applied to teams as easily as individuals: authority–which is in charge of what; task–who is responsible for what; political–what’s in it for us; and identity–who is us and who isn’t?

Criteria for Establishing Boundaries

In establishing boundaries, three essential criteria must be met. First, the boundaries are porous. That is, they do not become barriers to communication and information, either from outside sources or sources within the organisation. Second, the boundaries are clear enough to provide “safe havens.” Change is tough enough as it is, and individuals or teams need boundaries that will help guide them as they and their processes evolve with changing times. Third, employees understand the boundaries and had input in establishing them. Boundaries should always pass the common-sense test–and common sense may be found most easily on the shop floor.

Existing Organisation Structure and Supporting Processes: Compatible with the New Anchors and Boundaries

Alignment, alignment, alignment. If the organisation has gone through strategic HR analysis and business/HR alignment, it will have identified and studied its organisational structure and supporting processes from the standpoint of alignment with strategic and business goals. Now the question is whether the organisational structure and supporting processes are congruent with the newly identified anchors and boundaries.

Focus groups of employees can help to answer the following questions and help think of other similar questions to ask. If an anchor concept is empowerment, do team members have to go through several layers of supervision to take action or talk to people in other parts of the organisation? If a boundary gives a team responsibility for purchasing routine supplies, do they have the authority to make these purchases?

Accomplishing Alignment

There are various ways to accomplish alignment. Look at the structure and processes and consider whether they are congruent with the anchors and boundaries. When they are not, analyse why not and determine what needs to be done to make them so. Take each anchor and boundary and try to define what that would look like in actual application in the real world of the organisation. Compare that with what is and develop plans to close the gap. Again, employees who will be affected by the outcome should be involved in this task. The key is that the review takes place and the gaps between the new anchors and boundaries and existing organisation structure and processes get identified. In addition to employee involvement, however, executive management support is critical here. More harm than good can be done if employees do the work described above but management will neither support nor allow changes.

Is the Organisation Culture Compatible with the New Definitions?

This is remarkably similar to the previous step, but different in a significant way. Organisational structure and processes are normally well-defined and documented. They can be reviewed and revised in that context. Culture is somewhat different. It is often simply understood rather than written down anywhere, but it is immensely powerful in its influence on the organisation. There are many definitions, but essentially culture is the way we really act, the things we really stand for, the things that really count in the organisation, the behaviours that are understood to be acceptable, etc.

If the organisation has developed its strategic intent and its picture of what it wants to be, then it will know what it wants its culture to be in terms of values, philosophies, beliefs, and practices. This does not mean the actual culture matches the desired culture, so the organisation needs to test its current culture against the benchmark of the desired culture inherent in its strategic intent.

Team and Focus Group Questions

A questioning technique can be used with teams and focus groups to get at the real culture as compared to the cultural attributes raised by the new strategic intent; that is, “what do we really do vs. what we say we do and stand for.” These questions can be used to determine where gaps exist and where changes in the culture are needed.

As with structure and processes (which some may consider part of culture anyway), the key is to test organisational cultural reality against the new anchors and boundaries and to identify the areas where the current culture is not aligned with the new direction.

Are HR Policies and Programs Constant with the New Definitions?

When companies move to implement new organisational structure or new strategic directions, they often neglect to ask whether or not their HR policies and programs are congruent with the directions being taken.

For organisations that have gone through the business/HR alignment and planning phase, HR policies and programs will already have been tested against strategic and business goals from an operational sense. Further review against the newly defined anchors and boundaries will not be a difficult task.

A culture of trust, transparency, and openness

This period has required us all to be supportive of one another, as we all face uncertainty. Control has to some extent given way to trust. People are learning how to do work disparately and with far less oversight: they are learning “on the job” what works and what doesn’t work at home and holding virtual meetings that might have happened before but never to such an extent.

Ironically, in the midst of social distancing, many of us are getting closer. We are building more adaptive teams, are more consistently in touch with each other and connection has become a priority in the name of working remotely. But beyond that we are connected with purpose and as a community.

Working in a more agile way

It is unprecedented to have a large cohort of people, all over the world, start working remotely at once. The events as they have unfolded have shown how fast we can adapt though and have demonstrated that we can move faster and act in more agile ways than we thought.

Business leaders now have, in some sense, been gifted with a better idea of what can and cannot be done outside their companies’ traditional processes, and COVID-19 is forcing both the pace and scale of workplace innovation. Many are finding simpler, faster, and less expensive ways to operate.

All of this points to our innate ability to change, and to move away from prescribed approaches and standardized solutions. COVID-19 is a catalyst to reinvent the future of work and create opportunities for companies to look at things differently.

Our ability to recognize and proactively equip our teams with not just physical resources, but skills, mindsets, behaviours, and values, will be critical in ensuring that we build back better.

organisations face unprecedented upheaval due to the COVID-19 crisis—but its impact can also lead to a chain effect of additional crises—from dramatically different customer needs to business model shakeups to seismic market shifts. Strategies that have quickly pivoted to meet sudden drastic change will likely need to be further adjusted to address additional business fallout. How do you manage all these reverberating changes and survive?

Change management is a methodology to help you prepare and support employees to adapt resiliently and confidently to change in order to keep your organisation strong. Being proactive about managing change helps reduce chaos as the change is implemented. What will change and why (the content) must first be shared. The process by which the change will occur also needs to be discussed and outlined in detail. In addition, the people who will be responsible for making sure the change comes about must be designated, along with those who will be impacted by it.

The change management process seems logical, but it can quickly become complicated by the number of people involved in the change effort. To keep change from becoming difficult to manage, a change leader (normally a HR professional) must be appointed to give direction to others throughout the change process. Other key roles include the change sponsor, normally the CEO, MD or a member of the board who initiates the change, the change agent, who must see it through, and the change target. The change target includes any employee who must actually change what they’re doing in order for the change process to be successful. In addition, change advocates are those who are actively supporting the change, but do not have actual authority to implement it.

Since all people respond differently to change, it’s also crucial to consider how to deal with change overload. This can manifest itself in many ways, including employees feeling excluded from the change process, expressing concern over unrealistic timelines, feeling overwhelmed by what they perceive as too many changes coming too quickly, poor engagement, concerns about insufficient resources, and more. Those leading change must proactively establish guidelines for dealing with change overload, and strategize new ways to gain buy-in, remove silos, communicate openly, and eliminate barriers.

Osprey HR Practice can help

The pandemic presented a multifaceted challenge to employers and employees alike. With business closures, and the potential for business to radically slow down, many employers will be seeking to cut costs to keep their businesses afloat. But reducing staff numbers without following the proper procedures can expose employers to liabilities for breach of contract and unfair dismissal. More importantly, as illustrated above the process of re-alignment and pivoting the business through the management of change, in the long-term will be more beneficial in coming out the other-side of the pandemic `

We at Osprey human resources consultancy practice are very experienced in business re-organisation, change management and the difficulties associated with the short-term challenges to business in these contexts.  If we can assist in any way with the challenges that your business is facing, then please do not hesitate to contact me or one of my colleagues:  Paul Middlemast, Senior Partner at or call 07831 427234.

The content of this blog is for general information only. Please don’t rely on it as legal or other professional advice as that is not what we intend. You can find more detail on this in our Term of our website use. If you require professional advice, please get in touch.

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Dismissing an employee with less than two years’ service

22nd Feb '21

Osprey HR Blog. Insights on people management topics most important to you  and your organisation.

Author: Paul Middlemast, Chartered HR Practitioner

Dismissing an employee with less than two years’ service

It is a common misconception amongst employers that dismissing an employee who does not have the qualifying two years of service required to bring an ordinary unfair dismissal claim will mean that they are “safe” from an employment tribunal claim. This often leads employers to dispense with their usual disciplinary, capability and redundancy procedures when dealing with the dismissal of an employee with short length of service. However, although it is true that, in many situations, dismissing an employee who does not have qualifying service will be low risk, there are a range of exceptions to the rule.

Qualifying service rule

The basic rule is that employees require two years’ service in order to bring an ordinary unfair dismissal claim.

The exceptions

Given that unfair dismissal is one of the better known and frequently invoked employment rights, it is often at the forefront of employers’ minds when considering dismissal. The assumption is often made that if the qualifying service requirement isn’t met by the employee then there is no risk of a claim arising from the dismissal. However, there are significant exceptions to the general rule that two years’ service is required to claim unfair dismissal, and there are other claims linked to dismissal which have no qualifying service requirement (such as a claim that the dismissal was discriminatory). This means that close scrutiny should be given to the reason for, and circumstances of, dismissal.

The following are the key exceptions which arise most frequently in practice and should be borne in mind:

Is the dismissal discriminatory?

Dismissals which take place for a discriminatory reason will be actionable irrespective of length of service. Therefore, although the employee may not be able to claim unfair dismissal if they have less than the qualifying service, they could claim that their dismissal was discriminatory. Compensation for a discriminatory dismissal is calculated in a similar way to an unfair dismissal claim in terms of compensation for loss of earnings, but there is no cap on compensation in discrimination cases as there is in ordinary unfair dismissal, and an injury to feelings award is also payable where a finding of discrimination is made.

In light of this, when considering dismissal, employers should consider the reason for dismissal and whether it is linked in any way to a protected characteristic. The protected characteristics are:

  • age,
  • disability,
  • gender reassignment,
  • marriage and civil partnership,
  • pregnancy and maternity,
  • race,
  • religion or belief,
  • sex and sexual orientation

If there is any concern that the dismissal could be regarded as linked to one of the protected characteristics, then we recommend that legal/HR advice is taken in order to assess the degree of risk involved.

Is the dismissal for making a protected disclosure?
For example – an employee making a “whistleblowing” complaint.

Where an employee has made a “protected disclosure” and is dismissed because they made that disclosure, they can claim unfair dismissal irrespective of length of service. A protected disclosure is a disclosure of information made by an employee which that individual reasonably believes shows that one or more of the 6 types of malpractice specified in the relevant legislation has taken place or is likely to take place (commonly known as a whistleblowing complaint). Therefore, if an employee has made an allegation which relates to one of the following categories of wrongdoing, and they are subsequently dismissed, then there is the risk that they will claim that dismissal was linked to the disclosure and bring a claim of unfair dismissal irrespective of length of service:

  • Criminal offences
  • Breach of any legal obligation
  • Miscarriages of justice
  • Danger to the health and safety of any individual
  • Damage to the environment
  • The deliberate concealing of information about any of the above

This situation sometimes arises where an employee has raised a grievance alleging that they have been mistreated by their employer in some way, and they are subsequently dismissed for being a “troublemaker”. Provided the grievance was made in the public interest and the mistreatment amounted, in the reasonable belief of the employee, to breach of a legal obligation, then it may amount to a protected disclosure. As such, they could then claim that their dismissal was because they had made a protected disclosure and that it is, therefore, unfair, regardless of their length of service.

Is the dismissal for a health and safety reason?

Where an employee has been designated to carry out activities in connection with preventing or reducing risks to health and safety at work, or where the individual is the workplace health and safety representative or member of a workplace safety committee, care should be taken if dismissal is being considered. The law recognises that such individuals may come into conflict with their employer by the nature of their appointment and therefore protects them against dismissal because of their involvement in health and safety activities. Therefore, a dismissal relating to the employee carrying out these activities is automatically unfair, and no qualifying period is required to bring an unfair dismissal claim in these circumstances.

Has the individual asserted a statutory right?

Where an individual asserts a relevant statutory right or raises a claim to enforce a relevant statutory right, they are protected against dismissal on that basis. The relevant legislation identifies the various statutory rights which are captured by this exception. These include asserting rights under the Working Time Regulations (such as the right to statutory holiday or rest breaks), rights conferred under the Transfer of Undertaking (Protection of Employment) Regulations 2006 and asserting that an unlawful deduction from pay has been made. If such a right has been asserted, and dismissal is for that reason, then the dismissal will be unfair irrespective of length of service.

Is the employee a trade union representative?

If an employee is a trade union representative or has taken part in trade union activities, and dismissal is for that reason, then it will be unfair regardless of the individual’s length of service. Care should therefore be taken where dismissal of such an individual is being considered.

Does the employer have a contractual disciplinary or redundancy policy?

Some employers’ dismissal processes are contractually binding. This means that, if the employer does not follow their own procedure in dismissing an employee, then the dismissed employee may have a claim for breach of contract and be in a position to claim damages resulting from the breach of procedure. There is no qualifying service requirement in order to bring a claim of breach of contract. If employers do have contractual dismissal processes, then it is worthwhile considering making it non-contractual or adding a section to the effect that the rules will not apply during the first two years of employment in order to avoid this risk. Making a contractual policy non-contractual is not altogether straightforward and advice should be taken before doing so.

These are only a selection of the most commonly claimed exceptions to the normal requirement for qualifying service and we would recommend that legal advice is sought if there is any doubt in relation to the potential risk of a dismissal.

Minimising the risk

In each of these examples, although dismissal may (on the face of it) be for some reason entirely unrelated to their protected status, it is open for the Tribunal to look behind the reason given by the employer and explore the employee’s argument that the reason given by the employer is a smokescreen for the real reason. For example, if an employee has made a protected disclosure to the effect that their employer is committing a criminal offence and soon after making that complaint they are selected for redundancy, the Tribunal could conclude that the real reason for their dismissal was the fact that they made a protected disclosure if it is not satisfied that the employer has demonstrated that the selection for redundancy was genuine.

Employers often run into difficulty because, although they have a genuine and legitimate reason for dismissal, the assumption that dismissal can take place without any sort of dismissal procedure leads to a lack of evidence as to the true reason for dismissal. The best approach for employers considering dismissing an individual who it considers may have one of the protections identified above is therefore to ensure that the reason for dismissal and the process followed is as robust as possible. The more evidence that the employer can present to demonstrate that they had a legitimate reason for dismissal; the more likely they will be in a position to show that the dismissal was for a reason which does not bring the case into one of the exceptions to the two-year rule.

It is tempting to fast-track dismissal processes where the individual has less than two years’ service, and in some situations, it is appropriate and legitimate to do so. However, it is important that employers are mindful of the fact that there are exceptions to the general principle, such as those outlined above, and that additional protections provided to some categories of individual.

Employers should always keep an appropriate paper trail in order to demonstrate that the reason for dismissal was not unlawful. For advice, an initial free consultation on how to manage an easily misunderstood aspect of employment law and HR practice please contact our senior partner: Paul Middlemast at Osprey chartered human resources consultancy practice by email: or call 07831 427234.

The content of this blog is for general information only. Please don’t rely on it as legal or other professional advice as that is not what we intend. You can find more detail on this in our Term of our website use. If you require professional advice, please get in touch.

 

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Meaning of TUPE

TUPE – What does it mean

16th Feb '21

Osprey HR Blog. Insights on people management topics most important to you  and your organisation.

Author: Paul Middlemast, Chartered HR Practitioner

 

TUPE – What does it mean?

Introduction

This is the first of a short series of blogs written by Paul Middlemast, Senior Partner of Osprey hrc; chartered HR Practice. The focus of this blog is what TUPE means and how it applies to both an organisation and their employees when a business or service transfers to another, the question arises as to what happens to the dedicated workforce. Do the employees concerned have the wright to work for the new employers? And, if so, do they retain the contractual and other employment rights that they enjoyed prior to the transfer?

TUPE is the widely-used acronym for the Transfer of Undertakings (Protection of Employment) Regulations 2006.  It is the legal framework which safeguards employees’ rights when a business (or a part of it) is transferred from one owner to another, or where there is a change of service provider.  It applies to companies of all sizes, in both the public and private sector.

The rights of the employees are protected when a company changes hands. In addition, Terms and Conditions are also maintained when part of or the entire business transfers to another owner.

The TUPE regulations passed first in the year 1981 and were amended in the year 2006 and the year 2014, with the aim of safeguarding and protecting the rights of employees when the business that employed them decides to change hands.

Under the initial common-law position, a relationship between an employee and employer is personal as well as defined or set-out in the employment contract. If this business changes ownership or hands, the initial common-law position meant the termination of an original employee-employer relationship. This meant that the contractual rights of an employee end when the ownership of the business changes.

Put simply, TUPE regulations provide a framework which is associated with the protection of employee rights.

When does TUPE Apply

1. When a business or part of a business is transferred to a new employer or;

2. When a service provision change (SPC) takes place e.g. outsourcing, insourcing or where a contractor takes on a contract to provide a service for a client from another contractor. The two categories are not mutually exclusive and some transfers will qualify both as a business transfer and a service provision change for example the outsourcing of a service.

Business Transfers

To qualify as a business transfer the identity of the employer must change.  Therefore the regulations do not apply to changes of share ownership as the same company continues to be the employer. In the case of business transfers (but not SPC) there must be the transfer of “an economic entity which retains its identity.”  An economic entity means “an organised grouping of resources which has the objective of pursuing an economic activity, whether or not that activity is central or ancillary.”  The reference to pursuing an economic activity does not mean that charities are not covered and charitable organisations are covered by the TUPE Regulations in precisely the same way as commercial organisations.

Service Provision Changes

The regulations apply if there is “an organised grouping of employees which has as its principal purpose the carrying out of the activities concerned on behalf of the client.”  TUPE will not apply to an SPC in the following circumstances:-

  1. While the contractor changes the client must remain the same.  If the services are not being performed for the same client, TUPE will not apply.  In a voluntary sector context this generally means that the commissioner or funder of the services remains the same.
  2. The activities being performed before and after the change must be fundamentally the same as the activities carried out before the change.  
  3. There may be cases where services are so split up or “fragmented” that the activities are not fundamentally the same and TUPE will not apply.
  4. Immediately before the SPC there must be “an organised grouping of employees situated in Great Britain which has as its principal purpose the carrying out of the activities concerned on behalf of the client.” Therefore TUPE is excluded where there was no identifiable grouping of employees or where it just happens that in practice a group of employees worked mostly for a particular client rather than having being put together for that purpose.  An organised grouping of employees can constitute just one member of staff
  5. TUPE will not apply if the client intends the activities to be carried out in connection with a single specific event or task of short term duration (the activities must be both for a specific event and of short-term duration) and TUPE does not apply to the supply of goods.  The Department of Business and Innovation & Skills (BIS) Guidance gives the example of a client engaging a contractor to supply sandwiches and drinks to its canteen for the client to sell to its own staff.  TUPE would not apply in those circumstances but might apply if the contract was for the contractor to run the client’s staff canteen.
2014 Changes 

The TUPE Regulations were amended by the Collective Redundancies and Transfer of Undertakings (Protection of Employment) (Amendment) Regulations 2014 which came into force on 31 January 2014.  The mains changes are as follows:-

1. A clarification that the test for service provision changes is that the activities carried out after the change in provider must be fundamentally the same as those previously carried out.  This merely reflects established case law.

2. Amendments to the provisions which give protection against dismissal and changes to employment contracts.  These protections will apply where the sole or principal reason for the dismissal or variation is the transfer (unless the sole or principal reason for the dismissal or variation is an economic, technical or organisational reason entailing changes in the workforce (ETO reason).  Previously dismissals and contractual variations were also automatically unfair if they were “connected” to the transfer.

3. A change to the place where employees are employed post transfer can be an ETO reason.

4. Changes to employment contracts incorporated from collective agreements will be permitted when more than a year has passed since the transfer provided that overall the contract is no less favourable to the employee.

5. A provision allowing micro-businesses (those employing fewer than 10 staff) to inform and consult employees directly where there are no existing staff representatives.  .

6. The deadline for provision of Employee Liability Information is extended from 14 to 28 days before transfer.

7. An amendment to the collective redundancy regulations so that a transferee may elect to consult representatives of transferring staff about proposed collective redundancies (20 or more within 90 days) prior to the transfer so long as the transferor agrees to such a consultation.  

What Employee Rights Does TUPE Protect?

A TUPE transfer will mean that a new employer steps effectively into the role of an old employer, which means original contracts associated with employment stay the same before the actual transfer. This includes pension arrangements, annual salaries, and place and hours of work, holiday entitlements etc., stay the same.

This does not necessarily mean that conditions of the employee’s employment will not be changed after or before the transfer. Employment dismissals or conditions can only be changed for what is known as ETO (Economic, Technical or Organisational) reasons, which require that changes need to make to a workforce, but not due to the actual transfer.

If an employee decides that they would prefer not to continue working for the new owner of the business, employees have a right to terminate the contract. In these cases, the employment contract would come to an end on the transfer of the business. In these cases, employees are usually not entitled to notice or redundancy payments.

In practical terms, TUPE is designed to protect the rights of those employees who find themselves being transferred to work for the new employer, or are dismissed as a result of the transfer.

It is a very complex area of law and it is not unusual for employment specialists, such as us at Osprey hrc to be drafted in to assess whether the TUPE regulations apply to a particular set of circumstances.

The most common triggers of TUPE are

  • mergers, or sales or businesses or parts of businesses to new owners, or
  • Outsourcing (to external contractors), insourcing (bringing service provision back in-house) or re-tendering between contractors.

The employees of the old employer automatically become employees of the new employer at the point of the transfer. The new owner essentially steps into the shoes of the old owner. Temporary staff, workers, independent contractors and the self-employed does not transfer, however.

Existing contracts and terms of employment, such as salary, job title, bonus and holiday entitlement and sick pay provisions should remain unchanged. Trade union recognition and collective agreements are transferred with the affected employees. Any existing period of service will also count towards an employee’s continuous employment with the new employer.

Certain duties and liabilities are also transferred to the new employer, including any outstanding disciplinary and grievance affairs, ongoing employment tribunal claims, the obligation to meet any agreed pay increases and any collective agreements that are in force at the time of the transfer.

There is a notable exception to these obligations, however; occupational pension schemes need not continue on the same terms, although a minimum level of pension provision must still be offered. These requirements vary for the acquisition of privatised companies and for outsourcing by government organisations.

Dismissal as a result of the transfer is deemed ‘automatically unfair’ except for a limited number of qualifying reasons; put simply, where the dismissal is for either an ‘economic, technical or operational’ (‘ETO’) reason requiring changes to the workforce, and which is unconnected to the transfer. Similarly, any changes to the employees’ contracts or terms of employment must be for an ETO reason and agreed by both the old and new employers, unless the employees’ contracts already provide for such changes to be made.  As an aside, these provisions are indefinite; there is no set period of time after which it will be ‘safe’ to implement changes to new employees’ contracts so as to harmonise them with those of the existing employees, without the risk of a connection to the transfer being established.

All things considered, TUPE is not a cast-iron guarantee of job security, and any employee who objects to the transfer will be deemed to have resigned as from the date of the transfer. However, there would be no entitlement to statutory redundancy, notice pay, or to claim for unfair dismissal.

Employers should inform affected employees about a TUPE situation and in some cases; early consultation with any affected employees of both companies is also carried out.

TUPE regulations are in place to protect the employee’s contractual employment rights, when a business is transferred or sold. This now means employees cannot be let go or dismissed or their contracts varied or terminated, just because the business is sold or transferred. If you have questions regarding TUPE, then you can reach out to one of our qualified practitioners for advice by calling Paul Middlemast, Senior Partner on 07831 427234 or email . Please visit Osprey Human Resources Consultancy website: www.opsreyhrc.com

Disclaimer

This blog does not give a full statement of the law.  It is intended for guidance only, and is not a substitute for professional advice.  No responsibility for loss occasioned as a result of any person acting or refraining from acting can be accepted by the authors or Osprey hrc. © January 2020

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OUTSOURCED HR AND PROJECT MANAGEMENT

3rd Jun '20

HR OUTSOURCING: The Key Decisions

Do we need to change the way our HR operates?

Are you an organisation deliberating over whether to outsource all or part of your HR? Here, Paul Middlemast, Senior Partner of Osprey hrc a Chartered HR Practice, have put together this guide to explain what outsourcing HR involves, how to do it and what the benefits are for employers.

For any organisation: private, public sector or an NPO knowing when to outsource all or part of their HR management is a challenging decision. The importance of a well-managed HR function; its administration of people management and legal compliance is possibly vital to the success and future growth to the organisation and while there are advantages to taking work outside of the organisation, there are also risks involved.

What is HR outsourcing?

HR outsourcing is when a company pays a third-party group of specialists to carry out human resources functions on their behalf. This can involve the outsourcing of certain aspects, such as payroll, recruitment, administration or of the entire HR function.

The practice of outsourcing aspects of HR is not new, for example payroll. There has been a lot of noise about its benefits and there has been several high-profile deals.

Outsourcing is one manifestation of the transforming shape of HR and, in particular, the increasing demands being placed upon HR functions to deliver greater levels of transactional efficiency at the same time as raising the level of other HR activity to focus on ‘strategic’, value-adding service. Paul Middlemast, along with other commentators, believes that HR functions need continually to improve the efficiency of the administration and legal compliance services they deliver, as part of the shift to a more strategic and influential future of any organisation. Outsourcing is one potential route to achieving this. 

Outsourcing in context

Outsourcing involves buying one or more business services from an external provider. This could include HR and/or other services such as Finance and IT. Outsourcing of HR activities has been a growth area for well over a decade, as organisations have sought benefits in passing over a professional labour-intensive and expensive internal or non-core activity to a third-party expert. The drivers of HR outsourcing are varied, including, for example, a desire to reduce costs, increase effectiveness, obtain dedicated external expertise on a flexible and cost-effective arrangement to release their internal management to focus on the core activity of the organisation.

The specific processes of any HR outsourcing arrangement will vary from organisation to organisation – some may outsource virtually all of their HR processes while others select specific components such as a subscription service for policies (handbook), contracts of employment and other employment related documentation plus the administration and other transactional processes of HR including more strategic aspects of managing people in their organisation.

To avoid any confusion, HR Outsourcing is quite different from that of Shared Service Centres. However, there is a high degree of complementarity with HR Consultancy and Outsourcing in the broader context it is one-of-same, that is, a range of options for improving the efficiency and delivery of HR services. Referring back to the definition of outsourcing in the previous section the following is helpful in this respect.

Outsourcing: the delegation of one or more business process to an external provider (Consultancy), who then owns, manages, and administers the selected processes for and on behalf of the organisation.

The Aims of Human Resource Management (HRM)

Before any organisation sets about reviewing their current and future needs it is always good to understand the concepts of HRM. This, to ensure, any decision made on outsourcing is set against the following:

  1. The driving force behind HRM is ‘the pursuit of competitive advantage in the market place through the provision of high-quality goods and services, through competitive pricing linked to high productivity and through the capacity to swiftly innovate and manage change in response to changes in the market place or breakthroughs in research and development’ or Government policy.
  2. In a workplace that is inclusive, equal in opportunity, legally compliant set against good HR administration and policy (employee handbook) and contractual framework.
  3. By ‘valuing employees’ creating a climate to which productive and harmonious relationships can be maintained through partnerships between management and employees and where teamwork can flourish. Getting better results from the organisation, teams and individuals by measuring and managing performance within agreed frameworks of objectives and competence requirements; assessing and improving performance; identifying and satisfying learning and development need; against the background of an employment relationship underpinned by a comprehensive contract of employment; staff handbook (policies); flexible working to provide for rapid response and reward management.  

Why Outsource HR to a Consultancy Practice?

Outsourcing can seem like a simple solution, but there is a lot to consider beforehand. Perceived lower costs are often the primary reason for organisation’s opting to outsource rather than use in-house resources.

Organisations are constantly faced with the challenge of focusing their time and expertise on growth or expanding their services.  It does not make financial sense for many organisation’s to build the internal expertise to support all aspects of their business, so they look for external partners in areas such as IT, HR/Payroll and Marketing.  They also find that internalising all of their HR needs does not make financial sense.  Moreover, if an organisation has inadequate support then they may create compliance, legal and reputational risks.

Even when a organisation decides to internalise HR, they often have a “Department of One”  and finds it nearly impossible to have all the expertise needed to attract, grow and retain their workforce or to stay ahead of the many challenges brought on by the changing workforce and regulations.

As a result, many employers turn to outside experts consultants to provide the support they need around compliance, handbooks, policies, and procedures, recruiting, training and development, salary surveys and compensation design, engagement and retention strategies and benefits.  Outside experts have access to more resources than a company can afford individually as well as knowledge of the latest trends, developments, and legislation. 

Organisations are looking for experts that can provide professional support in a flexible and cost-effective manner and is primarily what many outsourcing organisations offer. Below, sets out the service framework provided by a professional and chartered HR Consultancy:

  • Recruiting

An HR business consultant may not post job advertisements or sit in on candidate interviews, but normally advise on what it takes to attract qualified applicants. Consultants whose specialty areas include recruitment and selection give small-business owners tips on the best recruitment strategies as well as how to make wise hiring decisions. Small businesses often cannot afford to waste resources on ineffective recruitment strategies; therefore, an HR consultant can help you create a productive workforce can ultimately save your company thousands by minimising your cost-per-hire.

  • Litigation

An HR consultant can assist you in handling employee relations matters, such as investigating informal and formal complaints file by employees alleging that your company has engaged in unfair employment practices. The advantage of having an external consultant is that it preserves the integrity of workplace investigations. In addition, an HR consultant who is specially trained to mediate workplace disputes can save exorbitant costs to litigate employment cases. HR consultants may also advise you on proactive measures to ensure employee satisfaction so that you mitigate future risks of liability concerning employee issues.

  • Expertise

HR consultants have to maintain their expertise to be valuable to their clients. Business owners who don’t have a dedicated HR department within their companies benefit from an HR consultant who can provide guidance on the day-to-day operations. Even if there’s an HR staff member in place, the HR consultant can advise him on HR functions that will sustain employee engagement and productivity. Most HR consultants work hard to continually upgrade their knowledge and expertise in HR best practices so they can market high-quality services to clients and ensure that their clients trust their advice and counsel.

  • Outsourcing

Many HR consultants are well-versed in the pros and cons of outsourcing HR functions. HR consultants may not perform the duties of an outsource provider, such as processing payroll or handling benefits administration. However, an HR consultant can help you decide whether to hire an outsource provider or help you weigh the benefits of one outsource provider over another. In the event your HR consultant does perform some of the HR functions your company needs; you save the expense of paying the salary and benefits of a full-time employee to handle personnel functions that are well within your consultant’s purview.

  • Strategy

Strategic human capital development is an HR consultant’s strength. There are two ways an HR consultant benefits your organization concerning the strategic direction of your HR functionality. Your HR staff benefits from the expertise that your HR consultant lends in coordinating the HR tactical functions. This frees the time your HR staff has to devote to designing and implementing your company’s workforce planning. In addition, it gives small-business owners the ability to leave HR functions in capable hands while they dedicate their time and focus to overall business development.

When considering whether to outsource, the following pros will assist the decision:

  • You can focus on running your business and streamline the focus of your internal processes.
  • A consultant can provide impartial insight
  • External HR professionals have access to more resources that you only pay for when you need them, and you do not have to spend time researching every issue that may arise.
  • A consultant will impact your bottom line
  • Outsourcing all or portions of necessary HR services is less costly than having a fully staffed, in house department.
  • External HR professionals can provide you with more expertise on issues such as human resource management and business effectiveness, the employment market, organisational culture, strategic HRM, managing diversity, employment legislation, TUPE and change management, performance and compensation, employee benefits, talent development and retention strategies.
  • One of the main downsides of trying to internalise all of your HR support is that it is exceedingly difficult for one person or even a small team to be an expert at everything. Your HR staff has a wide array of duties and as amazing as they are, it would be really difficult to be stellar at every single one of them.
  • When you are facing a highly political situation like defining the future HR department structure after a merger a HR consultant can remove the stress. A neutral and unbiased opinion is helpful in strategic system discussions. Your current HR staff sometimes view work through the local impact to their roles, but an outside expert can analyse and present options without history or politics.

In contrast, the following cons should be taken into consideration:

  • Outsourcing means fewer HR professionals on-site.  If this is a concern for you, make sure you find HR consultants who are willing to meet on-site occasionally. That way you and others at your company will have opportunities to speak with them in person.
  • Outside consultants might not be as considerate of company culture. You might find that consultants make decisions that do not align with company values. This can be both frustrating and disastrous. In order to keep things aligned with your company’s culture and values, make sure to ask every firm you meet with what steps they take to familiarise themselves with a new organisation. Avoid outsourcing to firms who do not care professionally research their clients.
  • Outsourcing can delay future internal development. None of us can see the future, but there may come a time when your company grows enough that you decide an internal HR department makes more sense. Outsourcing before then might mean depriving your company of developing the talent and skills it will need later. This doesn’t mean that you should take the risk and forego outsourcing, though: instead, try and partner with HR firms that are prepared for your company to grow and evolve—and will help train or otherwise prepare your company for potential transitions.
  • Your confidentiality could be at risk. HR professionals deal with a lot of sensitive information, from employee medical history to bank account numbers for direct deposit. While HR firms are obligated to keep this information confidential, you should still never partner with a firm that doesn’t seem to take confidentiality seriously. Be sure to ask the firms you meet with about their methods for ensuring confidentiality.
  • Choose an HR professional carefully.  Make sure that the individual or firm you hire is in the business of providing HR services as your employees are your greatest resource.

Is Outsourcing HR Cost Effective?

There are a large number of costs involved in maintaining an effective in-house HR and payroll function:

  • Salaries of the HR staff e.g. the ratio of a professionally qualified HR manager plus HR administration support to employees is approx.: 80:1 with average cost of £90,000 per year.
  • HR regulatory tools and subscriptions
  • External Legal Support of the HR staff
  • Costs of creating training programs and hiring trainers
  • Costs of recruiting tools
  • Office space
  • Time spent developing and improving internal policies, procedures, and processes
  • Managing the in-house team and the people risk of “Departments of One”
  • When you hire an HR consultant, you often pay an hourly rate or a monthly retained service. You can decide how little or how much support you need.
  • A high level of service can be provided at a lower cost.
  • You can hire the best experts at a fraction of the cost of a full-time resource
  • You benefit from the shared knowledge and experience of an expert that works with many companies like yours.

So, if, for example, you already have somebody in-house who handles HR, Osprey hrc can offer you your very own named and dedicated CIPD-qualified HR expert to enhance your existing team, by providing practical, hands-on support, either on-site or remotely.

The HR Advisor will act as an extension of your team working with you to run your company’s HR, and being available by telephone, email and in person, as appropriate. They will provide legal, professional, and commercial advice, undertaking HR tasks on your behalf.

Some of the HR services normally include:

  • HR policies and procedures / employee handbook
  • HR document and Staff Handbook subscription service
  • Handling of performance, absence, and disciplinary issues
  • Dealing with employees’ issues and requests
  • HR support and advice for managers
  • Termination / redundancy handling
  • Project delivery (including TUPE and redundancy management).
  • Assistance during peak workloads.
  • Specialist recruitment campaigns.
  • Impartial, professional consultation.
  • Access to market leading HR software for all your HR administration essentials enabling you to store all your employee records electronically.

Expert guidance will help your business to meet both its operational and its legal requirements. Keeping you up to date with the latest legislation and best practice, providing you with a clear, dynamic service based on your precise circumstances. We won’t take a one-size-fits-all approach with your business.

HR and Employment Law

Since the abolishment of employment tribunal fees in July 2017, the numbers of claims have increased by over 90%, putting businesses under more pressure to do the right thing by their employees, and that is where our expertise could become invaluable to you.

Professional consultants understand the risks of non-compliance and are ready to help you manage your staff efficiently and avoid common pitfalls.

In addition to the above, Retained HR Services package provides you with comprehensive HR support, all of the documents that you need, and the peace of mind that comes from knowing that your business is protected.

Retained HR Services package includes:

  • An agreed or unlimited expert consultancy
  • Case management documents covering disciplinary, absence, grievance, and redundancy
  • Bespoke document templates
  • Newsletters and legal updates
  • Prices normally start from just £250.00 per month and vary depending upon company size.

As part of the Retained HR Services package, Osprey will, for example, offer bespoke:

  • Policies, Procedures and Handbook
  • Offer letters
  • Terms and conditions of employment
  • Compromise agreements
  • Appraisal and performance management
  • Exit interview paperwork
  • Resignation documents

We at Osprey write every word in every HR document. We tailor it all to protect your business and comply with legislation. You can call us any time, any day, and receive instant HR advice—no matter what the subject. And, you’ll receive access to our suite of HR management software tools and optional legal expenses insurance.

At Osprey hrc, we believe in a partnership approach, which is why we can ensure a dedicated team of experts will be on hand to help you when you need it most. That’s why many organisations nationally and internally have outsourced HR to Osprey hrc.

If you want to find out more about how HR outsourcing can benefit your organisation, please get in touch with Paul Middlemast, Senior Partner by email:  or give us a call on 07831 427234.

To find out more about how we can help your business please take a look at the Services Section on our web site on https://ospreyhrc.com/hr services for more detailed information on our professional services for the people management of your organisation.

The content of this blog is for general information only. Please don’t rely on it as legal or other professional advice as that is not what we intend. You can find more detail on this in our Term of our website use. If you require professional advice, please get in touch.

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Flexible Working: the business benefits and best practice

7th Jun '18

Paul Middlemast, chartered HR consultant; principal of Osprey hrc has written this blog introducing a flexible working and homeworking policy(s) and how it can benefit you as well as your employees.

Flexible working: business benefits

Many employers believe that promoting flexible working makes good business sense and brings the following improvements. Below is a brief overview:

  • a happier, loyal, and more productive workforce, together with a possible reduction of sick days;
  • it is a perk that could encourage talented job-seekers to work for a particular company;
  • it can enable employers avoid redundancies;
  • it shows that a company is progressive and listening to the needs of its staff;
  • there is a cost saving to employers, who may be able to save office rental with more employees working at home;
  • staff can save on commuting time and costs of travel;
  • greater cost-effectiveness and efficiency, such as savings on overheads when employees work from home or less downtime for machinery when 24-hour shifts are worked;
  • the chance to have extended operating hours organisations can handle more business outside normal office hours;
  • ability to attract a higher level of skills because the business is able to attract and retain a skilled and more diverse workforce;
  • greater continuity as staff, who might otherwise have left, are offered hours they can manage; many employers find that a better work-life balance has a positive impact on staff retention and on employee relations, motivation and commitment;
  • high rates of retention means that you keep experienced staff who can often offer a better overall service and recruitment costs are reduced;
  • increased customer satisfaction and loyalty as a result of the above and,
  • improved competitiveness, such as being able to react to changing market conditions more effectively

Flexible working: employee benefits

The main benefit of working flexibly for your employees is that it gives them the chance to fit other commitments and activities around work and make better use of their free time, for example:.

  • Personal matters can be sorted without having to take time off. The kids can be taken to school, the shopping can be done when the stores are less full or employees can get to a concert or football match on time. Experience shows that flexitime provides more scope for employees to attend evening courses;
  • Mothers with young children can hold down a full time job and leave work in time to pick up children. No queues to beat at the end of the day as staff rush out of the door to be first at the bus stop. 
  • Elderly parents their well-being is regularly a cause of worry for their children. With flexible working, more suitable times are now available for employees to visit and care for those who have contributed so much

Introducing a flexible working policy

You should inform and consult employees before you introduce a flexible working policy. This may help them understand how flexible working arrangements may impact on your business.

When planning to implement a policy, you will need to consider the following:

  • What flexible working arrangements will suit the business?
  • How will you deal with applications, e.g. who will attend the meetings and how will the administration work?
  • Are there jobs that might be difficult to do under a flexible working arrangement, e.g. jobs that don’t suit homeworking?
  • How flexible are your IT arrangements, e.g. can employees access their email away from the workplace?

Types of flexible working

The term flexible working covers flexibility in terms of the hours that are worked and the location and includes the following:

Part-time working:

Employees are contracted to work less than standard, basic, full-time hours.

Flexi-time:

Employees have the freedom to work in any way they choose outside a set core of hours determined by the employer.

Staggered hours:

Employees have different start, finish and break times, allowing a business to open longer hours.

Compressed working hours:

Employees can cover their standard working hours in fewer working days.

Job sharing:

One full-time job is split between two employees who agree the hours between them.

Shift working:

Work that takes place on a schedule outside the traditional 9am – 5pm day. It can involve evening or night shifts, early morning shifts, and rotating shifts.

Shift swapping:

Employees arrange shifts among themselves, provided all required shifts are covered.

Self-rostering:

Employees nominate the shifts they’d prefer, leaving you to compile shift patterns matching their individual preferences while covering all required shifts.

Term-time working:

An employee remains on a permanent contract but can take paid/unpaid leave during school holidays.

Annual hours:

Employees’ contracted hours are calculated over a year. While the majority of shifts are allocated, the remaining hours are kept in reserve so that workers can be called in at short notice as required.

V-time working:

Employees agree to reduce their hours for a fixed period with a guarantee of full-time work when this period ends.

Home working/teleworking:

Employees spend all or part of their week working from home or somewhere else away from the employer’s premises.

Sabbatical/career break:

Employees are allowed to take an extended period of time off, either paid or unpaid.

Summary

Ultimately, flexible working arrangements will need to fit into your organisation’s strategic workforce plan. Considering the talent shortage in many countries and the ongoing pressure to attract more young people into the workforce, while retaining the knowledge and expertise of older workers, flexible working arrangements will be critical to your workforce strategy now and for the future. If you are introducing a flexible working strategy you should make sure that it is given the time and thought, associated with implementing any new strategy into the organisation.

Planning should include members of the management team, from the top, down. If management are not convinced that flexible working can benefit the bottom line and improve competitiveness, the strategy will not work. It is a fundamental principal of flexible working that the needs of the business are met.

Professional advice

Whether you are a small business employing only a handful of staff, or a larger company, HR issues will inevitably arise. It is always a good idea to take professional advice from a chartered HR professional such as ourselves. We have a wealth of experience in this area and can assist you in developing and implementing flexible working, contracts of employment, HR policies and strategies’ in your business. If you would like more information and an initial free consultation, please get in contact with Paul Middlemast, principal of Osprey hrc on 07831 427234, or email us at .

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Different Types of Employment Contracts

6th Jun '18

Different Types of Employment Contract

There are a number of different types of employment contract. We have set out below a brief description of the different contracts that employers may normally operate.  One size does not fit all. Take care in choosing the right Contract: e.g. Contract of Employment, Directors Agreements, Consultancy Agreement, Contract for Services and Employee Shareholder Agreement.

At Osprey hrc we can guide you through the process of determining the type of employment contract that suits your business and accurately reflects the arrangements you have with your employees and contractors.

The list below is not exhaustive and you should bear in mind that each of the employment contracts listed can have numerous variants. We can provide guidance to you in order to ensure that your contract fits your circumstances perfectly.

Full-Time Permanent Employment Contract

This is probably the most common type of employment contract. Full-time permanent employees are often the cornerstone of a business and many employers are incredibly reliant upon this type of worker. This type of contract can be based upon the employee being hourly paid or salaried and should set out the employees working hours, holiday entitlements, position within the organisation, and various other aspects of the employee’s working arrangements.

A contract of this type can be simple or complicated depending upon the employee’s seniority. For instance, an employer may want to prevent a more senior employee from going to work for competitors by adding restrictive covenants into the employment contract. Alternatively, it may wish to ensure that the confidentiality requirements its senior employees have to abide by are suitable and appropriate for their proximity to confidential business information.

Part-Time Employment Contract

Normally, a part-time employment contract would contain much of the same information as the contract of a full-time employee. In the part-time employment contract, employers need to have a particular focus on the employee’s working hours and pay. It is also important to ensure that the holiday entitlement for part-time employees is clearly and accurately reflected in the contract and meets the relevant statutory requirements.

The law protects part-time workers from being treated unfavourably on the basis that they are employed part-time. It is important to make sure that the terms and conditions of employment for part-time employees are comparable to those of full-time employees in the same organisation.

Zero Hours Contract

The zero hour’s contract has proved to be somewhat controversial in recent times. The government is currently in the process of implementing certain restrictions on how zero hours contracts can be used. The zero hour’s contract can however be a very effective tool for employers.

A normal employment contract would create a mutual obligation between the employer and the employee. The employer agrees to provide a certain amount of work and the employee agrees to go and carry that work out. The zero hours contract waters this obligation down by allowing the employer to require the employee to come to work without guaranteeing to provide work to the employee. This means that the employer can call upon the services of the employee as and when required.

Zero hours contracts can often require a great deal of consideration and it is important that arrangements with employees are such that a zero hour’s contract can be used.

Unenforceability of exclusivity terms in zero hours contracts

Under s.27A of the Employment Rights Act 1996, clauses in zero hours contracts that prohibit workers from working or performing services under another contract or arrangement or that prohibit workers from doing so without consent (i.e. exclusivity terms), are unenforceable (s.27A(3)). Section 27A was inserted into the 1996 Act by provisions in s.153 of the Small Business, Enterprise and Employment Act 2015, which came into force on 26 May 2015.

A “zero hours contract” is defined for these purposes as a contract under which an undertaking to do or perform work or services is conditional on the employer making work or services available but where the availability of work or services is not certain (s.27A(1)). Section 27A (2) specifies that an employer makes work or services available to a worker if it requests or requires him or her to do the work or perform the services.

Under s.27A(4) of the 1996 Act, the fact that s.27A(3) renders exclusivity terms unenforceable is not to be taken into account when determining a zero hours worker’s employment status.

Section 153 of the 2015 Act also inserted a new s.27B into the 1996 Act, giving the Secretary of State a power to make Regulations to prevent zero hours workers from being restricted by contractual provisions from doing work outside their contract of employment. Regulations introducing protection against detrimental treatment and unfair dismissal for breaching exclusivity terms came into force on 11 January 2016.

Protection for breaching exclusivity terms in zero hours contracts

From 11 January 2016, zero hours contract workers have the right not to be subjected to a detriment by their employer for breaching an exclusivity term (reg.2(2) and (3) of the Exclusivity Terms in Zero Hours Contracts (Redress) Regulations 2015 (SI 2015/2021)). A detriment is an act or deliberate failure to act, done by the employer and includes being unfairly penalised or disciplined.

Under reg.3 of the 2015 Regulations, a worker who is subjected to a detriment may bring a claim in the employment tribunal. The claim must be brought within three months of the detrimental treatment complained of although the tribunal can hear a claim that is outside this time limit if it is just and equitable to do so.

The burden of proof is with the employer to identify the grounds for the detrimental treatment. Under reg.4, if the employment tribunal finds the claim well founded, it must (if it considers it just and equitable to do so), make a declaration to that effect and order the employer to pay compensation. The amount of compensation is what the tribunal considers just and equitable in the circumstances, having regard to the employer’s default and the loss sustained by the worker.

If an employee who works under a zero hours contract is dismissed and the reason or principle reason for the dismissal is that he or she breached an exclusivity term, the dismissal will be automatically unfair for the purposes of part 10 of the Employment Rights Act 1996 (reg.2 (1) and (3) of the Exclusivity Terms in Zero Hours Contracts (Redress) Regulations 2015).

Casual Work Contract

Casual working arrangements can sometimes be confused with zero hours arrangements. There is however some fundamental differences between the two. A casual work contract is generally applicable to a person who is classed as being a ‘worker’ rather than an ‘employee’. Workers have fewer employment rights than employees. The casual contract is not normally a permanent employment contract and would, for instance, be used for seasonal workers who work only a few weeks of the year.

Unlike the zero hours model, a casual worker would not normally be obliged to accept work offered to them and may not qualify to be paid statutory payments such as statutory sick pay.

Annualised hours

Under an annual hours contract the employee agrees to work for a specified number of hours a year. Annual hours contracts afford employers considerable flexibility in how they schedule work and reduce the need to make overtime payments. They can give employees a degree of freedom to have lengthy work-free periods to pursue other interests and to travel. The employment contract continues during the periods when the employee is not working and he or she maintains continuity of employment and accrues benefits such as paid leave under the Working Time Regulations 1998 (SI 1998/1833).

An annual hour’s contract could be completely flexible, with the employer being able to require the employee to work whenever needed. However, this is unusual. It is more common for some of the hours to be fixed or rostered and others to be kept in reserve until the employer needs the employee to work them. The split between the rostered and reserved hours should be clearly set out in the written statement of terms and conditions of employment, together with the procedure that the employer will follow when it requires the employee to work the reserved hours.

Employers should also make clear the arrangements that apply in relation to, in particular, annual leave, hours of work, provisions relating to sickness absence, frequency of payment and terms relating to overtime payments (i.e. at what stage the rate of overtime will apply).

Annual leave entitlement under the Working Time Regulations 1998 does not have to be taken during rostered hours though employers should identify in the contract the period during which leave can be taken.

The bunching of annual hours into short periods can result in an employee exceeding the limit on working time under the Regulations. Adult workers (i.e. workers aged 18 and over) cannot lawfully be required to work more than an average of 48 hours a week calculated over a rolling (or static) reference period of 17 consecutive weeks. The reference period may be extended to a maximum of 52 weeks under the terms of a collective or workforce agreement. Employees can opt out of the working time limit.

Fixed-Term Employment Contract

A fixed-term employment contract is normally for temporary employees. The duration of the contract can be anything from a couple of weeks to a few years. This type of contract can vary dramatically in its scope and extent.

Temporary staff who are expected to be with your business for a few weeks may only require a very basic set of terms and conditions whereas employees undertaking specific projects over the course of a year or two can sometimes need very carefully drafted and prescriptive employment contracts.

Term-time only contracts

Under a term-time only contract, the employee works only during the periods that coincide with school terms and is not required to work during school holidays. Term-time only contracts are common in the education sector.

A typical reason for employees to choose to work term time only is so that they can meet childcare demands. Employers may offer term-time working to aid recruitment and retention.

Although employees who are employed on a term-time basis work for only part of the year, they remain employees throughout the whole year and the whole year counts toward their continuity of employment. Payment may be by 12 monthly or 52 weekly equal instalments, with the pay for the term-time periods of work spread out over the calendar year. Alternatively, a term-time employee may be paid only during the periods of actual work (and during annual leave).

Term-time work is effectively a form of part-time working and, under the Part-time Workers (Prevention of Less Favourable Treatment) Regulations 2000 (SI 2000/1551), employees who work on this basis are entitled to the same terms and conditions as full-time employees, on a pro rata basis.

Terms of employment should make clear the benefits to which the employee is entitled and how they will be calculated. The working arrangements, in particular when the employee is required to work, and any requirements regarding when the employee may and may not take annual leave, should be specified in the written statement of terms and conditions of employment.

Director’s Service Agreement

A service agreement is generally the most detailed and heavy-duty type of employment contract. Normally this document would contain specific details about how the director should behave within the business and the scope and extent of their duties. Service agreements are often very comprehensive documents.

As a director would usually have unlimited access to a company’s financial and confidential information, a service agreement almost always contain restrictive covenants and thorough confidentiality requirements.

Consultancy Agreement / Contract for Services

A consultancy agreement is normally used when an organisation wants to engage the services of an individual who will not be employed. Where an individual will be self-employed, they will normally need to be provided with a consultancy agreement (Contract for Services). A contract for services is a common law term and not defined by legislation. However, a contract of service is defined in employment and tax legislation, meaning an employment contract.

It is suitable for any service provider, including:

  • professional tradesmen such as builders, plumbers, electricians, plasterers, decorators and gardeners
  • professional service providers, such as domestic energy consultants, or business marketing consultants
  • self-employed people undertaking specific pre-defined project work, e.g. commissioned artists, or graphic designers

If an individual is self-employed, they should make sure that your terms with the client, as far as possible, define the relationship as a business to business one. If HM Revenue & Customs could argue that in reality your agreement was in fact not a contract of service then your client would be deemed to be the individual’s employer and be compelled to hold back tax and National Insurance contributions under the usual PAYE rules.

This document can take a variety of forms. It can be a simple letter or it can be a lengthy contract. A consultancy agreement is often a key tool in protecting the parties from complicated tax issues. Perhaps more importantly, the consultancy agreement is essential to protect the organisation engaging the consultant from being susceptible to challenge from HMRC on the basis that the consultant is actually an ‘employee’.

Without a consultancy agreement in place the consultant may allege that they are employed and consequently should be given normal employment rights, including the right not to be unfairly dismissed. This could create a very troublesome and expensive situation for the organisation engaging the consultant.

Secondment

Under a secondment agreement, an employee is loaned by his or her employer to another part of the same organisation, another organisation in the group or an external organisation. During the period of secondment, the employee remains employed by the original employer. He or she does not transfer employment to the host employer or department.

Secondment may be used for a number of reasons, for example to enable the employee to learn new skills, for the host to benefit from the services of a skilled employee without having to employ one or to set up a joint venture without the need to recruit.

Whether or not an arrangement is a true secondment depends on the terms of the contracts between the employer and the host and the employer and the secondee, and the way that the secondee is treated. An employer that wishes to ensure that a secondee remains in its employment (rather than becoming an employee of the host) should retain and exercise as many employment powers as it can and ensure that the employment relationship is reflected in the contract between it and the host.

Secondments should not be permanent or lengthy. If a secondment is to be long-term, it should be reviewed regularly.

To reduce the likelihood of uncertainty and conflict, employers should make clear in an agreement between the parties to a secondment arrangement

  • that the secondee will remain an employee of the original employer;
  • the work to be undertaken;
  • the place of secondment;
  • terms relating to the hours of work, wages, benefits and annual leave arrangements;
  • requirements regarding confidentiality and intellectual property;
  • that the secondee will carry out the lawful instructions of the host;
  • how the secondee will be appraised and by which party;
  • relevant policies and procedures, with which the secondee must comply (for example policies on data protection, health and safety and dignity at work);
  • the arrangements for terminating the secondment; and
  • the secondee’s position when the secondment ends (i.e. whether or not the original employer will hold a position open for him or her and the terms relating to that position)

Terms concerning the work itself and the place and hours of work, will be based on the agreement with the host, which must be able to protect its property and give instructions to the employee. Control over terms relating to pay, sickness absence, holiday (including the timing of holiday) and other benefits should remain with the original employer.

Appraisals will require input from the host, which may need to be involved in setting targets and assessing performance, but the original employer should normally retain overall responsibility. It should also retain control over discipline, dismissal and grievances and, although input from the host may be necessary, the decision should ultimately be the employer’s.

Termination of a secondment is distinct from the termination of employment. The host, employer and secondee have the right to terminate the secondment. Requirements relating to the period of notice and grounds for termination should be made clear in the agreement. Statutory minimum notice requirements do not apply because only the secondment, rather than employment, is terminated.

In most circumstances, the host will have the right to remove the secondee from the premises, without notice. The secondee and employer also have the right to terminate the employment (subject to the usual employment rights). Statutory and/or contractual notice will apply. The parties to a secondment agreement need to take care, when ending it, that they do not breach the agreement, or breach the duty of mutual trust and confidence, as this could amount to a constructive dismissal.

The host and the original employer should agree terms relating to the reimbursement of wages and other costs and insurance. Both the host and employer could be liable for negligence by the seconded employee.

Volunteers

There is no legal definition of “volunteer”. Volunteers are individuals who offer their skills or labour to an organisation (usually in the public or third sector) in return for no payment.

In the event of a dispute, an individual may challenge his or her volunteer status, and argue that the arrangement in question constitutes an employment contract and that he or she has employment rights.

To establish whether or not an individual is a volunteer rather than an employee, it is necessary to measure the purported volunteer arrangement against the key elements of an employment contract. The essential elements of employment are:

  • the existence of a contract;
  • that the work is done in person;
  • that mutuality of obligation exists; and
  • that there is control over the work that the individual is doing

The areas of uncertainty in relation to volunteers are whether or not there is mutuality and if there is a contract. In a volunteering arrangement, it would be unusual for the organisation not to control the work or for the volunteer to be able to send in a substitute.

National minimum wage

An exemption from entitlement to the national minimum wage applies to volunteers engaged by certain types of organisation.

Employee Shareholder Agreement

A new type of employment status came into effect in England, Wales and Scotland on 1 September 2013, “the employee shareholder”. Employee Shareholder status is not currently in place in Northern Ireland.

The legislation is aimed at providing businesses with greater flexibility in the way they engage staff and how they manage their employer obligations, particularly in relation to dismissal.
An employee shareholder is an employee who has agreed to have different employment rights, in return for being issued shares in the employer’s company.

To be an employee shareholder, the following conditions must be met:

  • the employee and employer agree that the employee will be an employee shareholder
  • the company issues or allots shares of a minimum value of £2,000 to the employee
  • the company provides the employee with a written statement of particulars of the status of employee shareholder, explaining the rights that attach to the employee shares
  • the employee gives no consideration other than by agreeing to become an employee shareholder

Tax implications

Shares acquired under an employee shareholder agreement on or after 1 December 2016 are subject to income tax and capital gains tax.

Where an employee shareholder agreement was entered into before 1 December 2016, shares acquired up to the value of £2,000 were not subject to income tax and National Insurance Contributions when they were acquired. With regard to agreements entered into before 1 December 2016 profits made by the employee on disposal of up to £50,000 worth of shares will be exempt from capital gains tax. However for those agreements entered into on or after 17 March 2016 and before 1 December 2016 there is a lifetime limit of £100,000 on gains eligible for this capital gains tax exemption.

Written Statement of Terms & Conditions / Contract of Employment

Employee shareholders have the right to be issued with a written statement of particular of employee shareholder status and the rights attaching to their shares.

This written statement must explain:

  • the specific employment rights that do not apply to the employee shareholder
  • the different notice periods that would apply in the case of the employee shareholder in relation to maternity, adoption and additional paternity leave

The written statement must also provide specific information about the rights that attach to their shares. This includes, but is not limited to, details of whether:

  • any voting rights attach to the shares;
  • the shares carry any rights to dividends;
  • the shares would (if the company were wound up) confer any rights to participate in the distribution of any surplus assets;
  • there are any restrictions on the transferability of the shares;
  • the employee shares are subject to other rights

Excluded statutory employment rights

An employee shareholder has the same statutory employment rights as an employee, with the following exceptions. Employee shareholders must give up the right to:

  • request time off work to undertake study or training;
  • request flexible working (but this right does remain in limited circumstances on returning from parental leave);
  • make a claim for ordinary unfair dismissal;
  • a statutory redundancy payment

Where protection from unfair dismissal remains

Employee shareholders exclusion from the right not to be unfairly dismissed is only in cases of ordinary unfair dismissal, that is to say cases where dismissal is on the grounds of conduct, capability, redundancy, some other substantial reason or statutory ban. Employee shareholders retain the protection from unfair dismissal where the dismissal is for the following reasons:

  • a discriminatory reason in breach of the Equality Act 2010
  • a reason that would be automatically unfair
  • in cases of health and safety

Working families

Employee shareholders retain the majority of rights available to working parents.
However, where an employee shareholder wishes to return to work early from a period of maternity, adoption or additional paternity leave, the notice requirement is extended to 16 weeks.

Employee shareholders are generally excluded from the right to make an application for flexible working. However there is a limited exception where an employee shareholder is returning from a period of parental leave.

Employee shareholders returning from a period of parental leave are entitled to make an application for flexible working within a period of 14 days of returning to work. If such a request is made, the employer must comply with the statutory flexible working procedure.

Discrimination

Employee shareholders have the same protections from discrimination under the Equality Act 2010 as other employees. Employers therefore, must ensure that employee shareholders are not treated unfavourably on the grounds of any protected characteristics.

Particular care must be taken when dismissing an employee shareholder to ensure that the reason for the dismissal is not discriminatory under the Equality Act 2010. An employee shareholder would still have the right to pursue a claim of unfair dismissal in those circumstances.

Validity of the Agreement

In order for an employee shareholder agreement to be valid, the following requirements must be met before the agreement is made:

the employee must receive independent legal advice as to the terms and effect of the agreement;

any reasonable costs incurred by the employee receiving advice must be paid by the employer;

a period of seven days has passed since the day on which the individual receives advice

What are considered ‘reasonable costs’ is not defined in legislation. The employer has this obligation whether or not the individual agrees to become an employee shareholder.

In most cases the employer will, therefore, pay the full cost incurred in the employee receiving advice unless there is a basis to argue that the particular cost is not reasonable. In any event, given the potential flexibility available to employers who successfully negotiate an employee shareholder agreement, the employer is more likely to pay the costs in full to help secure the employee’s agreement.

Detriment and Dismissal

  1. Existing employees are under no obligation to become employee shareholders.
  2. An employee has the right not to be subjected to a detriment by the employer on the grounds that the employee refused to become an employee shareholder.
  3. An employer must not, therefore, treat an employee unfavourably on the basis of such a refusal. For example, it would be unlawful to refuse training or promotion opportunities if the reason for this was on the grounds of the refusal to become an employee shareholder.

Similarly, an employee will have the right to claim unfair dismissal if the reason, or the principal reason, for the dismissal was that the employee refused to become an employee shareholder. Such a dismissal will be automatically unfair. The employer can however, make an offer of employment to a new employee conditional on the individual agreeing to become an employee shareholder.

Take professional advice

Whether you are a small business employing only a handful of staff, or a larger company, HR issues will inevitably arise. It is always a good idea to take professional advice from a chartered HR professional such as ourselves. We have a wealth of experience in this area and can assist you in developing and implementing contracts of employment, HR policies and strategies’ in your business. For further advice and an initial free consultation, please get in contact with Paul Middlemast, principal of Osprey hrc on 07831427234, or email us at .

 

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The Importance of HR Policies and Practices

9th Jan '18

The Importance of an HR Policies & Practices

Just like societies need laws to create order and common understandings, organisations need policies. Often, when businesses start small, they leave things loose and create rules as they go. However, there comes a point when an organisation needs to coordinate among its members and provide itself with legal protection.

The Importance of HR Policies and Practices

Many an organisation has asked us at Osprey hrc “why,” do I need a policies and practices strategy for my business?” The simple answer is because you have people working for you. With human nature being what it is, employees will test limits and act “creatively” in workplace situations, so you need a strategy for developing, communicating and enforcing a set of policies and practices that comply with legislation and reflect your standards of acceptable behavior.

When you get to the heart of the matter, performance improvement and growth of the business is really about the process of setting expectations and meeting them. The focus in business is not just about meeting specific goals, but also about how you achieve them. And the “how” affects the liabilities you create in the process.

Therefore, building a great company has a lot to do with how people work together, have clear expectations and treated fairly as they help to build your company. The answer is found in the way policies and practices can improve the way your employees interact, while minimising the personnel obstacles that often arise in today’s workplaces and protect the business from expensive litigation. So, to expand on the foregoing:

Why policies are important?

Policies serve several important functions:

  • Communicate values and expectations for how things are done at your organisation
  • Keep the organisation in compliance with legislation and provide protection against employment claims
  • Document and implement best practices appropriate to the organisation
  • Support consistent treatment of staff, fairness and transparency
  • Help management to make decisions that are consistent, uniform and predictable
  • To support business strategy and,
  • For smaller organisations, a desire to develop a more formal and consistent approach that will meet their needs as they grow.

HR policies provide written guidance for employees and managers on how to handle a range of employment issues. They play an important role in practically and effectively implementing an organisation’s HR strategy. They also provide consistency and transparency for employees and managers, helping to enhance the psychological contract and create a positive organisational culture.

Defining policy and procedure

A policy is a formal statement of a principle or rule that members of an organisation must follow. Each policy addresses an issue important to the organisation’s mission or operations.

A procedure tells members of the organisation how to carry out or implement a policy. Policy is the “what” and the procedure is the “how to”.
Policies are written as statements or rules. Procedures are written as instructions, in logical steps.

Which policy should be introduced?

It’s difficult to identify a comprehensive list of HR policies that employers should introduce since, as noted above, other than those policies needed to comply with legislation, HR policy needs often vary widely between organisations.

There’s no one-size-fits-all approach to designing effective HR policies; their content should be based on the unique needs and characteristics of the organisation and its workforce. Rather than following a ‘best practice’ approach which may be unsuitable for the diverse range of organisational contexts, a focus on why there’s a need for a particular policy, and how it’s aligned with the business strategy and business plans, allows an appropriate policy to be implemented for the particular context.

However, certain HR policies and procedures are specifically needed to comply with legal requirements. For example, a written health and safety policy is required for any organisation with five or more employees or workers, while there are also important legislative provisions surrounding the setting out of formal disciplinary and grievance procedures.

Even where a policy or procedure isn’t specifically required by law, employers often find it helpful to have a policy in place to provide clear guidance that reflects the legal framework for handling the issue in question and it also helps employees to be clear about the organisation’s stance on a particular subject.

You want to be sure that any policies you bring into the organisation address a real need and are in line with what your company values and how work should be accomplished. You also need to ensure managers have the skills and resources to be able to implement and monitor the policy.

Whatever your approach, the key to success is to devote the time and resources it takes to develop a policies and practices strategy for your business before the need arises. It’s an investment that can pay large dividends in increased productivity and minimised litigation. And it’s an essential component of your comprehensive people strategy. Many organisations do not have their own HR Department or the one they have is not in a position to develop the people strategy and policies.

If you think I need HR policies in my business… so now what?

Whether you are a small business employing only a handful of staff, or a larger company, HR issues will inevitable arise, and require your time and energy away from other business activities to address.

Osprey hrc can support and assist you with developing and implementing HR policies and strategies in your business, regardless of your business size. For further information please contact Paul Middlemast on 07831 427234 or email .

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Changes to Employment Law 2018

22nd Dec '17

Changes to Employment Law 2018

With the end of 2017 fast approaching, here at Osprey Human Resources Consultancy we have summarised below the key changes you should be aware for next year. For advice and guidance as to how those changes will affect your business please contact: Paul Middlemast at  

Employment law changes 2018

There was the seismic shift in tribunal access due to the removal of employment tribunal fees (latest statistics show a 64% increase in claims brought since their abolition) and many important judgments in every court, from the Employment
Appeal Tribunal to the European Court of Justice. So ensure your policies and procedures are in place and up to date.

It’s never an exact science to predict what will happen in 2018, but the main themes and date of key employment changes are:

Living and minimum wages

1 April 2018

Alongside this, there will be the usual increase to living and minimum wage rates on 1 April 2018, with the national living wage for workers aged 25 and over to be increased to £7.83 (from the current rate of £7.50).

Gender pay gap reporting for private companies

4th April 2018

Regulations require employers in the private sector with at least 250 employees to publish, by 4th April 2018, gender pay information. The information to be published includes the difference between the mean and median hourly rates of pay and bonus for male and female employees.

Pension’s auto enrolment

6 April 2018

There will be an increase to minimum auto enrolment pension contributions for both employers and employees. As it stands, the current minimum contribution for both parties is 1% but this will increase to 2% employer contribution and 3% employee contribution next April. There is then a further increase scheduled in 2019 for a 3% employer contribution and 5% employee contribution.

Changes to the tax treatment of termination payments

6th April 2018

One change to look out for when dealing with Settlement Agreements is the change in April 2018 to the treatment of taxation of termination payments in respect of payments in lieu of notice, all such payments will be subject to income tax and National Insurance deductions, whether contractual or not.

It is presently possible to pay entirely non-contractual payments in lieu of notice as damages payments, not subject to tax, but this will no longer be the case. Either the employee – in accepting reduced sums – or the employer – in “grossing up” the payment will be financially affected by this.

The General Data Protection Regulation (“GDPR”) comes into force

25th May 2018

GPDR (General Data Protection Regulations): These will replace the current provisions in the Data Protection Act in 2018, and will enable the UK to maintain its ability to share data with EU states post-Brexit.

GDPR will make changes to the current data protection rules. It will apply to any organisation which controls or processes personal data. The changes are significant, but the key ones, in summary, are as follows:

  • The definition of “personal data” will be wider;
  • Individuals will have a right to request that their data is erased, if there is no need for the organisation processing it to continue to do so. This is known as the “right to be forgotten”;
  • There will be tighter rules for obtaining consent from individuals before processing their data;
  • The maximum fines which can be imposed on organisations for breaching data protection will increase significantly.

Equal pay claims

We’re all familiar with the saga of public sector equal pay claims, which have been the subject of litigation for many years. However, as (some) of these draw to a conclusion, the focus will turn more to private sector claims and supermarkets seem the current target, with claims against Asda and Sainsbury’s currently winding their way through the tribunal system. Expect these types of claims to become more prevalent.

Holiday pay

Appropriate calculation of holiday pay has been a headache over the past few years, and with recent cases such as the European Court of Justice Case of King v Sash Windows, there may be further developments. Although the King case turned very much on its facts, it may offer scope for challenges to settled cases, therefore there is a possibility holiday pay entitlements may need re-calculated next year. We’ll keep you updated on any concrete developments.

Gig economy

We will see more “gig economy” cases, where individuals are fighting for worker rights notwithstanding a contractual self-employed status. The Pimlico Plumbers case is in the Supreme Court, the Uber case likely to be at the Court of Appeal (having been refused a direct appeal to the Supreme Court) and a number of other cases will be heard in the employment tribunal.

One particularly interesting claim is that of Jess Varnish, the Olympic cyclist, who has claims in the employment tribunal both against British Cycling and UK Sport for sex discrimination, detriment for whistleblowing, victimisation and unfair dismissal. These heads of claim will require her to establish at least worker status to allow some to proceed, and employee status for all to proceed.

Date to be confirmed: Shared parental leave to be extended to grandparents

Shared parental leave is to be extended to allow grandparents to take time off work to care for their grandchildren. The new system will allow a mother to share her maternity leave with a nominated working grandparent.

Forthcoming Changes

Caste Discrimination: Following a consultation paper launched in March 2017 the Government proposes amendments to the Equality Act to include caste as a protected characteristic within the definition of race discrimination.

Salary Sacrifices: Existing arrangements will remain protected until April 2018. For new schemes, as of April 2017, the only benefits that will receive a benefit from tax and NI relief include childcare vouchers, cycle to work equipment, ultra-low emission cars and enhanced employer pension contributions.

It’s sure to be an interesting year, and that’s without even contemplating the effect of Brexit on employment law. If you have any queries about any of the issues raised in this article, please do not hesitate to contact Paul Middlemast on 07831 427234.

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Osprey HRC

New Osprey HRC Website Launched

30th Oct '17

Today we are happy to be launching our new website at www.ospreyhrc.com. The site has a comprehensive overview of the services we provide and our fee structure.

Osprey HRCOur HR service areas are:

  • HR Strategy and Operations
  • TUPE, Mergers and Acquisitions
  • Business Restructuring and Managing Redundancies
  • Employment Legislation
  • Recruitment and Selection
  • Reward Strategies
  • Development and Training

Visit our HR services page for full details. Contact Osprey HRC here.

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