Forum of Private Business Employment Guide First edition published January 2000 This edition October 2018 Published by Forum of Private Business Limited Ruskin Chambers Drury Lane Knutsford Cheshire WA16 6HA Telephone 01565 626001 Email marketing@fpb.org Website fpb.org Copyright
© The Forum of Private Business Limited 2018
ISBN 978-1-871929-48-5 All rights reserved other than templates. No part of this publication may be reproduced in any material form, whether by photocopying, scanning, downloading onto computer or otherwise, without the written permission of the copyright owners, except in accordance with the provisions of the Copyright, Designs and Patents Act 1988. Subscribers to the Guide have paid for an update and information service, which is non-transferable. The document itself remains the property of the Forum of Private Business Limited. Any unauthorised or restricted act in relation to this publication may result in civil proceedings and/or criminal prosecution.
Disclaimer The Forum of Private Business Limited has taken every possible care to ensure that the information contained in this guide is accurate at the time of going to print, and the publishers cannot accept any liability for errors or omissions, however caused. The information given by this Employment Guide cannot be taken as an authoritative interpretation of the law. Such an interpretation can only be given by employment tribunals and the courts. Before taking any further action, you may wish to consider taking legal advice. The information contained in this guide is based around the employment rules and regulations as they apply in England. While generally the same regulations apply to Northern Ireland, Wales, and Scotland, please contact the Forum of Private Business Limited should you have specific issues in those areas of the United Kingdom.
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Foreword Setting up and running a business can be incredibly rewarding but there are also many problems to be faced. Not only are there economic pressures to be handled but there is a huge amount of administration, law and regulation to be understood and implemented. Any shortcomings in a company’s operations may cause serious problems further down the line. That’s why the right information at the right time can be crucial to a business’ chance of success. The Employment Guide 2018 is a comprehensive, detailed and up-to-the-minute examination of the procedures, practices and paperwork that every business needs in order to flourish and succeed in today’s competitive and challenging commercial environment. Operating in tandem with the Forum’s helpline, it’s an essential tool for all members. In addition to these key elements, businesses need to know that they have access to legal advice whenever they need it and that’s why the Forum has teamed up with rradar, a new and radically different law firm, created and run by recognised legal experts and industry professionals who have vast experience in advising private, public and charity sector organisations. Specialising in providing a wealth of pro-active advice and support, including representation in caution interviews, tribunal advocacy, accident investigation and guidance through court proceedings, rradar helps you to avoid the risks, costs and dangers that are associated with regulatory investigations and prosecutions. Any conversation you have with rradar will remain confidential under the rule of legal privilege, meaning that it can’t be used against you by a claimant, the police or other organisations. Supported by rradar and with the full resources of the Forum behind it, the new Employment Guide 2018 is the an essential tool for anyone interested in running a successful business.
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Employment Guide – 18th edition Contents Foreword Welcome About the guide
Section 1 – Recruitment Recruitment planning Employment status Other types of working arrangement The recruitment process Pre-employment checks
Section 2 – The contract of employment, induction and probation The contract of employment The induction process The probationary period
Section 3 – Managing people Personnel records Data protection Working time Holidays Pay Absence Monitoring progress Transfer of undertakings
Section 4 – Managing relationships Human rights Family-friendly rights Relationships in the workplace The Bribery Act Information and consultation Trade unions
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1 3 3 5 15 21
27 29 40 42
45 47 48 52 55 58 60 68 73
79 81 82 92 95 96 98
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Section 5 – Equality Equal opportunities in the workplace Discrimination Equal opportunities policy Protected characteristics in the workplace Employment practices and protected characteristics When someone complains about unlawful discrimination
Section 6 – Discipline and grievance Disciplinary procedure Grievance procedure Whistle-blowing
Section 7 – Dismissal and redundancy Dismissals Lay-offs and short-time working Redundancy
Section 8 – Post-employment References Restrictive covenants Final pay/records Garden leave
103 104 106 107 110 115
117 119 126 128
131 133 139 140
151 153 155 156 156
Templates
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Tables
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Summary of main employment rights Statutory payment rates for employees Control periods for common illnesses Recommended retention periods for personnel records Abbreviations used in the Guide
Index
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Welcome Having set up and run a number of businesses over the years, I know that you – like me – did so because you had a passion and belief for what you wanted to do and you put your money, time and effort into building that idea into a business. The issue we all face is that before you know it, you end up spending more and more of your valuable time dealing with red tape and compliance issues and less on building and developing your business for the future. You become less “PRODUCTIVE”. Nobody sets up their business wanting to spend their time dealing with red tape, and here at the Forum we know that small businesses – which make up the biggest part of the UK business community – spend on average 37 hours a month on the red tape and compliance issues*. Employment issues make up the vast majority of this time with over 14 hours being spent on staff and staff related issues. The good news is that as a Forum member you receive the best possible information, support and advice. Our job here at the Forum is to take care of the complicated and confusing stuff that takes up increasingly more of your time and requires you to seek external help. As a result you spend less time on these issues and less money on external consultants. For a simple and affordable annual fee your Forum membership lets you get on with doing what you do best - developing and growing your business. Our annual Employment Guide is a vital part of the information, support and advice we provide to our members. It helps make complying with regulation easier and gives you the complete confidence that your business is always up to date, compliant and protected. We are now into our 40th Year of business and we celebrate this with all our members and staff. Within your members area of the new website you will find our new digital Compliance Guide which is free to you and is also part of your membership. This years employment guide has more than 90 templates and again you can find the templates within your members area to download and customise for your business. Each year the Employment Guide is fully revised and updated to incorporate recent and upcoming updates to employment law. If you need further advice on any of the topics covered in the Guide, or any other business issue, our helpline team is here for you on 01565 626001 from Monday to Friday, 8.30am to 5.00pm.
Ian Cass Managing Director @IanCassMD
*Forum research 2016
About the Guide This Employment Guide is designed to help you deal with employment law. It is written in plain English and gives you practical information on handling issues from recruitment to retirement. We update the guide once a year and our website fpb.org is kept up to date to make sure you are always informed of new and upcoming legislation. The Guide is divided into eight sections: Section 1 – Recruitment Section 2 – The contract of employment, induction and probation Section 3 – Managing people Section 4 – Managing relationships Section 5 – Equality Section 6 – Discipline and grievance Section 7 – Dismissal and redundancy Section 8 – Post-employment Templates Tables Index
If you need further advice and support, please contact the Forum’s member helpline on 01565 626001 between 8.30am and 5.00pm Monday to Friday. If you are faced with an issue, please contact the helpline before taking any action to ensure your insurance will cover you.
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Notes
Note: The most costly areas for SME’s are staff, insurance, marketing, support and energy costs.
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Section 1 Recruitment
The development stage of any business is finding the need to recruit staff for the first time or to recruit additional staff as the business expands. A recruiting process does require considerable planning and thought. There are processes that an employer needs to take into account when considering recruiting staff, the laws that apply and the information needed to be collected from new employees. Employers can face some issues within recruitment which need to be considered when a business is planning to expand a workforce. Employers also need to consider issues within recruitment which need to be considered when a business is planning to expand a workforce, such as Tax and National Insurance. Visiting the HMCA website (hmca.co.uk) will give you more information. All templates referred to can be downloaded within the member’s area of the website fpb.org.
“Forum members spend 15% less time dealing with employment law issues and use our team of advisors for support and advice via the helpline.” Katie Handley, Forum Business Development Executive
Notes
Note: SME’s make up 99% of businesses in the UK and create 15 million jobs, having a collective turnover of £1.7 trillion .
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Section 1
skills of the people you already employ against expected future demand. It may be that you have existing employees whose skills are underused, or employees who are willing to be trained in the areas where you lack expertise.
Alternatives to recruitment Think about conducting a organisation is looking for. A skills audit will ensure you are aware of the skills the organisation has available and those which are lacking, and thus help pinpoint areas for future development, whether by training or recruitment. Encourage
decide to do an audit of their skills. Template 1.1 – Skills questionnaire Depending upon what you need to achieve, it may be possible to increase productivity by alternatives such as altering the working hours of existing employees or introducing a bonus scheme with a structure of incentive payments. Think going full time. If appropriate, you could also consider the introduction of new equipment or machinery which might You could also consider subcontracting or outsourcing some of your work or even consider using an employment employment law may make these options onerous and time consuming. Once you have decided that you do need to recruit, you should make detailed plans. Selecting the right individuals is considerable expense. Get it right and the business will have a valuable asset for the future.
regulations apply, depending on who you decide to employ. For example, you might find that any self-employed workers you have engaged for a specific project may be able to argue that they are in reality employees, even though you are not deducting tax or National Insurance from the payments you are making to them. HMRC has a useful tool gov.uk/guidance/employment-status-indicator which can assist you in determining employment status.
Employees An employed person is engaged by another – the employer – to carry out a particular job or function, and he or she is paid for the services provided, either weekly or monthly, by either an annual salary or an hourly rate. He or she is obliged
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to carry out the work provided by the employer, who exercises control over where and how the work is done. The employee has the equipment and/or tools of the trade provided and does not undertake any financial risk in respect of the work undertaken. An individual is likely to be employed by you if most of the following statements apply to them: you provide all the person’s work and all his or her income, whether on an hourly, daily, weekly or monthly basis, so that the person is not free to work elsewhere as well as for you you have a high degree of control over where, when and how a person’s work is done or carried out you provide the bulk of the equipment and tools necessary to carry out the work all the risk is yours so that there is no element of risk to the worker if some element of the job needs correction.
Workers ‘Worker’ is a broader category than ‘employee’ but normally excludes those who are self-employed. A worker is any individual who works for an employer, whether under a contract of employment, or any other contract where an individual undertakes to do or perform personally any work or service. Workers are entitled to core employment rights and protections. The following groups of people are likely to be workers but not employees: • most agency workers • short-term casual workers • some freelancers.
Self-employed A person is normally genuinely self-employed when he or she is engaged to work on his or her own account, provides the tools and equipment necessary for the job, is free to hire workers and allocate those workers to contracts, and is responsible for the profit and loss of the business. If the following apply, this indicates genuine self-employment: • you pay your worker gross, that is, without the deduction of tax and National Insurance • you do not pay for any element of sickness absence • the worker provides his or her own tools and equipment • the worker is responsible for correcting his or her own mistakes at his or her own expense.
Employee shareholders Employee shareholder status was introduced in 2013 with the intention of encouraging employers to take on Under the scheme, employee shareholders are given shares worth at least £2,000 in the company in exchange for forfeiting certain employment rights. These include the right to request flexible working, the right to a redundancy payment and the right not to be unfairly dismissed except in specified circumstances, including whistleblowing. It does Statistics suggest that the uptake of this scheme is low, but in a competitive labour market, shares in your company may convince high-calibre ambitious applicants that your vacancy is the best job for them. If you are considering introducing employee shareholder status into your organisation, call the Forum’s member helpline on 01565 626001 for advice.
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Part-time workers Obviously, you may not need full-time workers, but you should take care if you are considering employing part-time workers or employees. They must be treated in exactly the same way as full-time workers, not only in respect of the work they do and the salary they receive but also in respect of other benefits. Salary and benefits are normally provided to part-time workers on a pro-rata basis.
Job sharing it between them, for example, one person working in the morning and the other in the afternoon. If your vacancy is open to job sharing, you should pay particular attention to the issues which are applicable to both parties in the job-share arrangement. This will include hours of work, any handover period, the salary – which should, of course, be comparable for each party – the specific duties that each person is responsible for, and any interchangeability of working hours, e.g. to cover for absence or holidays. Particular care should be taken in respect of matters such as sickness absence and holidays, and you should have provisions in place to cover all the absences which ensue.
Agency and temporary workers Employers use temporary workers for a variety of reasons, whether to cover for an employee on maternity leave, or to provide extra capability for busy seasonal periods. Temporary workers can be either individuals employed by you but not on a long-term basis or they could be agency workers – that it, workers supplied to you by an employment agency. Ideally, temporary workers should only be used for relatively short periods to reduce the potential for such workers to gain protection against unfair dismissal. If a disciplinary issue should arise in relation to an agency worker, it is the employment agency that should deal with it, not your business. The Agency Workers Regulations 2010 confer rights upon temporary agency workers to ensure that they are treated fairly in comparison with permanent employees of the hirer. The Agency Workers Regulations apply to individuals who work as temporary agency workers; individuals or companies (private, public and third sector e.g. charities, social enterprises) involved in the supply of temporary agency workers, either directly or indirectly, to work temporarily for and under the direction and supervision of a hirer; and hirers (private, public and third sector).
Day 1 rights for all agency workers If you hire agency workers, you must ensure that they can access your facilities (such as canteen, childcare facilities, etc) and information on your job vacancies from the first day of their assignment.
After 12 weeks in the same job Equal treatment entitlements relate to pay and other basic working conditions (annual leave, overtime, etc) and come
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