Forum of Private Business Employment Guide First edition published January 2000 This edition October 2019 Published by Forum of Private Business Limited Ruskin Chambers Drury Lane Knutsford Cheshire WA16 6HA Telephone 01565 626001 Email info@fpb.org Website fpb.org Copyright
© The Forum of Private Business Limited 2019
ISBN 978-1-871929-52-2 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 the Employment 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 provided by the 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 the 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.
The Employment Guide 2020
i
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, there is also 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’s chance of success. The Employment Guide 2020 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 is an essential tool for all members. 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 law firm that specialises not only in the expert management of legal crises but also in the education and prevention of them in the first place. rradar provides legal, regulatory and risk management advice and support to the Forum and, in many cases, representation to members during investigations, prosecutions, employment tribunal proceedings and civil court proceedings. If a crisis arises, you can access rradar’s legal team who can advise on how to work with the Police, HSE and all investigating and regulatory bodies. Discussions and advice provided by rradar’s legal team are legally privileged, meaning the advice given is protected and confidential. Supported by rradar and with the full resources of the Forum behind it, the new Employment Guide 2020 is an essential tool for anyone interested in running a successful business.
ii Forum of Private Business
Contents
Employment Guide – 20th edition Contents Foreword Welcome About the Employment Guide
ii v vii
Section 1 – Recruitment
1
1. Recruitment planning 2. Employment status 3. Other types of working arrangement 4. The recruitment process 5. Pre-employment checks
3 3 5 15 21
Section 2 – The contract of employment 1. The contract of employment 2. The induction process 3. The probationary period
Section 3 – Managing people 1. Personnel records 2. Data protection 3. Working time 4. Holidays 5. Pay 6. Absence 7. Monitoring progress 8. Transfer of undertakings
Section 4 – Managing relationships 1. Human rights 2. Family-friendly rights 3. Relationships in the workplace 4. The Bribery Act 5. Information and consultation 6. Trade unions
31 33 46 51
55 57 58 67 71 74 75 84 89
97 99 100 112 115 116 118
The Employment Guide 2020 iii
Section 5 – Equality 1. Equal opportunities in the workplace 2. Discrimination 3. Equal opportunities policy 4. Protected characteristics in the workplace 5. Employment practices and protected characteristics 6. When someone complains about unlawful discrimination
Section 6 – Discipline and grievance 1. Disciplinary procedure 2. Grievance procedure 3. Whistle-blowing 4. Disciplinary/grievance investigations
Section 7 – Dismissal and redundancy 1. Dismissals 2. Lay-offs and short-time working 3. Redundancy
Section 8 – Post-employment 1. References 2. Restrictive covenants 3. Final pay/records 4. Garden leave
121 123 124 126 128 130 136
139 141 150 152 154
157 159 165 167
177 179 181 182 182
Templates
185
Tables
371
Table 1 Summary of main employment rights Table 2 Statutory payment rates for employees Table 3 Recommended retention periods for personnel records Abbreviations used in the Guide
Index
iv Forum of Private Business
373 375 376 378
379
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 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. Within your members’ area of the website you will find our digital Compliance Guide which is free to you as part of your membership. This year’s Employment Guide has over a hundred templates, which you can find 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 2019
Notes
vi Forum of Private Business
About the Employment Guide This Employment Guide is designed to help you deal with employment law. It gives you practical information on handling issues from recruitment to retirement. Working closely with our legal representative, rradar, we update the Guide every year to make sure you are always kept informed of new and upcoming legislation. The Guide is divided into eight sections: Section 1 – Recruitment Section 2 – The contract of employment 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.
The Employment Guide 2020 vii
Notes
viii Forum of Private Business
Section 1
Recruitment
The development of any business may involve recruitment of staff for the first time or recruitment of additional staff as the business expands. This requires considerable planning and thought. There are processes that an employer needs to take into account when considering recruitment, laws that apply and information to be collected from new employees. When a business is planning to expand its workforce, employers also need to consider issues such as tax and national insurance. Visiting the HMCA website (hmca.co.uk) will give you more information. All templates can be downloaded within the members’ area of the website fpb.org.
Notes
2 Forum of Private Business
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 technology. skills your organisation is looking for. A skills audit will ensure that you are aware of the skills available to the organisation and those that are lacking, and thus help pinpoint areas for future development, whether evaluating the skills base of your company. should you decide to do a skills audit. Template 1.1 – Skills questionnaire Depending on what you need to achieve, it may be possible to increase productivity in other ways such as altering the working hours of existing employees or introducing a bonus scheme with a structure of a part-time basis would consider going full time. If appropriate, you could also consider the introduction of You could also consider subcontracting or outsourcing some of your work or even 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 a skill, and the process demands great care. Recruit the wrong person and the business will the future.
There are four main types of employment status: worker, employee, self-employed and employee You therefore need to give serious consideration to the type of recruit you are looking for, as a number of For example, 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.
The Employment Guide 2020 3
HMRC has a useful tool gov.uk/guidance/employment-status-indicator which can assist you in determining employment status.
Employees An employee 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 reference to either an annual salary or an hourly rate. He or she is obliged 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 carried out. • You provide the bulk of the equipment and tools necessary to carry out the work. • All the risk is yours, with no risk to the worker should some element of the job need 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 personally to do or perform 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: • The person is not paid through PAYE, is responsible for their own tax and national insurance and submits an invoice for work done. • You do not pay for any element of sickness absence or accrued holiday. • The person provides his or her own tools and equipment. • The person 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
4 Forum of Private Business
Section 1
Under the scheme, employee shareholders are given shares in the company worth at least £2,000 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, 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.
Part-time workers 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 splitting 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 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 that 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 either be individuals employed by you but not on a long-term basis, or agency workers, i.e. 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
The Employment Guide 2020 5
