April 16

How to boost employee morale whilst remote working due to COVID-19….

COVID-19 has imposed a new culture of remote working and with this comes the risk of declining productivity, morale and overall team performance. Here are some top tips to boost employee morale and wellbeing during this difficult time:

1. Keep employees informed

Regular contact with staff is essential throughout this period of uncertainty. Email communications should be clear and concise focusing on important pieces of information that will keep employees up to date. Regular team check-in meetings via zoom, or similar, should be implemented. Encourage team WhatsApp groups to be set-up to allow employees quickly keep in touch.

2. Promote work-life balance

It is important to acknowledge that employees may find it difficult to adjust to remote working and that they may find themselves more distracted than normal with additional home responsibilities.

Encourage employees to establish a new working routine, which should incorporate regular small breaks during the working day. If employees are used to a daily commute suggest that they use this time to get some exercise before starting their working day. Ensure that employees know that they are not expected to work additional hours and that they should switch-off once their working day is over.

3. Ask for feedback

While employees may not be physically present in the office, they may still have opinions over how the business is operating and how it could be improved. Asking for feedback also helps employees know that their thoughts are valued and when any issues are addressed as a result of feedback.

4. Introduce employee recognition and rewards

Employers should ensure that they recognise and reward individuals or teams who are making significant contributions, show extra effort or deliver beyond expectations. This can boost employee morale and reassure employees that their work is valued. Employers may consider introducing a weekly email, which can be circulated to employees highlighting these achievements.

5. Be flexible and empathetic

Where possible, employers should consider allowing employees to vary their working hours to suit their new arrangements. For some employees being able to work before their children are awake or after they have been put to bed will be enormously beneficial. Employees’ productivity levels when they are free from distraction will also benefit employers. Employers could also consider introducing set core hours that all employees must be available at but allow employees to work their additional hours at other times convenient for them.

6. Team wellness check-ins

Set a weekly virtual team meeting to discuss not only work-related topics but also do a check-in to see how team members are doing. This is an excellent way for team leaders and team members to show their support for one another and to offer up tips that they find helpful in staying healthy. This is a good time to share fact-based videos and news from authority sites for discussion. Sorting through myths and keeping heads calm is important when dealing with low morale during this time.

7. Virtual coffee or perks

Schedule a virtual coffee get-together on a regular basis. Set up a zoom meeting, ask your team to grab their favourite drink and come prepared to share something funny or exciting – non-work related.

These aren’t the only ways to boost your virtual team’s morale during COVID-19 and beyond. The key is first recognising that your teams are likely to suffer decreased morale and then making the decision to do something about it. Trying to ensure they remain connected and productive is key for all parties.

email: nicola.goodridge@goodhr.co.uk
Telephone: +44(0)7917 878384

March 24

What is ‘furlough’ leave….the pros and the cons….?

The Coronavirus Job Retention Scheme was established by the government on 20 March 2020 and will be administered by HMRC.

The scheme will make available grants to those employers who elect to furlough, rather than lay off, employees who are without work during the current crisis.

What we know so far:

• All businesses are eligible, of any size and in any sector, to apply to use the scheme.
• The scheme involves “furloughing” designated employees who would otherwise have been “laid off” during this crisis.
• Any employee can be furloughed provided they are on PAYE and earn more than £118 per week.
• Zero hours workers who fulfil the same criteria may also be furloughed – the pay will be calculated taking an average over 52 weeks.
• This means that staff will be kept on the payroll instead of making them redundant or putting them on unpaid leave.
• HMRC will reimburse 80% of furloughed employees’ gross ‘wage costs’, up to a cap of £2,500 per month per employee.
• ‘Wage costs’ are expected to include wages, pension contributions and employer national insurance contributions.
• The employer can top-up the 80% HMRC payment but does not have to do so – it is recommended employers are consistent across all of their staff.
• Employers who have already made redundancies are encouraged to take back anyone they had dismissed and put them on furlough instead.
• The employer needs to pay their furloughed staff and then be reimbursed by HMRC.
• Employees cannot do any work for an employer that has furloughed them.
• There is nothing preventing employees from going to work part-time hours for another employer to top up their pay.
• The scheme will be backdated to 1 March 2020 and run for three months from that date. It will be extended if necessary.
• Employers need to decide on the employees and workers that you want to furlough and then submit the information to HMRC via a new portal which is due to be in place by the end of April 2020.
• Consent to the new arrangement needs to be obtained from all employees and workers in the correct format.
• The employer is likely to need to maintain benefits for furloughed staff, unless it agrees something different with them.
• Holiday is likely to continue to accrue during the time that staff are furloughed.

Less positive aspects of the scheme:

• It does not help where employees had agreed to reduce their hours, or to a pay cut but where they are still required to work. There is currently no option to do a mixture of reduced hours and furlough leave.
• It may create resentment between employees:
o Some will be at work getting either full or reduced pay
o Others will be on furlough leave getting paid at least 80% to do nothing
o Those off sick may only get SSP which at around £95 per week is likely to be less than 80% of full pay.
• There will be an incentive for employees not to notify their employer if they become sick or need to self-isolate during furlough leave because of these adverse pay consequences.
• Likewise, the employer will also be better off as they can only reclaim 14 days of SSP as opposed to indefinite furlough leave.
• The employees concerned will remain on the employer’s payroll and will continue to accrue holiday and service.

Next steps:

The scheme is clearly welcome news for the many businesses now struggling to cope with the Coronavirus crisis. Nonetheless, a careful approach is required when determined whether to furlough, or not to furlough….

For any advice, email nicola.goodridge@goodhr.co.uk or call +44(0)7917878384

March 20

How to safely change employment terms in the face of COVID-19….

Realistically, an employee isn’t going to complain about a pay rise or more flexible working arrangements – but what happens when proposals are less favourable? How do employers safely impose employment terms?

In the current coronavirus crisis, employers are having to make tough decisions and make the following sorts of changes to contractual terms:

1. Unpaid holiday/sabbatical for a chunk of time – say a month…or two….
2. Pay cut – employees work a full working week for less pay
3. Reduced working hours – reduce to a four, three or two-day week – less work for less money
4. Job shares – employees in a similar job share the job thus both working only half a week
5. Redeployment to other parts of the business in response to workflow requirements
6. No bonus or salary review
7. No overtime even if usually guaranteed

It’s important to understand the rules surrounding contractual changes in order to avoid legal pitfalls………..

Can I impose whatever terms I want, so long as the employee agrees?

No – the law establishes certain minimum duties and obligations that all employers must abide by. For instance, you cannot agree with an employee that you will pay them below the applicable National Minimum Wage. The law will override any agreed terms that do not fulfil statutory duties.

Do I need to consult the employee before implementing a change?

Yes, receiving express agreement from the employee is the safest way to vary a contract, as imposing new terms unilaterally may constitute a breach of contract.

If you want to make the changes you should:
• meet with the employee to explain your case for making the proposed change
• allow the employee time to consider the proposal and to put forward viable alternatives.

It’s likely that engaging the employee in the discussion and allowing them to express their views will make them more receptive to the change.

Do I need to get the employee’s consent in writing to the changes?

Yes, where it has been agreed to vary an employee’s contract and the change relates to a significant term in the contract, as detailed above, the changes should be recorded in a variation of contract letter which must be countersigned by each employee affected within one month of the change taking effect. Once signed this letter is then appended to the contract of employment and put into the employee’s HR file.

If you change terms and conditions that are not included in the contract, you must inform your employees of where they can access information about the change, for example in your Employee Handbook or on your intranet.

The employee is refusing to accept the change. What can I do?

Talk to them and give them time to consider and respond to your proposal. Explain again the reasons for the changes.

If, after lengthy consultation and negotiation, you’re unable to reach agreement, you can serve the individual employee notice that you will terminate their existing contract and offer a new contract with the new employment terms and conditions. If this is the route you decide to take, you must give the correct notice period to help avoid wrongful dismissal claims – although be mindful that claims can still be brought and advice should be sought to navigate safely through this process.

What happens if an employee brings a case for unfair dismissal?

In order to defend unfair dismissal claims, employers must be able to show that they had a fair reason to dismiss and followed a fair procedure (which is where consulting with the employee will come into play).

In unfair dismissal cases relating to changes to contractual terms and conditions, the outcome will often come down to the employer’s ability to demonstrate, with evidence, that they had a sound business reason for the dismissal – the reason given mustn’t be trivial but also doesn’t need to be as extreme as to be the determining factor in your business going under.

For any assistance, do email mailto:nicola.goodridge@goodhr.co.uk or call +44(0)7917878384

March 16

How to save staff costs as coronavirus takes hold….without taking the final step of redundancy….

As the coronavirus gathers strength employers may be looking to cut costs if they work in a sector where home-working is impossible. Employers will want to retain skilled and experienced, valuable staff and avoid the negative impact on morale that compulsory redundancies can result in.

Below are some alternatives to the final step of redundancy……

1. Recruitment freezes
Where possible, aim to avoid replacing employees who exit the business. Consider whether you can fill vacancies by redistributing work amongst existing staff or by accepting internal applicants before advertising externally.

2. Lay offs
You can ask your employees to stay at home. A lay-off is where employees are off work for at least one working day. There’s no limit for how long employees can be laid off but they should get full pay unless the contract allows unpaid or reduced pay lay-offs. If employees are unpaid they are entitled to guarantee pay.

3. Short time working
You can ask employees to work fewer hours or days in a week, unpaid. This can be on a temporary basis within a defined time period or indefinitely until business picks up. You will need the consent of the employee to mitigate any risk of breach of contract and/or constructive dismissal claims. However, provided they consent you can reduce staff hours to save costs, keep the business going with a skeleton staff in the hope that the business is viable and able to employ them fully when business has picked up.

4. Pay freezes or cuts
While pay rises are always desirable, it is likely that employees will be happy to settle for job security rather than a pay rise.

5. Pay deferral schemes
These allow a temporary deferral in pay, to be given back to employees at a later date.

6. Remove overtime
This may be an effective way to reduce costs, especially if there is no business requirement for overtime. However, banning or restricting overtime would need to be communicated carefully to employees, and employers would need to explain that it is a means of avoiding compulsory redundancies.

7. Reduce use of agency workers
Relying on core staff and cutting freelance cover is an option, especially in times of reduced demand.

8. Cut bonuses or pension payments
Never popular but employees will understand if this is a way to avoid other more drastic measures being taken.

9. Sabbaticals (paid or unpaid)
Arranging unpaid sabbaticals/career breaks can be a great way to save on the costs of salary for a fixed period of time, whilst retaining valuable staff and giving them the opportunity to do something for themselves such as study, travel or voluntary work.

10. Secondments to other companies
Internal or client secondments can work well to either train an employee in a certain area or provide a specific service to a client. This may help to consolidate client relations and/or develop the employee’s knowledge/skills, ultimately benefiting the employer’s business when the employee returns to their original role.

11. Redeployment in other parts of the business
If one area of the business is busier than another, it may be possible to retrain an employee with transferable skills to take up a new role on a temporary or permanent basis. It may also be possible to carry out a restructure without the need for any job losses, by redefining existing roles in line with work demands. Any significant changes will need to be agreed in writing with the relevant employee. Any redeployed employees will also need to be given training to ensure that they are properly equipped to perform the new role.

12. Purchase of additional annual leave
Offering employees the opportunity to take extra holiday in exchange for a pro rata reduction in salary, can save some money in the short-term during quiet periods. However, the parameters of this arrangement would need to be set out clearly, in writing.

13. Voluntary redundancy
Although offering voluntary redundancy can take some control away from the employer in terms of selecting roles for redundancy, it is the employer’s final decision as to whether or not to grant an application for voluntary redundancy. Ultimately, offering a voluntary redundancy package might reduce the need to make compulsory redundancies.

In order to protect the employer, care must be taken, the correct process must be followed and the arrangement should be carefully documented, in respect of all of the above options. If, after exploring the above tips, the requisite cost savings have not been made, then compulsory redundancies may need to be considered.

For advice on any of the above, do email nicola.goodridge@goodhr.co.uk or +44(0)7917878384

March 10

Do you need to re-think your disaster recovery plan….?

Growing concern over the spread of the coronavirus means that employers should have an effective disaster recovery and business continuity plan in place. This means that you should do the following:

• evaluate what will be required to continue, in terms of services, procedures and products;
• consider how this can be done with a limited number of employees;
• consider how the business will continue to function, without the use of a physical office.

The plan should include:

• a list of alternative plans, outcomes and instructions for all aspects of the business;
• methods of preferred communication between staff;
• how you will communicate the expectations that are anticipated during the crisis.

In addition to considering immediate policy issues such as adapting your sickness procedures and publicising your remote working policy, businesses may need to think about longer-term issues such as:

• how to deal with ongoing levels of absence or protracted travel restrictions?
• whether external resourcing agencies will be required to help augment your workforce if significant parts are affected by coronavirus?
• whether you could train existing employees and workers to cover business critical positions?
• who will be responsible for making coronavirus-related decisions that will impact the business and employees and which communication channels will be used to keep employees up to date?
• whether you have up to date contact details for all of your staff and reliable emergency contact procedures.

Develop flexible resourcing plans

As part of your organisation’s contingency plan, explore more flexible resourcing strategies in case your business experiences staffing shortages.

• If roles can’t be performed at home, consider more innovative resourcing solutions that may need to be deployed, such as split shifts to cover essential operations or services.

• Develop strategies to maximise the amount of home working to prevent the spread of infection if necessary. There are many roles that could be performed remotely with little disruption to service delivery.

Investigate ways of using technology to limit the amount of face-to-face contact:

o video conferencing to facilitate remote meetings.
o introducing or maximising the use of self-service options and online services.
o consider issuing staff with laptops so they can work remotely if necessary.

• Increased sickness absence may create a need for other employees, if willing, to work longer hours to keep your business going. If this happens, you will need to comply with the Working Time Regulations 1988 to ensure appropriate length of daytime working hours, night shifts and rest breaks.

Have plans ready to enable your organisation to operate on a skeleton staff if necessary:

o identify key services and roles that are essential and can’t be put on hold, as well as projects or roles that could be temporarily stood down.
o identify those individuals and managers who have transferrable skills, who can fulfil more than one function and could be allocated to more essential roles.

Carry out a resourcing risk assessment of the organisation:

o identifying essential areas of the business where few employees have the required skills.
o training additional employees in these skills should be considered.
o ensure that procedures are developed to ensure smooth handovers for employees who are filling in for colleagues in unfamiliar roles.
o provide additional training and a risk assessment if individuals are moving to roles where there may be a health and safety risk.

Some advance planning now for various scenarios – ranging from how to deal with different types of absences to what circumstances might necessitate a temporary facility closure – could help your business deliver a speedier and more effective response if coronavirus becomes a more widespread problem in the UK.

For any assistance please contact nicola.goodridge@goodhr.co.uk or +44(0)7917878384

March 4

UPDATE ON CORONAVIRUS – a clear plan for employers…..when to pay and what to do….

As the number of cases of coronavirus (COVID-19) increases in the UK, employers should consider some simple steps to help protect the health and safety of staff.

It’s good practice for employers to:

• Update all staff on actions being taken to reduce risks of exposure in the workplace
• Ensure all staff’s contact numbers and emergency contact details are up to date
• Ensure managers know how to spot symptoms of coronavirus and are clear on process
• Ensure there are clean places to wash hands with hot water and soap, and encourage everyone to wash their hands regularly
• Provide hand sanitiser and tissues for staff, and encourage them to use them
• Consider if protective face masks might help for people working in particularly vulnerable situations
• Consider if any travel planned to affected areas is essential
• Consider setting up as many staff as possible to be able to work from home

It goes without saying that employers must not single anyone out and must not treat an employee differently because of their race or ethnicity.

If an employee is sick

If an employee has coronavirus they should inform their employer immediately. The workplace’s usual sick leave and sick pay entitlement will apply. An employer may have to relax some aspects of sickness policy as an employee may not be able to get a sick note if they have been told to self-isolate for 14 days.

If an employee is not sick but cannot work because they’re in self-isolation or quarantine

If an employee does not have coronavirus but cannot work because they:

• have been told by a medical expert to self-isolate
• have had to go into quarantine
• are abroad in an affected area and are not allowed to travel back to the UK

the employer is not obliged by law to pay that employee.

However, it is good practice for the employer to treat it as sick leave and follow their usual sick pay policy. Alternatively, they can take the time off as holiday. Whilst there is no statutory right to pay, the advice to employers is to pay employees in this situation – firstly it is not their fault and paying them would be an act of good faith, secondly, the risk otherwise is the employee will return to work in order to get paid thus increasing the risk of the virus spreading, if they have it.

Remember, if they can work from home they can be paid as usual.

If an employee is not sick but the employer tells them not to come to work

If an employee is not sick but their employer tells them not to come to work, because they have returned from one of the affected areas, they should get their usual pay.

If an employee needs time off work to look their children because their school has closed

Employees are entitled to time off work to help someone who depends on them in an unexpected event or emergency as follows:

• if they have children they need to look after or arrange childcare for because their school has closed
• to help their child or another dependant if they’re sick, or need to go into isolation or hospital

There’s no statutory right to pay for this time off, but some employers might offer pay depending on the contract or workplace policy. They may offer say two days off to begin with and if more time is required they may ask the employee to book holiday.

What if employees do not want to go to work?

Some people might feel they do not want to go to work if they’re afraid of catching coronavirus. It is important, as an employer, to listen to any concerns staff may have.

If there are genuine concerns, the employer must try to resolve them to protect the health and safety of their staff.

If an employee still does not want to go in, they may be able to arrange with their employer to take the time off as holiday or unpaid leave. The employer does not have to agree to this.

If they are able to work from home that is something that can be considered.

If an employee is unable to work from home and refuses to attend work, it could result in disciplinary action.

Working from home

Employers should start thinking about whether they need to take any steps to facilitate home working, and to consider whether they want to encourage employees to ensure that they have the correct set-up at home to be able to work there if required to do so. This may include ensuring that all employees have a way of logging on to secure systems from home.

Employers may want to make it clear that an employee’s failure to take certain actions – ie. requesting particular log-ins – which would prevent them from working from home may result in those employees being subjected to disciplinary proceedings.

What to do if someone becomes unwell at work

If someone becomes unwell in the workplace and has recently come back from an area affected by coronavirus, they should:

• get at least 2 metres (7 feet) away from other people
• go to a room or area behind a closed door, such as a sick bay or staff office
• avoid touching anything
• cough or sneeze into a tissue and put it in a bin, or if they do not have tissues, cough and sneeze into the crook of their elbow
• use a separate bathroom from others, if possible

The unwell person should use their own mobile phone to call either:

• for NHS advice: 111
• for an ambulance, if they’re seriously ill: 999

They should tell the operator:

• their symptoms
• which country they’ve returned from in the last 14 days

Keep an eye on this for regular updates: https://www.gov.uk/guidance/coronavirus-covid-19-information-for-the-public

If you need further assistance, please email mailto:nicolagoodridge@goodhr.co.uk or call +44 (0)7917 878384

March 2

Dealing with coronavirus in the workplace…..

The UK is advising thousands of people to self-isolate to prevent the spread of coronavirus and it is important to remember that both employers and employees have a duty of care and “discretion is needed” with such an unusual situation as a coronavirus outbreak.

What should employers do to protect staff?

Employers have an obligation under UK law to take reasonable steps to protect staff health and safety. This would include:

• educating staff
• sending emails on cleanliness
• providing hand sanitisers
• cleaning communal areas.

Can employers stop staff going on holiday to high-risk regions?

No, because that could be discriminatory. An employer should direct them to government advice. An employee should realise that if they did travel there then that’s causing more problems for themselves if they have to self-isolate or risk contracting coronavirus.

What if an employee comes to work and then tests positive for coronavirus?

The UK government does not recommend closing down the workplace and Public Health England (PHE) will contact the management team to discuss the case and contact anybody who has been close to the infected person.

Staff who have had close contact with that person will be asked by PHE to self-isolate at home for 14 days from the last time they had contact with the infected person.

What do you do if someone suspected to have coronavirus has recently been in your workplace?

If there is a suspected case of coronavirus in the workplace, the government says no restrictions or special control measures are required while waiting for laboratory tests.

There is no need to close the workplace down or send other staff home at that point as most possible cases turn out to be negative.

Should staff travel be restricted?

Employers should restrict staff travel to places where there has been a coronavirus outbreak, as part of their duty of care.

If an outbreak happens while they are there, an employer has an obligation to ensure their safety and that of other staff.

Employees who have not had close contact with the person do not need to take any precautions and can continue to go to work.

Do I need to prove I’ve been in self-isolation for 14 days?

British law states that medical evidence is not required for the first seven days of sickness.

After that, the employer determines what evidence they require, if any. This does not have to be a note from your GP and employers are “strongly” suggested to use discretion, according to the government.

Employers have a responsibility to take “reasonable care” to look after their employees – which could mean allowing them to not come into work or work from home.

If you need assistance please email nicola.goodridge@goodhr.co.uk or call +44 (0)7917 878384

February 10

Now that Brexit is actually happening……..how employers need to prepare for it!

The realities of Brexit, from a practical and administrative perspective, will be obvious for the first time at the end of 2020 – government, businesses and individuals will need to be ready.

From an employment law point of view, there are no anticipated changes as UK employers will be expected to continue to follow EU rules until 2021. There is also strong public support for the protection of existing workers’ rights beyond this date, despite government plans recently being criticised for lacking clarity in this area.

But since the EU referendum in 2016, a major concern has been how Brexit will affect access to the staff employers need, especially in sectors that rely on overseas labour like healthcare, social care and hospitality.

Even though a deal has not yet been struck, it is understood that Brexit will end the free movement of EU citizens between the UK and EU nations and a new immigration regime that covers all non-UK nationals will be brought in.

Just what impact this will have remains to be seen, but immigration from the EU has decreased substantially since the referendum and this downward trend may continue depending on if a deal is struck. According to the latest Office for National Statistics estimates, EU net migration stood at 48,000 in the year ending June 2019, compared with over 200,000 in 2015 and early 2016.

As things stand, EU citizens will still be able to enter the UK freely during the transition period, so employers will still be able to access workers during this time. If the UK leaves without a deal, these staff and their families will need to apply for European Temporary Leave to Remain status to continue to live and work in the UK in 2021.

Employing EU citizens

• Compile a list of employees who are EU citizens and may be affected by Brexit.

• Start to reach out to them to understand their circumstances and to see whether they have applied for the EU settlement scheme.

• More than one million EU citizens have, so far, been granted settled or pre-settled status since the scheme was introduced – around two thirds of Europeans in the UK are yet to register.

• Consider putting FAQs and an information sheet on your intranet or hold drop-in sessions for EU citizens working in your organisation.

Key points on the EU Settlement Scheme

• EU, EEA (EU countries plus Liechtenstein, Iceland and Norway) or Swiss citizens and their families can apply to the settlement scheme now, to be able to continue to live and work in the UK after 30 June 2021.

• If the application is successful, the individual will be granted either settled or pre-settled status.

• Settled status is usually given to individuals who started living in the UK by 31 December 2020 (or the date when the UK leaves the EU in a no-deal scenario) and who have lived in the UK for 5 years continuously.

• Pre-settled status is usually given to those who do not have 5 years’ continuous residency in the UK when they apply and are living in the UK when the UK exits the EU. When the individual reaches their 5-year anniversary of living in the UK, they will be able to apply for settled status. Individuals can stay in the UK for a further 5 years from the date they receive pre-settled status.

• Under both settled and pre-settled status, individuals have the right to work in the UK.

• The deadline for applying to the settlement scheme is 30 June 2021 if the UK leaves with a deal, and 31 December 2020 if the UK leaves without a deal.

Things to know about the EU Settlement Scheme for employers

• It’s the individual’s responsibility to make an application to the scheme. There is no requirement for them to inform you, as their employer, or for you to ensure that they have applied.

• You cannot make an offer of employment or extension of employment on the condition that they have made an application to the settlement scheme. This is considered discriminatory.

• Current ‘right to work’ checks, for example using a passport or national ID card, are valid until the end of 2020.

• In the event that the UK leaves the EU with a deal, the rights and status of EU citizens living in the UK will remain unchanged until 30th June 2021.

• In the event of a no-deal scenario, this date is amended to 31st December 2020.

• You must be careful not to provide any advice with regards to immigration to your employees unless qualified to do so.

• You will not need to carry out retrospective checks on existing EU employees when the UK transitions to the future skills-based immigration system.

• Employers are not legally obliged to communicate to employees about the settlement scheme; however, it may be useful to point them in the right direction for information.

It is important for employers to maintain open and transparent communication with their staff around Brexit and its employment implications. Employers should support staff effectively in applying for the EU settlement scheme, if they wish to do so.

If you need assistance please email nicola.goodridge@goodhr.co.uk or call +44 (0)7917 878384

January 11

Three KEY changes to employment law in April 2020…..ignore them at your peril!

Three key reforms that are coming into force in April 2020 should be on your radar now, and below are some tips for how to prepare for them.

(1) New reference period rules for calculating holiday pay

At the moment, the way to calculate holiday pay for workers with variable pay is to look back at the 12-week period prior to taking the holiday. An average is taken over that 12-week period.

The change

From 6 April 2020, the reference period will be changed to 52 weeks, or the number of weeks of employment if a worker has been employed for less than 52 weeks.

The background

Ever since the European Court of Justice (ECJ) held that holiday pay must take into account “normal remuneration” such as contractual or regular patterns of overtime, pay allowances and certain commission payments, the 12-week reference period has been problematic. Fluctuations in pay can lead to higher holiday pay if leave is taken immediately following peaks and lower holiday pay if it is taken following troughs.

What you need to do

• Consider when and how you make the change: For the purposes of holiday pay, many firms begin their year on 1 January. If that is the case, you need to decide whether to change the way you calculate holiday pay on 6 April, or at the start of your holiday year. Christmas brings high levels of overtime for some sectors, which could have repercussions on holiday pay if you switch to the new system in January. It could also mean that people who work the same hours receive different holiday pay simply because of the dates they take leave. If your financial year ends after 6 April, the value of accrued but untaken holiday will increase, meaning you may wish to limit how much holiday can be carried forward.
• Adjust your HR systems: The 12-week reference period will need to be altered to 52 weeks.
• Review your variable pay policy: If you have not started to include variable pay in your holiday pay, now may be a good time to do so, given that the reference period was one of the few pieces of holiday pay case law that was unclear. If you decide to tackle this, it is important to assess what pay components you will cover and whether this could trigger claims for backdated holiday pay.

(2) Changes to the tax treatment of off-payroll labour

The change

From 6 April 2020, changes to tax legislation regulating off-payroll working (commonly known as IR35) also come into effect. These new rules will require larger private sector businesses to deduct income tax and National Insurance contributions via payroll from fees for services paid to a personal service company (PSC) where the individual performing the services would, but for the PSC, ordinarily be regarded as an employee of the client company for tax purposes.

The treatment of individuals who are directly engaged by the client company — for example “Joe Bloggs” rather than “Joe Bloggs Limited” — will remain the same. The correct tax treatment of the fees paid to these workers will depend on whether they are in reality an employee of the client company for tax purposes, or if they’re genuinely self-employed.

The background

At present, the tax liability rests with the PSC. The change will be accompanied by obligations on the client company to determine the correct position for each engagement and notify the other parties involved. It pays to be prepared for this reform. When similar changes were introduced in the public sector two years ago, many organisations were caught out.

What you need to do

• Audit your off-payroll labour: It is a good idea to start doing this as soon as possible, as the audit process could take some time. It is likely you will need to make individual decisions and have different communications with each PSC. The audit will be a factual investigation, looking at what each individual does in practice, how they do it, what contracts they’re engaged under, how they are paid etc. This may also be a good time to audit any off-payroll labour that is not provided through PSCs.
• Consider the knock-on effects: The audit is likely to have knock-on consequences that may require legal advice. As well as determining employment status, you may need legal advice to amend or draft contractual documentation, to advise on the effects on pension liability, and to consider how this change intersects with rules around immigration, the apprenticeship levy, and the gender pay gap reporting figures and strategy. In addition, if liabilities are identified or a revised model of working is required, accountancy input may be needed to quantify the position.

(3) Written particulars becoming a “day one right” for workers and employees

The change

The requirement to give written particulars will be altered in three key ways:

• It will become a “day one right” for those employed after 6 April 2020 – rather than the current position of needing to provide particulars within two months of the start date;
• It will cover workers as well as employees; and
• It will need to cover additional topics, such as probationary periods, any variation in working hours, and “any other benefit provided by the employer”.

What you need to do

• Review your contracts: Begin by revisiting all contracts used to engage employees and workers in readiness for new starters arriving after 6 April 2020. Most of the new areas are formulaic, but some thought will need to be given to areas that are more complex.
• Consider the impact on flexible working: If your workforce includes flexible working patterns, such as shift workers or zero hours workers, you will need to consider how your approach may vary and build this into your terms.
• Assess your benefits: To cater for the somewhat vague “any other benefit” requirement, you will need to decide what types of benefits should be covered and their contractual status.

Although these legal reforms may seem minor at first sight, they require HR teams to review key processes and possibly make important changes that have legal and financial consequences.

If you need assistance please email nicola.goodridge@goodhr.co.uk or call +44 (0)7917 878384

December 5

IR35: are you ready…?

Introduction to IR35

IR35 is a word used to describe two sets of tax legislation that were designed to combat tax avoidance by workers who were supplying their services to clients via an intermediary, such as a limited company, but who would be an employee if the intermediary was not used.

IR35 has been heavily criticised which is why the government is replacing the original IR35 legislation with the new Off-Payroll Tax which was initially introduced into the public sector in April 2017 and will be extended to the private sector from April 2020. Confusingly it is also referred to as IR35….

Genuine contractors, freelancers and consultants, in business on their own account, will have nothing to fear from IR35.

The new regime

So, from 6 April 2020, there are new rules:

• that require organisations,
• which engage workers via a personal service company (a limited company that typically has a sole director, the contractor, who owns most or all of the shares)
• to undertake checks to determine whether that worker should be treated as an employee or as self-employed for tax purposes, and
• account for income tax and national insurance if sufficient characteristics of employment exist.

In a nutshell, the changes coming in move the responsibility for determining whether contractors should be taxed as employees or self-employed on to the end user of the services (the client), rather than on the contractor.

They also impose the obligation to operate PAYE and NIC on the client rather than leaving it to the discretion of the contractor.

How it will work

The key amendments to the IR35 legislation are as follows:

• A client who engages self-employed contractors through personal service companies will now be required to carry out an IR35 assessment before a contract begins.

• The client must then issue an IR35 status determination statement which is a comprehensive statement which declares the following:
o The contractor’s deemed employment status
o The reasons behind the conclusion reached on the employment status

• From 6 April 2020 a status determination statement is to be completed for each new personal service company engagement and for each existing such engagement due to receive a payment after this date.

• It is important to note that the requirement to issue a status determination statement for each contractor only impacts where the client engaging the contractor is a medium or large business – if two of the following are met:
o generate more than £10.2 million revenue per year;
o have more than £5.1 million of assets; and/or
o have more than 50 employees.

• Clients who are small businesses will not be required to issue determinations (at least not yet).

• If employment status is determined it is then down to whoever pays the consultant’s fees to deduct income tax and national insurance contributions from payments made to them. It will therefore not matter whether the individual is invoicing a company personally or through a personal service company – if sufficient characteristics of employment exist then the end user, the client, will have to account for income tax and national insurance.

• If an individual disagrees with the determination of their status, the client will have 45 days to review the decision under a “status disagreement process”. The client will either have to change the individual’s status or provide them with confirmation of their original decision and reasons why they came to this conclusion.

The new IR35 rules will therefore significantly increase the risk involved in mislabelling workers and employees as self-employed. This is particularly the case where the mislabelling has occurred for several years and there will be back taxes, interest, penalties, costs and expenses to be settled with HMRC.

How should businesses prepare?

For the best possible chance of avoiding liability under IR35, companies should now be considering how their business is structured and how they currently engage with contractors. This should include:

• Reviewing existing contracts – contracts can be drafted to mitigate the risk of IR35 applying. Similarly, a poorly drafted contract can substantially increase your risk.
• For identified contractors falling within IR35, considering whether the extra costs are commercially necessary, or whether their current contracts should be amended or terminated.
• Estimating any likely cost increase due to the employer’s national insurance contributions and potential changes in the contractor’s rates.
• Reviewing systems and processes around your businesses engagement of contractors.
• Providing training for employees who are responsible for determining the status of contractors engaged by your business.

How can GoodHR help?

We can:
• Provide advice to help determine the employment status of a worker
• Provide advice on how to produce a status determination statement
• Help to review your existing engagements to decide whether the new rules are likely to apply to them
• Draft new contracts to take in to account the new rules
• Advise on (and implement strategies to) mitigate IR35 risk arising out of contractor engagements.

Call us on +44(0)7917878384 or email nicola.goodridge@goodhr.co.uk for expert advice and assistance.

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