Keeping on the right side of the law

Dan Watson
Wednesday, August 8, 2012

Staying up to date on obligations toward staff can be hard work. Here we provide a general overview of potential pitfalls

As the saying has it, when it comes to the law, ignorance is no excuse – businesses must know their legal obligations, even if the law is an ass, as the other saying goes.

For larger enterprises, the law is not so much of a burden; corporate legal teams are on hand to keep them on the straight and narrow. However, SMEs, which make up the backbone of the UK economy, particularly in print, are often run by jacks of all trades, working on everything from sales pitches to marketing drives, with employment law just another duty to be managed. From staff holidays to hiring and firing, there’s plenty to get to grips with.

To help, PrintWeek has put together a guide to some of the key areas that can trip companies up, to help you ensure that, while the law may be an ass, you and your company are not.

Current hiring laws
The two fundamental issues around hiring relate to the right to work in the UK and avoiding discrimination. Discrimination covers a range of issues, such as age, sex, race, ethnicity, religious beliefs, disability and maternity requirements.

Almost all citizens of the European Economic Area and Switzerland have the right to work in the UK without any kind of registration. However, Romanian and Bulgarian nationals are required to obtain an accession worker card, unless they are self-employed, employed for short-term seasonal agricultural work or taken on under the Sectors Based Scheme, which is centred around low-skilled jobs in the food manufacturing industry.

Possible problems Discrimination is an open-ended issue, with the risk of legal action from those who consider they have been dealt with unfairly a real and growing risk. Meanwhile, any firm employing a worker without the necessary paperwork, faces a fine of up to £10,000.

What the experts say "It’s a relatively easy process to get wrong," warns David Potter, partner and head of employment at law firm Freeth Cartwright. "Discrimination issues are complex – take age discrimination for example: if you advertise for an ‘energetic’ person, or someone with three-years’ experience are you discriminating?"

Dani Novick from recruitment consultants Mercury Search and Selection also warns that SMEs are often more at risk of unintentionally discriminating. "Small firms, particularly start-ups, hire people on gut instinct. But this can cause problems, both from a success perspective, but also around discrimination. You have to sit down and think about the structure of your interview, what you want to find out, so you can assess each candidate fairly and consistently," she says.

Another key thing to get right is references: "Always call for a reference. Don’t write," says Novick. "You can always gauge far more from a laugh or a slight pause than a tick in a box."

Despite these issues, George Thompson from recruitment firm Harrison Scott Associates says the industry seems clued up on hiring. "We’re not seeing any major issues or getting people ringing us with problems as firms seem well informed and are getting it right," he says.


Current firing laws
Workers hired since April 6, cannot claim unfair dismissal if fired during the first two years of employment (for those taken on before this date, it’s a one-year period). After this window has closed, a business will need to be able to justify any decision to get rid of an employee on the grounds of improper conduct, incapability or breach of contract.

Other changes in the law that came into force in recent years mean that there is no longer an age at which employees can be forced to retire.

Possible problems While the law is on the side of companies that want to remove staff who have been employed for less than two years, firing a worker is still complicated, with the potential threat of a discrimination claim never far away, while firing a long-term worker is a potential minefield.

Furthermore, the change in retirement law has the potential to cause problems as firms lose the ability to reduce staff numbers through natural wastage, which can cause a backlog of promotions within an organisation.

What the experts say Freeth Cartwright’s Potter says: "The switch to a two-year period before staff can claim unfair dismissal will have a dramatic impact by reducing claims staff can make and giving companies longer to address problems they see arising.

"However, post-recession, finding a new job is much harder, so those made redundant who face the risk of longer-term unemployment may look to bring a claim wherever they can."

Novick adds that another important aspect to consider when making staff redundant is morale. "Sometimes dismissals are seen as unfair by staff and this can affect their performance as they feel uncertain about the way the business is being run. So the benefits of doing things right are not just about avoiding lawsuits, but also about keeping the rest of the staff happy," she says, adding: "It’s the cases where a dismissal comes out of the blue that cause resentment and can even lead to litigation, although this is a relatively rare occurrence."

As for the change in retirement law, Potter admits it’s a headache for employers despite having been brought in for positive reasons – to reduce the number of instances of age discrimination.

"Firms face the unedifying prospect of asking loyal and long-standing employees to leave, with the risk of facing action due to age discrimination," he says.


Holidays
Staff are entitled to 5.6 weeks of holiday, equating to 28 days for full-time workers. This can include bank holidays, or firms can offer 28 days and bank holidays as additional holiday. Firms are not required to provide pay for bank holidays, though. For part-time workers, holiday is offered pro rata, so those working two days a week receive 11.2 days off (2x5.6). Lastly, a new Temporary Workers Directive, which came into force in October 2011, means temporary staff are entitled to the same benefits as full-time workers after 12 weeks of work.

Possible problems Staff may feel they are entitled to days off for events such as last year’s Royal Wedding or the Diamond Jubilee this year; however, there is no legal requirement to grant time off on these occasions. Similarly, staff may not realise it, but their employer has the right to turn down an application for time off.  

A recent European Court of Justice ruling also now establishes the right for staff to reclaim pre-booked holiday entitlement as sick leave if they fall ill before or during, their break.

What the experts say Holiday allowances for staff affected by illness is an area companies are increasingly concerned about, according to Anne Copley, head of legal at the BPIF.

"There is no definitive answer, which makes life very difficult for employers," she says, explaining that employees off sick over a long period of time are still entitled to claim holiday, provided that they tell their employer of their intention to do so.

"We are inching towards final clarifications, but currently, for employees on long-term sick leave, I would advise as a rule of thumb to allow 20 days holiday pay per year for those employees who have indicated their wish to take holiday, to a maximum accrual of 18 months."

As for the new Temporary Workers Directive, this has also raised more concerns for firms to address. "This not only increases costs, but also adds more administration – you have to understand exactly what benefits employees are entitled to, from holidays to subsided lunches, and apply them equally," explains Novick.


Sickness
The law says that firms have to provide minimum statutory sick pay (SSP) for anyone ill for more than four days. This can last for a maximum of 28 weeks at a cost of £79.15 per week, if a staff member earns more than £95 per week, but firms are not required to pay a full salary.

Possible problems The obvious issue is if staff take advantage by claiming sickness when they’re not actually ill – ‘Monday-morningitis’ – or if workers are recurrently sick with genuine problems and affect the smooth running of a business.

What the experts say Copley says firms should be willing to take a stand against repetitive illnesses: "If a pattern of short absences starts to appear, the employer should not be afraid to deal with it by way of a formal review backed up by a policy on this type of sickness absence," she argues.

For longer-term illnesses that are often classed as a disability, the situation is often more delicate, though. "The employer has to consider whether they can make any reasonable adjustments to allow the employee to continue in his job. Plus the employer must be aware of the dangers of discriminating due to the employee’s disability," adds Copley.

Potter from Freeth Cartwright concurs: "If someone is diagnosed with depression and is off for several months, then, as depression can be classified as a disability, are you discriminating against someone because of their disability if you fire them?"


Conclusion
This overview has only scratched the surface of numerous issues, including pensions, an area that is set to change in the future as the government looks to force workers into contributing more to pension schemes to reduce the burden on the state.

For those charged with staying on top of the law, help is at hand. There are numerous websites that offer advice, with the government’s DirectGov site (direct.gov.uk) a useful resource. Beyond that organisations such as the  BPIF and BAPC can offer advice on all manner of issues and professional legal advice is always available if a situation proves particularly tricky.

As all those above noted, the most important thing is to be fair, balanced and diligent in your work and maintain a proactive approach to the law.

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