Goodbye 2011...

For many of us (lawyers included) 2011 has been a challenge with prospects of the recession returning, cuts in the public sector, a squeeze on lending and a rise in inflation (not to mention VAT going up to 20%!). The government has promised the private sector and in particular small businesses/entrepreneurs government secured loans and changes in employment law (though the finer details are yet to be announced) in 2012 in a bid to get the economy back on track but only time will tell how that will come to fruition.

Reflecting on 2011, I have mixed emotions about the riots which started in London and travelled all the way up to Manchester (luckily Leeds was not on the hot list!). The local police forces did everything in their power to put a stop to the riots and punish the offenders, sending a message to the public that such volatile behaviour will not be tolerated. Unfortunately this did not deter people and businesses suffered great loss and three men in the West Midlands lost their lives.

I think the riots have made everyone think about whether greater power should be restored to police officers, having worked with officers I understand there are limits on how, when and by which methods offenders can be restrained. A very important debate that needs to be redressed…

I am however still optimistic that 2012 will bring many of us opportunities because ‘where there is a will there is a way’… I hope all my followers and readers have a great start to 2012 and a prosperous year and thank you all for following and reading my tweets and blog posts!

Merry Christmas!

Hi all I hope everyone has a lovely Christmas! It's the first year I am hosting Christmas lunch so need to get back to baking my Christmas cupcakes :) ...

When TUPE applies what does the business agreement need to cover?

Most small business owners don’t understand the importance of taking legal advice before they agree to sell or purchase a business due to perceived costs associated with approaching a solicitor and this is perhaps due to the fact that they do not understand the importance of warranties and indemnities particularly when it comes to transferring employees under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE).

What are warranties?

These are assurances by a party in a transaction that something is true or something will happen. If the warranty is breached then the party relying on it will be able to make a claim. To illustrate this, when a buyer is purchasing a business and the seller warrants that all electrical items work; if this proves untrue then the buyer will be able to make a claim against the seller for the cost of repairing the faulty electrical items.

What is an indemnity?

This is an agreement between two parties whereby one party agrees to compensate the other on the happening of a specified event. Where indemnities differ from warranties is that there is no obligation on the person suffering the loss to mitigate. To illustrate this if part A agrees to pay party B their legal costs in the event that a former employee makes a claim against them arising from the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE). In the event this happens party A must pay party B and party B has no duty to mitigate their loss so they can use the most expensive solicitor/counsel instead of shopping around for one that’s reasonably priced.

What are the requirements of TUPE?

All employees transferred by TUPE retain the terms and conditions specified in their original employment contract.

TUPE Regulations set out that employees dismissed as a result of the transfer or a reason connected to the transfer will have been automatically dismissed.

What should I look out for during the due diligence process?

Being an employment specialist I am going to emphasis what you need to watch out for in respect of employee’s (though I would be glad for any specialists to comment on other matters):

1.    Key employees are they being transferred over? If not how is this going to impact on your ability to run the company?

2.    If employees are resigning or being redundant as a result of the transfer how are they going to be dealt with? It’s a good idea to agree that they all leave on compromise agreements to protect both parties from litigation.

Checklist of clauses the sale/purchase agreement must cover:

1.    The seller delivers on completion all records of NI and PAYE relating to the transferring employees up to the date of completion together with all other documents.

2.    The understanding that TUPE applies to all the employment contracts of retained employees. Ensure benefits not transferred over are excluded.

3.    Clarity in respect to which employees are transferring over (I recommend listing all employee details including dates of when started, annual salaries and hours worked in a Schedule).

4.    How employees not transferred under TUPE are going to be dealt with.

5.    Indemnifies protecting parties against any costs (including legal), claims, demands and expenses arising from TUPE.

6.    Seller’s discharges and performance of their obligation towards employees up to and including the completion date (including wages and any redundancies).

7.    Seller’s indemnities in respect of carrying out the consultation process.

Alternative Business Structures (ABS) Friend or Foe?

ABS's are soon going to hit our streets; they are advertised as being "simpler, cheaper and more accessible legal services for consumers". Is that going to prove to be a reality?

Are local governments and private companies going to look at whether they can turn their in-house team into a commercial entity? High street firms and sole practitioners have shown increasing concern that this de-regulation of the legal sector can only end in disaster but will it also bring with it opportunity for some.

How is it going to affect you?

I think employment lawyers would all agree that they have been competing against non-lawyers for a long time and we are still here :). Though I think there may be some mileage in the argument that the advantage that firms have previously had (and which may soon be eroded by the ABS) is that they have had company/commercial departments so everything could be dealt with under one roof.  

I would love to hear views from other lawyers and how they think they will be affected.

Opportunity for some?

For some of us the ABS is going to bring opportunity as non-lawyers are now going to be allowed (subject to SRA authorisation) to be managers and owners of legal services – allowing firms that are struggling against the harsh economic environment to raise equity from a wider pool of investors.

The ABS will also allow entrepreneurial lawyers to team up with non-lawyers to run successful companies and practices. After all we have all heard the saying that a “lawyer is not a business man”.

The future of legal services

Only time will tell how the ABS will be used and whether it will only be multi-national corporations who are going to be taking advantage of the deregulation. But I think one thing is for certain high street firms are going to have no choice but to come into the 21^st Century and invest in technology particularly in case management systems if they want to survive.

I believe there will always be value in the brand “solicitor” however value is earned so lawyers who do not return client’s call’s, who fail to keep their clients updated and who fail to adhere to deadlines may soon find that they are no longer seeing return business or being recommended.  

The Agency Workers Regulations 2010: What your business needs to know!

The Agency Workers Regulations 2010 come into force on 1 October 2011.

Who is an agency worker?

-       Any individual who works through any “Temporary Work Agency” (TWA) under the supervision and direction of a hirer.

Who will the Regulations cover?

-       Traditional PAYE temporary workers paid by staffing companies;

-       Individuals “employed” under overarching employment contract by intermediary organisations (sometimes called ‘umbrella companies’) and then supplied to hirers via staffing companies.

The following class of workers may also be considered as agency workers:

-       Sole traders and interims operating intermediaries (unless genuinely self-employed);

-       Personal service company workers (unless genuinely self-employed);

-       Those supplied through managed service arrangements (where the supplier genuinely exercises supervision and direction).

Who will the Regulations not cover?

-       Individuals who find work through a TWA but are in a business of their own account (where they have a business to business relationship with the hirer who is a client or customer);

-       Individuals working on Managed Service Contracts where the worker does not work under the direction and supervision of the host organisation;

-       Individuals working for in-house temporary staffing banks where a company employs its temporary workers directly (and they only work for that same business or service);

-       Individuals who find direct employment with an employer through an “employment agency”;

-       Individuals on secondment or loan from one organisation to another – this is usually where the main activity of the organisation seconding the individual is not the supply of individuals to work temporarily under the supervision and direction of another party.

What rights are they entitled to?

Day 1

From the start of the assignment, a worker will be entitled to:

-       Access any shared facilities that the comparable employee/workers can access e.g. canteens, crèches and gyms;

-       The same opportunity to apply for relevant vacancies as comparable employees/workers (unless the vacancy arises as a result of restructure).

Completion of 12 weeks

Once the agency worker has completed a 12 week qualifying period, an agency worker will be entitled to the same basic working and employment conditions as their comparators at the hirer.

These conditions relate to pay, working time, night work, rest periods and breaks and contractual annual leave.

Please note:

-       That in addition to basic pay, includes bonuses for individual performance, commission, holiday pay, luncheon vouchers, childcare vouchers and eye test vouchers. 

-       A pregnant worker will have the right to receive various enhanced entitlements, including paid time off for antenatal care and potentially the right to paid time off for the remainder of an assignment unsuitable for pregnant workers.

Is there any pay that is not included?

YES the following pay is not included:

-       Occupational sick pay (statutory entitlement not affected);

-       Occupational pension;

-       Occupational maternity, paternity or adoption pay (statutory entitlement not affected);

-       Redundancy pay (contractual or statutory);

-       Notice pay (contractual or statutory);

-       Payments or rewards linked to financial participation schemes (such as share ownership, schemes, phantom share scheme);

-       Bonuses not linked to individual performance;

-       Discretionary, non contractual bonus payments which are not paid with such regularity that they have become custom and practice;

-       The majority of benefits in kind (i.e. incentives for long term service);

-       Payments that require a eligibility period of employment or service;

-       Overtime or similar payments where the agency worker has not fulfilled qualifying qualifications;

-       Payment for time off for trade union duties;

-       Guarantee payments (i.e. for laying employees off);

-       Advances in pay or loans; and

-       Expenses. 

When does the qualifying period accrue from?

-       From 1 October 2011 on a weekly basis;

Does the period need to be consecutive?

No.

The following ‘absences’ will keep the qualifying period running:

-       Pregnancy and maternity during a ‘protected period’;

-       Statutory maternity, paternity or adoption leave.

The following are absences in which the qualification period pauses (in this instance the absence itself will not count but weeks of service before and after will be counted together) are:

-       Any break between the same or similar assignments at the same hirer for no more than six weeks (please note that the anti avoidance provisions may apply if the worker is reassigned to the same hirer in the same or substantially similar role regardless of the duration of the break between these assignments);

-       Jury service of up to 28 weeks;

-       Sickness absence of up to 28 weeks;

-       Annual leave;

-       Organisation “shut down” (e.g. closure for Christmas);

-       Industrial action.

Under what circumstances does the qualifying clock reset to zero?

-       When an agency worker begins a new assignment with a new hirer;

-       Agency worker remains with the same hirer but is no longer in the same role (substantively different role); 

-       Breaks between assignments of more than 6 weeks (which do not fall into any of the reasons pausing the clock.

When might hirers be liable?

Hirers may be liable for:

·         A breach of obligations owed to an agency worker under the Regulations, if the tribunal thinks that the hirer was responsible. A tribunal can award compensation, taking into account the agency worker's losses and an assessment of what is just and equitable.

·         A failure to give certain information about their own workers' or employees' conditions when requested by a supplier or, in some circumstances, the agency worker. Although there is no express sanction for such a failure, the Regulations make clear that this would entitle the tribunal to draw an adverse inference, making financial compensation, or a declaration or request for action against the hirer, more likely.

Is there guidance to the Regulations?

Yes – the Department of Business Innovation & Skills have produced the guidance for the Agency Workers Regulations which is available at:

www.bis.gov.uk/assets/biscore/employment-matters/docs/a/11-905-agency-workers-regulations-guidance.pdf.

 Please note: the guidance is not binding.

How do I comply with the Regulations if I am a Hirer of agency workers?

-       Provide your agency with up to date information on your terms and conditions so that they can ensure that an agency worker receives the correct equal treatment, as if they had been recruited directly, after 12 weeks in the same job;

-        You are responsible for ensuring that all agency workers can access your facilities and are able to view information on your job vacancies from the first day of their assignment with you. It is therefore a good idea to provide the agency worker with the employee handbook.

-       Ensure if roles/duties of the agency worker change then you notify the TWA in writing that the role is substantively different and record details of the job requirements

How do I comply with the Regulations if I am a Temporary Work Agency?

-       You need to ask the hirer for information about pay and basic working conditions (when it is clear that the agency worker will be in the same job with the same hirer for more than 12 weeks) so that they are treated as if they had been directly recruited to the job;

-       Ensure you ask a new candidate for up to date information in respect to their employment history, to ascertain whether they have accrued the qualifying period for a particular role for a particular hirer;

-       Ensure you check whether or not the hirer is part of a larger group/legal entity.

-       If receive notification that the agency workers role has changed provide the agency worker with a description of the new role in writing. You must record details of the new vacancy and notify the agency worker, in writing, that their role has substantively changed and the qualifying period will start again.

How do I deal with pregnant workers?

-       After satisfying their 12 week qualifying period they would be entitled to paid time off to attend to antenatal medical appointments/classes while on assignment;

-       If no longer able to undertake the duties of the original assignment due to health and safety reasons then need to be found alternative work, paid at the same rate as the last assignment;

-       If alternative employment cannot be found then the pregnant worker will have the right to be paid by the agency for the remaining duration of the original assignment. Note no payment has to be made if the pregnant worker has unreasonably refused suitable alternative work. 

-       You must be very careful as not to discriminate against women as otherwise would open yourself up to sex discrimination proceedings.

Is there an exemption from equal treatment provisions on pay (and holiday pay)?

YES

-       Where a TWA can offer an agency worker a permanent contract of employment and pay the agency worker between assignments. This must be done at the commencement of the assignment and in writing;

-       This will mean that the agency worker after 12 weeks in a given job, will not be entitled to the same pay as if they had been recruited directly;

-       The TWA should explain the above to the agency worker so they make an informed decision and the contract of employment should contain a clause which reflects this;

-       The rate of pay between assignments must be at least 50% of an assignment pay, at least National Minimum Wage (NMW) and calculated using a reference period.

Does the TWA have to do anything in between assignments?

YES.

During any period under the contract after the end of the first assignment under that contract in which the agency worker is not working temporarily for and under the supervision and direction of hirer but is available to do so:

-       You must take reasonable steps to seek suitable work for the agency worker;

-       If suitable work is available, you must offers the agency worker to be proposed to a hirer who is offering such work; and

-       You must pay the agency worker a minimum amount of remuneration in respect of that period (the minimum amount).

 Can TWA end a pay between assignment contracts?

Yes when they have complied with their obligation (detailed above) for no less than four calendar weeks during the contract.

You must pay 4 weeks pay before the contract can come to an end.

Can the agency worker make a request for information?

YES.

If the agency worker believes that their entitlements under the regulations have been infringed.

Does the TWA have to provide the information within a specified time period?

YES within 28 days of receiving the request. The response should be in writing.

What happens if the TWA does not provide the agency worker with the required response?

The agency worker can request the information from the hirer if he has not received the information from the TWA within 30 days.

If a Tribunal upholds an agency worker’s complaint what can they award?

-       Financial compensation (minimum of 2 weeks pay);

-       Where the tribunal find that there was a prohibited structure of assignments a tribunal can order additional compensation of up to £5,000;

-       Make a declaration setting out the agency worker’s right in relation to the complaint;

-       Recommend that the hirer/TWA take certain action to remove the adverse effect on the agency worker.

What is the TWA liable for?

Responsible for any breaches of rights in relation to an agency worker’s basic working and employment conditions.

Does the TWA have a defence?

YES

-       If it can show that it took "reasonable steps" to obtain relevant information from the hirer and acted "reasonably" in determining the agency worker's basic working and employment conditions after the qualifying period and for the remainder of the assignment;

-       For these purposes, relevant information is information about the hirer's basic working and employment conditions and the employment terms ordinarily included in the hirer's terms of employment of comparable employees to the agency worker and why those employees are comparable.

What is the hirer liable for?

-       For any breaches of rights in relation to an agency worker’s basic working and employment conditions;

-       Any breach of their responsibility to provide access to collective facilities/amenities and access to employment vacancies.

Employment reforms how will they affect you?

Last month (on 23 November 2011 to be precise) Vince Cable announced a number of reforms, some of which came as no surprise for employment experts however the real question is - will the changes kick start recruitment in small and medium sized businesses?

In my opinion the key proposals for employees, businesses and employment law specialists are as follows:

Employees:  

1.      Unfair dismissal qualifying period doubled from 1 year to 2 to be implemented from 6 April 2012.  

2.      A fee to be changed for lodging employment tribunal claims and a further fee for taking the claim to a full hearing. There will be a consultation in respect to this policy however there is a hint that due to the level of detail provided by Mr Cable that this policy will be implemented.

3.      All employment claims will go to ACAS for pre-claim conciliation (on a number of occasions claimants no longer trust their former employees so it may prove difficult for any agreement to be reached).

4.      Complaints about breach of employment contract to be taken out of whistleblowing law.

5.      Maternity and paternity leave to be 'modernised', with emphasis on greater involvement for fathers.

6.      CRB checks are to be portable and once conducted ‘instantly accessible online’

 Businesses:

1.      Parties having ‘protected conversations’ that cannot subsequently be used as evidence in an employment tribunal. There are suggestions that this will be used for conversation in respect to retirement or performance management. This policy is going to be subject to a consultation.

2.      BIS will consult on the ides of ‘compensated no-fault dismissal’ for ‘micro firms’ (businesses with 10 or fewer employees).

3.      Slimming down the dismissal process will be considered. A ‘simpler, quicker and clearer’ dismissal process may include amendments to the ACAS Code.

4.      Clarification that compromise agreements can be used to settle discrimination claims.

5.      Financial penalties to be introduced on employers who breach employment rights, payable to the Exchequer, subject to discretion exercisable by Employment Judges.

6.      BIS will consult on ways that allow businesses to use agency workers flexibly.

7.      Cutting down the consultation period for redundancy from the current 90 days to 60, 45 or 30.

Employment law experts:

1.      Options for a ‘rapid resolution scheme’, to enable simple claims to be settled within three months.

2.      Potential changes to TUPE – evidence will be sought by BIS.

3.      A fundamental review of the procedural rules and regulations governing employment tribunals (including costs and deposit orders). A revised procedural code should be produced by April 2012.

Some of the proposals are going to require consultations and review therefore it may take some time before they are implemented however there is a serious risk that the reforms may increase the creativity of litigants and we will see an increase of discrimination cases.

Further I am unsure as to whether relaxing employment rights will have any impact on recruitment and I would love to get the opinion of both business owners and employment law specialists.