Monthly Archives: January 2013

A tale of two TUPEs

shutterstock_20212843“It’s a far better thing I do now than I have ever done before…”

Today I am going to tell you a story. Listen and pay attention, children, because there will be a test at the end.

Once upon a time a group of people in Europe thought it wasn’t fair that staff got fired when a business was sold. They also thought staff ought to be told in advance what was happening and what it would mean for them.

This resulted in the Transfer of Undertakings (Protection of Employment) Regulations 1981 (TUPE). This was a GOOD THING because lots of people didn’t get sacked. This was a BAD THING because the new boss couldn’t  just cut everybody’s pay.

It can be hard to tell a GOOD THING from a BAD THING, so you are going to have to pay attention.

It turned out that the Dutch have ways of doing business, like renting a business, that don’t really exist in the UK. The Germans had their own way of doing things, and so it went on.

Workers complained to the judges, saying they should keep their jobs when the business hadn’t been sold but their employer had changed. The judges said that even one part time cleaner could keep their job when their employer changed if they were an ‘organised grouping’.

Even the Germans, who are very good at being organised, were surprised. Everyone had to scratch their head about TUPE. This was a GOOD THING because it was fairer that all these business transfers were covered in the same way. This was a BAD THING because it meant it was hard for the boss to come up with a way of getting out of it all.

Bosses in the UK wanted certainty and ‘a level playing field’, although nobody had any as they had already been sold off years ago. The Government made new TUPE Regulations in 2006 which made it clear that the judges had been right.

All sorts of service industries from facilities management to PR were covered by the ‘service provision changes’ (SPC). This was a GOOD THING because people could stay in their old jobs without being sacked or having pay cuts. This was a BAD THING because the new boss couldn’t cut everybody’s pay.

A new Government arrived. They said it would be a GOOD THING for the bosses to be able to fire people more easily or cut their pay. Sacking people would reduce unemployment, and cutting their pay would encourage them to spend more money in the shops. Reducing unemployment and improving the economy are a GOOD THING.

The Government is asking for comments on making TUPE apply to some transfers and not others. This might be a GOOD THING because some bosses would make more money and might be a BAD THING because it would increase uncertainty.

Some service providers will find they are left with liabilities when their contracts end, since the ending of ‘gold plating’ (which was a BAD THING) means they will have to pay off workers they otherwise would have passed on to the new contractors.

This is a ……… THING – well work it out for yourself. Another round of TUPE changes is always a GOOD THING for employment lawyers (who wear wigs and not tupes at all).

Now here comes the test I promised. You need to make up your own mind and respond to the consultation documents by 11 April 2013. This is really important for anyone who is contracting out services, taking them back in house, providing services under a contract on an ongoing basis.

Click here to join the conversation on TUPE and the service sector and join our free teleseminar.

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All that jazz about performance

jazz1

Classical western music is a complex and rich tradition that relies on:

fixed scales and written compositions

 reproduced by performers who have practised for hours to produce a particular sound.

Large organisations often manage individual performance in a similar way:   

  • Each person is assigned an instrument and given a score to play.

 

  • The conductor’s/boss’s role is to ensure each player hits the right notes in the right way at the right time.jazz2 - conductor_Page_1 The  same piece is played in the same key every time. Variation is bad – we keep to the score the composer wrote.

Smaller organisations are more nimble:

Created by entrepreneurial bosses who were not happy to play the corporate/classical part they were given, the boss expects their team to know which instruments they are to play and what they should sound like.   Jazz musicians work in a similar way.

  • Each player knows the key the group will play in and knows the rules of jazz.
  • What the players don’t have is a fixed score or a fixed order to play the notes in.

To an outsider jazz can seem like a free for all where anything can happen.  To a jazz musician, jazz is an open system of fundamentals designed to allow the musicians to improvise without losing their way. Each performance is different and each musician changes the sound by the way they play. But it is always jazz.

jazz3Some people are solo artists. They cannot play with an orchestra or a group of jazz musicians. They can only do what they do their way. The group can accompany them as backing musicians and follow their lead, or the solo artist will not play. Many technical experts are solo artists at heart. They want their song played their way according to their definition of excellence.

A lot of the talk around performance management  in business ignores the fact there is no one-size-fits-all solution.   HR people act as if the classical tradition is the only one.

If you feel your organisation is a little more jazz than classical talk to us about creating contracts and handbooks that allow you to improvise around your fundamentals without pinning you down – click here.

If your organisation is full of soloists, you are probably employing lots of freelancers (or people who think they are) – click here.  If they really are your employees but still going their own way – talk to us about ways to bring them back to the fundamentals you require.

Annabel Kaye is Managing Director of Irenicon Ltd, a specialist employment law consultancy.
Tel: 08452 303050 Fax: 08452 303060
www.irenicon.co.uk
www.koffeeklatch.co.uk
www.balancingthebump.com
You can follow Annabel on Twitter

 

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Filed under contract, employment law, performance management

Getting real with PAYE

TaxOn 6th April 2013 the PAYE system changes to a ‘real time information system’ (RTI).  Under RTI  employers are required to update HMRC during the year about changes to staff earnings – so that people on earnings-related credits are not paid out the wrong amount.  This will include benefits and bonuses.

Here are the key points:

  1. Get  employees’ NI numbers on their first day of work with you (if not earlier).
  2. If you use a payroll bureau/agency, your payroll cut off date may be earlier in the month as they will need to collect and process more information. Make sure you note the new  deadlines they send you.   Give yourself time to collect and report on the new information.
  3. If you run your own payroll, make sure your software is up to date with the latest versions – check with your software provider for when “real time compliant” upgrades are available.
  4. If you are still on a manual payroll system, take advice on how to comply. It may be time to get a payroll bureau or some software.

New starters

  1. You’ll need the employee’s National Insurance number. If the paperwork supplied by the employee (P45 etc) does not give you this information, you can get HMRC to do a trace for the number – the form to do that is available from this HMRC’s website
  2. You have to check eligibility to work in the UK.  There is a help page setting out which documents you need to see (and copy) – available online.   If you need to use the new employee’s passport for this check, you will also need to give the passport number to HMRC.
  3. You will need employees to sign a declaration stating:
  • Whether this is their first job during the tax year
  • That this their only job OR
  • Whether they have another job or pension

Advantages

If RTI works employers and employees will be paying the right tax under PAYE and not building up liabilities for underpaid tax that need to be settled the following year (or paying too much tax and having to claim a rebate).

Top tips

If an employee is wrongly classified as self-employed for PAYE purposes, liabilities will be accruing and will need paying later.   You need to be  confident that self-employment is appropriate.  Just calling someone self-employed isn’t  enough – you have to meet the right tests based on the real way you work with them.

HMRC are on to how much tax this can save employers/employees and it is only a question of time before they start auditing some of the more dubious arrangements.

The tax goal posts have moved.    What seemed like a good idea five years ago can be inappropriate today – review your self-employed and freelance arrangements.

From the employer’s point of view, a newly appointed employee now has to serve two years before they qualify for unfair dismissal rights, so employment is an increasingly more flexible option.

For tax advice, please speak to your accountant.  More technical information is available from HMRC.

For a free talk on how employment law includes freelance workers check our KoffeeKlatch website.

If you have out of date arrangements or contracts, now is the time to review them and get it straight – talk to us.

Irenicon Ltd, Airport House, Purley Way, Croydon CR0 0XZ
Tel: 08452 303050 Fax: 08452 303060
Email: advice@irenicon.co.uk Website: http://www.irenicon.co.uk

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Filed under contract, Freelance Workers, pay