PBS HR Newsletter – April 2018

Warning to employers over unpaid overtime

A recent study commissioned by Totally Money found that UK employees work an average of over 10 hours overtime per week. However, around 6 in 10 of these workers will not be paid for working these additional hours.

It is common for organisations to include a standard clause on overtime within employment documentation, stating that staff may be required to work additional hours without pay to in order to fulfil their workplace duties. However, unpaid overtime can pose a risk to an organisation’s compliance with the national minimum wage (NMW). Requiring workers who earn at, or just over the age appropriate NMW rate, to work extra unpaid hours could take their average rate below the legal minimum pay threshold.  Given the recent government-issued fines surrounding NMW requirements, employers are encouraged to consider how unpaid overtime impacts their obligation to abide by statutory requirements.

The costs to employers of getting this wrong was highlighted in a recent high-profile case, when retail giant, Argos, was forced to correct hundreds of employees’ wages to address previously unaccounted for overtime. Staff had been required to attend unpaid briefings before starting their shifts, as well as to wait for security checks after the end of their working day. This time was not correctly accounted for and, when factored into the NMW calculation, meant that their average pay was below NMW.

More than half of the 2,000 workers surveyed admitted the reason for working extra hours was because there was too much work and 15% said that they worked late due to pressure from line managers and bosses.  Employers should ensure work is fairly and evenly distributed amongst staff. If employees are routinely staying late due to excessive workloads, then they should work to find a solution to this, which may include taking on additional staff.

Could tattoo image-bias mean employers are missing out on talented workers?

Tattoos are becoming more and more common, with some studies showing that nearly one in three young people now have them.  UK workers have no standalone protection under discrimination legislation for having a tattoo and it is not uncommon for businesses to impose a ban on visible tattoos (and piercings) within the workplace. It may be that there are good reasons for doing this, perhaps because of a feeling that it will detrimentally affect the business, due to the nature of its clientele, or because of the working environment.

One stance employers may take is to include in their dress code policy or other appearance policies that employees must not have visible tattoos whilst in the workplace.  However, in order for such policies to be acceptable in terms of employment law, employers must be able to show that they are implementing them for a clear and justifiable reason.  If employers are refusing to hire or dismissing an employee due to the fact they have visible tattoos, they will need to demonstrate that they have an objective justification for this.  It may be particularly risky to dismiss an employee on discovery of a visible tattoo if they have more than two-years’ service. In these circumstances, whilst workers have no standalone protection under discrimination legislation for tattoos, employers may still be open to a claim for unfair dismissal and must ensure that they have a clear and justifiable reason for that dismissal.

There is also a potential risk of discrimination claims.  Employers must not dismiss an employee due to their tattoos in a discriminatory way and must apply any policy in a consistent manner. It is generally not acceptable to impose different rules on appearance, or different standards of dress, on men and women (and this includes any workplace policies on tattoos). If a policy on tattoos has an adverse impact upon a particular gender, race or religious group that could be contended to be indirectly discriminatory an employer would need to be able to defend a claim by showing that they have objective justification for the policy.

Given these risks and the rise in the percentage of the population with tattoos, ACAS has advised employers to review their policies and to think carefully about their reasons for banning visible tattoos.  Perhaps more importantly, they also note that employers could be missing out on potentially valuable and talented workers, as a result of such policies.

Childcare Voucher Scheme given a reprieve

The government has announced that the current employer childcare voucher scheme will not now close to new entrants, as expected, in April 2018 and that it has been given a six-month reprieve. This decision was taken in light of mounting pressure from MPs who voiced their concerns against the government backed tax free online voucher scheme, which is already operational and was scheduled to become mandatory for new applicants in April.

The alternative Tax-Free Childcare scheme was first introduced in April 2017 with the intention of providing government assistance in dealing with ever increasing childcare costs. Under the new scheme, parents are required to open an online account on the HMRC website, in which the government would be able to deposit tax free payments up to a total of £2,000 per child, per year.  This saving scheme was to become mandatory for all new applicants as of April this year, with the caveat that those already using the pre-existing employer childcare voucher scheme would be free to continue to do so. Whilst the employer-led scheme is not mandatory, those organisations that choose to offer the scheme pay eligible staff weekly vouchers of up to £55 of sacrificed salary.

However, plans have now changed with critics blaming a flawed implementation process which has shaken public confidence in the online scheme. Parents have encountered difficulties in setting up accounts on the HMRC website, with thousands simply giving up and those that were successful in doing so being unable to access the funds deposited due to various glitches. Already nearly £40,000 in compensation has been paid to parents to cover expenses and inconvenience, as users struggle with the new system.

Speaking of this matter, MP Emma Little-Pengelly acknowledged the benefits of the pre-existing employer childcare voucher scheme, citing research which indicates that some families would be “better off” under the employer-led scheme which has enabled many parents to reduce the cost of childcare. Figures show that almost 450,000 parents have already benefited from this scheme, each saving up to £933 in tax and National Insurance costs on their childcare per year.  The delay to the closure of the employer-led childcare voucher scheme has been greeted with relief by many and it presents a further opportunity for employers who do not currently offer this scheme to consider the benefits of opening one for their employees.  The scheme is free for employers to join and, as well as delivery savings for employees, it could potentially be financially beneficial for the employer, as the vouchers issued are free from National Insurance deductions.

Call for ‘Daddy Leave’

The Women and Equalities Committee has carried out research into the support offered to working fathers to allow them to meet, and share, family and childcare responsibilities with their partners. The key finding of the report is that the government needs to carry out a reform to current workplace policies to offer them greater support.  It has found that, despite the best intentions of the government, the right to request flexible working and right to take shared parental leave have not created the cultural change they were intended to. Take-up of shared parental leave has been nearly negligible since its introduction three years ago.

The Committee states that it welcomes the government’s ‘Share the joy’ campaign to promote shared parental leave and increase awareness of the scheme, however, they suggest the campaign will not be sufficient to create a significant change.

The report contains key recommendations to enable change for working fathers, including:

  • the right to take paid time off work to attend antenatal appointments should become a day-one right for fathers. The government should also examine whether the entitlement to time off for two appointments provides the father with sufficient opportunity to support the mother where there are multiple babies
  • statutory paternity pay should be increased from the statutory rate (currently £140.98 per week but increasing to £145.18 in April 2018) to 90 per cent of the father’s pay
  • a new policy of 12 weeks’ leave for fathers – dubbed ‘daddy leave’ – to take during the child’s first year should be considered
  • legislation to be introduced to make it a requirement to advertise all jobs as flexible from day one, unless there are objective business reasons not to do so
  • action to be taken to harmonise workplace rights between fathers who are employees, agency workers and self-employed
  • to review whether a cultural change can be aided by introducing a protected characteristic of ‘paternity’ in the Equality Act 2010.

The CIPD notes that these measures are only recommendations, at this stage, so it remains to be seen whether they are taken up. In the meantime, they recommend that employers who wish to encourage take up of shared parental leave among working fathers should consider providing additional entitlements over and above statutory levels, such as increasing the amount paid to staff during shared parental leave. Increasing awareness and communication around this and other initiatives, such as flexible working policies, could also have a positive impact.

Brexit update: MAC interim report on revised immigration regime

In July 2017, the Government commissioned the Migration Advisory Committee (MAC) to report on the current and likely future patterns of migration from the EEA to the UK and to consider the likely economic and social impact of the UK’s exit from the European Union.  The MAC has now published an interim report summarising the record 417 responses received to the call for evidence, and its analysis so far of the challenges and opportunities offered by Brexit and the expected decline in the flow of migrant labour from Europe to the UK.

The report acknowledges that the vast majority of employers do not deliberately seek to fill vacancies with migrant workers, but do so because they are the best, and sometimes only, available candidates. This appears to be particularly the case in sectors seen as unattractive to resident workers, such as hospitality or manufacturing. The report suggests that low pay is part of the “image problem” for these sectors but fails to engage with the issue raised in a number of responses that many businesses are struggling to increase pay levels due to other cost impacts. The report also notes that current low levels of unemployment in the UK may also be responsible for the recruitment problems many employers are experiencing.

Employers were concerned about the prospect of restrictions on the ability to recruit European migrants. In the MAC’s view this is “unsurprising” given that any restrictions “are likely to make a hard job even harder”. Employers who currently use the Tier-2 immigration system to recruit non-EEA migrants complained that the system was time consuming, costly and overly complex and had serious reservations about the same system being extended to EEA migrants. Fears about the future migration system are particularly great in low-skilled sectors where many workers would not be eligible under the existing Tier 2 system.

The report highlights that many employers feel that the skills they require are scarce amongst the UK workforce, and are very concerned about a skills shortfall, at least in the short term. The MAC speculates that skills shortages might be alleviated more quickly with shorter training times but notes that this might require government action. Although the report does not go into detail, this may suggest that changes to vocational training are planned alongside changes to the immigration regime.

While this report highlights many of the key issues and concerns for employers, it unfortunately provides little practical guidance.  The MAC has not provided its views on what a revised immigration regime will look like post-Brexit and warns readers not to pre-judge what their final conclusions might be.  The final report of the MAC is due in September 2018, and any changes to the current immigration regime are expected to be implemented in 2021.

The full interim report published by the MAC is available online at: Gov.uk.

New fund launched to support carers returning to employment

The government believes that failing to support people who have left work to become carers to return back to employment when they are able to, means organisations are missing out on the benefits of their skills, experience and talent.  From 5th March 2018, organisations who put projects in place aimed at helping returners back to work can apply for a grant from the new returners fund. ‘Returners’ are classed as people who have left paid employment for a minimum of one year to carry out caring responsibilities and who are looking to return to paid employment in an appropriate role for their experience and skills. The fund is available where projects create new job opportunities, address specific barriers for returners and increase understanding of how to recruit and support returners.

Alongside the returners fund, the government has created a toolkit and guidance document for organisations who intend to employ returners. The guidance document outlines advice on how employers can design and introduce a returner programme. It encourages organisations to consider the benefits of introducing a programme, such as tackling skills shortages, cost effective recruitment and support for female talent, whilst reminding employers that their organisation’s culture needs to support such programmes if they are to be successful.

Reminder of new statutory rates and other changes

The following is a reminder of some of the key statutory rate and other changes that employers should be aware of, that come into force this April

National Minimum Wage rates
National Minimum Wage (NMW) and National Living Wage (NLW) rates will change on 1 April as follows:

  • 25 and over – £7.83 per hour
  • 21-24 years old – £7.38 per hour
  • 18-20 years old – £5.90 per hour
  • over compulsory school age but not 18 – £4.20 per hour
  • relevant apprentices – £3.70 per hour

Family friendly payment rates
Those eligible for statutory maternity pay (SMP), statutory adoption pay (SAP), statutory paternity pay (SPP) and statutory shared parental pay (ShPP) will see their weekly entitlement rise from £140.98 to £145.18. These increases are considered to be a way of improving the financial security of young families, however organisations are reminded that they also retain the ability to offer further increased rates of pay for their staff as a way of maintaining a competitive benefits scheme.

Statutory Sick Pay
From 6 April 2018 statutory sick pay will increase to £92.05 a week from £89.25. The earnings boundary which in part determines an employee’s entitlement to SSP has also increased to £116 a week.

Tribunal awards
On 6 April 2018, the maximum tribunal award amounts will increase Most notably, the new maximum award for an unfair dismissal, including the maximum basic and compensatory award, will increase to £98,922. These increases come at a time when organisations face a growing threat of employment tribunal claims with the removal of fees directly resulting in a 90% increase in claims from the same time in 2017.

Pension auto-enrolment
The new tax year also signifies a rise in minimum automatic enrolment (AE) contributions that organisations must pay towards their employee’s pensions. From 6 April 2018 both employers and employees will have to contribute a combined 5% of an individual’s overall earnings, with at least 2% coming from the employer and the rest from the employee, through automatic wage deductions.  It should also be noted that the minimum rates will increase again in April 2019, with the minimum combined overall contribution rate rising to 8%, at least 3% of which must come from the employer.  Failure to abide by these changes could lead to government fine and, if they have not done so already, employers should check their current pension contribution rates against the new minimum requirements that will apply from 6 April 2018 and 6 April 2019 respectively. Increases will be required if you currently contribute the minimum.

Taxation payments
From 6 April 2018 all payments in lieu of notice will be subject to income tax and National Insurance Contributions regardless of whether the right to pay is contractual or not.

Full details of all current statutory rates can be found here on the PBS website.


This newsletter was curated by Nicole Squires, MA, Chartered MCIPD, an Executive Consultant at People Based Solutions. People Based Solutions is an HR support company that specialises in supporting small and medium sized businesses meet all of their HR commitments. If you want to know how People Based solutions can help you meet your HR and Employment Law obligations click here for your free HR Health Check. Alternatively, you can call us on 01925 425 857, send an e-mail to enquries@peoplebasedsolutions.co.uk or Click Here to visit our website.


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