Businesses reported more than £40m in losses from employee fraud

Businesses reported more than £40m in losses from employee fraud last year, new statistics have revealed The data also showed that employers reported more than 800 incidences of frauds from inside their organisation in 2016-17. Employee frauds include falsifying claims for travel and subsistence, creating bogus customer records or simply stealing cash.

Apparently, the figures are likely just the “tip of the iceberg”, because much of employee fraud goes unnoticed.

The most serious and damaging employee frauds are often committed by longstanding senior employees who abuse their position of trust in the business and treat the company’s cash as their own. Such frauds are often extensive and can run into hundreds of thousands of pounds. Research revealed that almost half of insider frauds were uncovered by internal controls and auditing, while a fifth were stopped just in time, by line managers or whistleblowing.

According to Office for National Statistics data published in July, fraud accounted for 3.4 million – or roughly 31% – of the 11 million crimes reported in the UK in the year to March 2017.

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When is a contractual change constructive dismissal?

Constructive dismissal is where an employee resigns and shows they were forced to do so by the conduct of their employer. An employee may only bring a claim for constructive dismissal if they have a qualifying period of service of two years’ continuous employment. The steps leading to a constructive dismissal claim are:

1. The employer commits a ‘repudiatory breach’ of the contract of employment (ie the employee feels that they have no choice but to leave)
2. The employee resigns in response to this breach. The resignation may be with or without notice.
3. The employee does not delay in resigning.

With constructive dismissal the employee resigns in response to the alleged breach which must be so serious that it justifies the employee resigning. Examples include:

• Unilateral changes to the employee’s contract; for example, pay cut or demotion.
• Changes to the employee’s working hours.
• Change of the employee’s working location.
• Changes to the employee’s duties: many constructive dismissal cases are brought on the basis that the employer made unreasonable demands of the employee.
• Subjecting the employee to unlawful discrimination to the extent that the employee-employer relationship breaks down.

To be effective for constructive dismissal claims, the employee’s resignation letter should unequivocally set out the reasons for their resignation. If it doesn’t, the employee will find it difficult to prove later that it was solely down to the repudiatory breach.

Constructive dismissal claims are technically difficult to win, but employers should take them seriously.

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Suspension resulted in a breach of contract

A recent case shows that immediately suspending an employee accused of serious misconduct can cause difficulties for the employer, if unjustified.

A teacher was accused of using unreasonable force towards two children in her class, who were known to exhibit challenging behaviour. The head teacher investigated and concluded that the teacher had used no more than reasonable force. However, the teacher was suspended by the executive head. A letter was sent to the employer, stating that the suspension was a ‘neutral act’ and not a disciplinary sanction. It also indicated that the purpose of the suspension was to allow an investigation to be conducted fairly.

The teacher raised a claim for breach of contract, arguing that, in suspending her, the council had breached the implied term of mutual trust and confidence. She won her case on appeal. The High Court made several criticisms of the council’s handling of the case, including:

• The teacher was not asked for her version of events before being suspended;
• the head teacher’s initial investigation concluding that the previous allegations were unfounded was overlooked;
• no alternatives to suspension were considered; and
• no explanation was given as to why an investigation could not be carried out fairly without the suspension

This decision is a reminder that employers must give careful thought to a decision to suspend. Failure to do so might lead to a claim of constructive dismissal.

Employers can mitigate this risk by ensuring the following points are considered in deciding whether or not suspension is necessary:

• Would the employee’s presence impede an investigation?
• Is there a risk of the employee interfering with witnesses or evidence?
• Is there a risk to the safety of other staff, customers or service users?
• Are there suitable alternatives?
• Is suspension reasonable in the circumstances?

That is not to say that suspension should be avoided at all costs. It is important not to lose sight of the nature of the allegations against the employee – there will be cases where suspension is necessary. However, caution must be exercised to ensure that it is not the default position, even in cases involving potential gross misconduct, and all circumstances should be taken into account.

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Do you motivate your younger staff?

According to a report, our new graduates and young employees are the least motivated of the general workforce! After questioning 2,000 young workers (aged up to 28) the report found that a poor work/life balance made 33% feel demotivated and want to leave their job. 25% reported to feeling stressed at work and workplace bureaucracy made 22% question their motivation at work. Finally, conflict and tension contributed to 20% of younger workers lack positivity at work.

Apparently, the UK’s most motivated workers are 51 years old, driven by flexible working options, work that stretches and challenges them and opportunities to learn and develop their, or their team’s expertise.

People might be surprised that 20-year olds were found to be the least motivated workers in Britain, but many managers are getting it wrong by trying to motivate their young workforce in the same way that they motivate themselves, assuming they are identical to them. But times have changed and now the younger generation is less motivated by money or material awards but more by autonomy and a work/life balance.

By understanding our own work motivators, we can understand what makes our teams tick and therefore use this to boost workplace motivation.

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Unwitting age discrimination as the result of a casual comment

A woman who was told she might be “better suited to a traditional estate agency” was discriminated against because of her age, a tribunal has ruled.

The employee was 59 when the comment was made, which followed her transfer to a second branch of her company. She was criticised for using “outdated” technology and for making errors in typing. She was told that she needed to “update” her ideas and working practices.
When she was told that she would be better suited to a traditional office, she took that to mean that she was too old to work in that particular office. She had intended to stay with the company until she retired at 65.

She became ill with work-related stress and raised a grievance against her line manager who made the comment. Her grievance was upheld, concluding that she should be supported with more training and that the original meeting should not have been carried out in the manner that it was. However the employee felt that more should have been done and claimed age discrimination in the employment tribunal which found that the phrase “better suited to a traditional office” was a reference to her age, noting that it was defined in the Oxford English Dictionary as ‘long established’ and it was unlikely that such a comment would have been made to a younger employee. The tribunal also allowed the claims for harassment related to age and constructive unfair dismissal.

This is a reminder to employers of the risks of using words that could be taken to be a reference to someone’s age. An age discrimination claim can be brought where the comments allude to an employee’s age, even if they do not directly refer to it.

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Pregnancy discrimination in the workplace; how to ensure correct treatment

A recent report by the women and equalities committee revealed that 54,000 women lost their jobs in 2015 as a result of pregnancy discrimination, and that pregnant women and mothers are subject to more discrimination today than they were 10 years ago.

UK legislation already places a strict burden on employers to ensure pregnant employees and mothers are protected, treated equally and provided with rights, and to undertake risk assessments when they are informed an employee is pregnant to ensure safe working conditions.

Good practice for employers in dealing with potential discrimination:

• Deal with any performance issues as soon as they arise. If they are suddenly raised when an employee announces a pregnancy, it will look as though they’re being raised because of the pregnancy.
• Ensure swift risk assessments as soon as you are notified of an employee’s pregnancy to ensure that they have safe working conditions.
• Comply with basic minimum rights; for example, time off for antenatal appointments and supporting women who suffer difficult pregnancies.
• If any sickness occurs during pregnancy and the employee is brought into a disciplinary hearing for this then any illness relating to the pregnancy should be discounted.
• Carry out a thorough investigation before any disciplinary meeting, probation review or employment review, taking the longer procedure as best practice – even if employees are under the two-year service mark. If there are issues relating to discrimination then an employee will have the right to claim automatic unfair dismissal and discrimination, regardless of length of service.
• Maintain reasonable communication throughout maternity leave.

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Bonus should have been paid to former employee

A paralegal who handed in his notice before receiving his bonus was entitled to receive the bonus a tribunal has ruled. The employee started working part time a law firm specialising in personal injury claims, in April 2014.

It was agreed at the start of his employment that he would be entitled to a 5% bonus of the amount by which his ‘profit costs’ exceeded six times his ‘gross income’ between May 2014 and April 2015, which would be paid as a lump sum as soon after the financial year as possible.

At some point in May 2015, the firm’s paralegals were called to a meeting with the managing director to discuss several issues, including bonus arrangements. It was agreed at the meeting that the bonus amount for May 2015 to April 2016 should be increased to 10%, and the profit costs target multiplier would be reduced from six to five. According to a witness at that meeting was it not set out that an employee would be ineligible for the bonus if they were working notice.

After the meeting, the company sent around a template contract, which stated that bonuses would be paid in instalments and that an employee would be ineligible if they were on notice. The employee refused to sign the contract as he felt it did not accurately reflect what had been agreed at the meeting. Nobody at the firm chased him to sign it.

He resigned on 29 April 2016 providing a week’s notice. The company agreed that he could leave as soon as he had finished a handover. He did not receive his bonus and when he queried it was told he was not eligible to receive it.
The legal firm was ordered to pay £13,830.50 to cover the unpaid bonus.
This demonstrates that any change of terms should be backed up with a formal notice confirming agreement to the change.

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As a manager do you know how to deal with long term absence?

One of HR’s biggest challenges is long-term sickness absence. Even with traditional occupational health reports, most managers struggle with the minefield of long-term sick staff.

The Office for National Statistics reported that in 2016, 2.5 million working days were lost to long-term sickness absence, with companies reporting increases in absence.
Here are some guidelines to help get long term absentees back to work:

1. Conduct regular welfare meetings – using home visits if necessary. Discuss the prognosis and talk about modified job roles, adapted environments and possible return-to-work dates, offering plans to assist on return to work.

2. Talk to staff facing depression, stress or anxiety. Open discussion will help find a solution.

3. As a manager, take time to understand chronic conditions and have an understanding of how it may progress and how the employee can adapt.

4. During a phased return to work, be honest about required duties. Make reasonable adjustments – a requirement if the employee is regarded as disabled under the Equality Act.

5. Do not assume how a particular condition will affect job performance. Discuss with the employee the extent of their ability to work.

6. Keep in touch. Conduct regular meetings and ensure that you are constantly monitoring progress of amended duties or a phased return to work.

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Few parents use or understand the concept of parental leave

The law relating to leave for parents was changed in 2015 and ‘shared parental leave (SPL)’ was introduced. The idea of SPL is to allow parents to share 50 of the 52 weeks maternity leave with one another.

Although the changes received little publicity, parental leave was enhanced with effect from 6 April 2015. Until then, this leave had to be taken before the child’s fifth birthday (or 18 if they were disabled) and different rules applied to adopted children. But from 6 April 2015 this right was extended to all children up to 18.
Unpaid parental leave is available to any employee who has been with the same employer for a year or more so that parents can take more time off to care for their child, in addition to their annual holiday entitlement. It can be taken for up to four weeks a year, in blocks of one week, to a maximum of 18 weeks for each child before they turn 18.

But 41% of parents are unaware of their right to take unpaid parental leave to care for their children. According to a recent survey, 75% of respondents had never taken unpaid parental leave, although more than a quarter of them spent up to £800 on holiday clubs alone this summer. There is no obligation on an employer to bring this right to the attention of their employees and it seems that most employees are unaware of their entitlement to use it.

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Rising costs force businesses to examine the choices they make in employment

According to the British Chambers of Commerce (BCC), the National Living Wage, Apprenticeship Levy and pensions’ auto-enrolment could lead to reduced opportunities for investment and wage growth because of the increased cost for businesses.

The annual survey interviewed 1,400 businesses and a fifth of businesses complained that the apprenticeship levy was forcing up costs. 75% reported an increase in costs as a result of pensions auto-enrolment.

The changes to employment legislation were designed to help improve wages and prospects for workers, but the BCC is concerned that high employment costs will have a negative impact on employees stating that businesses are under increasing pressure from the burden of employment costs which is likely to influence the choices they make and outcomes for employees.

The government has announced the minimum automatic pension enrolment contributions will increase to 5% in 2018 and 8% in 2019.

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