Are you preventing tax evasion?

A new ‘failure to prevent the facilitation of tax evasion’ offence has been in force for several months but HMRC believe it is being largely overlooked.

In the case the businesses, the offence will be committed where an employer or engager fails to prevent someone who provides services for it or on its behalf, from evading tax. The key point is that employers are potentially liable for actions committed by those they engage. If workers are deemed to be disguised employees and therefore having failed to correctly account for tax and national insurance, the engager can be held liable.

The use of contractors has become increasingly common over the last few years. It is likely that a significant percentage of workers who define themselves as self-employed are in fact disguised employees. The government recently made it compulsory for public sector bodies to determine the employment status of workers and tax them accordingly, and is consulting on extending that obligation to the private sector. A business will have a defence against liability if it can demonstrate that it has put in place a system that identifies and minimises the risk of tax evasion. In practice, this means that will need to take a proactive approach to employment status issues.

In cases where the individual is engaged directly, a rigorous approach to determining if they are an employee or not, looking at the reality of the relationship as well as the wording of the contract, will be required.

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Time to change the traditional 9-5 working day?

Over half of UK workers believe that the traditional 9-5 work day is an outdated concept, with three quarters admitting that they work better at certain times of day, according to a recent study.

The survey of 1,200 professionals explored how employees feel about a 9-5 working day. The data revealed that two thirds would prefer to work hours that suited them. When asked what time of day they are most productive, the following results emerged:

In the morning: 64%
In the afternoon: 21%
In the evening: 9%
Late at night: 5%

Allowing for more flexible hours can bring significant benefits, not only to employees but also their employers. Something as simple as letting staff start an hour earlier or later depending on their needs could be all it takes.

What’s more, the majority of professionals believe that all businesses should offer flexible working, and yet only one quarter have the opportunity to work from home when they want to. Those who do have the option to work from home were asked where they felt they worked best and interestingly, a fifth said they work better in the office.

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How should employers be managing employees who claim to be stressed?

If an employee reports that they are suffering from work-related stress the employer should immediately conduct a risk assessment to evaluate the stressors that the employee is exposed to at work. If the risk assessment identifies areas where stress is evident, the employer should work with employees to agree realistic and practical ways to tackle it.

This can be managed in an action plan that identifies the following:

• The problem or stressor
• The way in which it becomes apparent (how it can be identified)
• Any proposed solution
• Changes that need to occur to make the solution viable
• Action dates and individual accountability (where appropriate)
• A review date

While identifying work-related risks and taking preventative measures should help minimise stress for most staff, it may still affect some team members due to issues inside or outside of the workplace. Managers should be prepared to help and support a team member experiencing stress.

Where a manager thinks a team member may be experiencing stress, they should approach the matter because without talking to the team member, it is impossible to know what is affecting them. Organisations should encourage staff to talk to their manager if they think they are becoming unwell. Creating a working environment that proactively supports staff who become unwell will make it easier for staff to tell their manager if they are experiencing stress.

If an employee approaches their manager to advise they are experiencing stress, the manager should:

• Arrange to have a private conversation
• Give time to the employee – be patient and allow time to talk
• Remain focused on what they say, seeking out solutions
• Be open minded about the likely cause of the stress
• Suggest potential solutions

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Improve information in job adverts to ensure the best fit!

Salary is the number one reason why employees change jobs, according to research from one of the world’s largest job and recruiting sites. The survey of 750 hiring decision makers in the U.S. and UK, found that nearly half of recruiters are told that salary is the top reason for employees changing jobs.

The top four reasons for changing job, according to the survey are:
• salary
• career advancement opportunities
• benefits
• location

However, fewer than one in 10 online job listings include pay data in the advertisement and job specification, which can result in candidates refusing a role having been through a lengthy and thorough recruitment process. Salary can be a significant motivator for employees to take a job but if few job listings actually include pay information there is a risk that employers will waste time and money attracting the wrong hire!

Hiring managers need to manage expectations and use all channels available to them to communicate with potential candidates to ensure pay realities meet expectations. Giving job seekers insight into salaries, benefits, culture and what their career path might look like in a job is the best way to ensure the best fit and therefore to result in higher retention in recruitment campaigns.

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What should a good company absence policy contain?

Sickness absence is an issue all employers have to address at some point with their staff and the best way to avoid ambiguity amongst employees and managers is to have a well-developed absence management policy and to ensure that managers are trained in its application.

Company terms and conditions regarding provisions for the treatment of absence and for sick pay entitlement must be given to all employees in writing within two months of beginning employment, either as part of their employment contract or via a separate policy or handbook documents.

The main points to include in any absence policy are as follows:

• Reporting arrangements: how and when to report absence, when contact must be made (daily or weekly etc)
• Medical certification: Self-certification and when a fit note is required, as well as any requirements to undergo examinations;
• Unauthorised absence: the policy should be clear about the consequences of failing to follow the procedure and/or to provide evidence;
• Return to work process;
• Trigger points: the company should be clear on any trigger points used (for example, the Bradford factor), stages of the process, meeting arrangements and in particular any rights regarding companions and appeal.

To allow employers to properly manage absence issues, there should also be a clear statement on when absence might be deemed to be misconduct; for example, what constitutes unauthorised absence or the consequences of an employee refusing to cooperate with a process.

It is also good practice to include a section on disability-related illnesses to ensure that those with disabilities have clear information on how to seek assistance, and that managers are aware of their obligations to make reasonable adjustments.

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When an Employee Leaves…

When it comes to employees giving notice, there are several key areas to note:
There is no entitlement to be paid instead of being asked to work notice. Employees can still be disciplined for misconduct, refusal to follow reasonable instructions (such as carrying out a handover) or failing to attend work during this time during a period of notice.

If the employee starts work for someone else in their notice period, it is possible to obtain an injunction to prevent them starting with their new employer and there is no obligation to pay them if they do not come to work. Although this is expensive and time-consuming so not something to be undertaken lightly!

If the contract allows, it may be commercially preferable to put the employee on ‘garden leave’ for some or all of the notice period. During this time, they remain an employee, are not required to attend the office and should be prevented from contacting clients, suppliers and colleagues, but they continue to owe all the usual duties of confidentiality and fidelity to the business. Garden leave must be for a reasonable and proportionate duration only and the contract may reduce post-termination restrictions by the garden leave period.

Employers may consider making a payment in lieu of notice (PILON) if there is a contractual right to do so. A PILON ends the employment immediately. Howeve holiday pay accrued during the notice period must also be paid.

Company property and reclaiming training costs

Employers are entitled to the return of their confidential information and company property, including passwords and logins, and this should be stated in the employment contract.

Subject to the terms of the relevant schemes, employers can seek repayment of money owed by the employee; for example, season ticket loans or cycle to work schemes. Training costs (and the like) can be reclaimed, provided the repayment terms are reasonable and proportionate. Check that there is a signed contract confirming that deductions can be taken from a salary, otherwise it is an unlawful deduction.

Restrictive covenants

Employers can lawfully restrict employees’ activities after the employment ends regarding confidentiality, intellectual property and, in some cases, contacting clients or colleagues and working for a competitor. But restrictions will only be enforceable if they are reasonable and proportionate ways of protecting a legitimate business aim and take into account things like the role carried out by the employee, their knowledge and workforce stability. However, if an employee has been placed on garden leave or paid a PILON without a contractual right, these restrictions will usually be invalid.

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Expected Employment Trends in 2018

This article focuses on the trends expected in 2018. What do we predict will occur?

1. More fluidity in the job market
Research has found that three quarters of employees believe that job-hopping has become more acceptable and 2018 will likely see more workers opting for freelance and contract positions.

2. Higher importance on workplace perks
A large proportion of candidates are likely to consider these to be a key factor when looking for a job. With many companies seeking new ways to stand out from their competitors, this will continue to be a priority in 2018.

3. More progress on closing the gender pay gap
A staggering 87.9% of women have said that they’ve been paid less because of their gender. This, combined with negative press and gender pay gap reporting, will place more pressure on organisations to ensure fair and equal pay in their workplaces.

4. A focus on a strong work/life balance
The average UK employee puts in over 13 extra working days a year, and nearly 2/3 admit that they often work more than their contracted hours. Businesses will be seeking ways to ease this pressure and alleviate stress.

5. Strong leadership will drive employee morale
We predict that organisations will focus on creating a robust senior management team, which can drive growth and employee engagement.

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Planned Changes to Pensions

Workplace pensions will be reshaped from the mid-2020s, in a move that will bring millions more people into the pensions regime and may increase costs and complexity for employers.

Contributions will be calculated as a proportion of earnings for all staff earning up to the higher-rate tax threshold of £45,000. At present, the first £5,876 of earnings is excluded from pensionable income. The move is designed to ensure that individuals in multiple jobs whose combined income totals more than £10,000 are enrolled into a pension scheme by their multiple employers, according to the Department for Work and Pensions.

The age at which employees can start building a retirement fund will also be lowered. In the mid-2020s – but not yet at a specific date – every employee aged 18 or over will be able to save into a workplace pension, as opposed to the present age of 22. This will pull an additional 900,000 people into a pension scheme through a widespread extension of auto-enrolment.

A spokesperson for the Pensions Regulator said lowering the age threshold would mean “more people will have the opportunity to benefit” from saving for their retirement.

In further pension changes, staff and employer pension contributions are to increase to 5% between the two parties from April 2018, with employees putting in a minimum of 3% of annual salary. By April 2019, these levels will increase again to 8% – 5% for employees and 3% for employers.

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How should employers deal with accusations of sexual harassment?

The recent flood of accusations of sexual harassment against senior figures is forcing businesses to examine the processes they have in place to deal with such a complaint.

So what steps should employers take:

• Be proactive in encouraging openness and communication. Having an open culture in the workplace is important for supporting good working practices as well as helping minor issues come to the surface. It also acts as a fundamental way to discourage inappropriate behaviour and secrecy.

• Ensure there are clear policies in place to respond to a sexual harassment case. Who is responsible and what expertise do they have? Who is going to have the initial conversation with the employee making an accusation and do they have the skills to cope?

• Watertight investigations are critical. There are many risks associated with mishandled investigations; for example, the potential for investigation conclusions to be challenged; claims of bias leading to employment tribunals and the long-term effects on staff morale, and the work environment.

• Any allegation needs to be treated seriously in the first instance. There should, for example, be an onus on the person facing an accusation to engage in the process, and not have the option to refuse any participation.

• Investigations need to be formal in terms of how they are organised, carried out and reported on, and they need to be proportionate with the alleged offence.

• Training in fair decision-making can be needed among panel members involved in the investigations and resolving situations.

• The response also needs to be seen as even-handed. If an alleged perpetrator of sexual harassment is found guilty, it’s important that a department can ensure sanctions are consistent.

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Will Brexit herald the end of the Working Time Directive?

Workers in the UK could lose their right to restricted hours of work, regular rest breaks, holiday and health and safety protection, following reports the Government will lobby to leave the European Working Time Directive following Brexit.

Under the directive, implemented into UK law under the 1998 Working Time Regulations, UK working hours are limited to an average of 48 hours a week, with 11 consecutive hours of rest in any 24-hour period. Workers are currently entitled to 5.6 weeks of paid annual leave per year under the regulations.

General secretary of the TUC Frances O’Grady described the government’s reported attempt to remove the UK from the Working Time Regulations as an attack on workers, warning that up to to seven million people – 4.7 million of them women – could lose rights to paid holiday should the government proceed with the proposal.

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