If you are an employer looking to address sick absence levels in your organisation, concerned about attendance management and what you can do to improve it, then I can help.
The current political storm about the number of senior civil servants who are not being paid ‘on payroll’ but are remunerated by either service companies or employment agencies – Civil Servants ordered to justify off payroll arrangements is one that in all of its furore is being widely and seriously misunderstood. The revelation that over 2,000 government employees who have been paid more than £58,200 through these alternate arrangements have got the Government, MPs and interested bodies such as the Taxpayers’ Alliance very hot under the collar and demanding that these arrangements must come to an end. However, whilst it seems clear that these individuals benefit from reduced taxation by being engaged via service companies, little consideration seems to have been given that one of the reasons these arrangements have continued is that they are significantly cheaper and offer better value for money for employers- in this case the Government which means you and me as taxpayers.
By being engaged (rather than being employed) through this arrangement, it does mean that the employer does not have to pay other the employer’s National Insurance Contribution (NIC) nor pension contributions. In addition, it is unlikely that holiday or sick pay is paid either. If you look at a worked example of employing these people by putting them on the payrolls it can be seen that an employer would almost certainly be far worse off:
Fee paid via service company arrangement: £58,200
Salary paid on payroll: £58,200
Employer’s NIC (13.8%): £ 8,032
Employers pension contribution (15%): £8,730
Total cost per person £74,962
This suggests that for each of the 2,000 people engaged via service companies or other agencies that the additional cost of putting them ‘on payroll’ could be as much as £16,762 or a total of £33 million, and this is almost certainly an under estimate as it assumes that the average fee paid is £58,200 and the pension contribution is based on an average figure paid by a number of large private sector companies, when for the public sector it is likely to be much higher. In addition, as an employee these individuals would also be liable for redundancy payments if their services were no longer required whilst being engaged through a service contract would probably not require any termination payments as the contract would just not be extended and be cancelled on its expiry. It’s true that these individuals would almost certainly then have to pay the full tax liability rather than at the corporation tax level but the potential additional cost to the government and tax payer would substantially out weigh that, which is why, I suspect, the HM Treasury solution to this issue is to seek assurances from individuals that they are paying the same amount of national insurance and income tax as an employee or face the consequences of contracts being cancelled or host government departments being ‘fined’. The lesson that employers can take from this is that whilst there is a reputational issue about some people enjoying tax benefits, the cost of ensuring that all ‘staff’ pay the same income tax is likely to hit their bottom line and profits.
The need for employers to look at the well being of their staff in order to improve performance and productivity is currently the focus of a provocative article:
In it, Dr Bridget Juniper – a well respected well-being specialist- has argued that as good as employee engagement is in helping to turbo charge work performance, it ignores the science of employee well being that is a real driving factor in the commitment that workforces give to their employer.
To begin with, it is probably best to be clear what the two areas of HR actually refer to. Employee engagement is really about trying to get ‘discretionary effort’ from people in terms of getting them to ‘go the extra mile’ and how motivated they are on the basis that a ‘switched on’ person is a more productive one.
Well being looks at the importance of people’s mental and physical health and how that influences their attendance at work and their performance there.
There is clearly an overlap between the two specialisms but they are often seen as different things with HR interventions seeing them as separate entities and being run as different projects when really they do need to be integrated.
The work that I have done in both areas in the public sector indicated that if as an employer your aim is to have staff that are ‘Happy, Here and Healthy’ (i.e. that they are motivated and engaged with what their work is, that they are at work the vast majority of time and they are generally of a high mental and physical standard), then you need to understand how you get your staff to be like that.
Studies have indicated that to have such a committed workforce that they themselves need to believe that as an employer you are equally committed to them. Now, that doesn’t have to mean inflation breaking pay rises or annual trips to Las Vegas, but it should include managers giving employees a stake in the workplace, a feeling that their views matter, that what they can do can make a difference etc so that there is something approaching a genuine ‘partnership’ between employer and employee.
Examples of the kind of things that employers need to look to providing that will help enhance employee well being and engagement so that they give their best for you should include:
Managers need to listen to people’s concerns on issues such as workloads
Managers should be open to reorganise or reprioritise work to deal with heavy demands and excessive pressure
Employees should be given the opportunity to be flexible in how they work- managers need to be sympathetic about requests for alternative working patterns (compressed hours, working from home etc)
Employees need to be allowed to take regular breaks from the workplace
Managers need to really communicate with their teams and truly listen to concerns about how work is carried out- they need to involve staff in work design and future change
Managers need to support staff who are absent through sickness and enquire (without excessive probing) if they can help improve their health
Managers need to act as mediators in conflict situation i.e. deal with problems before they become arguments
Managers have to be vigilant and proactive in dealing with cases of bullying and harassment
Employees need to know that their efforts are appreciated – it’s not about giving them financial bonuses at the end of the year – just saying ‘well done!” can make such a difference
Managers need to encourage their staff to do the things that are more likely to lead to them having a healthy mind and healthy body e.g. stop smoking, moderate their alcohol intake, have a healthy diet and take regular exercise.
As a start, employers could do worse than involve their HR teams (or engage a HR Consultant!) to produce a Well Being Handbook and other Health Intiatives to help engage and improve their people .
One of the major concerns that employers have are the rights that people who ‘work’ for them have when they are no longer required, especially with regard to possible redundancy rights and recourse to take them to an Employment Tribunal.
Granted that a lap dancing club, in this case, Stringfellows, may not be the typical work environment, the ruling goes to the heart of the difficulty in determining what leads to someone being an employer/worker rather than someone who is for example self-employed.
In the case of Nadine Quashie, who was a dancer at the club and later dismissed, her legal team successfully argued on appeal that she was in fact an employee of the dancing club rather than being self employed, quashing the decision of an earlier Employment Tribunal that had ruled that she did not have such employment rights.
Such cases and judgement often focus not on whether a person is told whether they are employees of the company which can be seen as merely a ‘label’, but more on how they are actually treated in the workplace. In this particular case, it was reported that Ms Quashie had to work rostered hours, had to comply with a specific dress code and it was claimed, have to be prepared to dance with clients at a given time.
This may have influenced the thinking that this was suggestive of a relationship whereby the company was controlling what the individual needed to do which is more akin to an employer/employee relationship than that of a company and contractor- self employed or otherwise. The EAT did not comment on the merits of the actual claim of unfair dismissal itself, instead it referred the case back to the original Employment Tribunal.
For companies and organisations, this and similar cases should bring home the need to be acutely aware that how they treat someone working for them may determine their employment status as much as what is said in an appointment letter or contract. In short- if you treat someone as an employee (control their work, demand that they dress a certain way etc) even though you call them self employed, then it is quite likely that in legal terms, they are in fact employees, with all the rights that go with that status.
Whilst the political anoraks were gushing over the James and Rupert Murdoch testimony to the Leveson Inquiry this week and questioning whether there would be a new Culture Secretary, a number of employers were chewing over the impact of a UK Supreme Court ruling that suggested that employers can force retirement.
Previously it was very common practice for employers to have what became a ‘default’ retirement age that was often 65 at which point workers even if they wanted to work on would be compulsory retired. However that right was fully abolished on 1 October last year and it meant that if employers wished to retire staff it would have to be objectively justified and could not be done on age alone.
Now this was excellent news for those people who felt that they wanted to work on but were previously forced to retire especially with the increased longevity that we now have. For example, the average 65 year old in 2012 can expect to live to the age of 83 and the pensions crisis means that in a lot of cases people just can’t afford to retire and need to continue working.
But for employers the change in the retirement rules meant that they would be restricted on changing their workforce- quite often younger staff would be brought in when someone retired, or at least it was an opportunity for a company or organisation to cut a post without incurring redundancy costs. Politically it is also becoming a problem. Youth unemployment has topped the 1m mark with just over 22% of people under the age of 25 out of work and the opportunities for younger people to apply for jobs has receded as jobs that would traditionally have been opened up for them do not exist as people have been working on.
Age discrimination is a big issue for employers and the Supreme Court judgement this week is a landmark ruling because it gives employers some much needed clarity on the kind of grounds on which workers could legitimately be retired. In their judgement, the court indicated that issues of succession and poor performance could allow people to be retired and that in particular “All businesses will now have to give careful consideration to what, if any, mandatory retirement rules can be justified in their particular business”.
So there is some clarity now but the belief from employment lawyers in light of this important judgement is that employers now need to be proportionate in their workforce planning to justify forced retirement rather than simply setting a specific age at which people had to retire. The bottom line is that such rules have to be objectively justified which could include the need to ‘refresh’ their organisation.
My sense though is that whilst this judgement and the clarity it brings is to be welcomed, employers need something more specific to help them plan for the future and to avoid claims of ageism.
