You may not normally pay a lot of attention to the world of employment law – after all that’s what HR professionals are for – but you may well have noticed the recent case about Uber in the media. So what does the recent case ruling mean for you and your business?
Put simply the Uber case was about whether the taxi drivers working via the Uber app are self-employed or actually work for Uber, so are classed as “workers”. Why does it matter? Being a “worker” gives you a number of rights and protections under current UK employment law that you don’t get if you are self-employed. Being a worker is a big advantage for the people driving for Uber as it now means that they are entitled to earn at least the National Living Wage (if they are aged 25 years +) or National Minimum Wage (if they are under 25), as well as being entitled to paid holiday and other benefits. Up until now many Uber drivers had complained that they weren’t earning even the National Minimum Wage and were being treated as “slave labour”. This is now set to change, pending an Appeal of the case by Uber.
A lot of businesses use self-employed people, be they consultants, skilled tradesman or technical experts. This is particularly true of small businesses and new “start-ups” who don’t necessarily have the budget or need for staff all of the time. However, neither you as a business owner, nor an individual, can just decide that you want someone to be self-employed – they have to meet certain criteria or conditions, which can be complex to interpret. If you get it wrong, both the business and the individual are liable for some hefty penalties from HMRC. You can find more information about this here but we also recommend that you get some appropriate professional advice on this if you are in any doubt – we can assist with this.
October is one of the two months when changes to employment law currently happen. This October (2016) has seen a few changes that, depending on the nature and size of your business, you may need to take action on. The main changes are:
- Increase in the National Minimum Wage rates – effects all businesses and sectors
Effective from 1 October 2016 there has been an increase in all levels of the National Minimum Wage that you must pay to any workers or employees. The new rates are:
Age 21 up to 25 £6.95 per hour (+ 25p)
Age 18 up to 21 £5.55 per hour (+ 25p)
Under 18s £4.00 per hour (+17p)
Apprentices £3.40 per hour (+10p)
Workers / employees aged 25 years + are entitled to the National Living Wage which is currently £7.20 per hour and has not changed.
- Modern Slavery statements – effects any business supplying goods and / or services with a turnover of £36m + per annum
The Modern Slavery Act was implemented earlier this year, and it’s first deadline for businesses to take action has just passed. If you are a business whose turnover is £35m + and whose financial year ended between 31 March and 30 April 2016, then your business should have published a “modern slavery statement”, signed by a Director, on your company website or have one prepared that you can issue on request.
Hereon in every organisation whose turnover (relating to goods and / or services) exceeds £35m per annum needs to publish their annual “modern slavery statement” within 6 months of the end of their financial year. If your business hasn’t yet prepared your statement yet and are now or soon required to do so, please contact us for help and advice.
There are other changes on the horizon too, that we recommend that your business starts preparing for:
- Mandatory gender pay gap reporting – reporting to start from April 2017, for publication in 2018 onwards
This will apply to any organisation that employs 250+ people. The guidance on what is required in the reports is still being developed and is complex. Large fines are likely to be issued for non-compliance. If you are a larger business and don’t already analyse and report on your gender pay differences / gap now is the time to start preparing to do so. We have expertise in this area and are happy to help you prepare – please contact us.
- Pension auto-enrolment updates – now scheduled for April 2018
This will apply to all businesses who employ at least one worker / employee. This will see an increase to the minimum employer contribution rate, taking it to at least 2%, as well as an increase to the minimum employee contribution rate. Given the amount that these increases will be an added employment cost to your business, we would recommend that you start your financial modelling now so you can see how this will affect your future workforce costs.
In my HR “life” back in the UK, I often found myself providing advice on managing change, whether it be restructuring, TUPE transfers or subtler cultural change. I now find myself on the other side of things, as Happy Holidays and one of their former competitors, Smiley Holidays, have both been acquired by a large French company. While these purchases took place a while ago now, it is interesting to see how the changes have now started to trickle down to the staff (me!).
So, can these changes create one new, contented holiday company / family? At the moment, the views of myself and colleagues are mixed – we’re not entirely convinced that things will be better, or even as good. What could be done to change our minds and to keep us engaged and motivated? Here are some suggestions:
- Communicate, communicate, communicate
With any changes or takeovers there are always rumours about what will and won’t happen. Clear, regular communication is key if you are to stop the rumour mill and keep staff feeling engaged, rather than worried for their jobs. A monthly newsletter is better than nothing but it doesn’t really do all it needs to. How about using social media and other forms of communication too? – Especially if staff are based in multiple locations or work different shift patterns. Certainly face-to-face updates and briefings tend to be the most popular method with staff themselves, so can this be done in any shape or form? (Skype, Facetime, podcasts etc)
- It’s not all about structures…..
Most people tend to think of “change” as being about restructuring, but that isn’t always the case. Yes, it can make sense to join up some teams and to make some efficiencies and savings while doing so, however, this shouldn’t be the knee jerk reaction. If you are keen to keep current brand identities then you need to keep some differences in place, which means not merging and restructuring everything. Be clear on what structures will change, why and when, so allowing other, not directly affected teams / departments to stop worrying about what might happen to them. (at least for now) At least they can focus on their roles properly again and not be distracted or worried about what may lie ahead.
- Timing is everything
Make sure you understand what the businesses do when and why. Are there any critical or very busy times when it would be unwise to change things? For example for Happy Holidays, changing all of the company mobile phones over to a new network provider with new phone numbers perhaps should have been done outside of the holiday season! There would have been no customers in resort trying to call old numbers or not knowing about new numbers, and would have avoided a number of problems, upsets and complaints.
- Who are we again? What do we do?
Staff do identify with the organisation they work for and can often be surprisingly loyal to it. Staff will feel that they have their “psychological contract” in place with their employer, as well as their actual employment contract. Any change can potentially challenge the trust between employer and employee, and potentially sever the “psychological contract”.
It’s really important that staff can see and understand what the future holds and what will be changing. They can then choose whether they want to be part of this or not, and act accordingly. This can include seemingly obvious things such as – are we still planning to deliver the same product(s) or service(s) to the same customer(s)? Will we keep the same company values (eg. “green” or “ethical” commitments)? Will I still wear the same uniform? Will I still work in the same place? Will I be working the same hours? Things like this can really make a difference to someone deciding whether they will stay and go through the changes, or leave now to avoid them.
Even though this is about the two holiday companies I hope that the suggestions will be helpful for your business too. If anyone from Happy Holidays is reading this, you know where I am and I’m more than willing to make this change a positive one!
Whilst most employers run the usual January to December holiday year, some companies operate a holiday year which mirrors their financial year. Those very brave employers have a holiday year which follows each employee’s employment start date (administratively this must be a nightmare!)
Employers with an April to March holiday year will find themselves in a peculiar situation for 2016 through to 2018. Remember that all workers are entitled to a minimum of 5.6 weeks’ paid holiday, which means 28 days for a full-timer. Bank holidays count towards this entitlement.
Due to the moving Easter holidays, rather than the typical eight bank holidays in a year, April 2016 – March 2017 will have only six bank holidays, while April 2017 – March 2018 will have ten.
So what can you do about this?
Your first port of call is to check your contractual wording around holiday entitlement. This could throw up a number of different scenarios.
Here are a few (using full-time workers as an example):
- When the contract states: “you are entitled to 20 days holiday plus all bank holidays”. For April 2016 – March 2017 this would mean that your employees would only receive 26 days holiday, which is obviously below the statutory minimum entitlement. You would therefore need to give them an additional two days paid holiday. For April 2017 – March 2018 they would receive 30 days holiday, but without specific wording which has anticipated this exact scenario it is unlikely you will be able to deduct the extra two days, as the entitlement is to “all” bank holidays.
- When the contract states: “you are entitled to 20 days holiday plus 8 bank holidays”. Again your employees would only receive 26 days holiday for April 2016-March 2017 as there are only six bank holidays. You would therefore need to give your employees an additional two days paid holiday to ensure they receive their statutory minimum entitlement.
However, for April 2017 – March 2018 you could choose not to give employees two of the ten bank holidays (there is no automatic right to time off on a bank holiday). However, unless they agree otherwise, you would not be able to deduct these from the 20 day holiday entitlement as the contract says that they are entitled to 20 days holiday. You would instead have to get them to work two bank holidays, which may not be practical if the office is closed and certainly will not be popular.
- When the contract states: “you are entitled to 28 days holiday inclusive of bank holidays”. The result of this is the same as point 2 above. You will have to give two extra days for 2016-2017 and you could choose to require employees to work two bank holidays for 2017-2018.
This situation is bound to arise again in the future so the next time you undertake a review of your employment contracts it would be worth considering whether you want to include wording in the holiday clause so that holiday entitlement can be adjusted each year if necessary to allow for this scenario.
This may be even more desirable where you already offer holiday in excess of the minimum statutory entitlement and don’t want to be in a position of having to afford additional days to employees in a particular year.
Following the unexpected confirmation of a “leave” vote, many businesses will already be turning their attention to what happens next?
The most important message is that the referendum result does not trigger any automatic legal changes; neither does the UK’s formal notification that it will be withdrawing from the EU.
The UK will continue to be a member of the EU for the time being, and the status and effect of all UK and EU law remains unchanged for now, and possibly for some time in the future.
Beyond that, however, much remains to be debated and negotiated – such as the shape of trading agreements between the UK and the EU, the status of EU-derived law, thorny issues such as acquired rights, and the UK’s relationships with non-EU states.
It’s still business as usual for a while – no immediate changes
Neither the referendum result nor the UK’s formal notification to the EU has any immediate legal effect. From a legal perspective, it will be ‘business as usual’, probably for some time to come.
- The next step is for the UK to give formal notification to the EU of it’s intention to leave. This will start the withdrawal process, which must be concluded within two years unless an extension can be agreed (which requires the consent of all twenty-seven remaining Member States).
- The future trading relationship between the UK and the EU could take one of a number of different forms; which form it takes will have significant implications in terms of the movement of goods, services, people and capital.
- The UK will also need to undergo a major legislative project to identify which areas of EU-derived law will stay, which will be modified and which will no longer have effect in the UK.
Each of these processes is likely to involve much consultation with the UK public and industry. Businesses have an important part to play in shaping the environment that they will be trading in, domestically and cross-border.
Employment implications of Brexit for your business
UK employers are unlikely to see any large-scale changes to current employment law in the short-term as a result of the UK leaving the EU. The UK’s on-going relationship with EU Member States, as well as our own workplace culture, is likely to demand that the UK retains many of the EU-derived laws that have already been incorporated into domestic legislation.
Free movement of workers within the EU
Now we’ve voted to leave the EU, the free movement of workers will certainly be affected. However, changes to legislation are likely to be gradual rather than immediate.
While in theory citizens of EU member states no longer enjoy the automatic right to work in the UK (and vice versa), this will form part of negotiations to establish the UK’s new trading relationship with the EU.
EU nationals already employed in the UK may already have acquired rights under UK legislation, depending on how long they’ve been here. It’s likely that many will be permitted to stay in return for a similar agreement for UK nationals currently employed in EU member states.
For prospective employees, however, it may be a different story. While it will still be possible to employ personnel from EU member states, there may be extra administrative costs to be factored in, such as visa applications. An EU employee’s capacity to remain long-term in the UK may also be affected.
There may also be limitations on the type of workers that will be allowed to seek employment in the UK. If we choose to follow a model more like the US or Australia, visas may only be granted for those in professions identified as having a particular need.
Other employment legislation changes
We also expect some piecemeal reform to specific areas of employment law, such as:
- Clarification of the rules for calculating holiday pay and how holiday accrues during periods of long term sick leave, under the Working Time Regulations (WTR)1998.
- There is on-going litigation regarding inconsistencies between the WTR and the EU Working Time Directive (which the WTR implements in the UK), creating wide-spread confusion for UK businesses and potentially significant accrued and on-going liabilities.
- Whilst the UK government is unlikely to repeal current working time rules, it may well take the opportunity to clarify the rules around holiday pay and provide much needed guidance for employers.
- Pro-business reform of agency worker rights, given the additional costs and complexities of engaging agency workers since the introduction of the Agency Workers Regulations 2010, which implement the Temporary Agency Work Directive.
Whilst the AWR gives agency workers limited equal treatment rights with comparable permanent employees from day one, following a 12-week period, an agency worker has a right to equal pay, working time and holiday with a comparable permanent employee. The extent of any reforms in this area will depend on the exit terms the government is able to negotiate.
KEY THINGS TO CONSIDER NOW
Understand the profile of your workforce. How many are EU citizens? How long have they lived in the UK? Do any have the right to a British passport that you can support?
If you are in a sector recruiting lots of EU nationals or likely to, consider accelerating any planned recruitment before changes are announced to the process. Much more likely that any existing arrangements will be allowed rather than unpicked.
If you are planning to expand into areas of Europe, familiarise yourself with local employment legislation and understand any opportunities to second staff from UK and vice versa.
If you would like to speak to an experienced employment advisor, please contact us.
With the new requirements for organisations with 250+ staff to conduct a gender pay audit and publish results from 2018, many organisations are reviewing or implementing their job evaluation schemes.
Employers operate job evaluation schemes for a range of reasons, including the development of clear and orderly pay and grading structures and to help counter equal pay claims, as well to assist with market pricing where required.
A single job evaluation may be implemented to cover the whole workforce or employers may operate different schemes for varying groups of employees. The former approach is often favoured as this is likely to help counter any potential equal pay issues.
Types of job evaluation
There are two main types of job evaluation: analytical schemes, where jobs are broken down into their core components, and non-analytical schemes, where jobs are viewed as a whole. The use of analytical schemes is more popular because of the capacity to help provide a defence against equal pay claims.
These offer greater objectivity in assessment as the jobs are broken down in detail.
Examples of analytical schemes include ‘points rating’ and ‘factor comparison’ approaches.
Points rating – the key elements of each job, which are known as ‘factors’, are identified by the organisation and then broken down into components which may also be weighted. Each factor is assessed separately and points allocated according to the level needed for the job. The more demanding the job, the higher the points value.
Examples of factors commonly assessed include:
- knowledge and skills
- people management responsibility
- communication and networking
- working environment
- impact and influence
- financial responsibility.
Factor comparison is also based on an assessment of factors, though no points are allocated. Use of this method is less widespread than ‘points rating’ systems as the latter approach enables a large number of jobs to be ranked at the time.
These are less objective than analytical schemes, but are often simpler and cheaper to introduce. Methods include job ranking, paired comparisons and job classification.
Job ranking -puts jobs in an organisation in order of their importance, or the level of difficulty involved in performing them or their value to the organisation.
Paired comparisons – compares each job in turn with another in an organisation. This takes longer than job ranking as each job is considered separately.
Job classification, also known as job grading. Before classification, an agreed number of grades are determined, usually between four and eight, based on tasks performed, skills, competencies, experience, initiative and responsibility. Clear distinctions are made between grades. The jobs in the organisation are then allocated to the pre-determined grades.
Developing job evaluation schemes
Whether adopting an analytical or a non-analytical approach, organisations have three main options over scheme design and development:
- a scheme may be developed in-house
- a consultancy’s off-the-shelf package may be purchased
- a consultancy may tailor its package to suit the organisation’s needs.
The system selected will depend on the size of the organisation and the aim of the job evaluation exercise. The Hay Group’s Guide Chart-Profile Method is the most widely used scheme.
Other factors to consider
Job evaluation is a complex and time-consuming task and many organisations draw on the expertise of external organisations to help. The key issues to consider include:
- The process is often as important as the results.
- Job evaluation is an ongoing process.
- An appeals procedure should be established before the evaluation begins.
- Clear, detailed and up-to-date job descriptions have to be drawn up.
- The more complex the scheme, the more detailed the job description needed.
- Accurate records of decisions have to be kept.
- The results have to be checked to see if there are any pay anomalies.
- Effective communications are essential, as employees may have concerns over their future job grading and pay.
Many organisations don’t have the skills in-house to conduct a Gender Pay audit or review or implement job evaluation schemes. The latter can be a big piece of work and organisations should not under estimate the time and cost implications. Given we are half way through 2016 and first set of published results will be April 2018 time is tight to really get your house in order though still possible.
Any company Job evaluation (and market pricing exercises) schemes need to be reviewed regularly to ensure such approaches continue to meet changing business needs. Job evaluation is an assessment of the role, not the person doing it, and should be based on a fair, transparent system that is effectively communicated and understood by employees.
The type of scheme chosen will depend on organisational needs, but any staff making decisions on job roles must remain impartial and may require training in the chosen system.
How can we assist you?
Amelore can provide both job evaluation and gender pay auditing services tailored to your needs. If you would like more information, please get in touch with us.
More than four decades after the Equal Pay Act, the gender pay gap still stands at about 19%, with the average British woman earning around 80p for every £1 earned by a man.
In October 2016 the Government will introduce Regulations that require all companies with 250+ employees to carry out a gender pay review, and publish their data. This has implications for the company’s reputation, its ability to attract and recruit staff and could also trigger equal pay claims from existing staff.
The Regulations will make changes to the Equality Pay Act 2010, and aim to “end the gender pay gap in a generation” (David Cameron). They will take effect from 1 October 2016 with the first reports needing to be published before 30 April 2018 and then annually by 29 April.
Has your company ever carried out an equal pay audit? Do you know what your issues are and are you taking steps to resolve them? If not, we strongly recommend that you consider carrying out an Equal Pay Audit this year ahead of the compulsory reporting dates so that you are not caught by surprise and can address issues early on.
A confidential Equal Pay Audit will:
- Review and analyse gender pay
- Identify any gaps and risks
- Examine which objective justifications exist
- Make recommendations for resolving areas of high risk.
Facts and Figures
The UK’s gender pay gap currently stands at 19.1% (Office for National Statistics, 2014) – forty four years after the Equal Pay Act was introduced – and lags behind the rest of Europe on 16.4%.
The new duties apply to private and third sector employers, employing 250 or more staff within Great Britain, and include limited companies, LLPs, statutory bodies and unincorporated associations.
Employers will have to provide and publish five items of gender pay information: the mean and median gender pay gap, the mean gender bonus gap, the percentage of men and women in the bonus scheme, and the distribution between men and women in salary quartiles.
The September 2015 Business in the Community Survey reported that 89 per cent of employees said they would feel more negatively towards their employer if the gender pay gap was relatively large in their organisation.
However if it was relatively small, 71 per cent would feel more positively towards their employer.
Do employers intentionally pay women less than men?
Not they don’t do this intentionally but they can often do it unconsciously. Men are often much better at negotiating when they join an organisation. Women have the expectation that if they work hard and are good at their job so they will be fairly rewarded. Whilst this is true it is extremely rare for an employer or HR professional to review salaries with gender in mind. If someone is earning less than they could or should, this is seen as operationally savvy and commercial. Good management even.
We have reviewed many employer data sets and observed stand out discrepancies which are explained away as historical, personality or line manager driven and as such no longer issues. However if an organisation is paying a woman or women less than men in equivalent roles for no tangible reason, this will not only need to be rectified urgently but could result in resignations and a damaged employer brand and/or Employment Tribunal proceedings.
Benefits to the organisation
Pay is at the heart of the employment relationship, it influences how valued an employee feels and can act as a powerful demotivator if you get it wrong.
As an employer you will need to go public with your data, publish it on your website and upload it to a government website.
It is worth looking at the information early to assess what risks you are carrying and what measures need to be put in place over the next year to two before the first reports are published. Carrying out an audit now will help you comply with the law and good practice.
It is important that you feel confident that any analysis has been carried out reliably and that valid defences are understood or that indefensible issues are tackled so that you have fair, rational and transparent pay for your employees.
Understanding your risk profile and the measures to reduce these risks will protect your company from reputational and financial risks.
How we can help?
Amelore can conduct a gender pay audit and provide you with a report and recommendations now so you can address any issues before this legislation takes effect.
So many factors contribute to success in merger and acquisition (M&A) transactions — and many involve getting the right people into the right jobs. Unless the deal involves nothing more than physical assets — which is the exception to the rule of acquisitions in today’s global business world — the acquirer will need talented, high-performing individuals at all levels in order for the deal to reach its full potential.
Consequently, it is critical to assess the target company’s human capital with the same rigor that is applied to the assessment of pension liabilities, inventories, financial statements, and other significant assets. If we agree that people are ultimately a company’s most valuable asset and largely responsible for income generation and revenue growth, identifying and managing people risks and opportunities usually account for the difference between M&A success and failure. In many cases, however, acquirers know very little about the human capital — at least not initially — that may soon be part of their corporate families.
M&A transactions always trigger decisions about individuals. A merger, for example, often produces redundancies; suddenly there are two CFOs, two HR Directors and so on. The question is: Who should go and who should stay (even if in a different role)? In an acquisition, the acquirer must determine whether incumbents from the target are the best people for the job, given the objectives of the new organisation. Talent assessment addresses this important issue.
For each key position, talent assessment aims to answer these questions:
- Can this individual successfully achieve the business strategy?
- Has he or she demonstrated leadership that produces results?
- What is the employee’s industry-specific knowledge?
- How well does this person manage relationships?
- Will this individual be able to work within our culture effectively?
- Does he or she develop the talents of key subordinates?
- How long will this person stay and remain motivated?
- Are there any reasons for concern about stability or volatility?
Talent assessment can be completed at any time, but the more information an acquirer has before signing a letter of intent or closing the deal, the better. For many practical reasons, however, this almost never happens. Time is insufficient. Data from the target are spotty or unavailable. Or the target will not give access to its key people. As a result, a big part of talent assessment tends to be done after the closing, when the acquirer has full control.
Thus, organizations should do whatever they can to overcome these barriers as early in the deal as possible. While a full, formal assessment may not be possible in the early stages of a deal, many actions can be taken to begin the assessment process and get an early read on people and potential deal risks that allow for an early determination of whether to proceed with the deal or walk away.
These include observing behaviour during management presentations and meetings, reviewing CVs provided in the data room, conducting internet searches (or “desktop” research), and conducting informal operational or functional meetings as part of the due diligence process.
The target’s deal team can begin compiling a list of business, leadership, and other behavioural attributes that begin to tell the story of whether a key or critical employee will fit into the go-forward organisation or kill the deal.
The figure below describes the assessment approaches and tools that can be utilised for a systematised approach to talent assessment that will ensure thoroughness and save valuable time.
In our experience, there are five steps in the process.
- Clarify the business imperative
Always begin with the objectives of the deal and expectations for the new organisation. Talent, after all, must be measured against its potential to fulfil those expectations. A clear understanding of business objectives should guide the assessment. For example, is quick turnaround of the business needed, are growth objectives very high, or is the acquisition in a stable environment that will need little change?
- Define the essential success criteria
The next task is to define the success criteria required by the business objectives. Those criteria typically involve skills, knowledge, behaviours, experience, values, and — for executives — leadership ability and strategic thinking.
For example, to fill the CEO position at a target company, it is important to determine:
- The level and scope of experience required to successfully lead the organization, depending on its size and complexity.
- The technical skill/industry knowledge required for success in this position.
- The intensity of ambition, commitment, and personal interest a person must demonstrate in order to achieve the defined business objectives.
- The balance of strategic and operational focus needed by the ideal leader.
- The leadership style and fit with culture and core values
Culture is an important part of this step. The acquirer should define the workplace culture it wants its key people to embrace and demonstrate through their behaviour.
In many instances, acquirers want people whose values are compatible with their culture. They know that conflicting values will make for a bad corporate relationship and impair the deal.
- Develop role profiles
In this step, the assessment moves from the general to the specific, documenting the success criteria for each position in terms of job scope and responsibilities; required skills, know-how, and behaviours; and experience the ideal candidate brings to the table. Based on conversations with the acquiring company or hiring managers, the assessment team identifies the level of responsibility and job requirements for the target roles.
From this it identifies the requisite skills, knowledge, and abilities necessary to carry out the role requirements to their fullest extent. In addition, the team examines what experiences have helped other successful individuals in the past that are relevant to the current situation. This enables the creation of a robust, defensible, and detailed description of the requirements of the target roles.
- Assess the talent pool
The first three steps set the stage for the detailed work that follows, gathering whatever relevant data are available on candidates for each key position. The goal is to give decision-makers the information they will need in selecting the best people for each role. These data are gathered by interviewing the board (in the case of CEO talent assessment), hiring managers, or others involved in the acquisition and by gathering any past performance information that is available.
For executive and director/manager positions, the typical selection criteria include leadership ability and leadership style, alignment with the culture of the new organization, potential for future personal development, cognitive ability, and motivation. For professional positions, selection criteria are more geared around specific skills and experience in the job; thus, assessment is heavily weighted toward professional competency, work history, past performance, and future skill-development potential.
- Review and select talent
The results of the assessment are presented in detailed reports to decision makers, who use them for review and selection. The quality and extensiveness of these results go a long way toward ensuring the full value of the deal.
Indeed, M&A transactions are full of risks and opportunities, and many of those reside in the target company’s human capital. Because of this, it is essential to thoroughly evaluate key and critical talent with focus, rigor, and honesty, beginning as soon as possible and continuing throughout the deal phases.
The consequences of getting people decisions wrong could be the difference between winning and losing in the marketplace — something no company should risk in today’s highly competitive market and volatile economic environment.
We are all aware that the police use forensic techniques to collect evidence and build a criminal case. Likewise many will be aware of the growing discipline of Forensic Accounting and Taxation which often results in expert witness presentations in court for criminal or civil actions.
Forensic HR (FHR) is still quite rare in the UK partly because of how HR practitioners are trained. Initially they qualify with the CIPD (Chartered Institute of Personnel and Development) who don’t recognise or promote FHR and then most of their CPD is in the form of legal updates led by lawyers whose risk adverse cautious approach is infectious. Lawyers are informed by case law which is basically the latest legal argument or debate. Interestingly recent case law allows employers to monitor private telephone calls if they have reasonable cause to do so.
Forensic HR is more common in countries like America, South African and Australia.
Ultimately anyone in dispute wants a swift resolution and the law allows companies to agree Settlements with employees without going through a protracted disciplinary process although the majority of companies seem to go through a long process as advised by their HR department, legal helpline or lawyers before they agree to settle. Likewise good contracts of employment will usually have the provision for reasonable investigations if the employer has just cause.
What is it?
In a nutshell the Forensic HR expert is called in to hear an allegation or suspicions regarding an individual, group of individuals or a company. Often the individual or company has an outstanding complex case and what is required is new or fresh evidence to present a counter claim or new angle and help close the matter.
The Forensic HR expert will always ensure there is just cause to investigate and that any investigations don’t stray out of a tight and agreed remit. Likewise if they feel there are any medical concerns they will ensure those are closed off before and if they proceed. Any investigations must meet the high standards demanded by the CIPD code of conduct and be both ethical and lawful.
Typical investigations can include:
- Private investigators – for cases like sickness absence where there is good reason to suspect the case is not genuine or theft where stock is going missing or where the company wishes to investigate a potential new senior employee
- Forensic laboratory techniques – To restore a document to it’s original state like a taxi receipt, set of accounts, or hard copy notes from a meeting.
- CV, qualification & background checking services – to verify that every piece of information given to the employer is 100% correct.
- Social media searches – it is quite common for employees to put information on social media and therefore in the public domain that is useful to a FHR investigation.
- PC, mobile and other devices investigations – Looking at this in-house or sending it away to recreate deleted files. Particular focus on emails sent by the employee externally.
- Interviews as part of a Protected discussion which present select pieces of evidence and use of intensive interviewing techniques designed to stress test the individuals case & resolve.
- Time recording evidence – Many companies have systems which track how long employees are in the office or online. This information can be very useful.
The skill with Forensic HR is to gather just enough evidence to help present a case and agree a settlement. The purpose is always to avoid paying out large sums due to fear or management incompetence. The forensic HR expert will often be looking in a different area to the one the complaint originated from.
Forensic HR takes a brief from the highest level within a company and needs an “Access All Areas Pass” to carry out a thorough investigation & present a report and recommended actions. Often we may take charge of negotiations with the employee regarding a swift exit or they can work closely with the in-house HR team, employment lawyers etc
A Forensic HR case
A great example of a successful Forensic HR case was a large firm of brokers who employed a well connected female broker whose nationality was Greek. She enjoyed lots of flexibility from her employer including 10 weeks paid leave to return to Greece when her father was ill.
One evening when her boss had gone home without signing out, she accessed his emails (without his permission) and saw that he had referred to her as a “bubble” in a jokey conversation with a collegue about how long she took off. He had said “These bubbles take a lot of time off”. (From the Cockney rhyming slang – bubble and squeak – Greek).
She immediately complained to HR that this was racially offensive and as the Director admitted he had said it, he was suspended pending an investigation. He made a lot of money for the firm and was unable to trade. The firm were advised by a lawyer they consulted that as racism was discrimination, the total compensation paid out could be excessive as it would be uncapped.
Amelore were brought in by the CEO who was flabbergasted by this and wanted an alternative viewpoint. We quickly investigated and presented a case to show that she had regularly altered her taxi receipts to claim expenses relating to the weekends & also traded over her limit. Neither had been picked up or challenged as staff were frightened of her.
She also had no right to access her bosses emails without permission which was a disciplinary matter in itself. She was a registered person with the FCA so when dismissed for gross misconduct it was the end of her career. She was not entitled to any notice or other pay.
As part of our service we did some training with the HR team who had failed to see the bigger picture.
Can any HR practitioner have a go at Forensic HR?
Forensic HR should only be practiced by individuals with long experience of Employee Relations; a good understanding of employment and other relevant legislation, human behaviour and the right type of inquisitive, intelligent, objective and impartial approach. Training is recommended. Equally it is much harder to practice Forensic HR as an in-house practitioner. As the employer you have a duty of care to the individual you are investigating and this can present a conflict of interest. Likewise the trust and confidence in HR by the rest of the workforce may be damaged by your actions.
Whilst most companies choose not to pass information on to the Police once an investigation is concluded, some of our clients have done this for extremely serious cases which have resulted in custodial sentences. All our investigations are highly confidential however, if we come across anything that is criminal, involves children or vulnerable persons we will immediately notify the relevant authorities.
A good result
Ultimately Forensic HR is about saving the Company money – reducing a potential liability by introducing and presenting a stronger case. But equally its about leaving the organisation in a better and stronger place. Our final debrief with the CEO/COO/FD/HRD is a critical and important part of the process.
If you are interested in finding out more about Forensic HR or arranging some training for your HR team, do get in contact with us.
Tribunal claims have dropped significantly since the introduction of fees. Despite this many organisations (including legal firms) still sell HR services linked to Tribunal insurance, which introduces a risk adverse much slower pace and lengthy process for resolving disputes. Failure to follow advice or a long winded process
In the most expensive pay-outs for 2015, it is easy to see both a public sector bias and also a theme regarding the types of claims. For instance, due to the Equality Act, any situation where your approach to staff with additional protection may deemed to be unfair might leave your business exposed.
Ensuring you are treating all your staff fairly and even handedly will be important. Likewise getting good pragmatic advice as early as possible if you have any concerns. Ask whoever you are going to work with if they have ever lost a Tribunal? We haven’t in 25+years across a variety of sectors and we are very proud of that fact.
Personnel Today have done a great summary to round up the six-figure employment tribunal awards that employers were ordered to pay in 2015, with a total compensation amounting to £2.5 million.
Expensive employment tribunal awards: six-figure sums in 2015
- Large award for caste discrimination claimant
In Tirkey v Chandok and another, a claimant who brought a groundbreaking caste discrimination case was awarded a total of £266,537.
- Employees dismissed after raising commission concerns
In Gilmore and others v Vodafone Ltd, five salespeople who were dismissed after complaining about how their commission worked were awarded £264,349.
- Mismanagement of sick leave was disability discrimination
In Turner v DHL Services Ltd and another, the claimant was awarded £257,127 over his employer’s lack of support when he went off sick as a result of work-related stress.
- Redundancy of mother of disabled child
In J v H Ltd, the employer was required to pay out £251,460 to the mother of a disabled child over the way in which her redundancy was handled.
- Dismissal of employee with acute anxiety
In Marcelin v Hewlett Packard Ltd, a claimant who was disciplined for, among other things, his refusal to consent to the release of a medical report was awarded £239,913 for disability discrimination.
- Large award for senior NHS whistleblower
In Sardari and another v South Devon Healthcare NHS Foundation Trust and another, the employment tribunal found that a senior NHS manager who raised concerns about an alleged biased recruitment process was subjected to a detriment for making a protected disclosure. She was awarded £228,778.
- Deceased London Underground worker in large payout
In O’Sullivan v London Underground Ltd, a deceased London Underground worker was awarded £223,869 for disability discrimination. In the event of a successful claimant’s death, the tribunal award goes to the claimant’s estate.
- Disability discrimination against ME sufferer
In A v S, an employee with chronic fatigue syndrome (ME) was able to show that the way in which a move to a new role and her subsequent absences were handled was discriminatory. Her compensation totalled £192,656.
- Financial officer dismissed after accounting disclosure
In Nishioka v C&S Shops Ltd, a financial officer who was suspended and summarily dismissed after raising accounting concerns was awarded £184,741 in a tribunal.
- Employer admits constructive dismissal
In Asare-Brown v Mortgage 27 Ltd, an employer that admitted that it constructively dismissed a web designer after non-payment of wages was required to pay £130,702.
Median employment tribunal awards 2014/15
THE REAL COST OF GETTING IT WRONG
Generally the cost of getting it wrong is much bigger than the actual claim. Management time, morale and reputation, retention and if it gets in the press it can affect sales.
At Amelore we have a tailored our services to help business grow quickly and feel confident about making the right decisions. We have never lost a Tribunal (as a company) or in the history of Ruth Cornish our founder who has worked in a variety of sectors including the City and the Public Sector.
Call us on 01453 548070 if you’d like to discuss your needs.