In this e-book, Kate Russell, Managing Director of Russell HR Consulting, explains that the real success of hiring your first employee lies in following the correct procedures, adhering to the requirements of legislation and taking action at an early stage. Employers can employ an efficient employee and retain him/her through simple steps as directed.

The e-book is a good read for all businessmen wanting to find an employee with the right, attributes, skills and attitude to achieve business aims effectively. The author elucidates that any job description should be drafted putting much thought into it. Further, the selection process must also be well planned and justifiable. Once an employee is hired, it is essential that the employer has an efficient and effective way to monitor him/her to ensure work does not suffer. Read on to know more.

–Harrison

How to Employ Your First Employee

Contents

1	Overview of the Ebook
1.1	Introduction
1.2	Who counts as an employee?
1.3	Recruitment and pre-employment checks
1.4	Contracts of employment
1.5	The first few months
1.6	Employee rights
1.7	What if the employee just doesn’t workout?
1.8	Correcting performance or misconduct
1.9	Health and safety responsibilities
1.1	Additional legal responsibilities
2	Who counts as an employee?
2.1	Introduction
2.2	Employed or self-employed?
2.3	Agency staff
2.4	Interns and work experience students
3	Recruitment and pre-employment checks
3.1	Introduction
3.2	Basics of recruitment
3.3	References
3.4	Medicals
3.5	Immigration checks
3.6	CRB checks
4	Contracts of employment
4.1	Introduction
4.2	Where is the contract contained?
4.3	Legal requirements
4.4	Extra terms
4.5	Updates and amendments
5	The first few months
5.1	Introduction
5.2	Purpose of probation
5.3	Less favourable terms during probation
5.4	Extending the probation
5.5	Dismissal at the end of probation
5.6	Dismissal after expiry of the probation period
6	Employee rights
6.1	Introduction
6.2	Pay
6.3	Pension
6.4	Sick pay
6.5	Hours of work and breaks
6.6	Holiday
6.7	Discrimination
6.8	Family friendly rights
6.9	Time off
6.1	Dispute resolution
6.11	Redundancy
6.12	Young people
7	What if the employee just doesn’t work out?
7.1	Introduction
7.2	Dismissal during or at the end of probation
7.3	Dismissal after the end of the probation
7.4	Dismissal – the minimum procedure
8	Correcting poor performance or misconduct
8.1	Introduction
8.2	Poor performance
8.3	Misconduct
8.4	The correction process
9	Health and safety responsibilities
9.1	Introduction
9.2	Policy statement
9.3	Risk assessment
9.4	Employers’ responsibilities
9.5	Employees’ responsibilities
9.6	Sanctions
10	Additional legal responsibilities
10.1	Introduction
10.2	Employers’ liability insurance
10.3	NICs
10.4	Statutory records
10.5	Data protection

Preface

It happens to almost every successful business owner. At some point in the growth of your business you realise that you can no longer go it alone. Most business owners are well aware of the problems and costs of employment, and will initially try to use outsourced support. If that works well for you, there’s no reason not to use it, though be careful about the over-use of so-called self-employed workers who clearly are not genuinely running their own business.

However there may well come a time when your business has expanded and it can’t be done on an outsourced basis. Then it’s time to think about employing someone. There are a wide variety of laws, obligations, taxes and statutory records that can trip you up when you don’t know what you’re dealing with.

Lack of knowledge is not a defence, so ensure you find out what you have to do at an early stage. It will save you time, money and worry. This book has been written with the intention of helping you to avoid these types of sticky situations. The real success of hiring your first employee lies in following the correct procedures, adhering to the requirements of legislation and taking action at an early stage.

About the author

Kate Russell, BA, barrister, MA is the Managing Director of Russell HR Consulting and the author of this publication. As Metros HR columnist, she became known to thousands, with her brand of down-to-earth, tactical approach to HR. Kate is a regular guest on Five Live and her articles and opinions have been sought by publications as diverse as The Sunday Times, Real Business and The Washington Post, as well as every major British HR magazine and her HR blog has been rated third best in the UK. She is the author of several practical employment handbooks and e-books, the highly acclaimed audio update service Law on the Move, as well as a monthly e-newsletter, the latter document neatly combining the useful, topical and the frivolous.

Russell HR Consulting Ltd delivers HR solutions and practical employment law training to a wide variety of industries and occupations across the UK. Our team of skilled and experienced HR professionals have developed a reputation for being knowledgeable, robust and commercially aware. We are especially well versed in the tackling and resolving of tough discipline and grievance matters.

We also specialise in delivering employment law training to line managers, business owners and HR professionals, both as in-house, tailor made workshops or on open courses. We provide a wide range of practical employment training, enabling new and experienced managers to ensure that they work in a compliant and ethical fashion, and gain optimum employee output.

At Russell HR consulting we will design and deliver a solution that suits your particular needs, identifying and addressing the issues in the way that best fits your workplace.

1) Overview of the Ebook

1.1 Introduction

Deciding to employ your first employee can be a daunting decision to make. But if you don’t expand your workforce, you’ll always be limited to what you yourself can do. As your business gets busier, you’ll find you’re pulled in many different directions. Recruiting your first employee may well solve the problem. The key thing is to ensure you’ve got the right person, and then to ensure that you’re managing him lawfully and efficiently.

In addition to the process of recruiting the right person, you also need to ensure that you have fulfilled all the many other obligations placed on employers.

This book gives you an introduction to the key responsibilities for a first time employer and provided that you follow the guidelines, you will be able to j ump successfully from a one-person business to two – or more!

1.2 Who counts as an employee?

One of the first points to consider is who actually counts as an employee. Sometimes it’s quite clear what the employment status is. Business owners often try to avoid employing someone directly because of the number of employment rights and the costs of National Insurance Contributions (NICs).

If there’s a dispute, either between the employee and the worker, or the employer and HMRC (who are very keen on collecting NICs) the courts will apply a number of tests and reach a conclusion based on the commercial reality.

1.3 Recruitment and pre-employment checks

In order to recruit the right person, it’s important to define the role and the essential attributes for the job. From that you can design a data collection process which gives you the information you need to make an objective choice. Once you have made the selection, you’d be well advised to take up references. In some cases, you may want to have a pre-employment medical, though this can generally only be explored once an offer has been made.

In all cases you are also required to carry out a check on the prospective employees eligibility to work in the UK.

1.4 Contracts of employment

The Employment Rights Act 1996 requires employers to provide written terms of employment to an employee within eight weeks of the employee having started his employment.

This constitutes a large part of the employment contract, but terms can be found in other documents, for example, the offer letter and employee handbook (where you have one).

This chapter takes you through the legal requirements as well as some suggested additional terms.

1.5 The first few months

Many employers make the first few months of employment a probationary period. It has no specific legal standing (nor is it illegal as suggested by some organisations), but you can have less favourable terms for employees during this time. For example, it’s quite common to limit sick pay to statutory sick pay (SSP) during probation. Throughout the probation period, you will be training and coaching the employee and providing guidance where he fails to meet your standards.

1.6 Employee rights

Employees have more statutory rights than at any time in history. This chapter takes you through the key rights and when the employee becomes entitled to them.

1.7 What if the employee just doesn’t work out?

Throughout the early stages of employment, you need to keep a close eye on an employee’s performance. If an employee fails to meet standards in the probationary period you should provide guidance and extend the probation period if necessary. If there’s no improvement you can dismiss at the end of that time.

1.8 Correcting performance or misconduct

In most cases poor performance is the issue rather than misconduct. We look at the general process that you need to follow where employees fall below the standards required at a later stage.

1.9 Health and safety responsibilities

Employers are responsible for the safety of their employees while at work. This involves providing training and information, conducting a risk assessment, writing a health and safety policy and keeping records up-to-date.

1.10 Additional legal responsibilities

When you become an employer you need to adhere to a number of legal requirements. For example, you will need to ensure that you meet compulsory insurance requirements, keep statutory records, comply with data protection requirements and (from 2016) make arrangements for auto-enrolment into a qualifying pension scheme.

2) Who counts as an employee?

2.1 Introduction

Anyone who works for your business under a contract of service will count as an employee. The status of those who work for the business owner will either be employees, workers or self-employed. Getting the status right is important. If you get their employment status wrong, from the tax point of view, you may have to pay extra tax, NICs, interest and a penalty. Separately, from the point of view of employment rights, a tribunal would first have to determine the worker’s employment status and then whether or not he is entitled to the employment rights claimed.

2.2 Employed or self-employed?

There is no one thing that completely determines a worker’s employment status. If there is a dispute about the status between a worker and employer, an employment tribunal will consider all the circumstances of a case. Many employers will try to reduce their liability by using outsourced workers.

The sorts of things the tribunal looks at fall into four main categories. Below are some questions to help explain what the categories mean.

The more questions that are answered ‘yes’, more likely it is that the worker is self-employed. The more questions are answered ‘no’, the more likely the worker is to be an employee.

This is for guidance only and a definitive answer can only be given by an employment tribunal or court.

2.2.1 Mutuality of obligation

Mutuality of obligation has been described as the “irreducible minimum” by the courts. This means that both parties owe each other an obligation. Employers are under a duty to provide and pay for work. Employees are under a duty to do the work. If there is no mutuality of obligation there can be no contract of employment.

So the first area considers the extent to which the employer is required to offer the worker work and the extent to which the worker is required to do it.

• Does the company offer work only if and when it is available?
• Can the worker decide when he will work and can he turn down work when offered?

2.2.2 Control

Employees tend to be subject to a much greater degree of control by the employer than those who are genuinely self-employed. So the questions here consider the extent to which the employer decides what tasks the worker does, how and when he does them.

• Does the worker have the final say in how the business is run?
• Can the worker choose whether to do the work himself or send someone else to do it?
• Can the worker choose when and how he will work?

2.2.3 Economic reality

Typically, people who run their own business carry their own costs and take their own financial risks.

• Is the worker responsible for meeting the losses as well as taking the profits?
• Is the worker responsible for correcting unsatisfactory work at his own expense?
• Does the worker have to submit an invoice to the company in order to receive payment?
• Does the worker get a fixed payment for a job (including materials and labour)?
• Does the worker provide the main items of equipment needed to do the job?
• Does the worker work for a range of different employers?

2.2.4 Integration

Another area for consideration is the degree to which a worker is treated as part of the organisation. The sort of things a court might consider are shown below.

• If the worker needs assistance, is he responsible for hiring other people and setting their terms of employment?
• Is the worker excluded from internal company matters, such as corporate training and staff meetings?
• Is the worker exempt from having action taken against him using the company disciplinary procedure?
• Is the worker excluded from company benefits and pension schemes?

2.2.5 Personal delivery of service

Both employees and workers have to deliver work in person. Self-employed workers can arrange for a substitute to do the work. Note that the mere presence of a substitute clause in a contract won’t confer self-employed status on the worker if there are stringent conditions attached.

Example

Ms Macfarlane was a qualified gymnastic instructor working at recreational and sports centres operated by GCC. If, for any reason, Ms Macfarlane was unable to take a class, she would arrange for a replacement from a register of coaches maintained by the council. Occasionally, the council itself organised the replacement. The replacements were paid directly by the council, not by Ms Macfarlane.

In 1998 Ms Macfarlane was presented with a new form of contractual agreement which, in her view, significantly changed her terms and conditions of employment and had the effect of making her self-employed. She declined to accept the new form and subsequently claimed that she had been constructively and unfairly dismissed. GCC argued that Ms Macfarlane had always been self-employed.

The case eventually came before the EAT. The court agreed that Ms Macfarlane was an employee of GCC.

It said that a provision allowing for a limited ability to delegate does not always lead to a conclusion that the contract was one for services. In the present case, the provision allowing Ms Macfarlane to arrange for an approved replacement if unable to attend work did not have such force that it overwhelmed opposing factors and clearly lead to a conclusion that she was not an employee. Ms Macfarlane could not simply choose not to work in person. Only if she was unable to attend could she arrange for another to take her class. Secondly, she could only provide someone from the Council’s own register. To that extent GCC could veto a replacement and could also ensure that such persons as were named on the register were persons in whom the Council could repose trust and confidence.Thirdly, GCC itself sometimes organised the replacement. Fourthly, the council did not pay Ms Macfarlane for the time served by a substitute but instead paid the substitute direct.

Macfarlane v Glasgow City Council 12001]

2.2.6 Workers

Workers work on a contract for services. As opposed to an employee’s contract of service. They may work on a casual, wages-only agreement, where they are paid only for the hours they work and do not assume any other employment rights

All workers are entitled to certain rights which include:

• paid annual leave;
• rest breaks and limits on working time;
• the national minimum wage;
• no unlawful deductions from wages;
• right not to suffer unlawful discrimination or harassment under the Equality Act 2010;
• health and safety at work.

2.3 Agency staff

Agency workers are classed as workers rather than as employees.

The Agency Workers Regulations 2010 give additional rights to workers who have been with the hirer for 12 continuous weeks in a given job. The agency worker will be entitled to at least the basic working and employment conditions such as pay and working time which are equal to the hirer’s own employees.

The Regulations don’t cover the genuinely self-employed, individuals working through their own limited liability company, or individuals working on managed service contracts.

From Day 1 of their employment, an agency worker will be entitled to:

• the same access to facilities such as staff canteens, childcare and transport as a comparable employee of the hirer;
• be informed about job vacancies.

After a 12-week qualifying period, an agency worker will be entitled to the same basic conditions of employment as if he had been directly employed by the hirer on day one of the assignment, specifically:

• pay – including any fee, bonus, commission, or holiday pay relating to the assignment. It does not include redundancy pay, contractual sick pay, and maternity, paternity or adoption pay;
• working time rights – for example, including any annual leave above what is required by law.

The 12-week qualifying period does not have to be continuous. Most breaks between or during an assignment to the same job that are less than six weeks in length will simply “pause” the accrual of the 12-week qualifying period. Most breaks between or during an assignment to the same job that are six weeks or more will reset the 12-week qualifying period.

The accrual of 12 weeks qualifying period can be paused by absences for sickness and jury service (for up to 28 weeks) or annual leave, shut downs (e.g. factory closures and school holidays) and industrial action (for the duration of the absence).

Pregnancy and maternity-related absences, maternity leave, paternity leave and adoption leave will not pause the 12-week accrual at all. Instead thel2-week accrual period will continue throughout the duration of the absence and include these weeks as those counting towards the 12-week total. Agency Workers (regardless of their employment status) will also be entitled to paid time off to attend ante-natal appointments during their working hours.

2.4 Interns and work experience students

Taking on work experience students and interns from time to time can be helpful for both parties. The student can get some valuable exposure to work and it can be a good way of sourcing potential future recruits.

Work experience generally refers to a limited period of time that a student spends with an employer. The nature, length and arrangements for work experience vary greatly, but it is generally for a fairly short period of time and is unpaid.

Internships are usually longer term placements to work at a company for a fixed, limited period of time. Interns are usually undergraduates or students, and most internships last for any length of time between one week and 12 months. They may be part-time or full-time.

The term intern’ has no legal status and many employers don’t pay them. However, recent case law has suggested that in some cases interns are employees and have the same rights to national minimum wage etc. as other employees.

Example

Keri Hudson worked at My Village website as an unpaid intern in 2010. She worked at the website from 10am-6pm and was personally responsible for a team of writers. She also carried out training and delegating tasks, collecting briefs, scheduling articles and even hiring new interns. The company had told her she was not eligible for any pay because they considered her an intern.

Ms Hudson gave evidence that she had been asked when the site was taken over by TPG Web Publishing Ltd if she would stay on and work for the new company. She was assured her pay would be fixed. After five more weeks she was informed she would not now be receiving a payment for the work she carried out – she resigned and took out a grievance.

The tribunal accepted her evidence and found she was a worker even though she didn’t have a written contract and was therefore entitled to be paid at least the National Minimum Wage and holiday pay. Ms Hudson was awarded £913.22 in national minimum wage back pay and £111.76 in holiday pay from TPG Web Publishing.

Hudson v TPG Web Publishing [2011]

3) Recruitment and pre-employment checks

3.1 Introduction

Finding that person who has the right attributes and skills can involve hours of CV sifting and interviews. However the whole process can be made a lot simpler if you follow a robust procedure and design a data collection process which gives you the information you need to shortlist and choose the right candidate.

3.2 Basics of recruitment

Some businesses resort to hiring the first person who walks through the door. Not surprisingly, this is the wrong approach to take.

Having the right people is essential if you are to achieve your business aims effectively. They can bring enthusiasm, commitment, knowledge and experience to your business. Hiring the wrong person is not only disruptive, a waste of time (and can be painful!) but costly.

3.2.1 Job descriptions and personal specs

Start by deciding on the role that you need and create a job title and job description accordingly. Essentially a job description is a “snapshot” of a job which needs to summarise clearly and concisely what responsibilities and tasks the role will entail.

A job description should include:

• the job title;
• a summary of the job’s main purpose;
• the main duties.

It is important to ensure that the job description includes a catch-all phrase stating that the job holder is required to carry out any other reasonable request by management. While there is an implied duty upon every employee to carry out reasonable management requests, it makes life much easier if you spell it out.

In addition to the job description, you may also wish to include a person specification within your job advert. Although this is not a legal requirement, it can help you to summarise the key attributes, knowledge, skills and qualifications that a desirable candidate might have. Make sure your job description and person specification avoid requirements which might constitute unlawful discrimination.

It will be automatically unlawful for you to discriminate against candidates for reasons related to a protected characteristic i.e. because of their gender, age, race, religion or disability for example. The only exception to this is if it is a requirement of the job or it qualifies as a genuine occupational requirement (GOR). For example, being of Indian origin may be an essential requirement for some Indian restaurants where an ‘authentic’ atmosphere is important. You can ask for waiting staff of Indian appearance, but not necessarily Indian cooks.

It would be unlawful to state that candidates are required to have at least five years experience in waitressing for example, as this could discriminate against younger employees.

Note that if your selection process isn’t well thought-out and justifiable, you may be the subject of a discrimination claim from somebody whom you have never even met.

Example

Mr Berry, who was in his 50s, sent an email to Recruitment Revolution, a recruitment agency who had advertised a role which advertised a job for a “junior administrator/administrative assistant” indicating that it would be suitable for a school leaver or someone who had recently taken A-levels on behalf of a client, saying that he appeared to be prevented from applying by reason of his age and that unless he heard back he would assume that there was no point in applying. Recruitment Revolution advised Mr Berry that the advertisement had been mistyped and that he should send in his CV, which would be considered with all other CVs received

He did not apply for the advertised job. instead he submitted an age discrimination complaint against Recruitment Revolution. Mr Berry was, in fact, a serial litigant who had brought in the region of 50 tribunal claims against recruitment agencies and employers complaining that job advertisements were unlawfully discriminatory under the Age Regulations. A number of the claims were settled. In this case, his claim was struck out and Mr Berry appealed to the EAT.

The EAT was equally unimpressed and dismissed his claim. It emphasised that the Regulations were not intended to provide a source of income for those who complain of arguably discriminatory advertisements for job vacancies for which they had no intention of applying, and that those who try to exploit the Regulations in this way would be liable to a costs award

Berry v Recruitment Revolution [2010]

Make sure you draft job descriptions and person specifications carefully to avoid discriminatory claims arising.

3.2.2 Advertising your job

There are a wide variety of options available to you when you are advertising your job and as a general principle you are expected to trawl the market to get to the widest range of possible candidates. Think about who you want to read the advertisment, how long it should run for, how quickly you want a response and how much you would be willing to pay.

Here are some examples of places you can advertise your job.

• social media – Linkedin, Twitter, Facebook;
• online recruitment companies;
• agencies;
• trade journals;
• local newspapers;
• broadsheets;
• word of mouth;
• Job Centre;
• university and college web sites.

An effective job advertisement sells the position and the business and attracts the right candidates. If you’re writing the advertisement, the job title should come first and then the key elements of the job description and person specification, followed by a concise description of the business. Tell people how to apply and include contact details and a closing date.

3.2.3 The data collection process

Decide how you wish candidates to supply their details. The CV on paper-format or online application is often the most popular choice, but application forms are generally considered to give a more accurate basis for the comparision of candidates, since you can create a form which sets out the data you want to know about. It means that you (rather than the candidate) determine what information is included. It also makes it quicker and easier to compare applications. Sifting through individual CVs and cherry picking the most useful and appropriate information can be a time consuming process.

Following on from this, the interview tends to be the most common method of recruitment. Unfortunately, the probability of predicting the future success of an applicant from this method alone is very low at around 33 percent.

Use testing to increase your knowledge of the candidates’ capabilities. Make sure that any testing is relevant, non-discriminatory and consistently applied.

When deciding which process best meets the needs of your job requirement, it is important to remember that you must make reasonable adjustments for candidates who have a disability. Failure to do so could lead to a discrimination claim.

Example

After a road traffic accident Mr Burns was left with brain damage, causing ataxia. He also suffered from mobility problems and a noticeable speech impediment which defined him as disabled under the Disability Discrimination Act 1995.

Mr Burns applied for the job of trainee mortgage advisor after seeing the advertisement at a job centre. He fully met the requirements specified by the advertisement.

However, the company denied receiving his application, although after an investigation it was discovered that someone from the company had telephoned Mr Burns to discuss his application. Mr Burns was not invited to an interview after the conversation, and the tribunal concluded that a likely reason for this was due to his speech impediment which would have been evident during this conversation.

The company could not justify its reasons for not inviting a candidate who was appropriately qualified to an interview. With regards to Mr Burns’s disabilities-one of which would have been evident on the phone -the tribunal concluded that the reason for not inviting Mr Burns for an interview was because of his disability.

The tribunal awarded £1,500 for injury to feelings and recommended that the company should thereafter ensure compliance with discrimination legislation.

Burns v GRF Financial Ltd. [2003]

3.3 References

Reference checking is absolutely essential. One of my clients took on a woman without checking her references because he was so impressed with her. She was a very plausible applicant. In fact it emerged later she had been sacked from every job she had ever held and her CV was a tissue of lies (embellishment by job applicants is not unusual). She even tried – albeit unsuccessfully – to take the company to tribunal. Overall, it cost my client about £4,000 and a great deal of angst and management time to conclude the case.

You can ask for information which should support the applicant’s statements. If there’s a discrepancy, then check it out.

References should only be taken up once an offer has been made. Ask the candidate for written permission to approach his employer for a reference.

This is the type of information you can ask for.

• Final salary and job title.
• Start and end dates.
• Capacity in which employed.
• Number of days of sickness absence.
• Whether there were any disciplinary warnings live on the file at the time of termination.
• Whether the employee resigned or was dismissed.
• Performance appraisal rating.

3.4 Medicals

Except in a very limited set of circumstances, asking questions about a candidate’s health is unlawful during the recruitment process.

You should only ask about a candidate’s disability or health if you need to find out whether:

• he will be able to attend an interview or do some form of selection test;
• you will need to make some form of reasonable adjustment to enable him, to attend an interview or to do the test;
• he will be able to do something that is intrinsic for the job in question.

It would also be acceptable to ask about a candidate’s health if you want to monitor the diversity of your applications or wish to take positive action to recruit more disabled workers.

Pre-employment medical checks should only be carried out once you have offered the job to a particular person, if the candidate would be required to undergo testing to determine if he is fit to undertake the job or if it is a legal requirement. For example, commercial vehicle drivers may be required to take an eye test. In any case, the level of assessment will depend on the nature of the job and can range from a full health examination to simply checking the levels of absence in a previous job.

3.5 Immigration checks

Under the Immigration, Asylum and Nationality Act 2006, all employers have a duty to check certain documentation to ensure that the candidate has the right to work in the UK. Irrespective of a prospective employee’s country of origin, the checks should be carried out in every case. You must ask to see an original document, inspect it and take a copy for the file before the employment starts.

The documents that are acceptable for proving that someone has the right to work in the UK are split into two lists; List A and List B.

3.5.1 List A

Documents provided from List A provide a permanent excuse to work in the UK. Any one of the documents listed below will provide the necessary evidence of the right to work in the UK:

• a passport showing that the holder is a British citizen, or has the right of abode in the United Kingdom;
• a document showing that the holder is a national of a European Economic Area country or Switzerland. This must be a national passport or national identity card;
• a residence permit issued by the United Kingdom to a national from the European Economic Area country or Switzerland;
• a passport or other document issued by the Home Office which has an endorsement stating that the holder has a current right of residence in the United Kingdom as the family member of a national from a European Economic Area country or Switzerland;
• a passport or other travel document endorsed to show that the holder can stay indefinitely in the United Kingdom, or has no time limit on their stay;
• a passport or other travel document endorsed to show that the holder can stay in the United Kingdom; and that this endorsement allows the holder to do the type of work the employer is offering if they do not have a work permit; or
• an Application Registration Card issued by the Home Office to an asylum seeker stating that the holder is permitted to take employment.

3.5.2 List B

Documents from List B indicate that the applicant or employee has restrictions on his entitlement to be in the UK. List B documents provide a temporary excuse to work in the UK. If an employee is supported by a document from List B, you will need to ensure that he takes steps to renew his permission before it expires. Repeat checks should be made at least every 12 months.

Two of the documents in the combinations listed below will provide evidence of the right to work in the UK.

1. A document giving a person’s permanent National Insurance number and name. This could be a: P45, P60, National Insurance card, or a letter from a Government agency;

and one of the following documents:

• a full birth certificate issued in the United Kingdom, which includes the names of the holder s parents;
• a birth certificate issued in the Channel Islands, the Isle of Man or Ireland;
• a certificate of registration or naturalization stating that the holder is a British citizen;
• a letter issued by the Home Office which indicates that the person named in it can stay indefinitely in the United Kingdom or has no time limit on their stay;
• an Immigration Status Document issued by the Home Office with an endorsement indicating that the person named in it can stay indefinitely in the United Kingdom or has no time limit on their stay;
• a letter issued by the Home Office which indicates that the person named in it can stay in the United Kingdom; and this allows them to do the type of work that the employer is offering;
• an Immigration Status Document issued by the Home Office with an endorsement indicating that the person named in it can stay in the United Kingdom; and this allows them to do the type of work that the employer is offering.
• a work permit or other approval to take employment that has been issued by Work Permits UK;

and one of the following documents:

• a passport or other travel document endorsed to show that the holder is able to stay in the United Kingdom and can take the work permit employment in question; or
• a letter issued by the Home Office confirming that the person named in it is able to stay in the United Kingdom and can take the work permit employment in question.

If you are found to be employing a worker who does not have a statutory excuse you could face a civil penalty of up to £10,000 per illegal individual.

Example

In November 2012 the UK Border Agency investigated a Tesco warehouse in Croyden and arrested 20 students for alleged breaches of visa terms that restricted the amount of hours they could work. The UKBA officials discovered the students, who were predominantly of Bangladeshi and Indian origin, had been working up to three-and-a-half times longer than their visas allowed.

The workers all had the right to work in the UK, but there were limits on the right. Investigations found they had been working between 50 and 70 hours a week during the school term, when their visas only allowed for 20 hours

Tesco was subsequently issued with a “notification of potential liability” and faced significant fines.

3.6 CRB checks

Normally, employers aren’t allowed to ask job applicants about spent convictions, but for jobs that need a CRB check this rule doesn’t apply. An employer must not apply for a check unless the job needs one. Tell the applicant why he’s being checked, and where he can get independent advice. The most common roles which require these sorts of checks are jobs which involve working with children and vulnerable adults.

Criminal records checks should not be requested until after a job offer has been made. However, you should make it clear, in writing that the job offer is conditional upon a satisfactory check being made.

There are two types of check, depending on the type of work. For most roles the standard check is sufficient. Jobs that involve caring for, supervising or being in sole charge of children or adults require an enhanced CRB check.

Type: of check	What it will check for	How long it normally takes
Standard	Spent and unspent convictions, cautions, reprimands, final warnings	About 2 weeks
Enhanced	As above – plus ‘approved’ information from local police records, and the Independent Safeguarding Authority (ISA) barred lists	About 4 weeks

Standard checks – To be eligible for a Standard level CRB check the position must be included in the Rehabilitation of Offenders Act (ROA) 1974 (Exceptions) Order 1975

Enhanced checks – To be eligible for an Enhanced level CRB check, the position must be included in both the ROA Exceptions Order and in Police Act Regulations.

You will find more detail in my book The Employer’s Guide to Recruitment – How to get the Right Man (or Woman) for the Job, published by BookBoon.

4) Contracts of employment

4.1 Introduction

The moment an applicant unconditionally accepts your offer of employment, a contract of employment comes into existence. The Employment Rights Act 1996 requires you to provide a new employee with a written statement of main employment particulars within two months of the employee starting his job.

4.2 Where is the contract contained?

The terms of the contract tend to come from a number of sources. The terms can be oral, written or implied, and typically come from the offer letter, written statement of the main terms of employment, employee handbook or company policies.

Contracts do not have to be in writing to be legally valid but having the terms and conditions written down can help avoid misunderstandings and disagreements later on. An oral contract is as binding as a written one, but its terms can be more difficult to prove.

The courts have established that all employment contracts have the following terms included, whether express or implied:

• to behave reasonably;
• to maintain trust and confidence through co-operation;
• to act in good faith towards each other;
• to take reasonable care to ensure health and safety in the workplace.

4.3 Legal requirements

The general rule is that employers must provide employees with a written statement of their main terms and conditions of employment within two months of starting their job. The written statement is not the whole contract, because contract terms may be found in other places, for example, the offer letter, but it does form a significant part of it.

The main terms must contain:

• the names of the employer and the employee;
• the full address of the employer;
• the place of work;
• the job title or a short job description;
• the commencement date of the employment;
• the duration of the contract; either fixed or permanent;
• the rate of remuneration and pay intervals;
• annual leave and other paid leave entitlements;
• hours of work (including overtime);
• sick leave;
• pension arrangements (where applicable);
• notice requirements; and
• reference to any collective agreements in force.

You should also have a dispute resolution process (discipline and grievance procedures). Include details of these in your main terms or refer to where they may be found.

Both parties should sign and date the written statement. You should also keep a copy of this for at least one year after the employee leaves the organisation.

4.4 Extra terms

Whilst it is not necessary, it is recommended that you also include the following:

• a probationary period;
• provision for lay off and short time working;
• a flexibility clause;
• a confidentiality clause;
• a clause which details the changes to conditions of employment;
• clauses relating to current issues e.g. rules about social media usage and personal mobile phones.

These ‘added extras’ will help to ensure that you are covered should any disagreements occur at a later stage. The lay off and short time provision for example, gives you added flexibility if you suddenly have to reduce your employees working hours. It is also advisable to state within the probationary clause that you have the right to extend the probationary period if necessary.

4.5 Updates and amendments

Should you wish to update or amend the contract of employment, there are certain procedural requirements that have to be undertaken to ensure that you are not in breach of any legalities.

Any change, other than the most minor, is likely to require the consent of the employee, preferably in writing. This is still the case even if the contract is oral or based on implied terms. Without this agreement, there is the risk that the employee may sue you for breach of contract or claim constructive unfair dismissal if he has sufficient service qualification. This is a year if the employee was employed on or before 5th April 2012 and two years if the employee was employed on or after 6th April 2012.

Any changes to the statutory written statement of particulars must be communicated to the employee no later than one month after you have made the change. Such a change will also require the employee’s agreement.

Make sure you consult affected staff about proposed changes. Any change which involves employees suffering financial loss is likely to be at risk of being a breach of the implied term of trust and confidence.

Example

The supermarket chain Asda decided to amend the contracts of employees and put them on a “new regime” of pay. Asda sought to ensure that no employees suffered a loss of pay and underwent an extensive consultation period.

Despite this, more than 700 claims were brought by Asda store staff claiming unauthorised deductions from wages, breach of contract and unfair dismissal. Asda sought to rely on a provision in its staff handbook (the variation clause) which stated, “The company reserves the right to review, revise, amend or replace the contents of this handbook, and introduce policies from time to time”

The tribunal found that the introduction of the new regime was a significant change, that pay was fundamental to the employment relationship and on ordinary principles Asda was required to obtain consent to the changes. However, the tribunal accepted that employers may reserve the contractual right to vary terms or change important aspects of the job, irrespective of whether the employee consents. If the change or variation falls within the contractual power to vary, it will be effective.

The Employment Appeal Tribunal (EAT) upheld the tribunal’s decision and held that the staff handbook permitted Asda to make the changes to the pay and work regimes without the consent of the employees. The wording of the handbook was wide enough to permit Asda to change matters set out in it.

Bateman v Asda Stores [2010].

Although this decision appears to give a very wide discretion to employers to make unilateral changes to contracts where there is contractual variation clause, in practice it should be treated with caution. Had Asda not consulted with its employees about the proposed changes, then the outcome could have been significantly different.

The importance of having a variation clause within your employee’s contract of employment is therefore quite important if you wish to give yourself maximum flexibility to make changes in the future.

5) The first few months

5.1 Introduction

The first few months will be an eye-opener for both you and your new employee. When someone starts a new job it can often take some time to ascertain how well he’s getting on. Many businesses choose to have probationary periods as it allows them to see how well the new employee takes on the job requirements. This gives you the scope to set targets and monitor improvement if the person continues to fall short of expectation.

5.2 Purpose of probation

The probationary period only really has one purpose: it allows you to evaluate the performance of your employee to decide whether or not he meets your standards. If you have followed a rigorous selection procedure, then hopefully there will be no problems. However this can never be guaranteed; many applicants look great on paper, but when it comes down to the nitty-gritty, they underperform and disappoint. The probationary period allows you to spot and prevent under-performing employees from progressing in your company.

To effectively evaluate your employee during the probationary period, set up weekly or monthly review meetings with the aim of providing constructive feedback. This should focus on both the positive and negative points of their performance and include examples of success as well as examples of areas for improvement. If the employee is struggling, give him something more attainable. On the other hand, if someone is completing the tasks with ease, provide something more challenging.

5.3 Less favourable terms during probation

Many employers enhance statutory rights such as sickness and holiday entitlement. These come at a cost, so during the probationary period, you may wish to limit some or all of any enhanced contractual rights where given. For example, its quite common to limit sick pay to statutory sick pay (SSP) during this time. In a sales department it is also quite usual for a person on probation to receive a lower commission from sales compared to an employee with longer service.

During the probationary period, an employee has short service and is unlikely to succeed with a claim for unfair dismissal, although he is not excluded from making claims for unlawful termination.

Example

Miss Whyte began her three month probationary period with Capital & Regional Property Management Ltd. on 26th April 2004.

On 16th July, she was dismissed because of various concerns about her performance which related to concerns about her sickness absence and failure to keep on top of her work.

What had been earlier described as a “poor” sickness record of three days had since increased to another three days, but the company was aware that those three days’ absence related specifically to Miss Whyte’s pregnancy. As a result of this absence, she found it difficult to keep on top of her work and reduce her backlog.

The tribunal found that although there were reasonable areas of concern about Miss Whyte’s performance that began before the employer became aware of her pregnancy, it was too quick to reach a decision to dismiss without giving her the opportunity to improve through an extension of her probationary period.

The tribunal found that the dismissal at that time would not have taken place were it not for the knowledge of Miss Whyte’s pregnancy and the fact that she took time off work for pregnancy related ill-health. The tribunal found the dismissal to be sex discrimination and unfair dismissal.

Whyte v Capital & Regional Property Management Ltd [2004].

NB While there is a service qualification for unfair dismissal, employees have the right not to suffer unlawful discrimination at any stage of employment and there is no service qualification for such claims.

5.4 Extending the probation

It is normal for probationary periods to last between one month and six months but if the employee doesn’t meet your standards, then it may be appropriate to extend the probationary period. This will allow you more time to assess the employee’s performance.

It is important to give your employee regular feedback and ways to improve throughout this period. If no set targets are given then it can be hard to give an objective reason why the employee’s performance does not meet the requirements.

If, after this time, the employee demonstrates improvement, then the probation will end and he will become a permanent employee. However, if no improvement is seen then you have the right to terminate the employment when the extended period is over.

5.5 Dismissal at the end of probation

If you dismiss at the end of the probationary period, make sure you follow the correct procedure. At the minimum, this will entail writing to the employee to set up a formal meeting to discuss the employee’s performance and the approaching end of the probation period. The employee should be advised of his right to be accompanied by a work companion or a trade union representative. The meeting will formally explore the issues and, if after an adjournment you are of the same mind, you should confirm your decision to dismiss. The employee will be advised of his right of appeal and the whole thing should be confirmed in writing.

5.6 Dismissal after expiry of the probation period

Make sure you properly manage the performance of employees during the probationary period. Prompt action should be taken to address any concerns and feedback on targets to be achieved should be given. If a probationary period is to be extended ensure that this should be done prior to the period end.

6) Employee rights

6.1 Introduction

Employees have a wide range of statutory rights. Some, like the right to redundancy pay, are acquired after a period of time. Others apply immediately, for example, the right not to suffer unlawful discrimination. You can always enhance statutory rights, but you cannot reduce them, even with the agreement of the employee.

6.2 Pay

All employees are entitled to be paid for the work that they have done, and unless the employment contract states otherwise, they are also entitled to be paid if they are ready and willing to work but you have not provided them with any work to do.

With a few exceptions, all workers are entitled to the national minimum wage. Any pay above this is dependant on the employee’s individual contract of employment.

Example

Pendragon plc is a large car dealership. It employs around 10,000 people in 250 UK and four US locations. The company runs a scheme allowing staff to lease a car from its car dealership in return for a deduction from the net pay of participants. The payment for the benefit is recouped from employees by way of a deduction from their wages, with the company retaining the sums and not remitting them to an external party such as a finance company. HMRC carried out an investigation into the pay arrangements for 40 staff.

HMRC argued that Pendragon made deductions from workers’ pay for the use of lease cars and salary-sacrifice schemes. This resulted in pay falling below the national minimum wage.

The company accepted that the money taken from the workers’ pay brought their pay below the national minimum wage in the amount of £30,254.68. However, the company argued that the amounts taken were not deductions, but were payments made by the workers to the employer for their own benefit and use. They further said that the sums had been taken directly from the workers’ net pay “purely for administrative simplicity”; and to disallow its arrangement would be contrary to the Government’s aims in enforcing the national minimum wage.

The tribunal rejected the company’s submissions and ordered it to pay a total of £30,354.68 to the 40 workers to meet the underpayments. Pendragon has also been ordered to pay a £5,000 penalty for non-payment of the national minimum wage.

Pendragon v HMRC [2012]

You are only allowed to make deductions from an employee’s wages if:

• the deduction is required by law. For example, tax and national insurance;
• allowed for by the employee’s contract. There must be a specific clause in the contract which allows for that particular deduction to be made; or
• the deduction has been agreed to in writing by the employee before it is deducted.

6.3 Pension

6.3.1 Legal framework

New regulations which came into force in 2012, make it a requirement that all employers will have to provide a pension scheme in which eligible employees will automatically be enrolled.

The exact date on which a business will be affected is dependent on the number of employees employed in April 2012. Smaller businesses will not be affected until 2016, however, it is worth investigating the exact date and the likely costs to your organisation.

Eligible employees are defined by the Pensions Regulator as workers who:

• earn more than the minimum earnings threshold;
• are aged between 22 and the state pension age; and
• work in the UK.

The main things that you must do as an employer are:

• provide a qualifying scheme for your workers;
• automatically enrol all eligible jobholders into the scheme;
• pay employer contributions for eligible jobholders to the scheme;
• tell all eligible jobholders that:

• they have been automatically enrolled; and
• they have the right to opt out if they want;

• register with the Pensions Regulator.

You must contribute at least 3% of your workers earnings, although you can choose to contribute more if you wish.

Employers who don’t have a suitable pension scheme can make use of NEST, a simple low cost government sponsored scheme run by a not-for-profit trust.

For all employers, compliance with the pension reforms is compulsory. It is therefore crucial that you understand how your workforce is categorised under the legislation, and make plans to adhere to the requirements.

6.3.2 Employer’s checklist for pension auto-enrolment

1. Identify the date when you must start auto-enrolment.
2. Identify a suitable pension scheme to meet the minimum requirements for auto-enrolment. This includes minimum contribution levels (for defined contribution schemes) or benefit levels (for defined benefit schemes).
3. Establish which of your job holders are not already enrolled in a compliant scheme. Jobholders include employees, temporary workers, directors employed under a service contract and may include agency workers.
4. You will need to meet the requirements in respect of minimum contribution levels for your employees. For auto-enrolment purposes, contributions are based on a definition of earnings which includes salary, wages, commission, bonuses and overtime. Contributions are only paid in respect of earnings in a