With the new year bringing fresh hope for businesses in the year ahead, this is the ideal time to make sure your company HR policies are compliant with legislation and all records and procedures are up to date and accurate. This may sound laborious, but the penalties for poor record keeping for an employer should be enough to push it higher up your ‘to do list'.
The credit crunch has impacted on employee relations in companies, resulting in a huge increase in disciplinary and grievances procedures being instigated by both management and employees. The number of Employment Tribunal (ET) claims lodged by employees against their employers has soared by 43% in a year. With effect from 1 February 2010, the maximum compensatory award in unfair dismissal cases is now £65,300. This is a slight decrease from the previous maximum award of £66,200. Each year, the maximum award is reviewed and is usually increased, in line with the retail prices index (RPI). The statutory maximum has increased steadily in line with the RPI since 1999, but reduced with effect from 1 February 2010 to reflect the recent fall in the RPI.
Employers must ensure their compliance and termination processes, internal control and investigation policies are up to date and effectively enforced with sound management training in order to avoid damage to the company reputation (which could also lead to negative publicity and loss of customers) as a result of having to defend an Employment Tribunal claim. Staying out of Tribunal can be good business practice as negative publicity is not only costly in money terms but also damaging to a growing business.
All small business owners must make sure their company policies are fair and consistent. Policies act as a way of communicating your organisation's values and practices to employees. At the same time, many solicitors will warn their clients that poorly drafted policies may land you in court. Well-written policies can both serve as an effective communication device and help you stay out of court, or if necessary give you a better chance of winning.
Consequences of poor record keeping
In a recent high profile situation with Baroness Scotland MP, the importance of record keeping of new employees is highlighted. The Immigration, Asylum and Nationality Act 2006 along with the Immigration (Restrictions on Employment) Order 2007, brought in new requirements for employers to check the eligibility of employees to work in the UK. They also set out civil penalties for employers who do not carry out the necessary checks and employ illegal workers and criminal sanctions for employers who knowingly employ illegal workers.
Civil penalties
A civil penalty of up to £10,000 per employee can be imposed on an employer who employs an adult who is subject to immigration control and does not have permission to work in the UK. However, an employer can be excused from the penalty if appropriate document checks were carried out before the person started work, ie checking validity of the document and keeping copies. It is therefore critical to carry out the necessary checks and copy the relevant documents for new employees.
To ensure consistency and avoid any potential discrimination claims, employers should request the same documents from all new prospective employees at the recruitment stage. Companies who ignore these 'good employment practices' may land themselves in hot water and may be subject to a financial penalty, which could have been avoided.
Policies Requiring Review
Most employers develop policies on the following topics which need reviewing and updating:
- Employment contracts
- Pay procedures
- Benefits (including any paid holiday, sick leave, and other forms of leave)
- Meals and breaks
- Personal conduct
- Attendance and punctuality
- Sexual and other forms of harassment
- Equal employment opportunity
- Disciplinary procedures
- Termination
SME policies should be considered dynamic, not static. You may need to add to them, revise them, and even withdraw them to meet the needs of your business as it grows and changes.
For a free initial consultation to help your business review your HR requirements and comply with employment legislation please call 0845 0949605 or visit www.jdshr.co.uk
