Redundancy – Making a Fair Selection   Deciding upon suitable selection criteria in a redundancy situation can be a potential minefield and the consequences of getting it wrong can be expensive.

National Minimum Wage Increases   The National Minimum Wage is set to rise from 1st October 2008.

Changes to Liability Insurance Certificate display   

Migrant Workers   Immigration controls have changed.

Redundancy – Making a Fair Selection

Credit crunch prompts surge in employers seeking advice on sacking staff 

Financial institutions and construction companies have announced more than 10,000 job losses since the end of June, and now there are fears that these redundancies will spread to other sectors of industry.  (Telegraph August 08)

Redundancies at 'seven-year high'

More UK bosses are being made redundant than at any time in the past seven years, according to a new report. Company bosses in East Anglia have suffered the most from deteriorating economic conditions with redundancies affecting one in 12. (BBC News May 08)

With news of the "credit crunch" dominating the headlines on a daily basis, it is hardly surprising that many businesses have given consideration to reducing their labour costs.

Unfortunately, even though redundancy is a potentially fair reason for dismissal managing redundancy is a complex matter and getting it wrong can lead to costly consequences.

Firms risk Tribunals by making Credit Crunch Redundancies

Employers are risking employment tribunal claims by not following statutory redundancy procedures when laying–off staff as part of their credit crunch cutbacks, employment law firm Croner Consulting has warned. According to the UK Tribunal Service, there has been a 42% rise in employment tribunal claims during the last 12 months. Croner’s employment technical consultant, Gillian Dowling, said: Small Business News (3rd August 2008)

Who Stays and Who Goes?

Ascertaining which employees are to leave the business can be an area where errors are often made.  Employers have an obligation to apply fair, objective selection criteria in deciding which employees are to be made redundant.

Last in, first out (LIFO) has been traditionally regarded as the easiest method, and until recently was the most common method used.  However, with the introduction of the Age Discrimination legislation in October 2006, any use of LIFO may now place an employer at risk of a discrimination claim.

So what criteria are considered to be reasonable?

Work performance may be reasonable if your organisation sets employees measurable targets and regularly reviews staff performance against these targets e.g. through the use of employee appraisals.  A subjective opinion given by a manager will not be acceptable.

Disciplinary records can provide a good measure provided that the company process has been completed fully and fairly.

Attendance records can be used.  However, employers must discount any absences related to disabilities or maternity to avoid attracting discrimination claims.  Employees are likely to feel that their absences from work due to ill health were justified.  Indeed, an historically good attender who has suffered unusually high absence levels during the year may be unfairly penalised and for this reason it would be unwise to rely solely upon this criterion.

Employee's skill and knowledge would be considered reasonable providing they are assessed objectively. For example, holding a job specific qualification,  knowledge of a specific area of the business that will be required in the future.

Selection criteria are of great importance.  Employers should spend significant time and consideration when deciding upon the criteria that you will use.  For criteria to be considered to be reasonable they should:

be relevant to the business change situation;

be easily understood;

be objective;

not discriminate in any way i.e.by sex, race, disability or age.

Picasso HR advisors can help with deciding upon selection criteria and in steering your company through the legal hoops posed by the redundancy situation.  Avoid becoming tomorrow's headline and contact us for advice.

National Minimum Wage Increases

The National Minimum Wage is set to rise again on 1st October 2008.  The new rates are detailed below:

• Adult minimum wage will increase from £5.52 to £5.73.
• Development rate for 18-21 year olds will increase from £4.60 to £4.77.
• 16-17 year old rate will increase from £3.40 to £3.53.

The Government has announced new measures to enforce payment of the minimum wage and intends to toughen up penalties on those employers who are found to be breaking the law.  These include increasing the maximum penalty for non-payment to an unlimited fine with the most serious cases to be tried in a crown court.

 Don't forget.  Ensure you are prepared for the 1st October deadline.

Changes to Liability Insurance Certificate display

Under proposed amendments, from 1st October 2008 it will not be a legal requirement for companies to display their Employers Liability Insurance; however it must be made available in an electronic format or similar so that it is easily and readily accessible to all employees.

For smaller businesses it will probably be easier to continue displaying the certificate as before.

Bear in mind that the fine of £1000.00 still stands if the certificate is not made readily available for all employees, either displayed in the workplace or electronically on the company intranet for example.

Migrant Workers

Potential employees from outside the European Economic Area (EEA) who are looking to work in the UK now have to demonstrate that they are highly skilled or obtain sponsorship from a UK employer in order to work in the UK.

The EEA is made up of the following countries:

Austria, Belgium, Czech Republic, Cyprus, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Slovakia, Spain, Sweden, United Kingdom,

5 new categories of work permits known as tiers have been created.  These apply to all potential employees that are not EEA nationals.

Tier 1 permits will only be allocated to highly skilled workers.  These individuals can apply for this permit themselves and the permit will allow them to work in the UK and move between employers.

Workers applying for permits in tiers 2 to 5 will require their potential employer to obtain a licence in order to sponsor them.  Their permission to work will restrict them to working soley for their sponsoring employer.

Tier 2 - sponsored skilled workers

Tier 3 - low skilled positions required to cover shortfalls in the UK labour market

Tier 4 - students

Tier 5 - youth mobility schemes/temporary workers

To enforce the new controls, penalties for employers found to be illegally employing an individual have increased to £10,000 from February 2008.

To protect against employing illegal workers we recommend that employers should:

• Ask to see every applicant's original passport prior to them commencing employment.  If they do not own a passport they should be asked to bring in a full birth certificate showing the names of both parents together with a document such as a P60 form showing their national insurance number.
• Ensure that you check the document.  Does the photograph look like the person in front of you? Is the date of birth consistent?
• If you are happy with the document, take a copy.  You should sign and date this copy with the comment "I certify this is a true copy of the original".  The copy should then be kept on the employee's file. 
• If the applicant is from outside the EEA ensure that they hold a Tier 1 permit or have permanent residence granted.
• Hold the necessary licences if you intend to employ people from outside the EEA.

Potential employees from EEA countries will not require sponsorship to work in the UK.  However individuals from the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia and Slovenia must apply for a workers registration document within one month of commencing work with a UK employer.  A copy of this document should be retained on the employee's file.

If you have, or plan to recruit migrant workers, Picasso HR can help you to check that you have the right documentation in place.  Contact us for more information.

The information in this newsletter is of a general nature and is not a substitute for professional advice. You are recommended to obtain specific professional advice before you take any action.

For further information, advice or assistance on any of the matters raised in this newsletter please contact Picasso HR on 01473 890037.

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