The cost of workplace sickness and steps to reduce it   

Working Time Regulations 1998   Holiday pay regulations - employers still get it wrong

Rolled-up holiday pay   It's now conclusive

Young workers   Special rules under Working Time Regulations

The cost of workplace sickness and steps to reduce it

Imagine yourself feeling over-stressed and overworked, the thought of facing another day playing catch up and being reactive makes your stomach churn.

Would you not look for an excuse to take a few days off work? This behaviour can turn into a vicious circle leading to reduced levels of productivity, performance and increased absence. Work-related stress was the top cause of sickness absence, with latest figures from the HSE suggesting that nearly 600,000 of us took time off for stress in 2001/02. There is no doubt that it is an issue employers will have to take more seriously in the future as the six point stress code will be launched next year.

For details of the code see our August newsletter

Do you know the true cost of sickness absence in your organisation? It is not enough to just take into account the salary and temporary staff cover. For a true reflection of the costs involved, organisations should also consider lost productivity, lost sales opportunities and reduced product and service quality. Employers should also take into consideration the effect on the people who are left to cope with the work pressures caused by absent colleagues.

Managers have a significant role to play in managing lost time. They have the day to day responsibility of managing people performance, implementing relevant policies and procedures and accessing timely clinical advice.

What you can do

Here are a few steps that employers can follow to reduce unnecessary absenteeism

• Introduce a policy that is clear and concise to avoid any misinterpretations
• Ensure a return to work interview is conducted by trained line managers, who will address issues promptly. Line managers should also have the relevant legal training for the situation.
• Anything longer than 2 weeks absence must be investigated and action taken if necessary.
• Monitor the pattern - The reason for absence should be recorded and checked periodically since it can indicate stress or other health problems.
• Ensure managers at all levels take workplace sickness seriously and that line managers are given the autonomy and tools to provide the necessary guidance to reduce it.
• Support health initiatives and provide information on health living. The British Heart Foundation, for example,  provides a Workplace Health Foundation toolkit, with information, practical ideas and materials to help employers encourage their staff to lead healthier lifestyles. British Heart Foundation website

For ‘Return to work interview’ training contact us on 01473 890037.

Causes of workplace sickness

Companies cannot effectively manage attendance unless they know the true causes and whether employees tell the truth will depend on the organisation’s culture.

Firstly, it is important to be aware of the main health issues that can arise in the workplace:

Stress

As we have already said, stress can be a major issue and the main cause of sickness absence. Ensure senior and line managers:

• Understand the tough new standards that are going to be introduced by the HSE in 2004 – organisations that don’t come up to scratch could face fines.
• Know how to recognise the signs and more importantly how to manage the situation instead of ignoring it.

Musculoskeletal disorders

Back and limb problems affect 1.1 million people each year and result in loss of around 12.3 million working days. Poor working habits and bad habits have a lot to answer for. Employers have a legal obligation to ensure safe working practices and that their people are not being injured by work.

Alcohol & Drugs

Research suggests that one person in 13 is dependent on alcohol and is responsible for 3 to 5 per cent of all absences from work. With workplace stress on the increase, this figure can only go up. Employees suffering from a drink-related problem are entitled to confidentiality and support.

Drugs affect the way a person thinks, behaves and perceives the world around them.

Look out for the following signs; poor performance, loss of concentration, mood swings, aggression and a tendency to become confused. Managers need training on how to deal with the problem in a confidential and supportive manner.

Employees in high risk jobs will not perform at their best if they are alcohol or drug abusers and will be a danger to themselves, colleagues and possibly the public.

Ensure you have a clear policy on alcohol and drugs, which will help managers ensure they follow procedures and deal with problems appropriately.

If you believe you have a problem in your organisation and would like confidential advice, please call Lina Hogg on 01473 890037.

Smoking

We mentioned the risk of passive smoking in last month’s newsletter. Smoking contributes to higher sickness rates and increased levels of early retirement due to ill health. Employers would do well to support those smokers trying to give up. A large number of organisations have introduced a no-smoking policy to help employees give up and prevent passive smoking.

Other health areas employers need to be aware of are heart disease, asthma (if you discover that an employee is suffering from work-related asthma, act quickly and remove them from the cause), diabetes and dermatitis.

Working Time Regulations 1998

Employers still get holiday pay wrong

The Working Time Regulations came into force in 1998 and has seen amendments since then. Most employers now seem to have got to grips with the 48 hour per week working time limit. However, when it comes to calculating holiday pay many small and medium sized companies still seem to be unaware of what is required of them.

If your employees earn commission or are on a bonus scheme, and it is a contractual arrangement, do you know how to calculate their holiday pay? This applies to employees whose hours and/or salary may vary from week to week. In situations like this, the Working Time Regulation makes it very clear that it is not a case of basing it on just their basic salary.

Do you know how to calculate holiday pay as part of their final salary on termination of employment? We look at Taylor v East Midlands Offenders Employment Consortium [2000] for what the Employment Tribunal Appeal concluded on this subject.

Employers failing to comply with the regulation could face hefty wage bills to compensate employees who have been incorrectly paid for holidays. It is not too late to do something about it. 

• All workers whether part or full-time are entitled to four weeks’ annual leave and it accrues from day one.
• There is no statutory right to take bank holidays off.
• A week’s leave should allow a worker to be away from work for a week. So it is the same length of time a worker works in a normal week.
• Workers must give the employer notice that they wish to take time off for holiday.
• Employers can ask workers to set days aside for shutdown periods such as Christmas.
• On termination of employment, all workers have the right to be paid for holiday accrued.

Taylor v East Midlands Offenders Employment Consortium [2000]

Mr Taylor was full time employee working 5 days a week with an annual salary paid monthly. His holiday entitlement as defined in his contract of employment was 20 days in addition to bank holidays. Mr Taylor had 10 days holiday remaining when his employment was terminated. Mr Taylor argued that the outstanding holiday pay should be calculated one way, but his employers argued another.

Mr Taylor argued that the annual or monthly salary should be divided by the number of working days and that he should receive holiday pay based on that rate. However, what his employers did was to calculate a monthly salary by dividing the annual salary by 12, and then divide that monthly salary by the number of days in the current month to obtain the rate for a days pay.

The Employment Tribunal judged that the employer was right. However, the case went to appeal and the EAT (Employment Appeals Tribunal) disagreed. They said the Tribunal should have grossed up the 10 days holiday to 14 calendar days so as to take account of weekends.  The EAT said that the amounts should be grossed up and referred to the calculation of holiday pay in The Working Time Regulations - Regulation 16 and the definition of a weeks pay in the Employment Rights Act. The EAT felt that a method of calculation which varied according to the month was not sound.

The EAT indicated the correct method of calculation if 10 days holiday is owed was as follows. Divide gross salary by 365 to get a days pay, and then multiply by 14. The additional amount due to the applicant was around £200 so there is a significant financial difference depending upon the method of calculation.

Calculating a weeks pay

Fixed hours and pay

For those employees whose hours and pay are fixed the calculation for holiday is simply the pay due for basic hours.

Pay for overtime hours is not included unless it is contracted overtime, that is, it is not voluntary.

Hours constant and pay varies

This may be the case with piece workers or workers on commission and/or bonus. Weeks pay is the averaged hourly rate multiplied by normal weekly hours. To calculate the hourly rate:

• Divide weekly pay over previous 12 weeks by the number of hours worked during the same period.
• Any week in which the worker did not receive any pay is replaced by the week before the 12 weeks when they were paid. If the workers has worked less than 12 weeks than it is averaged over the number of weeks they have worked.

Commission or performance related bonus:

• For those who are on commission or on a bonus scheme, 12/13 of any quarterly bonus or 12/52 of any annual bonus should be included. Only bonuses specifically related to a week’s work should be included. Where remuneration varies with the amount of work done, commission and bonuses should be included in the calculation of an employee's week's pay.
• General profit-sharing or other such bonuses are not included.

Hours and pay varies in a set pattern (Shift workers, sales representatives, or commission only )

This is for shift workers who may work a set pattern but the hours and pay vary each week. Week’s pay is average number of hours worked multiplied by average hourly rate. To calculate average number of hours:

• Add up all hours worked over past 12 weeks and divide by 12
• Hourly rate is calculated as above.

Rolled-up holiday pay

Rolled up holiday pay is where the employer pays the employee a salary which includes an element for the time when holidays are taken. The employee then receives no pay for the holiday period. The Employment Appeals Tribunal concluded recently that rolled-up holiday pay can be permissible, provided that it is specified clearly in the contract as a sum or % and that it forms a true addition to the normal contractual rate of pay.

Young workers

The employment of young workers, people aged between the minimum school leaving age and 18, is regulated under the Working Time Regulations 1998 (SI 1998 No.1833).

A young person stops being of school age on the school leaving date (the last Friday in June) in the year they are 16.

In addition to regulations that apply to all workers, there are special provisions for minimum rest and break periods for young workers:

Hours

• The working time of a "young worker" is limited to 40 hours per week and 8 hours a day. There is no opt-out provision on this 40 hour week as there is with the "adult" 48 hour working week.
• Night working is also prohibited between the hours of 10pm-6am or 11pm-7am.

Daily Rest

• An uninterrupted rest of 12 hours, in each 24 hour period in which they work
• A rest break of 30 minutes for each period of work lasting more than 4.5 hours

Weekly Rest

• Two days off each week and cannot be averaged over a two-week period

If a young worker is working for more than one employer, the time he or she is working for each one should be added together to see if they are entitled to a rest break.

In certain exceptional circumstances these rules may be relaxed, although compensatory rest periods must then be given within three weeks.

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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