What you should know about employing people in...the UK
An increasing amount of UK law derives from directives issued by the European Union, which set minimum levels of protection for employees in several work-related areas.
However these directives must be implemented into UK national law before they can officially take effect and the UK government has a certain level of flexibility in determining exactly how to implement them.
1. Which laws are relevant?In the event of a conflict between EU and UK law, the presiding UK court or tribunal can make a reference to the European Court of Justice for a judgment which should in turn assist the UK court in resolving the case before it. Generally, EU law takes precedence over UK law.
2. Protection against dismissalEmployees in the UK have a statutory right not to be wrongfully or unfairly dismissed.
A wrongful dismissal claim will arise where an employer terminates an employee's contract in breach of its terms, typically by failing to give the employee sufficient notice. Employees have a statutory right to one week's notice after their first month of service, rising by one week for each year of service up to a maximum of 12 weeks’ notice for employees with 12 or more years’ service.
An unfair dismissal claim will arise where an employer has failed to dismiss the employee for one of six prescribed statutory reasons or has acted unreasonably in doing so. The six prescribed reasons are capability, conduct, redundancy, retirement, statutory restriction (where an employee cannot legally continue in their job such as a lorry driver who receives a driving ban) or some other substantial reason (such as a refusal to agree to a change in terms or a personality issue).
The employer must also be able to demonstrate that they have followed a fair procedure in terms of investigating the issue and giving the employee a reasonable opportunity to respond to the issues.
Compensation for an unfair dismissal is generally limited to approximately £70,000 but there are certain situations where no limit applies, such as where the dismissal is related to a pregnancy or in a whistle-blowing situation.
3. DiscriminationEmployees are protected from discrimination on the grounds of disability, race, sex (including pregnancy, marital or civil partnership status or gender reassignment), sexual orientation, age and religion or belief. The discrimination in question can be direct or indirect (such as where a dress code indirectly discriminates against individuals who are required to wear a particular item as part of their religion). The legislation also extends to prohibiting the victimisation of an employee who has alleged discrimination and the harassment of an employee for a discriminatory reason.
The level of compensation that can be awarded for a breach of the discrimination laws is unlimited.
4. SalaryMost workers in the UK are entitled to be paid a National Minimum Wage ("NMW"). The exact rate depends on the age of the worker [and can be found at HMRC]. It is a criminal offence for an employer to deliberately pay a worker less than the NMW. Amongst those who are not entitled to the NMW are volunteers, the self-employed and those on certain apprenticeships or government training programmes.
Employers are also prohibited from making any deduction from an employee's wages unless the deduction has been authorised in writing by the employee or is permitted either under the employee's contract or by law (such as for tax purposes).
5. Working HoursWorking hours are regulated by the Working Time Regulations 1998 ("WTR"). The WTR prohibit workers from working on average more than 48 hours per week (calculated over a 17 week reference period). However UK employers can ask workers to consent to opt out of this limit, provided that the worker retains the right to change their mind later.
The WTR also provides the right to daily, weekly and in–work rest periods and places restrictions on the amount of night work that workers can perform, although certain exceptions apply such as where continuous production is required or someone is sufficiently senior to set their own working hours.
A worker is also entitled under the WTR to a minimum statutory paid holiday entitlement. This is currently 5.6 weeks per year which equates to 28 days for someone who works 5 days a week, which can include the UK's 8 annual public holidays.
6. Pension and BenefitsTwo forms of pension provision operate alongside each other in the UK: the state pension and private pensions.
Throughout an employee's working life, national insurance contributions are automatically deducted from their salary. Provided that sufficient contributions have been made by the time of their retirement, an employee will be entitled to a basic state pension.
Employers with over five employees are currently required to ensure that employees have access to some form of private pension scheme and, if the employee joins, to arrange for employees' contributions to be deducted and paid to the scheme. There is no requirement for an employer to contribute to that scheme on an employee's behalf. There are numerous pension providers who employees can engage to provide a private pension.
However this is scheduled to change in 2012 when employers will be required to automatically enrol jobholders in a workplace pension scheme that meets certain qualifying criteria and also to make mandatory minimum employer pension contributions on behalf of those employees who join the scheme.
The provision of other benefits such as life assurance, private medical insurance and permanent health insurance is at the choice of the individual employer. There is no statutory right to such benefits7. Terms of employmentAll employees are legally entitled to receive within two months of starting employment a written statement setting out the main terms on which they have been employed. In reality, most employers deal with this by providing a written contract of employment at the start of employment.
The information which must be provided is: name of employer and employee, place of work, salary, hours of work, holiday entitlement, sickness absence and pay entitlements, notice periods, details of the disciplinary and grievance procedures, whether there are any pension arrangements in place and whether a collective agreement applies to the employment. Failing to provide this statement may result in the employer having to pay the employee a sum equal to between two and four weeks' wages.
8. Sick PayAll employers are required to pay Statutory sick pay ("SSP") to employees who are off work due to illness or injury for at least four days in a row (including weekends). SSP is set at a relatively low level [VIEW HERE]
Employees are entitled to be paid SSP for up to 28 weeks in any period of incapacity for work. After 28 weeks the employee will have to claim Employment and Support allowance from the Government Department for Work and Pensions.
Most employers choose to pay more than SSP and details of Company entitlements should be included within the written statement of terms/employment contract.
9. Data ProtectionEmployees in England and the rest of the EU have greater rights to privacy in the workplace than in many other countries. The current data protection laws require all employers to process any personal data in accordance with eight specific principles. These principles essentially aim to ensure that such information is processed fairly and lawfully and is not dealt with, shared or maintained in inappropriate ways. The legislation also gives a number of key rights to employees including the right to find out what personal information is held on computer and most paper records.
10. Restrictive CovenantsEmployers are at liberty to include restrictive covenants in a contract of employment. These are designed to limit the employee's ability to damage the business following the termination of employment. Such covenants can involve placing restrictions on an employee's ability to work for a competitor or on their right to solicit customers of their former employer. However it is vital that employers ensure that the scope of any restriction, such as in time or distance, is never any wider than is reasonably necessary for the benefit of the business. This is because if a restriction is deemed too excessive, it will generally result in the whole clause being completely void.