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UK HR Solutions: Managing performance issues

Welcome to the next post in our weekly series of hands-on guidance for UK HR professionals. In this series we look at common HR issues that you’ll encounter in the workplace and give you practical guidance on how to deal with them. Over the course of the series we’re covering a variety of topics, such as how to handle grievances, disciplinaries, suspension, sickness absence and much more besides.

This week we look at managing performance issues.

Click here to read our guidance note on what to do when a performance issue arises.

This article was co-written with Paralegal Peter Summerfield.

UK HR Two Minute Monthly: disability discrimination; TUPE; employment status

August 11, 2020

Categories

As we move towards a ‘new normal’, our August 2020 update outlines some of the key non-COVID related employment law developments in the UK over the last month. It includes a TUPE-related ECJ judgment which takes a different approach to our usual domestic position, as well as cases on disability discrimination and agency workers. We also provide an update of other recent points of interest. You can find our latest UK COVID-19 employment law updates for the UK here.

Unfair dismissal of long-term sick employee does not automatically mean dismissal is disability discrimination

The Employment Appeal Tribunal (‘EAT’) has held that an employment tribunal erred in focusing on an employer’s decision-making process when considering whether a dismissal arising from disability was proportionate.

The employee was dismissed for disability-related sickness absence. The employment tribunal found that she had been unfairly dismissed. It also upheld the employee’s claim that her dismissal constituted discrimination arising from disability, rejecting the employer’s objective justification defence to the disability discrimination claim. It held that the employer’s aims of protecting scarce public resources and reducing the impact of the employee’s absence on her colleagues were legitimate but that it was not justified because it was not a proportionate means of achieving either aim.

The EAT upheld the employer’s appeal against the finding of discrimination. Having accepted that the employer had legitimate aims for the dismissal, a balancing exercise between the employer’s needs and the discriminatory effect of the dismissal should have been carried out. The fact

Extension of UK Off-Payroll Working Rules (often referred to as “IR35”) delayed to April 2021

Summary

The extension of the UK off-payroll working rules to private sector clients, due to take effect from April 2020, has been delayed by one year. This follows growing calls from businesses and business leaders given the difficult and uncertain times faced by many in light of the coronavirus pandemic. This is a huge relief for many contractors and businesses but it is just a postponement. The extra time should be used wisely to prepare for the changes; given the year-long extension it is unlikely that HMRC’s promise not to be ‘heavy handed’ on penalties during the first year of IR35 will stand.

The delay may, however, put some in a difficult position. If, in anticipation of the new rules coming into force, it has already been determined by a private sector client that a relationship would be one of employer/employee if the intermediary was not involved, the intermediary (in most cases the contractor’s PSC) should seriously consider operating PAYE and account to HMRC for employer/employee NICs and employee income tax accordingly. HMRC previously stated that it will not carry out targeted campaigns into earlier tax years where a client determines that a worker would be an employee if engaged directly by the client. However, HMRC may see things differently if a determination has been made in relation to the current working arrangements, in anticipation of the new rules coming into force, and that determination is now ignored. Some contracts may also already have been re-negotiated on the basis of

IR35 – 5 key milestones to ensure you’re ready for the new UK regime

Summary

With the revised IR35 (off-payroll working) rules coming into force in the UK for private sector employers in just a few weeks, are you ready for the new regime? Here are 5 key actions to benchmark your readiness.

Are you definitely in scope for the new IR35 rules?

‘Small’ companies can continue to operate the existing IR35 regime (obligation to assess IR35 status and account for tax/NICs falls on the Personal Service Company (PSC)), rather than apply the new regime which puts the obligation on the fee payer/client.

‘Small’ companies are those that satisfy at least two of the following requirements:

  • annual turnover not more than £10.2 million;
  • balance sheet not more than £5.1 million; and
  • not more than 50 employees.

If you are a subsidiary within a group, your parent company must also satisfy the small company test for the exemption to apply.

Have you mapped all your Personal Service Company (PSC) relationships?

This includes identifying both direct engagements with PSCs as well as those provided through an agency.

Have you set up robust processes to make consistent employment status determinations and appropriately communicate them?

The client (the recipient of the consultancy services) must take reasonable care determining whether the consultant would have been an employee if they were engaged directly. HMRC expects you to make a correct and complete determination, and preserve sufficient records to show how the decision was reached. Blanket assessments of a PSC population as a whole are unlikely to be

UK HR Two Minute Monthly: religious discrimination; TUPE; IR35

Summary

Our first update of 2020 outlines key UK employment law developments over the last month. It includes cases on the definition of ‘employee’ under TUPE, the impact of a job evaluation survey in relation to equal pay, direct maternity discrimination, dress codes and religious discrimination, loss of privilege, and a recent tax tribunal decision on the application of IR35. We also outline other points of note, including the publication of the ICO’s new draft guidance on Subject Access Requests.

Dismissal violated employee’s freedom of expression under Article 10 ECHR

The European Court of Human Rights has held that that an employee’s right to freedom of expression under Article 10 ECHR was violated after he was dismissed for posting on a personal knowledge-sharing website.

The employee described himself in his website blogs as an expert in HR management who worked at a large bank, but did not mention his employer by name.

The employee argued that the termination of his employment breached his right to freedom of expression and appealed to the ECHR. The Court addressed four main questions when considering whether the right to freedom of expression had been infringed:

  • Nature of the speech – the Government argued that as the blog was only addressed to HR professionals (rather than to the public generally) Article 10 was not engaged. However, the ECHR noted that free speech does not only protect comments that demonstrably contribute to a debate on a public matter.
  • Motives of the author – in this case,
  • Medium and large businesses getting ready for private sector off-payroll working rules in the UK

    Despite calls for the start date to be delayed, it appears that the extension of the off-payroll working rules to private sector engagements will go ahead in April 2020.

    Under the draft legislation, responsibility for determining whether engagements with individuals who provide their services through an intermediary (typically a “PSC”) are within the off-payroll working rules shifts to the client, with the burden of operating PAYE and collecting National Insurance Contributions (“NICs”) falling on the relevant “fee payer” in the work supply chain. More detail about the requirements under the draft legislation can be found in our earlier blog.

    As they prepare for the changes, many medium and large businesses are taking the opportunity to review their use of consultants and the terms of their contractor services more widely, in some cases leading to a major shake-up in engagement models. In addition to reviewing the terms which apply where a business contracts directly with a PSC, it is also important to consider the terms on which employment agencies provide contractor services.  With only six months to go until the changes go live, businesses which have not started the review process should act now.

    Off-Payroll Working Rules

    From April 2020 the responsibility for determining whether engagements with individuals who provide their services through an intermediary (typically a “PSC”) are within the off-payroll working rules shifts to the client for engagements in the Private Sector, with the burden of  operating PAYE and collecting National Insurance Contributions (“NICs”) falling on the relevant “fee payer” in the work supply chain.

    Although it is encouraging that HMRC have reconfirmed that it does not intend to carry out targeted campaigns into previous years when individuals start paying employment taxes following the reforms, we expect that HMRC will take a robust approach to the enforcement of the new rules.

    There is an enormous amount of work to be done across the private sector to ensure that medium/large businesses who are dependent on a flexible workforce are ready in time for the changes in April 2020.

    Status determination and communications

    When clients have determined an individual’s status for the off-payroll working rules, the client will be required to pass the determination to the party they directly contract with, as well as the individual worker.  Significantly, clients will also need to provide reasons for the determination.

    It is hoped this will be an incentive to clients to take care in making determinations – reducing the risk of “blanket” assessments and limiting status disputes.

    Businesses must therefore adopt internal policies to make proper status determinations for engagements and communicate these to individuals and their contract counterparties effectively.

    HMRC promise plenty of guidance, targeted communications as well

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