Coming Down The Tracks In 2011

MOGERS FOR HR

COMING DOWN THE TRACKS IN 2011

Sean McDonough & Tim Gofton

18th March 2011

Today’s Session

• The economic outlook and the impact on HR;

• Silver Surfers – abolition of the DRA; and

• General Update, Q&A & lunch.

Mogers for HR• Engaging with HR community; not just

quarterly power point presentations;

• Mogers for HR Linkedin page – open forum for members;

• Mogers Emplaw iPhone app – free iPhone app! See iTunes or our website.

Economic Outlook

• “Global economy has emerged from a great depression…” (IMF);

• “’Recovery’ to date has been based on soaring spending…and borrowing, by government…” (Moneyweek);

• Government Spending Cuts;

• Real uncertainty for business.

Hresource Survey Results

• 41% reported increased grievance activity particularly against managers (stress and bullying and harassment);

• 56% rise in ET claims;

Hresource Survey Results

• 80% of HR professionals reported an increased workload (50% saying that increase was significant);

• 68% reported that the economy had had a negative impact on business.

Impact on HR Teams

• Increasing pressure to add value and to do far more with less;

• Increase productivity;

• Incentivise staff;

• Retain talent.

Projects for 2011

• Redundancies (again)? – Unlikely to solve the problem;– Many businesses cannot cut back operations

any further.

Projects for 2011

• Restructuring (of what and why)? – Right bums on rights seats? – Job descriptions;– Training and development;– T&Cs – flexible enough in terms of hours,

location, duties?

Projects for 2011

• Creative terms and conditions– Zero hours;– Annualised hours – operational peaks and

troughs;– Casual workers;– Homeworking.

Projects for 2011

• Creative low cost incentive schemes– Reward very important coming out of a

recession;– Flexible benefits;– Holiday purchase schemes;– Training and development;– Bonuses – contractual terms very important.

Silver Surfers

• Current default retirement age will be abolished with effect from 1st October 2011;

• Transitional provisions are in place (just!)

• Notification of retirement must be issued prior to 6 April 2011;

• Can still be 6 – 12 months before IRD (but only employees who reach age of 65 before 1st October 2011); and

• All other stages of retirement procedure must be met.

• The last effective date of termination for retirements where no extension agreed is 5th April 2012; 

• If a 6 month (or less) extension is agreed, the retirement date could be as late as 5th October 2012;

• The short notice provisions will be abolished from 5th April 2011.

Potential Hot Spots• “Without prejudice" retirement

discussions;

• Poor succession planning and younger employees; 

• Not dealing with capability issues directly because undignified.

Good Practice Tips

• Build retirement discussions into appraisal systems;

• Avoid "why don't you retire to avoid an undignified sacking?"

• Ask open questions…

Retirement Age Options

Remove fixed retirement ages altogether or retain a fixed retirement age; 

B&Q, Sainsbury's, M&S, HBoS, BT have already abolished fixed retirement ages.   

Retaining Fixed AgeNeed to demonstrate:-

•Legitimate aim, is being met and that the particular retirement age meets that aim, and;

•It is proportionate to use that retirement age as a means of meeting that aim.

Legitimate Aims• Workforce planning;

• Facilitating the recruitment and retention of younger employees;  

• Protecting the dignity of older workforce by not requiring them to undergo performance management procedures;

Legitimate Aims• Avoiding adverse impact on pension and

benefits, i.e. the increased cost of extending such benefits to older workers;

• Ensuring continued competence;

• Having an age-balanced workforce and sharing job opportunities amongst the generations.

Legitimate Aims

• UK tribunals and European courts seem to agree - establishing a legitimate aim is relatively straightforward;

• Tricky bit is demonstrating that the retirement age is proportionate means.

Legitimate Aims

• Martin v Professional Game Match Officials [2010];

• Hampton v Lord Chancellor [2008];

• Baker v National Air Traffic Services [2009].

Insurance Backed Benefits

• There will be an exemption which enables employers to withdraw insurance backed benefits for employees at or over 65 (or state retirement age);

 • This will only apply to group benefits provided

to employees or classes of employees.

Insurance Backed BenefitsNB

•Does the contract allow for the benefit to be withdrawn? Potential for breach of contract claims;

 •‘Good Leaver/Bad Leaver’ provisions in benefit schemes. Not dealt with but many will refer to ‘retirement age’

Action Points - General

• Imminent retirements are they covered? 

• 30 March 2011 last date on which full six months notice may be given;

• Review those already started.  

Action Points - Contracts & Policies

• Amend (as required) age specified in the contract of employment or operated as a matter of practice & policies;  

• Fixed retirement age – can it be objectively justified;  

• Review share scheme and any associated documents.

Cultural

• If necessary, change the culture with regard to appraisals and performance management;

• Include discussions about future plans into the appraisal process across the board.

Keep an eye out for…

3 April 2011

•Additional paternity leave regulations come into force;

•Extension of Flexible Working requests;

•Increase in rates for statutory

mat/pat & adoption pay.

6 April 2011

•Public sector equality duty implemented;

•Positive action introduced;

•Right to request time off for training extended;

•DRA abolished.

6 April 2011

•Income Tax (Pay As You Earn) (Amendment) Regulations 2011.

Hresource Areas of training

• Managing Redundancy Dismissals;

• Managing the Disciplinary Process;

• Equality Act 2010.

How we can help

• Reviewing and advising on existing structures, proposed restructures, contracts & policies;

• Provide in house training for management teams;

• Hresource – LEI product.

Disclaimer

• These slides represent a summary of the legal issues referred to in them and are not intended to provide or be relied upon as giving specific legal advice, nor are they intended to be a comprehensive statement of the law.

• If you require advice on a specific issue, please contact one of our specialist solicitors.