Return to work interviews

A vital part in any process as regards the management of sickness absence is the return to work interview. This is something I regularly recommend and even include this either in the contract of employment or as part of the sickness absence policy within the handbook. The return to work interview is something you require all employees to attend on returning to work, either after every period of absence or significant absence.

However, you may get a situation where the employee objects to the person who will be conducting it, what do you do in that situation?

I recommend return to work interviews as part of the sickness absence process for four reasons:-

1. The employer needs to know whether there are any issues that he needs to be aware of and if anything can be done to prevent future absence.

2. If the return to work interview is done either on all occasions, or to a fixed schedule, for example, after 10 days of absence, the culture within the organisation will be such that the interview will be anticipated and will not be seen as a threat.

3. It has been proven that return to work interviews do reduce fraudulent sickness absence on the basis that employees may be less likely to take a day off if they will have to go through this process on their return.

4. From a health & safety perspective you will fulfil your legal duties and obligations in ensuring that the employee is fit to work and whether any adjustments are required.

So, to go through the return to work process, ideally the interview should be arranged as soon as the employee returns to work, i.e. that morning as early as possible before they start work. The discussion should be held in a private place and be conducted by the employee’s line manager; this is not something to be delegated. If the line manager is not available then an alternative may be used but should be a person of a similar status in the workplace.

In the event of the employee raising objections to the person who is going to conduct the interview the first thing the employer needs to establish is the reason for the objection. All too often I come across line managers who jump to conclusions, which is the wrong approach; always establish the facts. In particular ask for the reasons for the objection (is this objection masking some other reason) as opposed to asking why they don’t want a particular person to conduct the interview (this could be because they have an issue with that person or the matter could be highly sensitive and they would prefer to discuss this with someone of the same sex).

The reason could be perfectly reasonable and if so then it has to be right to accept that but then offer an alternative person. However, in a situation where the employee refuses point blank to engage with anyone or their objection has unreasonable grounds then this is simply not acceptable. In this situation the employer should say to the employee that they are obliged to co-operate and you have a duty to protect their and others’ health and safety. If this approach is still met with an objection then I am afraid this becomes a disciplinary matter.

Head of Human Resource at Nicholsons Chartered Accountants Lincoln HR

What next after Brexit?

The UK has formally given notice it will be leaving the EU, but the path forward is filled with uncertainty.

On Thursday 30th March, nine months since the nation voted to leave the EU, Prime Minister Theresa May announced: “There can be no turning back”.

But rather than bringing an end to the episode, the reality is we are only at the beginning. Article 50 is effectively a two-year notice period to depart from the EU, with the priority being to agree the terms of Brexit.

A wide range of details will be debated between the British government and EU ministers, with the Prime Minister outlining 12 negotiating priorities her government will focus on.

Most of these discussions are expected to take place away from the spotlight, but with Brexit such a major media talking point, it’s a topic that’s unlikely to fade into the background.

Even after the terms of Brexit have been agreed and the UK has formally left, the government still has to decide which EU laws to keep and which to discard. In total there are 80,000 pages of EU agreements to renegotiate. As they affect the way UK businesses currently operate, the implications around keeping and changing these rules could be significant.

“In the current climate, developing a balanced portfolio of investments could help you to achieve a smoother investment journey”

There’s no doubt that uncertainty is going to reign for a number of years – even after Brexit takes place. Leaving the EU is going to fundamentally change the UK. But in what way, and to what extent, no one can really know.

How could this affect your investments?

On the morning after the UK vote to Leave the EU, stock markets endured sharp falls. But since that point, it has been a relatively positive period for global markets.

Last year’s decline in the value of Sterling currency hurt many UK businesses (mainly those who rely on imports as part of their operational model), but Sterling has started to recover early in 2017. Investors with global assets – or who are invested in UK businesses that rely on exporting goods – have been able to benefit from the fall in Sterling.

Clearly, the outcome of the Brexit negotiations will have an impact on markets. For example one of the major areas of contention is trade deals. Right now, UK businesses benefit from being part of the single market, where goods and services can be imported and exported free from tax. Leaving the EU could mean businesses face significant costs to continue trading with Europe. This would hurt their profits and have an impact on stock markets.

Some sectors will be largely immune to the situation, such as domestic-focused businesses like estate agents and house builders. Others, who trade overseas, could continue to benefit from the fact Sterling is still weaker than it was for the moment; but their long-term fortunes might be tied to the UK’s ongoing membership of the single market.

Don’t neglect your own financial future

The uncertainty over Brexit might be an unavoidable part of life for the next few years, but that doesn’t mean your own financial future needs to be compromised. If you have major financial goals and are unsure of your ability to accomplish them, it could help to meet a financial adviser to review your plans.

In the current climate, developing a balanced portfolio of investments could help you to achieve a smoother investment journey. That way, even if areas of the market struggle due to Brexit-related developments, for example, you might have other areas of your portfolio still generating strong returns. An adviser can help you build a strategy that suits your individual needs.

It will also help to continue regularly reviewing your investments. That way, if the economic landscape and outlook shifts significantly, you can examine any impact this might have on your plans and make any changes needed.

The value of your investment can go down as well as up and you may not get back the full amount invested. Levels and bases of and reliefs from taxation are subject to change and their value depends on the individual circumstances of the investor. The Financial Conduct Authority does not regulate Taxation and Trust advice.

When a key employee resigns

It is never a nice situation when a key employee resigns. You have to decide whether you would like the person to stay or whether you are okay with the fact that this employee is leaving you. Whatever your decision when faced with an employee’s resignation, it is important to deal with matters quickly, and even more essential if you are considering an attempt to change their mind. Believe me, the closer it gets to their termination date, the less likely they will do a U-turn. In addition, other administrative factors will need to be considered in relation to the impending departure and keeping all of this confidential will be very difficult.

If you want to try and keep this employee I would set up a meeting with this person within 24 hours of receiving the resignation letter. You may want to do this by sending a letter or e-mail where you make the request to meet in order to discuss the reasons for leaving and any other matters that may be relevant to the decision to leave. You may wish to add in the communication that you would like to explore whether there is any possibility of persuading that person to change their mind. This will get the employee thinking about their position.

You don’t have to try to persuade an employee to stay on – so it’s entirely up to you whether this section is included. If you don’t, the meeting will simply be to discuss the employee’s reasons for leaving with a view to ensuring there are no issues or problems which you may have previously been unaware of.

At the meeting the aim is to discuss what has led to the resignation. When you have this information it will be easier for you to work out whether you can tempt the employee to stay. I tend to look at the following;

  • If they want a career change or move to another part of the country then there is not a lot you can do about it.
  • If it is about salary or benefits – is there anything you can do; pay a bonus? Enhance the benefits? Etc..
  • Are they looking for more flexibility in their work? Could they work from a different location?
  • Could some of their job duties or responsibilities be changed? Or are they feeling disenchanted at a lack of career progression? Some simple variations to their role can make an enormous difference  Is the issue that they just don’t get on with their colleagues or manager? In which case could you consider work location or changing the reporting structure?
  • When I have been involved in these types of conversations, whilst I have asked for confidentiality it rarely happens, so be careful what is said and what you are agreeing to because if confidentiality is breached you may have set precedents that you don’t wish to follow or indeed you may then have an army of employees demanding a pay rise.

If, after discussions, the decision is made to part company you should take time to remind the leaving employee of possible contractual clauses in the contract of employment; such as the duty of confidentiality and secrecy, obligations under any restrictive covenants and the return of Company property. You may also wish to consider, if your contract of employment allows for this, putting the employee on “garden leave”.

Head of Human Resource at Nicholsons Chartered Accountants Lincoln HR


Micro Entities – Disclosure versus credit

When it was announced that FRS105 Micro Entity accounts could be prepared by companies meeting the criteria everyone jumped at the chance. Minimal disclosure and information about private companies going into the public domain, what was not to like?

What nobody was made aware of was that the credit agencies were not geared up to read the necessary information from the filed accounts. They do not calculate a “net worth” position for the company based on the information filed.

Some Directors may not be concerned with this new information. Others, however, may need to rethink what they file going forward. If a company needs credit  of any form, or even a lease for a vehicle or equipment, a credit search will be undertaken and if the company has filed Micro Entity accounts it will not have a credit score. This could significantly limit your credit options.

Discussions with agencies such as Experian have indicated that they have no plans to amend their systems to pick up the data so be aware that the new regime is not all it may seem. The issue arises because the balance sheet would not show any differentiation between tangible and intangible assets.

To be eligible to file Micro Entity accounts your company must meet 2 of the 3 following criteria:-

Turnover below £632,000

Balance sheet  below £316,000

Average employee numbers below 10

Always consider the above when deciding on what accounts to file. Disclosure versus credit.

Government U-turn is a boost for self-employed

how the general election 2017 will affect business in lincoln

One of the headlines from March 2017’s Budget was news that the government was planning to increase the amount of tax self-employed people have to pay on their earnings. But with the move proving unpopular, Chancellor Philip Hammond has decided to scrap the measure.

Hammond initially announced he would be increasing Class 4 National Insurance Contributions for the self-employed. The plan was it would rise from 9% to 10% in April 2018, and then to 11% the year after. Hammond initially defended the measure on account of a rising number of people becoming self-employed; and the fact they currently pay a lower level of National Insurance contributions than employed people.

However, widespread outrage at the measure – which would have cost every self-employed person an average of 60p a week – and the fact it went against the Conservative Party’s own manifesto lead to Hammond scrapping these plans a week later. This is great news for self-employed people, who no longer face a tax hike on their earnings.

Sickness Absence During Notice Periods

A question that we are regularly asked concerns what an employer should do as regards pay when an employee, who is signed off sick, resigns giving notice.

Sickness absence can always be a problem for employers; especially so when it happens during a departing employee’s notice period. Assuming that you do not have an Occupational Sick Pay scheme in place many employers believe that it is in order to pay the departing employee statutory sick pay (SSP) only during their period of absence through sickness when they are working their contractual notice, but is this correct?

To determine the answer we must go back to the law and what the Employment Rights Act (ERA) of 1996 states. The Act states that the employer must pay full pay during the statutory notice period where an employee is “incapable of work because of sickness or injury”. In the case of a resignation the statutory notice period is always one week, but in the case of a dismissal effected by the employer, e.g. a redundancy, it is one week for each complete year of service to a maximum of twelve weeks.

So if an employee has say one month’s contractual notice, that includes one week’s statutory notice, this means that the statutory part of the notice period should be paid at full pay and any additional contractual amount may be paid at SSP. The statutory notice is the first part of the notice period and any additional contractual notice follows on.

There is however an exception to the rule. Section 87(4) of the ERA states that the employee’s rights to statutory notice pay does not apply if the contractual notice to be given by the employer is “at least one week more than statutory notice” . This is the case if it is a resignation by the employee or a dismissal by the employer.

This particular situation was examined by the Employment Appeal Tribunal (EAT) in Scotts Company (UK) Ltd v Budd 2003, where Budd (B) was dismissed on three months’ contractual notice after two years’ sickness absence but was not paid any notice pay as he had exhausted all his sick pay entitlement. B was entitled to twelve weeks’ statutory notice as he had been employed for over twelve years, and three months’ contractual notice. He brought a claim for statutory notice pay but the EAT held that Scotts Company (UK) Ltd was not liable for it because B’s employment contract provided for at least one week more than the statutory notice.

Had B only been entitled to receive statutory notice, his employer would have been liable to pay him full notice pay for twelve weeks. It is always the employer’s notice that is looked at to decide if the contractual notice is at least a week more than the statutory minimum.

So, generally speaking, the first week of the notice period should be paid at full pay and the balance paid at your normal sick pay rates, e.g. SSP only. This rule does not apply where the contractual notice you are required to give under the employment contract is at least one week more than statutory notice.

Head of Human Resource at Nicholsons Chartered Accountants Lincoln HR

Making Tax Digital Delayed Until 2020

After the political chaos of the last few months, the government has finally announced their much anticipated backtrack to plans for making tax digital.

The legislation had been billed by HM Revenue and Customs as ‘Making Tax Easier,’ but it has in fact proven to be far more difficult to convince everyone else of this than the government expected. The vision was for all tax paying businesses and individuals to have an online account with HMRC, which they updated quarterly, with a year-end adjustment, hence replacing tax returns and with one submission covering VAT, income tax and corporation tax.

Prior to the election the plans were under scrutiny by the House of Lords, with practical objections being put forward by the CLA, NFU and Treasury Select Committee amongst many others. One of the key concerns voiced was the speed and reliability of rural broadband.

Somewhat inevitably a House of Commons briefing paper was released yesterday amending the timetable for Making Tax Digital; with businesses trading above the VAT threshold being required to keep digital records for VAT purposes only from 2019, which is unlikely to cause any big changes for businesses in the immediate term. Digital record keeping for any other purpose will not be introduced until at least 2020.

The report suggests it is anticipated that approximately 3.5million businesses will be caught up by the digital plans, with 3.4million of those being classed as small or micro businesses. The cost to these businesses of adopting Making Tax Digital is estimated by HMRC to be £280, although it is noted in the document that the Federation of Small Businesses places their estimate at £2,770 per business. The adoption cost is in reality likely to depend on how much a business is prepared to undertake themselves and the choice of software.

One possible major contributor to the hold-up of the project has been the promise from HMRC that there would be basic, free software made available, but it would appear that this has been quite slow to develop.

While in essence the halt to the government’s digital plans was essential with systems being far from ready, it should not stop smaller businesses from reviewing their record keeping. With tidy records it is much easier to ensure all VAT and travel expenses are being reclaimed, and to make sure you collect in all money that is owed to you. There are also significant savings in accountancy costs that could be made with tidier records.

We are always happy to discuss bookkeeping with our clients as we know one system does not fit all and to help put a system in place that works with the way you run your business.

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