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The tipping minefield

Last year saw a number of high profile cases where large employers in the hospitality sector faced a public shaming in respect to how they handled the payment of tips to employees. Demand from the public for greater transparency in this area continues with the government now reviewing the position.

The issue was picked up in the media over the summer, with chains such as Pizza Express, Ask & Zizzi opting to bend to public pressure and drop the practice of charging an administration fee on tips before distributing them to employees.  The debate does highlight the uncertainty in the public’s mind as to what happens to tips once they are collected.  Business Secretary Sajid Javid expressed the view that “When a diner leaves a tip, they rightly expect it to go to staff”.  The coverage on this suggests that had been the public’s assumption as well.

The Business Secretary has decided to act, and has sought to consult with those affected. The investigation was launched on 30th August 2015 and closed on 10th November 2015; businesses must therefore await the imminent outcome of the investigation and how this may affect them.
The general position is that since 2009 employees should be paid the National Minimum Wage in addition to any payment they receive as tips. In addition employees are responsible for paying tax on any tips they receive. The range of options for distributing tips to employees varies enormously. 

Broadly though they fall in to three main types:

  • Individual employees retaining cash payments from individual customers
  • Tips are paid as part of pay in the employees pay packet (but separately identified)
  • Pooled tips shared amongst a group of staff.  This system is often referred to a ‘tronc’, and is administered by a ‘troncmaster’

The distribution of tips by employers is governed by a voluntary Code of Practice.  It is anticipated that rather than introducing new legislation this Code will change following the government investigation.

None the less employers do need to have regard for the contractual position which could in itself give rise to legal disputes with employees, not to mention the bad publicity linked to what could be viewed as an unfair practice in the public’s mind.

Employers are advised to review how they manage and distribute tips and set these arrangements out in the handbook and contract.  If left to an informal arrangement the potential for a legal dispute with employees can arise in what is a sensitive area.  

Businesses should clearly set out the full details of the arrangement, dealing with such matters as:

  • How cash and card payments are distributed
  • Whether an administrative charge will be made and what it is
  • How will tax and national insurance be dealt with
  • What happens when the employee is on holiday

Needless to say a further review of current practise will be required once the outcome of the government investigation is published later this year.

Posted by: Grahame Davies
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Zero hours contract changes

The debate about zero hours contracts is never far from the public eye and throughout last year’s election period the subject regularly cropped up with differing views being aired.  The New Year has now seen the first restrictions placed upon employers’ power to offer these contracts.

Despite criticism, the number of workers who are employed on zero hours contracts continues to rise.  The Office for National Statistics has indicated the number of people reporting that they work on contracts without a minimum number of hours rose by 19% in 2014.  To put this in context only 2.4% of the 31 million UK workforce are on zero hours contracts; however it continues to remain a controversial subject.

Zero hours contracts are predominately offered to employees of larger companies and particularly for businesses engaged in the hospitality, retail and manufacturing sectors.  But equally they offer smaller businesses a number of benefits not least in terms of greater flexibility in staffing; which in many cases is essential to ensuring tight margins are protected.

It is increasingly recognised that zero hours contracts do offer benefits to employees in terms of flexibility and that these benefits are often ignored in the debate. However, the reality is zero hours contracts do seem to have negative connotations in some quarters and are likely to face further restrictions from whichever government is in power.

On 11th January 2016, the Exclusivity Terms in Zero Hours Contracts (Redress) Regulations 2015 came into force providing a legal remedy for workers on zero hours contracts against employers.  Going forward employers who seek to impose an exclusivity clause, preventing a worker from having another employer face the risk of ending up in a tribunal with no defence.

The regulations state:

  • The dismissal of a zero hours contract employee will be automatically unfair if the principal reason for the dismissal is that they have breached an exclusivity clause.
  • An employee can bring an unfair dismissal claim in this respect without any qualifying period.
  • It is unlawful to submit a zero hours contract worker to detriments if they work for another employer in breach of a clause prohibiting them from doing so.

Employers are advised to review their current zero hours contract terms to ensure they are compliant with this change in the law. In addition, watch this space as no doubt the debate isn’t over yet.

Posted by: Grahame Davies
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References; Proceed with Caution

At a recent Employment Appeal Tribunal (Pnaiser v NHS England and Coventry City Council), the judgment handed down was that the withdrawal of a job offer due to a poor reference concerning previous absence from the workplace as a result of a disability was disability discrimination under the provisions of the Equality Act 2010.

The Council provided a negative opinion on suitability for the role with NHS England due to their experience of significant absence by the Claimant which related solely to her disability. The opinion was presented without evidence and accepted by the employing Respondent, NHS England, with knowledge of the disability suffered by the Claimant at the time. Withdrawal of the job offer followed receipt of the reference without any exploration of evidence to support the opinion provided.

It was determined that the Claimant had been treated unfavourably because of an issue arising in consequence of her disability and so the matter has been remitted to the Tribunal to decide upon an appropriate remedy.

This case serves as a reminder that not only must employers ensure that references are offered with care, but the reliance on the receipt of a reference to offer or withdraw employment must be approached with absolute caution.

Posted by: Rachel Harkin
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Is your business fit for 2016?

This free event is designed for business owners who would like to review the what, why and how of their business strategy.

We’ve teamed up with Allens Accountants and Athena Law to give you access to three experts under one roof – where else will you find the answers to your business challenges all in one morning?

Sign up for this FREE event to hear how to have less staff issues and water tight contracts in addition to strategies for growth, profit maximisation, tax management and exit planning.

When: Friday 29th January 2016 from 10:00am to 12:00pm

Where: 123 Wellington Road South, Stockport, SK1 3TH

To reserve your place, click here (http://www.eventbrite.co.uk/e/is-your-business-fit-for-2016-tickets) or alternatively email info@opsium.co.uk or call 0161 603 2156.

Eventbrite - Is Your Business Fit For 2016?

Posted by: Sarah Wilton
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Black Friday!

Brace yourselves!

Black Friday is this Friday 27th November…a day when people lose their minds over a bargain and care not if they trample over children and old people for a heavily discounted television.

However it falls on a Friday…a day when your staff should (hopefully) be in the office. So get ready for potential employee attendance headaches!

You may notice annual leave requests have been submitted so make sure that you stick to your annual leave policy and apply the rules consistently and fairly, i.e. on a first come, first served basis. Ensure that you have sufficient cover in place and remember that you have the right to reasonably refuse a request for leave.

Some employees may have already used their annual leave allocation and therefore you may be left with staff calling in sick. To ensure that only those with ‘genuine’ illnesses are absent this Friday, start reminding your staff of the rules regarding notification of absences and the repercussions of not abiding by them.

If the prospect of Black Friday has caused you to worry then give us a call for further advice on 0161 603 2174.

Posted by: Jessica Stock
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