Shared Parental Leave – the Story so Far

One year after the introduction of shared parental leave for parents of babies born on or after 1 April 2014, surveys on take-up were undertaken. Reports in the press declared it to be very poor, but it seems they got the wrong end of the stick.

What the Surveys Said

My Family Care and the Women’s Business Council questioned HR directors from 200 companies and found that around 1% of men had requested and been granted shared parental leave. But this was a percentage of all men employed, and only 10% of both the men and women employed had had a baby since April 2015. In fact, 24% of these women and 30% of the men who were new parents had taken shared parental leave.

In another survey by Totaljobs, out of 628 respondents, 86 became parents in the qualifying time. Among these, 21% were ineligible to take shared parental leave, while 31% took it. In both cases, this was considerably more than was reported in the press.

Are the Surveys Representative?

However, Mark Crail, content director at XpertHR, said the research should be taken with a pinch of salt. Not only were the samples particularly small, there were other factors to be taken into consideration.

“If the 30% figures are correct then take-up has been higher than expected – it’s good news, not the shock-horror story that much of the media has been running about these research findings,” he said. “The problem is many employers simply will not know whether or not men are eligible for shared parental leave unless and until they apply. If someone’s partner has a baby and they choose not to tell their employer, they won’t show up in the records. That makes it extremely difficult to get a good overview of what’s really happening.”

Why Parents Don’t Apply

There are clearly still barriers to taking shared parental leave. Many people just can’t afford it, especially if their employers are unwilling or unable to top up the statutory pay awarded. Among men, the culture of their organisation may discourage it, and both men and women are sometimes fearful that their careers would suffer. Some women and men said that they believed that women prefer to be the main carer of their children. A lack of awareness about shared parental leave also seems to be a problem.

In small businesses, shared parental leave may be seen as yet another burden for the employer and affordability is bound to be a problem. If you have any questions about shared parental leave for your staff, your local bookkeepers will be happy to advise you.

How the EU Referendum will Affect Small Businesses and Employers

June 23^rd 2016 is when the UK public will vote on whether or not to remain in the EU. If the result of the referendum is to leave, the government must notify the European Council. There will then be a two year period of negotiations before we can finally exit. Not until then will we know what kind of relationship we will have with EU countries or whether we can still have access to the single market. It is therefore difficult to predict the effect of a withdrawal on small businesses, but various people have suggested a number of scenarios.

The referendum date was decided after the Prime Minister had negotiated an agreement with all other EU countries to a package of reforms in the event that we vote to stay in. These reforms include an exemption from ever closer union and a four year ban on in-work benefits for EU member immigrants. Critics felt the high levels of immigration would not be reduced and Brussels would still retain unacceptable levels of power.

The Need for Information

After the referendum announcement in February, the Federation of Small Businesses (FSB) published research which found that, of 4000 small businesses polled, 42% had not decided how to vote. Most did not feel at all well informed. Members were asked what they needed more information on: almost half mentioned the economic impact on the country; 38% wanted more detail about the administrative load of regulation compliance; 33% wanted to know more about the cost of EU membership.

Mike Cherry, policy director at the FSB, said, “It is crucial that once appointed, both the ‘Remain’ and ‘Leave’ campaign groups tackle this information deficit. Smaller businesses want to know the practical impact that remaining within or leaving the EU would have on their firms.”

Will There be a Level Playing Field?

Another poll conducted by major accountancy firm, Moore Stephens, of nearly 500 owner-managed businesses found that 17% had already made their minds up that they wanted to leave the EU. This was mainly because they were concerned about “the excessive bureaucracy associated with EU trading regulations, especially in the food industry, and also because of the prospect of tax reductions which could benefit business," according to Mark Lamb, a Moore Stephens partner.

He also said, "Owner-managed businesses are concerned that future growth will be disproportionately hit by a UK exit as they would no longer compete on a level playing field in the EU. Economic and political uncertainty is already impacting trade for some SMEs, and there is a fear that leaving the EU could severely destabilise business growth in the long-run. Small businesses currently benefit from unrestricted access to the large European market and many could find increases in tariffs and potential trade restriction difficult to overcome, stifling international growth potential."

The Effect on Employers and Employees

In recent years, many small employers have found it hard to comply with EU regulations on workers’ rights. Our own government has recognised the difficulties and sought to alleviate them by, for example, increasing the qualifying period for unfair dismissal from one to two years, and capping the compensation that could be awarded. In 2013 it introduced a cost on applications for employment tribunals.

The TUC is therefore encouraging its members to vote to remain in the EU. Its general secretary Frances O’Grady said: “Working people have a huge stake in the referendum because workers’ rights are on the line. It’s the EU that guarantees workers their rights to paid holidays, parental leave, equal treatment for part-timers, and much more. These rights can’t be taken for granted. There are no guarantees that any government will keep them if the UK leaves the EU.”

Who to Believe

Meanwhile the Chancellor is making a very gloomy forecast about the economy if we leave, with everyone paying heavier taxes to keep the country going. Boris Johnson, MP and Mayor of London, who backs the exit campaign, appeared on our TV screens to tell us that this is totally wrong and we have a great future ahead of us if we leave.

Unfortunately no one seems to have definitive answers about what will happen if we leave. Entrepreneurs are, by definition, optimistic and eager to turn all eventualities into opportunities. Many of them will look to their local bookkeepers to help them ensure that their small businesses, with or without employees, will be prepared for whatever comes next.

National Living Wage: Common Questions Answered

Each time new regulations are introduced, they throw up many questions that need to be answered to be sure of compliance. On 1 April 2016 the national living wage (NLW) of £7.20 per hour became the minimum amount that employers could pay workers aged 25 or over. Here are our answers to some of the most commonly asked questions about this.

When did the NLW have to start?

On the first day of the pay reference period that fell on or after April 1^st.

What does not count towards the NLW?

To be sure that the NLW has been paid for any pay reference period, you should not include the following elements in the calculation: 

•  Employer pension payments
•  Repayments of expenses
• Benefits in kind
• Shift premiums
• Overtime
• Advances of wages
• Loans

When all these elements have been excluded, the worker should be paid a minimum of £7.20 per hour for every hour worked. The gross amount calculated can include bonuses, commission and incentive pay.

How should holiday pay be calculated?

You should include any regular overtime undertaken as well as a worker’s normal or average working hours when working out holiday pay.

Must I pay the NLW to apprentices who are over 25?

Yes, unless they are still in the first year of their apprenticeship, in which case the relevant band of the national minimum wage still applies.

What happens when a worker turns 25?

He or she will not be eligible for the NLW until the first day of your next pay reference period. They must be paid the NLW for the period following their birthday.

When will the NLW next increase?

The government intends to review all the statutory minimum wage rates to introduce any changes by April 1^st each year, beginning in 2017. The NLW rate will gradually increase until 2020, when it is intended to have reached £9 per hour.

How does the NLW apply to those paid a fair piece rate?

If they are over 25, these workers are eligible for an additional 20% on the normal NLW. You should pay them £8.64 per hour.

How will the NLW be enforced?

The consequences of not paying the minimum rates that apply could be financially crippling and are designed to be a good deterrent to non-compliance. An HMRC compliance officer can order an employer to pay any arrears to the workers and pay a fine of 200% of the underpayment for each worker. Serious cases may be criminally prosecuted, in which case there is no limit to the fines that can be imposed following a guilty verdict.

The questions listed above are those that are most commonly asked. If you are not clear about any of the answers, or have other queries, your local bookkeepers will be happy to help. 

Two Important Insurance Policies Businesses Think They Have (But usually do NOT have)

It is a legal requirement for any company that employees staff to hold employer’s liability insurance, and no doubt there will be numerous other policies you hold as a business owner. But do they cover every area for which you need protection?

For example, do they cover the effects of cyber-crime? Are you covered for the cost of acquiring cover staff if someone is off work due to an injury? If it happened at work and was due to negligence, your employee liability cover might kick in, but what if it happened outside of work? If you are a sole trader who does not need employee liability cover, what would happen if you had an accident and suffered injury yourself?

Traditional insurance policies rarely include all these eventualities. Fortunately, you can still get the cover you need through specialist insurance policies. Cyber risk and key worker injury insurance plans are available to all businesses, whatever their size.

How to Cope with the Effects of Cyber Crime

Most organisations have no option but to rely heavily on IT that can be adversely affected by viruses or hacking. It is a sad fact that despite all efforts at protection, breaches of data security and successful cyber attacks are still happening in the small and medium business community, as well as in major companies and private sector bodies. The effects can be wide ranging and devastating, from financial penalties and specific extra costs, to loss of business and reputation.

The only way for you to have true peace of mind about this is to cover all potential risks with specialist insurance.

How to Protect a Business from the Effects of Accidents

In a small business, losing a member of staff for a sickness period following an accident can make an enormous difference to productivity. Unless someone else can do the work, in extreme cases you may be unable to fulfil orders and get a reputation for letting customers down. Whether the accident occurred at work or in the employee’s own time, there may well be heavy costs that are not covered by your liability insurance.

With the right insurance plan however, these costs can all be covered. And you could be able to arrange for the best health care and rehabilitation therapies, all covered by your insurance policy, to get your worker fit and back on the job in the shortest possible time. Everyone can benefit when this happens and it will do wonders for the morale of your whole team.

Your local bookkeepers are likely to have experience of these types of policies and will be able to direct you to a good insurance broker, so it’s worth getting their opinion on what you need and where to go for it.

What to Consider When Taking on Your First Employee

When your business has developed to the point where you need additional help, courage is needed for the next step. It has to be taken though, otherwise your business won’t be able to grow any more.

According to the government’s web page about taking on your first employees, there are seven things you need to take action on immediately. Actually you’ll find there is a lot more to it than that, but its list is a good starting point.

What Does the Government’s List Cover?

The first item is to decide how much you will pay. It has to be at least the National Living Wage (currently £7.20 per hour) unless the worker will be under the age of 25, when the National Minimum Wage applies for the appropriate age range. If you think the worker might be worth more than that, and you can afford it, you can decide on a higher starting figure, which will possibly attract more suitable candidates for the job, but take care not to set a precedent that you may not be able to keep up.

To comply with employment law, you may need to have Disclosure and Barring Service (DBS) checks of the criminal records of employees, depending on the nature of your business, and whether it involves security, children or other people who are vulnerable. You must also ensure that all applicants are not here illegally and have a right to work. And you should have employers’ liability insurance in place before employment starts.

If this is your first employee, in 2016 you probably won’t have to have a workplace pension in place yet, but from 2017 it will most likely be a requirement, so you need to start planning for it. You do need to register with HMRC as an employer.

Once you have your chosen employee, you have up to two months to issue a written statement of employment particulars or, if it applies, before the employee travels abroad for you. The statement should include the terms of the contract that automatically applies once a job offer of longer than 1 month has been issued and accepted.

What Else Should Be Considered?

Among the considerations not covered above is the legal minefield of recruitment. Great care must be taken to avoid an allegation of discrimination in any form, whether you advertise for free on social media or go the more expensive advertising routes or use a recruitment agency. You will also need to set up employment policies and procedures to cover things like bullying, staff grievances, holidays, sick pay and much more.

Even with only one employee, you must set up a payroll and make the appropriate contributions of tax and National Insurance and report on this to HMRC in real time. Your local bookkeepers will be able to help with this. In many cases, they often take over all the payroll activity so the business owner doesn’t need to worry about it. They’ll also be happy to advise and help on all the other aspects of taking on the first employee, including whether you could do with other professional help for anything.

A Useful Summary of Employment Law Changes April 2016

April 2016 sees the introduction of a number of changes to employment law. If you are an employer, read on for a summary.

The National Living Wage

The National Living Wage (NLW) was introduced on 1 April 2016. The new pay rate should not be confused with the National Minimum Wage (NMW) which still applies, or the Living Wage, which is a voluntary rate.

If you have employees aged 25 or over, the NLW will be payable without exception. This includes agency workers, casual labourers, apprentices who have finished their first year and agricultural workers. The rate is currently set at £7.20 per hour, and will be reviewed each year in April. We will be covering the National Living Wage in more detail next month.

Sick, Maternity, Paternity, Shared Parental and Adoption Pay Frozen

These statutory rates have all been frozen for 2016/17 at the rates at applied for 2015/16. For sick pay this is £88.45 per week. The others are £139.58, or if the normal weekly wage of the person involved is less than that, it is 90% of their normal earnings.

Employer National Insurance Contributions Abolished for Apprentices Under 25

From 6 April, employers no longer have to pay Class 1 National Insurance contributions on earnings that fall below the upper earnings limit for apprentices under 25 years of age.

Pensions Changes

With the introduction courtesy of the Pensions Act 2014 of the new state pension for anyone reaching the pension age from 6 April, the pension rules for employers have changed. There will be no more contracting out for defined-benefit schemes. Employers in the private sector can therefore increase employees’ pension contributions and reduce pension accrual.

Employment Tribunals

From 6 April, the rules of Procedure in the Employment Tribunals (Constitution and Rules of Procedure Regulations 2013) changed, so that there is a limit to the number of postponements that a party can be granted, unless the circumstances are exceptional. This is to avoid significant delays in decisions and related rising costs. What is more, from 6 April, increases in the limits on certain employment tribunal awards came into force. The limit on a week’s pay for calculating redundancy payments will increase from £475 to £479 and the maximum compensatory award for unfair dismissal will increase from £78.335 to £78,962 providing it is lower than the additional compensatory award cap of 52 weeks’ pay.

If you have any queries about these changes, bring them up with your local bookkeepers. They will be happy to guide you through the implications for your business, and just as earnest as you to ensure that you don’t fall foul of any of the new rules.

Are you Prepared for the New Rules on PSC Registers?

Business owners and employers know only too well that the 6^th of April every year always brings changes, and this year the date has not let us down.

One of the most far reaching changes this 6^th of April is the introduction of the need for the majority of UK companies and limited liability partnerships (LLPs) to start keeping a register of ‘people with significant control’.

The ‘PSC register’ as it will be known is a new statutory register which has been formulated to make sure the people that ultimately own and control a company are identified.

What Legislation is Behind the New Rules?

The rules come in on the back of the Small Enterprise and Employment Act 2015 and carry the objective of tackling money laundering, terrorist financing and tax evasion. This will be done by making public both the beneficial and legal ownership of a business.

A new part and two new schedules will be added to The Companies Act 2006 and provisions will be detailed in TheRegister of People with Significant Control Regulations 2016.

Who is Affected by the Registers?

Anyone who owns or controls over 25 per cent of a company’s shares of voting rights, or who has control in any other way over the management of a company, will need to appear on the PSC register. The register will not resemble the shareholder register, as the controlling individuals are not usually the same as the shareholders.

All UK companies will need to compile and maintain PSC registers, except publicly traded companies already subject to the disclosure requirements of DTR 5.

PSC registers are not allowed to be blank, even if the company is dormant or has no interests to register. Failure to comply will lead to criminal punishment.

What are the Key Dates to Note?

Registers must start being compiled from 6^th April 2016 and from 30^th June 2016, companies will be required to file their PSC registers with Companies House.

Once filed, the registers will be searchable online, although residential addresses will not be shown.

What Action Should I be Taking Now?

It is time to take the first step and identify who owns or controls your company indirectly and directly, and who will need to appear on the register. Check your register of members, articles of association or if applicable, your shareholders’ agreement where you should find the information you need.

If you feel you need any guidance in ensuring you are compliant with the new system and its statutory requirements, you could speak to your local bookkeepers in the first instance. They will be able to point you in the right direction concerning the compilation of your PSC register and if required, they will be able to manage the maintenance and filing of the register at Companies House.