Law-abiding employers should welcome the moves here is why:
In many low margin businesses it is not a level playing field. Those honouring employment rights are competing with those that turn a blind eye. While the latter take a serious risk – challenges in an Employment Tribunal can sink an employer – they push down the margins for honest employers.
The Government has promised stricter enforcement of contractual rights for all workers, including workers holiday and sick pay. Employment rights are often complex and not every employee (or employer) understands them. So too many poor employers “get away” with flouting employee rights by accident or design.
HMRC already enforce the National Minimum Wage and the Home Office cracks down on illegal workers. While these are partially successful no Government body is directly tackling unpaid holiday pay, denied sick pay or (at least until recently) underpaid “sleep-overs”.
The Government promises to take an increasingly pro-active role in the future.
Could you be caught out, though?
John Lewis had already put up their hands in 2013 and paid out over £40 million over underpaid holiday pay. Then they discovered, last year, an underpayment of £36 million from National Minimum Wage errors.
One of our clients recently received a claim from one worker for over £8,000 in back holiday pay. It was only partially justified and we were able to help them limit the claim to less than half the figure. Nonetheless we know of other employers that are even more vulnerable.
Many care homes operating “Sleep-overs” within previous guidance have found themselves liable for substantial National Minimum Wage claims. Repayment rights are retrospective, so the effect on cash flow can be dire.
Some otherwise diligent employers are not as diligent as they should be over eligibility to work in the UK. With fines of up to £20,000 per illegal worker, failing to check appropriate documentation using the correct procedures could be an expensive mistake.
How to stay safe
Employer Solutions is already providing short term HR support to SMEs. An HR Adviser on site for just a few days per month can, over a few months, unearth most vulnerabilities and allow remedies. Putting oversights right, in a timely fashion, can be an invaluable investment. Furthermore professional HR support enables good systems to go into place, protecting you for the future.
Malcolm Martin FCIPD
Author Human Resource Practice.