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    5 legal points for creating Employment Contracts

    The UK has perhaps the most comprehensive employment laws in Europe, and in 2013 there will be a number of additional amendments to existing legislation which will have a direct impact on all new employment contracts issued. Here we take a look at 5 of the most pertinent aspects of employment legislation that employers need to be aware of when issuing new contracts this year.

    1. Work Time Directive

    In a bid to better manage Britain’s long hours work culture, the Government’s Work Time Directive has set the maximum limit by which workers are required to work at no more than 48 hours a week, with the notable exception of those working in certain industries, such as the armed forces and emergency services.

    2. Pension Auto-Enrolment

    Employers with 50 or more workers are now legally required to enroll all employees automatically, and make mandatory employer contributions, into a qualifying scheme or the National Employment Savings Trust (NEST) which will be implemented in stages. Employers may postpone enrolment for three months, although employees will be able to opt in during this period.

    3. Parental leave

    The new Parental Leave Directive (96/34/EC) will increase the amount of leave a parent or adopted parent is entitled to following the birth of a child from three to four months. Furthermore, changes to the Equality Act (see below) now safeguard women against discrimination on the grounds of pregnancy and maternity during the period of her pregnancy and the statutory maternity leave which she is entitled to.

    4. Changes to the national minimum wage

    In October the national minimum wage increased from £6.08 to £6.19 per hour, while the youth rate (which applies to workers aged 18 to 20) and the rate for workers aged 16 to 17 will remain unchanged in 2013. The apprentice rate, however, has seen a marginal increase from £2.60 to £2.65 per hour.

    5. Provisions of Equality Act 2010

    The introduction of the Equal Pay Act in 2010 was the greatest shake-up of employment legislation in a generation, yet despite its significance some employers are still struggling with its implications. Here are some of the key elements of the Act which must be taken into consideration during the contract stage:

    1) Age, disability, sex, and race discrimination have not only been outlawed but certain recent amendments to the Act mean that:

    –       Employers can no longer fix a compulsory retirement age

    –       Employers can they enquire as to the physical health and well-being of an individual, except only to determine their ability to perform the job at hand

    –       Employees cannot be discriminated against for their race or sexual orientation and employees who have undertaken gender transformation are also protected.

    2) Rehabilitation of offenders: Periods after which criminal convictions become spent will be reduced in March and former offenders cannot be prejudiced against for any spent convictions.

    3) Third-party harassment provisions in Equality Act repealed: Employers will now be liable, in certain circumstances, if an employee is harassed by a third party.

    While none of the above will come as a major surprise to employers, the constantly evolving and increasingly complex nature of the UK’s employment laws has seen a sharp rise in demand among employers for advice on how best to pre-empt and effectively react to various employment issues. By familiarising yourself with the pertinent aspects of contract law you will at least be aware of the key changes that must be considered when preparing any new contract of employment.

    If you need further clarification on any of these points or require more info you can use the wealth of online info available – start here – or please feel free to contact me directly for a chat, if I can’t help then I will refer you to a partner who will – jg@elevatedirect.com

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    The Fragmenting Workforce – Part One

    In this article I will explain how and why workforces globally are radically changing. This takes some doing with quite a lot of data and references to look at so this article will be split over two posts.

    The way we work is changing. Across the world, there has been a shift in the way we are employed and a clear move towards a freelance/interim/contingent workforce. These structural changes are being driven by the following factors;

    1)      The weakened economy

    2)      How we want to work and how we consume work

    3)      The growth in the mobility of labour

    As Talent Futurologist Kevin Wheeler says, we are seeing two worlds colliding; the “traditionalist” wants security, a career path, predictability, income and camaraderie whilst the “free agent” wants choice, flexibility, opportunity and “pay per performance”. http://www.futureoftalent.org/

    In Kevin’s opinion, there are four key trends shaping ‘The Future of Work’ which will result in a rise in the contingent workforce. These are;

    –          The Rise of the Career Mosaic – “Everyone is an entrepreneur and Job Security is You… the new job security is alive and well and centred in you, not in a company.” – The New Job Security, Pam Lassiter http://www.huffingtonpost.com/pam-lassiter/

    –          Collaboration or Crowdsource – Work is more complex and it’s difficult to find and screen scarce talent. There’s great demand for innovation so should we share these scare resources?

    –          Health and Happiness – New concepts of prosperity and success change how we view and value work

    –          Beyond Words – The changing nature of communications means that how and where we work will change and the opportunity to be “independent” will be greater

    One of the messages in the KPMG’s 2012 survey report ‘Rethinking Human Resources in a Changing World’ , is that there is a “need to create more innovative, agile and globally responsive organisations”. This is not unsurprising. How they plan to do this; by “achieving an optimised workforce that has an appropriate mixture of employee types and employment policies”, is becoming increasingly feasible.

    Some key data from the report was that 72% of those surveyed maintained that their companies should increase the use of both virtual and flexible workers. This includes hiring former employees as contractors – an increasing trend highlighted by 41% of respondents.

    According to official data sources, (ONS Labour Market Survey – July-September 2012), the UK has 1.6m people; 6.4% of its workforce is engaged on a ‘temporary’ basis. Of these, just 20% state that they are engaged in this way through choice – down from 29% in the same period of 2008.

    There is, however, another significant pool of contingent workers contained within the 4.2m Self-Employed register. Research conducted on behalf of the PCG (Professional Contracting Group) estimated that, in 2011, there were 1.56m professional freelancers/ contractors residing within this pool.

    Of these, numerically, the dominant freelancing group is that of associate professional and technical occupations; some 630,000 people. More than half a million people work freelance in professional occupations and a further 350,000 work freelance in managerial occupations.

    Recent research commissioned by the PCG (Stephane Rapelli – European I-pros: a study) classifies these people as I-pros – “self-employed workers, without employees, who… engage in activities of an intellectual nature and/or which come under services sector.”

    The report notes that “the rise in (European) I-pro numbers between 2000 and 2011 was remarkable (+82%). Between 2008 and 2011 there was growth of 12.5% which was driven by four countries; Germany, France, Poland and the UK.” Within the same time period, the UK achieved double the European growth level, and UK I-pros now constitute 19% of the European total.

    With this clear transition of highly skilled professional workers to the contingency side of the market it is now ever more important for an organisaiton to consider whether the permanent employee really does offer the asset that organisations expect and believe they bring to the business. So here’s a question – with candidate numbers now potentially decreasing on the permanent side of the market where does the effort to find these candidates leave businesses who are desperate for skilled resources to deliver projects/sales/innovation/shareholder value? Dissapointed I would expect or frustrated at best – the amount of time and resources spent managing a unsuccessful rcruitment process is waste that eventually could be detrimental to the future of your business.

    In the second part of this blog post we will look in a bit more detail at the transition from both the hirers’ perspective and just as importantly from the candidates point of view.

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    Has Online Recruitment Reached Tipping Point?

    The UK online recruitment market has become increasingly diverse over the last 2-3 years. The job board sector has seen a dramatic rise in the number of vertical (or niche) job boards entering the market, while the use of social media sites such as LinkedIn, Facebook and Twitter have added a new dimension. The challenge now for employers is how to achieve greater hiring effectiveness in this mature online recruitment marketplace and stand out from the e-crowd in the electronic haystack.

    There has, it seems, been a marked shift in the balance of power between the various online channels. The sites which worked best in terms of attracting the right candidates 2-3 years ago may no longer do so, with the likes of Monster and TotalJobs, previously relatively unchallenged in their sectors, losing ground to sites such as CV-Library and Reed along with the rise in the number of niche job sites and job aggregators such as Indeed. Add social media to the equation and the options for employers become even greater. With so many options available, selecting between them can be confusing. But does this mean that job boards have had their day? Actually no, far from it.

    While the role of job boards as a prime medium for both job seekers and employers/recruiters alike has been the subject of much debate over the past 12 months, the simple fact remains that job boards continue to account for a high volume of new hires – second only to referrals, according to a CareerXRoad survey in 2012.

    And the reason for this is simple: job boards offer more traffic and more opportunities for your advert to be seen by the right people and at the right time. It’s where job seekers go and where your competition advertises. Yet this doesn’t absolve job boards of much criticism – some of which, it can be argued, is justified.

    One of the main reasons for this criticism is a matter of laziness: go online and see how some recruiters advertise their clients’ jobs and you will soon see why some (me included) suggest their days may be numbered. Terribly crafted job descriptions with evidently little or no thought or attention to detail, exaggerated positioning of their clients who all seem to be ‘the market leader’, bad grammar, typos and the abject lack of reply to online applications from many recruiters weaken response levels and cause employers to question their effectiveness as a recruitment tool. But effective they are, if used in the right way.

    Another fundamental reason is the overwhelming choice of job sites available for advertisers, with over 1,100 job boards in the UK alone it is hardly surprising that a degree of confusion exists. The critical success factor when it comes to marketing your vacancy online is choosing which candidate sources to use so that you allocate your marketing budget effectively. In response to this, specialist multi-posting and application management service providers have entered the market – some as partners for recruitment consultancies and others exclusively for employers looking to avoid third-party recruiters and manage their recruitment directly.

    Aside from recruiter failing and the plethora of choice for employers, a third cause for concern is in the way the job boards themselves operate. According to the International Association of Employment Web Sites (IAEWS), 60% of job boards surveyed do not know the traffic source of where their online applications come from. And some critics have suggested the sector has been guilty of possessing a silo mentality which precludes it from fully embracing and learning to co-exist with other online tools, such as social media.

    But there is another way. Job boards, quite rightly, will continue to play a key role in recruitment process. However, there remains a relatively untapped source of potential candidates that the current crop of job boards are unable reach: those who rarely, if ever, visit a job board.

    As the war on talent continues to escalate, competition between employers to get the right candidate for the job remains intense. These so-called ‘passive’ candidates will invariably be ‘in’ the market rather than ‘on’ the market – the difference between being pro-active or reactive job seeker – and as such present a significant challenge for employers in terms of how they can gain their attention.

    Short of hiring a headhunting or executive search firm, who typically bill you before they even start their search and charge up to 50% in commission fees, employers can appeal to potential candidates in other ways. One such approach is to engage your target market by talking to them in none-direct, none-salesy way.

    In other words, rather than running a series of recruitment adverts in the hope that the people you want to attract will apply, consider stripping back the ambiguous and cloak and dagger approach in favour of impartial direct sourcing technologies that allow passive job seekers access to employer branded job content rather than third party job adverts placed by recruiters. For example, increasing your PR activity and writing commentary pieces in the key media that your target candidates are likely to be reading not only positions you as a thought-leader and key influencer, it will also appeal to the very people you want to work for your organisation. They want to know what is happening in their sector and you want them to see that your organisation is at the forefront of their sector.

    While opinion may be divided, the reality is that job boards aren’t going anywhere (just yet). Employers will always have a need to post jobs, especially in niche areas, and social media will continue to act as a job search engine driving traffic to the job boards themselves.

    Direct recruitment models are another- and increasingly- preferred alternative option for employers. In short, these models, which are effectively direct candidate attraction processes, such as that offered by Elevate, have already demonstrated their ability to save organisations £000s each year off their recruitment budgets. According to our own findings, with the average cost per hire (contractor/freelancer), using systems based on the Elevate model, typically save employers around £720 per month per contractor (earning circa £300/day) than with a recruitment agency. Which, when taken on an annual basis, we find that employers hiring five contractors for 12 months could save around £44,000 in recruitment fees.  Add that to your bottom line and see you FD or CFO smile broadly.

    To counter the criticism they receive, job boards must improve their editorial standards to help advertisers get the most from their advertising. They need to remind themselves of how to demonstrate their value proposition in the face of competition from social media in much the same way as they did some twenty years ago when they disrupted the print channel.

    As for recruiters, they must take more responsibility and step away from the mindset that simply posting, anything, online is enough to generate response. It isn’t.

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    What does 2013 have in store? Boring tax stuff – Very important

    Next year (or this year depending on when you read this) promises to be one of the most tumultuous periods for business finance and tax in recent memory, with a whole slew of new legislation coming into force.

    It’s vital your business is prepared for these changes or you could end up on the receiving end of a weighty fine from the authorities. With the end of the year in sight, we thought now would be a good time to round up everything you need to be aware of in 2013.

    Here are some of the high-lights (or low-lights depending on your view point!)

    January – Child Benefit Changes

    From 7th January those earning over £60,000 will lose their entitlement to Child Benefit, while those earning over £50,000 will see their Child Benefit payments reduced. If you operate your own limited company there are several ways to mitigate the impact of these changes, but you must act now!

    January – Self Assessment

    All freelancers, contractors and directors of limited companies must submit a Self Assessment, so if you were trading in the tax year 2011-12 you only have a few weeks to prepare for the January 31st submission deadline. If you delay, HMRC’s updated penalty regime is waiting!

    April – Real Time Information

    Real Time Information (or RTI) is a new scheme designed to streamline the flow of payroll information between employers and HMRC. You may have received a leaflet from HMRC recently detailing the changes, which come into force in April. RTI is a complete overhaul of the way payroll operates, and you will most likely need brand new payroll software to deal with it, unless you are using online accounting software like Crunch.

    April – Rate and threshold changes

    At the beginning of the new tax year of 6th April there will be a number of rate changes. The highlights include a 1% drop in the Main Rate of Corporation Tax to 23%, a rise in the Personal Allowance to £9,440, a drop in the Higher Rate threshold to £32,010, and a lowering of the Additional Rate from 50% to 45%. It is crucial you and your business are aware of any changes that are relevant to you.

    October – Universal Credit

    If you receive Income Support, Working Tax Credits or Child Tax Credits, your payments will be changing with the introduction of the Universal Credit.

    Get started now – Pension Auto-Enrolment

    This new scheme is designed to ensure all employees are paying into a pension whenever they are in salaried employment. All businesses with 500 employees or more must be operating Auto-Enrolment by the end of 2013, however there is a large amount of preparation required, so smaller firms should start the groundwork soon!

    For more in-depth information on these and further legislative changes please check out Crunch at http://www.crunch.co.uk/getting-ready-for-2013/ – check them out, they really know their stuff.

    Here is to a profitable New Year.

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    The Preferred Supplier List; A Good or Bad Thing?

    In the recruitment industry we have all come across the “power” of the purchasing or procurement function, whether you are in a recruitment consultancy and are faced with the constant “you’re not on our PSL” or in an Advertising/HR Communications Agency and are having to fill out a huge tender prior to even pitching for the account, which only seems to be interested in one thing, price. All of us in recruitment will have found ourselves in this position at some time.

    But I would like to pose a number of questions;

    1)       Does the Preferred Supplier List hold your organisation back from finding great talent?

    2)       Does it really deliver value for money?

    3)       Does the “widgitization” of Copywriting and Creativity lead to the best copy, creativity and brand development?

    4)       Is the PSL and 1990’s way of managing the excess of that era failing to take into account the technology led “marketplaces” of the 21st century?

    All of us in the recruitment Industry have – over the last 25 years – been increasingly driven by the PSL.  Large organisations with significant recruiting needs or those in the public sector with a statutory requirement have used their purchasing functions to do the following:

    – Control the number of recruiting firms an organisation works with.
    – Manage costs/fee structure from multiple suppliers.
    – Manage legal contracts.
    – Create structure.

    However, there is a growing number of recruiting firms for whom PSL’s are no longer a consideration. Indeed, many recruiters report that the somewhat arduous and significantly time consuming bidding process, which can take several days to complete given the wealth of information – legal and otherwise – required by the purchasing team, has led to some recruiters to abandon their PSL aspirations altogether. But might these firms have a great candidate?

    We have also seen the growth of the Vendor Managed Service which seek to provide a way of managing multiple suppliers, driving price down and creating efficiency. But yet again, many “smaller” recruiting firms will not bid for these contracts.

    There is another trend that is taking place in the UK recruitment industry that could also have an impact on the “use” of the PSL: the rapid growth of the In-House Recruiting Team. One of the mistakes many organisations have made is to allow the Line-Manager/Recruiting Manager to use any recruiting firm they want and I know of companies who have 100’s of suppliers.

    This becomes an obvious target for the In-House Recruiting Team and running the PSL is a simple way to reduce costs and “regain” control of the situation.

    So I pose the question: Is the job of the HR/Recruiting function to attract the right candidate irrespective of cost? And if, so does the PSL stop that?

    The answer has to be yes, because it restricts the access to the “talent”. But in the 21st century, with a much more open and transparent labour marketplace driven by technology, we are seeing new generation of internet based models that enable smart, quicker and cheaper ways to access talent.

    So is the PSL relevant? The answer should be yes. BUT don’t become a slave to it or the purchasing team. A new generation PSL needs flexibility and should take into account the new generated of technologies being developed that facilitate a more open and direct way to access talent, whether it be permanent or freelance.