HR News July 2010

Welcome to HR News. In this months issue we take a look at a few of the headlines from the recent emergency budget and how it will effect employees. We also look at the lack of provision that over 50 females are making for retirement and how to handle difficult staff who are in the grips of World Cup, Wimbledon and festival season.

Capital Gains Tax to be increased to 28% for high-rate taxpayers

The chancellor of the Exchequer, George Osborne,  announced Capital Gains Tax is to be increased to 28% for high-rate tax payers, but will remain at 18% for low and middle earners paying the basic tax rate.

Speaking at his Emergency Budget speech, Osborne said: Capital gains tax means the richest people pay less capital gains tax than those who clean for them.

However, the Government has pledged to take 850,000 low earning employees out of income tax through new tax breaks.

There will be a £200 tax cut for as many as two million staff paying the basic rate, and the personal income allowance is increased by £1,000 from £6475 to £7,475.

But those earning higher earnings and paying higher tax rates will be no better off from the decision, which is expected to cost the struggling economy £3.5 billion.

VAT up from 17.5% to 20% from 4 January 2011

Years of debt and spending have made this unavoidable many argue, but it will generate £13 billion by the end of this parliament.

The VAT change means it is absolutely vital for employers to communicate their benefit schemes. Voluntary discounts will make all the difference to staff and they will really appreciate the savings.

This is a fine balancing act for employers. It could lead to employees wanting larger pay settlements, rather than more from benefit schemes.

But with pay frozen in the public sector and with budgets cuts, this could prove a problem for HR.

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Women over 50 not saving enough for pension

Women over 50 years old are least likely to be saving enough for retirement, as the overall number saving falls to its lowest for four years.

The annual Scottish Widows Pension Report found just 48% of people are saving enough. One in five (21%) who could be saving are failing to do so.

According to the report, the recession has caused people to become disheartened about saving into a pensions scheme. Among women over 50, just 38% are saving enough this year, down significantly from 52% last year.

Ian Naismith, head of pensions market development at Scottish Widows, said: "I think many women of that age have lost confidence in saving generally and have the attitude of 'why throw good money after bad'. The worry is that by this stage they have left it too late to save enough for their retirement."

Dealing with the effects of the morning after the night before!

With the World Cup, Wimbledon and festival season in full swing, employers may find themselves having to juggle work schedules with a depleted or impaired workface. There may be an increase in flexible working and holiday requests, or employers might allow staff to view matches at work. But another consequence of summertime social events is the impact on performance in the workplace after a bout of excessive drinking the day before.

The charity 'Drinkaware' recently conducted a survey revealing that every day, 520,000 people in the UK go to work with a hangover. What should employers do to manage the problem?

Fit for purpose

Most employers already have policies and procedures in place to allow them to manage employee performance and absence effectively. But these policies may not cover managing employees who attend work when they are not fit to do so because of excessive drinking.

Employers have the right to expect that employees are fit for work, and most contracts of employment will make this clear. Many employers will incorporate an express statement that employees should not be under the influence of alcohol when at work. Employees may well regard a hangover as being outside the scope of such policies, but clearly the outcome is the same, because the ability to perform work could be adversely affected. Employers may want to spell this out to employees.

Gross misconduct
For certain jobs, such as those involving driving or operating machinery, being under the influence of alcohol could be gross misconduct and may also constitute a criminal offence. Employers should have specific alcohol policies in place where health and safety is critical or where an employee's impaired judgement could lead to grave risks. Alcohol policies should allow the employer to take actions such as testing to check whether employees are under the influence and to take appropriate disciplinary measures if necessary. Employees may perceive such policies to be intrusive, but for certain situations they are essential.

Duty of care
An employee suffering from a hangover may suggest that symptoms such as nausea and headaches are for some other medical reason unrelated to alcohol. But employers have a duty of care to provide a safe working environment and employees suffering from hangovers may pose a risk through disruptive behaviour or impaired performance. An employer who thinks such risks exist is entitled to act accordingly and if necessary, suspend those concerned and permit them to return only when they are fit to work. The employer should then use its disciplinary procedure to deal with the incident that prompted the suspension.

Employees do have to be responsible about their drinking habits during the working week and ensure they do not allow their social lives to affect their ability to do their job. Employers seeing poor workplace performance as a result of excessive drinking could consider instituting a proactive health campaign to encourage staff to moderate their behaviour.

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