Probation and Notice Periods – What You Need to Know

Probation and Notice Periods – What You Need to Know

Thinking of saying goodbye to a new hire? Then something obviously hasn’t worked out. To ensure their departure goes smoothly, you need to give them the right amount of notice.

But how long should that be when an individual is still in their probation period? And what else do you need to consider? Read on for the answers.

Probation – Not Just For Criminals

Most employers operate a trial period for new employees – also known as a probation period – which can vary from a few days to several weeks or months. The length of probation should be clearly set out in the employee’s contract alongside the employee’s standard notice period.

But what happens if they hand their notice in, or you want them to leave, during their probationary period? Does the standard notice period apply? Or can you legally give less notice and hasten their departure?

It Depends on Length of Service

People with probation periods shorter than one month are not entitled to any notice so you can exit them from your firm immediately.

Of course, notice periods work both ways and employees can notify you of their intent to leave too. Which means you could be left in the lurch if someone leaves within their one-month probation period.

That’s why most organisations stipulate a probation period of three months. This often increases to six months for more senior roles and jobs that are difficult to recruit. By extending the notice period, both employers and employees are protected.

There are two types of notice that employees and employers must give.

Contractual Notice

Contractual notice is the agreed notice period, as set out in the employment contract, that must be given by either side to terminate the arrangement.

You can choose to give more notice than legally required. But of course you cannot give less than the law stipulates.

Typically, contractual notice periods are:

  • Less than one week for staff with under one month’s service
  • One week for people with between one and six months’ service
  • One month for people who have recently passed their probation

These notice periods give both sides a degree of protection and tie in nicely with the following legal minimums.

Statutory Notice

If you don’t include a notice period in your employees’ contracts you have to abide by legally predefined notice periods based on the individual’s length of service:

  • Less than one month’s service > no notice
  • One month to two years’ service > one week’s notice
  • Two years’ service > two week’s notice
  • Three years’ service > three week’s notice

The notice periods increase by one week for every complete year of tenure. So someone with eight years’ service would need to give and be given eight weeks’ notice.

Notice Has Been Served – What Happens Next?

This usually depends on who gave notice and the reasons why.

If an employee gave notice and there’s no problem (like performance issues), you will probably want them to work for the duration. This helps your organisation by keeping work moving and giving you time to recruit.

If you’ve given notice to a member of staff during the probation period, it’s usually because performance or attitude is not up to scratch. Which might mean you don’t want the employee to come in.

In this instance, you will still need to pay them for their notice period and you can do this in one of two ways:

  1. Pay in lieu of notice – you end the employment before the individual serves their notice and pay them as if they had worked their notice period.
  2. Garden leave – the employee serves their notice but doesn’t do any work for your company. This might happen if they are leaving to work for a competitor. Again, they must be paid for the full notice period.

Nobody wants to recruit the wrong person for the role. But occasionally it happens. Protect your business by:

  • checking your contracts of employment
  • paying notice periods as required
  • revisiting your recruitment practices to spot any gaps

If you want help protecting your business from the unexpected, get in touch with Crosse HR.

How is Social Media Impacting Recruitment?

How is Social Media Impacting Recruitment?

How long do you think Facebook, Twitter and LinkedIn have been around? Although it feels like forever, they were only born in 2004, 2006 and 2011 respectively.

Despite their youth, these platforms have significantly influenced recruitment. In this article, we explore how and take a look at what you can do to exploit social for your business.

A Potted History of Recruitment

Before social media was a glimmer in anyone’s eye, businesses recruited using good old-fashioned methods. Word of mouth and recommendations were standard practice limiting the recruitment pool businesses could cast their net into.

The only chance of finding fresh blood was to advertise in newspapers or pay premiums to recruitment agencies to access details from their hoard of paper CVs.

With the advent of the web, organisations began advertising roles on their websites. This extended their reach well beyond existing networks and opened up vacancies to a wider range of applicants.

In the late nineties, job sites emerged and compiled job listings providing businesses additional places to recruit. Between 1999 and 2000, the job site Monster had 1.2m unique monthly visitors and held 7.2m CVs.

Suddenly, job seekers and recruiters were able to access thousands of new opportunities and candidates around the world.

Which meant candidates could be pickier about what they applied for. Putting pressure on firms to step up their game to attract the best and brightest.

Social Means Even More Choice

As social media came into play, there was a clear demarcation: Twitter and LinkedIn were considered professional tools while Facebook was deemed to be personal.

However, research shows that attitudes are shifting: Twitter is now considered a personal platform even though more businesses have a profile on Twitter (14%) than Facebook (11%).  

With other ‘non-business’ platforms attracting large audiences, businesses are beginning to cultivate a presence on sites like Facebook, YouTube and Instagram too. All of which means recruiters have additional avenues and new ways to communicate with potential candidates.

The introduction of social media has resulted in two main changes to recruitment:

  1. Personal profiles are constantly on display making the passive proportion of the market (those who are not actively job-seeking) more available to recruiters.
  2. Social has merged the power of word-of-mouth with the reach of the internet. Giving recruiters, businesses and candidates their greatest opportunity to find exactly the right job or hire.

 

What This Means for Your Recruitment

Exploiting the recruitment benefits that social can bring relies on understanding what it means for your business. If you’re considering using social to recruit, take a note of these tips.

  • Be Prepared for More CVs

More jobs, more widely-advertised are applied to by more people. Which adds to up to a CV-screening nightmare for small business owners who don’t have a dedicated HR team to support them. In 2017, employers received a median of 24 applicants per low-skilled vacancy and 19 per medium-skilled vacancy. If you don’t have the capacity to sift through this many CVs and covering letters, consider hiring an HR specialist so you only have to read the very best.

  • Make Your Job Ads Stand Out

Increased recruitment competition means job adverts need to be accurate yet enticing to attract the best people. Get the right words on the page and convey what makes your business great to work for to cut through the noise.

  • Provide Competitive Total Reward

When candidates can find another role at the click of a mouse, you need to be able compete. Competitive pay and benefits, a great working culture, flexible working, training and development. It’s all important in attracting candidates and retaining employees. Particularly when you consider that some individuals are probably being contacted multiple times a year by recruiters. Review your package to ensure you’re competitive in comparison to the area you want to recruit from.

  • Control Your Firm’s Online Presence

Managing your firm’s reputation was easy when you only had a website to consider. Now you need to control your presence across a number of different platforms so that future employees see what you want when they check you out.

  • Use Social for Added Candidate Insight

Yes, candidates can and will check your business out. But this works both ways. 11% of firms check social to get a more rounded view of a candidate, mainly at the application and interview stages.

  • Don’t Rely on Social for Diversity and Inclusion

Social has levelled the playing field by aredicating the need for an old boys’ network. However, things aren’t as rosy as you might think. Did you know that 80% of LinkedIn users are caucasian? Rely solely on social media for your recruitment and you could be missing out on diverse talent.

Social media has significantly changed the face of recruitment. Organisations can now source potential candidates from a global recruitment pool that also includes passive candidates.

Businesses who are on the social media front foot have greater opportunity to find the right mix of skills, experience and personality for their vacancies. Those who don’t will miss out.

Get your business on the right side of social media history by contacting Crosse HR on 0330 555 1139 or at hello@crossehr.co.uk.

Staff Turnover: What It’s Costing Your Business

Staff Turnover: What It’s Costing Your Business

Letters of resignation mean only one thing: more work for you. Managing the notice period and the paperwork, ensuring a proper handover, updating the job description, advertising, interviewing, hiring, training. It’s a lot to do and it’s all on top of your day job.

But your time and effort is just the tip of the iceberg. We set out the full cost of employee turnover to your business.

Time Equals Money

When you’re recruiting you’re not earning. Which is why many businesses decide to outsource their recruitment activities to an HR specialist. But how much does it cost to hire a new employee?

Economic modelling experts Oxford Economics ran the figures and found that replacing an employee who earns £25,000 a year will cost your business, on average, a total of £30,500. This figure varies dependent on sector ranging from £20,113 for retailers to £39,887 for legal firms.

How did they get to these figures? By considering the two main costs involved in recruitment:

1. Logistics
a. Management time spent recruiting, inducting and administering
b. Paying for advertisements
c. Running assessment centres
d. Overtime or temporary employees to cover the work

Depending on the role and the employee’s wage, the logistical costs vary. Replacing someone who earned £25,000 per year would cost on average £5,433; those on higher salaries would cost more.

2. Productivity
a. Inducting a new hire into the organisation
b. Training the new employee
c. Loss of productivity as the new hire gets up to speed

In the retail sector, the lost productivity while a new workers gets up to speed is £25,000 whereas in the legal sector (where the individual’s knowledge is the product) the cost is £35,300.

These numbers are eye-watering. So what can you do to reduce them?

How to Stem the Flow

If you seem to be recruiting more often than you’d like it’s worth assessing your turnover figures and comparing them to industry averages. HR Magazine reported a new high for UK turnover rates of 15.5% in 2016. If yours is above that it could be time for concern.

Before you can take any steps to address your turnover you need to understand why people are leaving. Asking them face-to-face may not elicit the most truthful responses; instead set up an anonymous online exit questionnaire to find out what people really think.

Once you know why people are leaving, you can pull together a plan of action to put things right.

The risk of people leaving is not small. While the Independent reports that happiness in work is at an all-time high, almost half of UK workers plan to look for a new job in 2018. What were the most common reasons for leaving?

● poor management – 49%
● low pay – 40%
● feeling undervalued – 49%
● lack of career progression – 30%

The good news is that all of these issues can be resolved by working with a specialist HR consultant.

Not All Turnover is Bad

It’s worth pointing out that in some cases turnover is a good thing.

If you keep losing poor performers, you may have no cause for concern. Underperformance costs your business in terms of low productivity, high absence and additional management time.

Their departure means you have the opportunity to replace them with someone brilliant. Studies have shown that the top one percent of performers generate ten times the average output of their co-workers and the top five percent more than four times the average.

Of course, this relies on getting your recruitment, onboarding and training spot on which is why it’s worth investing in a specialist recruiter to do the job right first time.

Three Pronged Attack

There are three main steps to address employee turnover and limit the cost to your business:

1. Understand why people are leaving and find ways to resolve these challenges.
2. Invest in your recruitment strategy to employ someone who will hit the ground running; this will reduce the £25,000 of lost productivity that accompanies the average new hire.
3. Hire someone who will fit well with your culture; the longer they stay and the more they produce the quicker they offset your hiring costs and start contributing to the bottom line.

Get these three steps right and you’ll stabilise your team and save a lot of money into the bargain.

If you’d like the support of an experienced HR consultant to reduce your turnover and manage your recruitment, contact Crosse HR on 0330 555 1139 or email at hello@crossehr.co.uk.

Succession Planning – A How to Guide

Succession Planning – A How to Guide

You wouldn’t run a business without insuring your IT equipment. Yet many organisations fail to plan for the vacancy of critical positions. All businesses need to be ready to react to expected and unexpected departures alike and succession planning is a great way to do this.

In this how-to guide, we explore the considerations and practical steps you need to take to secure your business’ most critical resource.

Ready to Respond

Critical roles can be hard to fill. Finding a new CEO or Finance Director will take most firms months, not weeks, and in that timeframe, anything could happen. Succession planning is a great way to insure your business against the risks of operating without key roles or with untrained people filling gaps on a temporary basis.

By identifying those roles that are key to the success of your business and deciding who is best placed to fill each person’s shoes, you can insure your business’ continuity no matter who leaves.

The Succession Planning Process

Good succession plans consider the short, medium and long-term. By identifying immediate replacements and ensuring a pipeline of talent ready to fulfil vacant roles in the years ahead, you’ll be well-placed to respond to any eventuality.

There are a number of key considerations to attend to:

Be strategic – identify the current and future needs of the business based on your company’s vision. This will include not only succession but skills too and should link with your recruitment plan.

For example, an IT firm might want to expand its services to include Virtual Reality yet lacks the skills to deliver this technology. Identifying this gap enables the business to upskill existing employees or attract suitable new recruits.

Identify critical roles – the CEO and their direct reports are always critical but remember to identify lower level roles too. There may be a specialist at a lower grade with skills you couldn’t survive without or a role that’s particularly difficult to recruit for.

Work out timings – while retirement dates are no longer enforceable everyone will stop working at some point. Build estimated retirals into your planning and ensure managers advise of anyone who is thinking about leaving.

Use your data – identify talent by assessing performance reviews or conducting new surveys with managers.

Consider motivation – not all employees want to progress their careers. As part of the appraisal process ensure managers discuss employees’ career aspirations to understand whether it’s worth adding them to a succession plan. If you include them without understanding their career intentions, you could end up with an unexpected gap.

Now You’re Ready to Get Started

Succession planning doesn’t have to be complicated. Creating a simple spreadsheet with the key roles you need to replace will be sufficient. As in the image below, identify who is ready to take over each role, who needs one to three years and five or more years to be ready to step up.

Source: Sigma Assignment Systems

http://www.sigmaassessmentsystems.com/wp-content/uploads/2016/03/successionplanningtemplate.png

Once you’ve identified any skills and experience gaps in your plan, you need to take action to fill them. This could mean:

  • Developing a training plan for key individuals
  • Exposing potential candidates to more senior colleagues
  • Providing experience of different working practices
  • Involving successors in larger or more strategic projects
  • Ensuring replacements have sound financial knowledge

Depending on your company culture, these meetings can sometimes become combative as managers seek to present one of their team as the next best choice for a particular role.

If you’re running the meeting, be prepared to take a firm but fair hand to resolve any disagreements. Alternatively, you could secure an external facilitator experienced in managing the process.

Re-evaluate

Succession plans shouldn’t be locked away in a draw. Revisit them regularly to ensure they are still fit for purpose and that the people identified as successors still work for your organisation.

Reviewing the plan every six months is a good rule of thumb unless you work in an industry with high turnover or that regularly reorganises. In these instances, you may need to review your plan quarterly.

Why Bother When You Can Recruit?

Bringing new blood into an organisation can be helpful and even with your succession plan, you will still need to do this. However, it can often be better to look internally to fill a position because it:

  • Creates career opportunities for existing employees
  • Boosts engagement by demonstrating that you are prepared to promote from within
  • Retains knowledge within your organisation and not your competitors’
  • Reduces the time it takes for a new person to get up to speed
  • Minimises the additional recruitment costs associated with hiring more senior roles

Whether you decide to communicate your succession plan to named individuals is up to you. While it can be inspiring for individuals to know that they have been earmarked, it can also be upsetting if plans change and they are no longer designated for succession.

Succession planning is an integral part of business risk management. By aligning your people with your strategy you’ll be prepared for the future. And your plans will give you the comfort of a fall-back position whatever happens.

If you’d like the support of an experienced HR consultant to establish or conduct your succession planning process, contact Crosse HR on 0330 555 1139 or email at hello@crossehr.co.uk.

The Taylor Review – Good Work for All

The Taylor Review – Good Work for All

There has been significant change in the Human Resources landscape in recent years. Inexplicably high levels of employment during a period of economic instability, a spike in zero hours contracts and higher levels of gig working and self-employment. Alongside ongoing issues with national productivity, the government felt it was time to appraise the situation. So they commissioned a report into modern UK working practises called the Taylor Review. What does the report mean for you as an employer? And is there anything you need to do right now?

The Standout Recommendation – Good Work

Following public hearings, round table and small group discussions with entrepreneurs and businesses, the Taylor Review produced a 116-page report. Its main recommendation is that the UK needs to sign up to the ambition of “all work being good work.”

According to the report, what ‘good work’ means varies from individual to individual at different life-stages and is also impacted by personal circumstance. It means changes in legislation and HR practices to ensure: sufficient pay and pay progression; fair treatment of all employment types; and holding fulfilling jobs with realistic scope for personal development. Issues such as good work-life balance, employee wellbeing and the potential to influence the direction of their job are also considered to comprise quality work.

The Recommendations and What They Mean for You

Here are the Taylor Review’s seven recommendations and what they could mean for your business.

1. A Sense of British Fairness

Fair work means ensuring all forms of employment are entitled to a reasonable balance of rights and responsibilities with a baseline of protection and routes to enable career progression.

What this means for you

Employment contracts may need to be provided on day one of employment for all employees and workers with more detail concerning rights than is currently required. This should give workers additional protections.

2. Employment Status

The report recommends retaining the flexibility of gig working arrangements but recommends making clearer distinctions between employees, workers (to be re-named as ‘Dependent Contractors’) and the self-employed.
The aim is to better protect dependent contractors with improved employment rights like holiday pay and the minimum wage. And continuity of employment may become easier to demonstrate making it easier for workers to accrue more employment rights. Its recommended that after 12 months on a zero hours contracts, an individual would be entitled to a contractual number of fixed hours. For more information on the current position, see our blog.

What this means for you

The good news is that the complexities of employment status should be reduced. The bad news; your employment costs are likely to increase if you employ dependent contractors.

Complex Employment Law – No More

Employment law is currently a complex mix of case law and legislation which makes it difficult for employees to know their rights and for employers to make the right choices. Again, the report’s focus is on ‘dependent contractors’ with a recommendation for additional protections for this group who are most likely to suffer from unfair treatment.

Stronger incentives (read penalties) are also suggested to ensure firms treat this group fairly. People suffering from ill health could also benefit from a right to return to their previous job and the report also recommends extending Statutory Sick Pay from day one of a contract.

What this means for you

Again, costs could increase and you would be required to backfill vacant roles due to long term sickness absence on a temporary contract basis. Employees will become increasingly HR-savvy meaning you need to be on your toes when it comes to employment law. Work with an HR consultant to ensure your processes are fit for purpose.

3. More Responsibility for Employers

How is all this going to be achieved? Through improvements to corporate governance, good management, and strong employee relations. Employers are expected to be seen to take the concept of good work seriously, be open about their HR practices and ensure all workers are engaged with and can voice opinions. The Taylor Review recommends requiring just 2% of the workforce (not the current 10%) to request an employee representative body.

What this means for you

If you already have high levels of engagement, clear people policies that you consistently follow and you regularly consult with your employees about working life (and act on their feedback), keep going. If not, start making these changes now before your competitors do or risk losing employees.

4. Career Development in the Spotlight

The report recommends all individuals should be able to continuously enhance their capabilities through formal and informal learning and on and off the job activities.

What this means for you

Consider developing formal career paths within your business. This will help attract and retain employees who can see a future with your organisation. Alternatively, expose your employees to project work or rotate people into related roles to keep work fresh and enhance business knowledge.

5. Good Job Design for Good Wellbeing

As the Taylor Review says, “the shape and content of work and individual health and well-being are strongly related.” Work intensity, hours, work-life balance and workplace health are all critical in ensuring firms, workers and the public benefit from good work.

What this means for you

Research shows that poor employee wellbeing impacts negatively on your business so if you think you could be doing more to enhance workplace wellbeing, seize the moment. If you’re not sure where to being, contact an HR specialist to light the way.

6. Enabling Pay Progression

While the National Living Wage has improved the finances of low-paid workers, the Taylor Review suggests an accompanying strategy to ensure everyone, but particularly those on low wages, can progress their careers and their earnings.

What this means for you

Pay progression goes hand in hand with career progression. So, if you plan to implement career paths or give people additional responsibilities to further their capabilities, you should also consider how to commensurately increase their pay. A well-designed pay structure can also control costs, attract and retain employees.

These are just some of the changes that could be afoot over the coming parliament. Keep your eyes peeled to know when you need to act or work with an HR Consultant to ensure you remain a law-abiding employer.
If you need support managing any element of employment law or your wider people practises, get in touch on 0330 555 1139 or at hello@crossehr.co.uk.

Will You Still Be Employed in 2030?

Will You Still Be Employed in 2030?

Ten years ago, the phrase ‘unexpected item in the packing area’ would have been meaningless.  Today, it’s a frustratingly familiar accompaniment as we scan and pack our shopping bags.  The trend for increased automation is set to continue as Price Waterhouse Cooper (PwC) predicts 30% of UK jobs could be at risk of mechanisation within the next 15 years.  This blog explores what automation is, which jobs it will impact and which jobs are likely to be safe.

What is Automation and Who Will It Impact?

Automation has historically been thought of as the process of removing humans from production through the use of machines. We’re used to seeing robots in car manufacturing plants, the aforementioned self-service checkouts and, on the news, unmanned drone planes.  This kind of automation tends to threaten manual jobs with PwC stating that “the most exposed sectors include[e] retail and wholesale, transport and storage, and manufacturing”. 

But with advances in artificial intelligence, highly skilled, knowledge-based roles could also be impacted.  At particular risk are those roles that undertake rule-based activities, such as accounting or law, elements of which can be replicated by computer programmes.

Three Jobs at Risk of Automation

Lawyers

In recent years, law firms have introduced new technologies to automate some of the more routine legal work.  For example, software that extracts data from the Land Registry and checks the details to saves legal teams several weeks of mind-numbing, manual fact checking.  While more senior legal roles are safe for now, there’s predicted to be less demand for junior lawyers and paralegals.

Farmers

Farming has long embraced new technology to make what was once back-breaking work easier and more efficient.  In this instance, with Brexit looming, farmers may need to replace 90,000 seasonal EU workers with machines, something that’s already happening in other countries.  For example, strawberry picking machines are in operation in Spain and robotic apple pickers are being used in the US to minimise the workforce required. 

This has inspired researchers in the UK to explore whether wheat can be produced without human intervention. With the average age of a farmer at 59, while automation threatens certain jobs, it might be necessary to ensure the future of the UK’s food production.

Taxi Drivers

Uber have been testing driverless cars for some time citing the potential of their project “to save millions of lives and improve quality of life for people around the world.”  Traditional taxi drivers are already fighting Uber’s gig-economy service and driverless cars could strike another blow to an industry that employs around 300,000 people in the UK.

Three Safe Jobs

Jobs of the future will require three core elements: qualifications in Science, Technology, Engineering and Maths (STEM); creativity; and emotional intelligence.  Here are three jobs that reflect this range of skills and will likely be safe in 2030.

Marketing, design and communications

While machines are good at understanding rules and assimilating work based on rational instruction, creativity isn’t easy to replicate.  This means roles in marketing, design and communications will be safe.  According to website, ‘Will Robots Take My Job?’, marketing managers, writers and designers have a 1.4%, 3.8% and 8.2% chance of being replaced by robots respectively.

Robotics Engineers and Technicians

With the rise of the machines comes more jobs in support of this new technology.  Those who have studied STEM subjects will be able to secure this kind of work.  Government and business are encouraging more children to take up these subjects in order to plug the existing skills gap.  In the short-term, these roles may need to be filled with overseas hires.

Psychiatrists, nurses and doctors

Roles that require emotional intelligence and a human touch aren’t jobs that robots or AI are likely to be equipped for.  However, healthcare professionals will continue to rely heavily on new technology as research and development in this sector continues.  With existing staff shortages within the NHS and the potential for Brexit to make matters worse, training to become a healthcare professional, is a safe bet.

Possibility or Threat?

Automation may sound like it poses a threat to the future, but in reality, jobs are likely to change shape rather than be completely replaced by new technologies.  For any business owner impacted by automation, there are a number of people issues to be considered such as workforce planning, training and job redesign. 

If you need specialist HR support to review your people strategy in the face of technological change, get in touch by calling us on 0330 555 1139 or via email at .

 

Overcoming the Biggest HR Issues for Not for Profits

Overcoming the Biggest HR Issues for Not for Profits

With limited resources and additional scrutiny, managing employees at not for profit organisations comes with extra challenges.  Being able to understand and empathise with the difficulties service users face and attracting and retaining the right workforce to do this is key to delivering your mission.  As is the effective management of your volunteer workforce.  Get these critical factors wrong and it makes it difficult for you to operate effectively.  This article explains how to overcome three of the biggest human resources issues faced by not for profit organisations.   

Diversity

The problem

According to the NCVO, the typical voluntary sector employee is predominantly female, slightly older and university educated.  While the trend towards an ageing workforce is in line with other UK businesses, the racial profile of voluntary organisations is not. 

Only 9% of employees in not for profit organisations are non-white, whereas public and private sector workforces are more diverse with 11% and 12% from black and ethnic minorities respectively.  Add to this the fact that only 35% of the charity sector workforce is male and it’s clear there’s a diversity issue.

Why is this a problem?  Organisations that service diverse communities need to interact with a broad base of service users and understand and reflect the needs of the group.  Charities that employ a range of people from different backgrounds are better equipped to do this and they also benefit from more diverse thinking.

The solution

Bringing new blood into organisations relies on your recruitment strategy.  If you often recruit via word of mouth or through referrals from existing employees, you’re likely to get CVs from people similar to your current personnel.  Try advertising on diverse job boards to attract different demographics or use social media to target and drive specific populations to the careers section on your website.

Assess which jobs genuinely require a degree; where it’s not necessary to have one, remove this hurdle from your person specifications to open the door to different people.  It can be tricky to get this right and remain legal, so work with a specialist HR provider to support you.

Attracting and Retaining Talent

The challenge

Once upon a time, not for profits could rely on commitment to their cause to attract and retain employees.  But, in recent years, the landscape has shifted with industry-wide data suggesting that charities are starting to compete with private sector benefit packages.  While salaries remain lower than in other sectors, ensuring your reward package is competitive without breaking the bank is key.  

The solution

Rather than guessing what the market pays, source voluntary sector market data to provide you with the salary and benefit information you need.  There are many benefits to paying for sector specific data:

 

-It stops you over or under paying on salaries and benefits so you can attract and retain effectively
-You can spot trends and changes in the data so you can lead, lag or keep abreast of the market in line with your HR strategy
-By comparing reward packages with other not for profits, you’re competing with the right organisations on the same financial basis
-You’ll benchmark or job evaluate roles in a fair and consistent manner
Market data provides a solid rationale when gaining reward package approval from trustees and compensation boards

 

As with other organisations, people don’t join and stay solely for pay and benefits.  Not for profits have historically been good at providing employees with flexible working and job-sharing arrangements and career breaks.  It’s important to maintain broader benefits like these as they allow you to take a strategic Total Reward approach that can be designed to appeal to the right employee demographic. 

Managing a Volunteer Workforce

The problem

It’s estimated that 14.2 million people formally volunteer at least once a month in the UK.  Managing this workforce is critical, but as with any organisation, managing people is not straight forward. Volunteering Waikato lists ten of the most common volunteer complaints, five of which are people management problems:

-lack of organisation
-being asked to do something other than what the volunteer signed up for
-being asked to take on extra jobs
-volunteers don’t feel they’re making a difference
-volunteers are micro-managed and not trusted

The solution

At the heart of the solution are good people management skills. While salaried employees turn up to work (in part) for pay, volunteers do not.  This means you need to treat them even better than employees.  Because the work itself is the primary reason they volunteer, get everything around this right and you’ll keep them coming back.

Consider writing volunteer job descriptions so people know what’s expected of them.  This will also help your volunteer managers or team leaders to assign appropriate work.

 

-Get organised
No-one likes to give up their time only to find it’s being wasted through poor organisation. Ensure volunteers know where to be, what they’ll be doing, when and how, to maximise use of this resource and make them feel you respect their time.

-Specify job roles
Consider writing volunteer job descriptions so people know what’s expected of them. This will also help your volunteer managers or team leaders to assign appropriate work.

-Recognise and engage
Volunteers have offered to work for you for free because they believe in what you do. Help them feel that their time has been well spent by:
explaining how that day’s activities contribute towards the organisation’s overall mission
thanking every person every time for their help
sending out letters or cards of thanks annually
hosting an annual social for volunteers to thank them for their contribution

-Training and support
It can be tempting for team leaders to feel they need to micro-manage volunteers because they’re new or considered to be less effective than a full-time employee. Where necessary, training volunteers will ensure your organisation manages risk and governance issues effectively and will help project leaders feel more comfortable with the skills of their workforce. Invest in training your managers and team leaders to help them find different ways to manage people. Combined with improved organisation and volunteer job descriptions, those leading activities will feel they can take a more hands-off approach.

It can be tempting for team leaders to feel they need to micro-manage volunteers because they’re new or considered to be less effective than a full-time employee. Where necessary, training volunteers will ensure your organisation manages risk and governance issues effectively and will help project leaders feel more comfortable with the skills of their workforce. Invest in training your managers and team leaders to help them find different ways to manage people.  Combined with improved organisation and volunteer job descriptions, those leading activities will feel they can take a more hands-off approach.

Deal with these key people issues to make your not for profit organisation an employer of choice with room for people from all walks of life.  Not only will you attract and retain the best employees and volunteers, but you’ll have a motivated workforce who are ready and able to serve your beneficiaries.

If you need specialist HR support for any of the issues covered in this article, get in touch by calling us on 0330 555 1139 or via email at hello@crossehr.co.uk.

 

Salary Sacrifice Schemes –  What You Need to Know

Salary Sacrifice Schemes – What You Need to Know

Providing a range of employee benefits helps differentiate your business from your competitors. Deliver these benefits via salary sacrifice and you’ll gain an additional advantage by making tax savings. But salary sacrifice schemes are not straight forward, and recent changes to legislation mean you’ll need to make amends to the way you operate existing schemes. Whether you’ve got salary sacrifice arrangements in place, or you’re thinking of setting them up, this article outlines how salary sacrifice works, the pros and cons of this approach and details the changes you need to know about.

What is Salary Sacrifice and How Does It Work?

Salary sacrifice is a legal way for employers to provide benefits to employees so that both parties make tax savings. By deducting the cost for benefits from gross pay, both employer and employee benefit by paying tax on the remaining, lower salary.

Depending on how a salary sacrifice scheme is implemented, simply or SMART, either the employee saves on tax and NICs (National Insurance Contributions) or they gain a higher value of benefit than their contribution. With either approach, employers save their NICs on the proportion of the salary being sacrificed.

The table below shows the savings employees on differing tax rates would make if they exchanged £100 of their salary for certain benefits.

Salary Sacrifice Schemes

Is Everyone a Winner?

There are many positive reasons to provide benefits in this way.

The obvious benefit of tax savings
Despite changes to tax legislation in this area (more on this in a moment), there are still tax savings to be made for both employers and employees on some benefits. These savings can make a big difference in terms of helping lower paid employees gain access to benefits they could not otherwise afford.

Enhancing your total reward package
The more cost-effective benefit provision is, the more benefits you can afford to offer and the more attractive and competitive your reward offering becomes.

As a business owner, you can decide what to do with any employer NIC savings; put them back into the business or share them with employees. Some organisations use some or all of their employer NIC savings to make additional pension contributions or fund an additional low-cost benefit, such as a health cash plan. This enhances their employer proposition and makes existing employees even happier.

Keeping your high earners happy
If your business has any high earners, their £11,000 personal tax allowance reduces by £1 for every £2 earned over £100,000. Using salary sacrifice reduces their gross earnings; bring their earnings below £100,000, and their personal allowance will be preserved boosting their tax- free income.

The Drawbacks to Salary Sacrifice

While the tax savings and ability to offer a range of attractive benefits is tempting, salary sacrifice has it downsides.

It’s not straight forward
Operating a salary sacrifice scheme requires a specialist tax knowledge to set the schemes up correctly and to provide the right employee guidance. Administration of benefits, including real-time tax reporting, also needs to be on point to remain on the right side of the law. One way around these issues is to work with a HR consultant to set up a scheme underpinned by the effective processes.

Business risk
Some salary sacrifice schemes entail a degree of financial risk for the business (such as Cycle to Work), where the employer pays for the cost of the benefit up front and the employee makes repayments via payroll. If record-keeping falls down, or a leaver’s final pay cheque does not cover the outstanding cost, you’ll be liable for the expense.

Not everyone can participate
Where a salary sacrifice arrangement would reduce an employee’s gross salary below the national living wage they will not be able to participate in the scheme which can be divisive. Inadvertently take an individual’s pay below the living wage and you’ll need to pay the staff the shortfall in wages and you may incur up to £20,000 in HMRC penalties per employee.

It’s not always beneficial for employees to reduce their gross earnings
Lower paid employees may find their ability to claim certain means-tested benefits, such as jobseekers allowance or statutory maternity pay, is impacted. That’s because their NICs will have reduced and they may not meet the earnings threshold to qualify for these benefits should they need them in future. Other financial arrangements such as applying for a mortgage can also be affected by reducing gross earnings via salary sacrifice.

Which Benefits Can You Provide via Salary Sacrifice?

Recent legal changes surrounding salary sacrifice mean that not all benefits will continue to attract the same levels of tax savings. From April 2017 onwards, salary sacrifice will continue to operate as normal (attracting employer and employee NIC savings and employee tax savings) for the following benefits:

• pension savings (and related advice)
• childcare provision (including employer-provided childcare and childcare vouchers)
• cycle-to-work schemes
• ultra-low emission cars (CO2 emissions under 75g/km)

However, the benefits listed below can no longer be offered in this way and will only attract NIC savings for the employee:

• company cars (CO2 emissions of 75g/km and above)
• work-related training
• car parking near your workplace
• health screening checks
• mobile phones and computers
• accommodation
• gym memberships
• school fees

This means, if you offer any of the benefits above and retain the employer NIC proportion of your saving, this will now be a cost to the business.

Transitioning to the New Arrangements

The good news is that schemes in place before April 2017 are protected until April 2018. Arrangements for benefits in the second group above will be protected for three years until April 2021. But beware: if you renegotiate your contract before these dates, you’ll need to adopt the new tax legislation from the effective date of your new contract.

If you need specialist HR support to review your position and manage any changes, get in touch by calling us on 0330 555 1139 or via email at hello@crossehr.co.uk.