Monitoring employees at work
The Data Protection Acts 1988 – 2003 applies to all information that employers collect about their workers – personal information, medical history, CCTV images.
The Act does not prevent an employer for collecting and using such information, however, it does try to strike a balance between the employers need to maintain employment records and the individual’s right to privacy.
Pension – the funding crisis
In the past 10 years there has been a switch from the established ‘Defined Benefit’ schemes (DB) to the more secure ‘Defined Contribution’ schemes (DC). The under funding crisis has affected the majority of DB schemes and a number of high profile cases hit the headlines – Bank of Ireland, Aer Lingus, ESB, Ryanair and the Irish Times.
The combination of low interest rates and volatile stock markets has caused DB funding levels to reach crisis levels. The Irish Times 13th August 2016, reported ‘that the pensions hole in Ireland has almost doubled in 2016, at the start of the year the deficit was just under €3 billion and by the end of July it had jumped to €5.7 billion’.
The review of Employment Policies is necessary to achieve the objective of bringing all employees under single legal employer and ensure fairness and consistency across a range of policy areas – – pay, promotion, training and development.
Employment policy statements establish basic ground rules for decisions relating to the compensation and treatment of employees. The Policy framework allows the BoD to delegate decision making responsibility to the management team by determining appropriate action, providing guidance and defining limits.
The policy framework should be decided by the BoD, the following list is typical of the area’s that may need to be reviewed:
- Remuneration policy
- Internal selection & appointment
- Sick pay policy
- Retirement age
The policy should determine the appropriate pay rates and benefits for staff and should reflect the tasks and level of responsibility required in their job. It is the principal means of rewarding people for their hard work and commitment.
Staff rates of pay will be subject to annual review by the remuneration committee. The committee should comply with the governance and risk management regulations as specified in the ‘Credit Union Handbook’.
In determining future rates of pay and benefits the committee should consider:
- The credit unions ability to provide pay increase for staff
- Labour market survey to determine trends in pay increases in the Credit Union sector
- Projected cost of living increases as determined by the Consumer Price Index (CPI)
- CU dividend policy as determined by the BOD and ratified at the AGM.
Many Credit Unions continue to rely on pay scales linked to civil service rates which have a number of fundamental flaws:
- Scales do not reflect economic conditions and result in pay rates well above market levels
- Scales do not reflect the CU ‘ability to pay’
- Scales do not reward commitment and performance
- Scales eventually become obsolete
Internal Selection & Appointment
The C U should be committed to providing opportunity for internal candidates to develop their skills & qualifications and achieve promotion within the organization.
Selection and promotion decisions should be based on objective criteria – qualifications, experience, skills, personal traits needed for the job.
Staff members will be encouraged and supported to participate in training programmes and achieve Credit Union related qualifications.
If there are no suitable internal candidates vacant positions will be advertised in the external market.
The TUPE legislation protects the terms and conditions of staff involved in the transfer, which ensures that staff carry all of their existing terms and conditions to the new legal employer.
The contract of employment is a legal agreement between the employer and the individual employee and any changes to the existing agreement needs the employee’s consent.
Balancing the cost of payroll against providing a reward package that will retain key employees and stimulate performance can be a very demanding task. Already CU’s are encountering problems recruiting and retaining sufficient skilled and experienced staff to meet the demands of the new legal and regulatory regime.
Establish contractual arrangements
It will usually be clear who transfers with an undertaking but in some cases there may be some employees in respect of whom it is not so clear. There are obvious uncertainties where an employee may not technically be employed (volunteer) or where the employee only works part of their time or where they are employed on a temporary contract.
To decide on this issue we need to examine the following information:
• Payroll records for at least one month prior to transfer;
• Establish the rates of pay, hours of work, holiday entitlements, and general terms & conditions of employment;
• Date of hire and continuity of employment;
• Outstanding legal claims / liabilities, e.g. personal injury, employment tribunal claims;
• Performance/ disciplinary record;
• Individual agreements that may affect the employment relationship, e.g. flexible arrangements – start times, hours of work, payment arrangements;
• Pension/ PRSA arrangements.
Employee pension rights do not automatically transfer to the new employment because group pension schemes often have more than one Participating employer. The result is that the Group Pension Scheme does not transfer with the business being transferred.
However where there is a pension scheme in place at the time of transfer, the legislation provides that;
• The new employer must ensure that pension rights are protected
• If the scheme is an occupational pension scheme covered by the Pensions Acts, then the protection given by the legislation applies
Negotiations are required to establish what pension obligations transfer to the new employer and other issues need to be considered – PRSA arrangements, life insurance and health insurance.
Changing terms of employment
Following the Transfer, employers often find that they have employees doing the same job on different T&C of employment.
TUPE provides protection for the existing individual contractual arrangements, however if the employee and employer can agree to changes the strict letter of the law need not apply.
The employer may consider applying the most favourable terms or offering incentives for employees to change; buyout of the term of the contract or trade off against another entitlement (increased holiday entitlement v increased mobility).
The challenge is to review the range of options available and select the right mix – pay rates, hours of work, mobility etc. The decision-making process should include a ‘benchmarking exercise’ which will provide management information to evaluate current levels of pay + benefits; decide future remuneration policy; prepare individual pay + benefit packages.
The Report of the Commission on Credit Unions 2012 identified the issue of governance as at the core of strengthening the regulatory framework for Credit Unions.
The Credit Union Act 1997 sets out comprehensive governance standards that include a clear organisation structure, with well defined, consistent reporting lines that reflect the nature, scale and risk profile of the CU.
The new standards emphasise the importance of the separation of authority and responsibility between the Board of Directors (governance and oversight functions) and the management team (implementation of policy and ‘day to day’ operations).
Governance is the system by which the CU directs and controls it’s affairs to meet strategic objectives; protect member’s funds; and ensure compliance with the legal and regulatory framework.
The organisation structure – the allocation of people and resources – is a matter for individual CU but should reflect the scale, complexity and risk profile.
The Board is responsible to the membership for the performance of the CU, but authority for day to day activities is delegated to the management team.
The CEO / Manager should act as the link between the Board and the executive management team. The separation of functions ensures that there is clarity about individual authority and responsibilities and avoids the possibility of failure of governance or conflicts of interest.
The ‘Transfer of Engagement’ process will usually involve some change to the employment relationship and terms & conditions of employment. Therefore it has the potential to give rise to issues that may make the ‘transfer process’ more complex or contractual problems that may end up in an Employment Tribunal.
However, the transfer process also provides the opportunity to update and develop organisational, employment and contractual arrangements in line with new CU legislation and Central Bank regulations.
The HR challenges & opportunities created by a ‘transfer’ revolve around a number of key issues:
- Governance and management issues
- Harmonising pay and benefits
- Reviewing and updating employment policy
- Changing contracts and terms of employment
- Keeping valuable staff members on board
Governance and management issues
The Report of the Commission on Credit Unions 2012 identified the issue of governance as at the core of strengthening the regulatory framework for Credit unions. The 1997 Act as amended by the 2012 Act, sets out comprehensive governance requirements that are designed to provide a framework for improved governance standards, with a particular focus on the Board of Directors(governance and oversight functions) and the management team (implementation of policy and the operational functions).
The new standards emphasise the importance of the separation of authority and responsibility between the Board of Directors and the management team.
The Due Diligence investigation should seek to understand the current structure and consider future governance and management issues for the new entity.
Harmonising pay & benefits
Balancing the cost of your payroll against providing a reward package that will retain key employees and stimulate performance can be a very demanding task.
The TUPE legislation protects the terms and conditions of staff involved in the transfer, ensuring that staff carry all of their existing terms and conditions to the new legal employer.
The challenge is to review the range of options available and select the right mix – pay rates, performance bonus, sick pay, health care, travel allowances and pension.
Reviewing & updating employment policies
Bringing all employees under single legal employer and ensuring fairness and consistency across a range of policy areas – remuneration policy, working time, sick pay, leave entitlements, retirement age – can be a complex project.
Employment policy statements establish basic ground rules for employees and help protect the credit union from future litigation.
Changing contracts and terms of employment
The contract of employment is a legal agreement between the employer and the individual employee and any variation of an existing agreement needs the employee’s consent.
It is usual to consider incentives for the employee to agree to proposed changes – buyout of the term of the contract or offer an enhancement of the terms of employment, such as, increased holiday entitlement.
The employer will be expected to engage with the employee, take reasonable measures to reduce the negative impact on the employee and consider future employment options.
Keeping key staff on board
Staff members are only able to perform at their best if they understand their roles and rights and have opportunities to make their views known to management on issues that affect them.
Collaborative problem-solving is a critical tool to get the input of employees – it is employees who have the knowledge and experience of the detailed operations, the problems and the pitfalls, and how to improve member services.
Staff members should be given a timeline for the completion of the merger process and weekly meetings should be held to provide a forum for discussion and updates on progress.
It is not enough to have regular meetings and provide loads of information. In dealing with difficult issues it is important to give employees an opportunity to understand the issues and express their views. The time spent in collaborative problem solving will improve the decision making process and gain understanding and commitment to the implementation of the new arrangements.
16th June 2016
‘Retirement can be a controversial topic’
Retirement has become an increasingly complex issue and the question of whether an employer should be able to impose a mandatory retirement age is a controversial topic.
In December 2015, a report on the ‘Employment Equality (Abolition of Mandatory Retirement Ages) Bill 2014’ concluded that a mandatory retirement age was an outdated concept. The default retirement age (65) is being phased out and people want to work as long as they like.
A surprisingly large number of employers do not have a clearly defined policy on retirement but rely on the States Pension age to determine the retirement age. The potential impact on public finances has led to recent changes in the State Pension age – the current retirement age is 66 rising to 67 by 2021 and 68 by 2028.
The controversy will intensify as an increasing number of people expect to have to work beyond the normal retirement age. Up to now the majority of employees have accepted 65 as the norm but there is evidence that this assumption is being challenged. Employment Tribunals have established that compulsory retirement ages and ‘fixed term contracts based on age’ may in some cases be considered to be ‘age discrimination’.
‘8 out of 10 businesses expect to award pay increases in 2016’
Employers will face sustained pressure for increases in pay in 2016, as it looks like you may be facing the perfect storm – economic growth forecast 6 – 7%; unemployment is falling creating increased competition for staff; and politicians are making election promises.
The low Pay Commission has recommended that the National Minimum Wage be increased from €8.65 to €9.15 effective the 1st January 2016.
ICTU have been promoting the concept of the Living Wage (€11.50 per hour) and some private sector businesses – IKEA, Lidl and Aldi – have declared support for the concept.
Private sector pay deals
Pay increases in the private sector will be determined by local wage negotiation, with high performing export sectors (pharmaceutical & electronics) agreeing deals of 2 to 5%. At the other end of the spectrum many expect deals below 2.0% and some companies that are still in difficulties trying to maintained pay freezes that have been in place since the economic crisis began in 2008.
Trade Union position
TU leaders have proposed that pay increases should be between 2.5% to 5.0% for 2016. This is to be expected but the evidence suggests that there will only be a small number of deals at the high end.
The Trade Union – SIPTU – recorded 170 wage agreements in the past 18 months with an average annual increase of 2.0%.
However, there was a wide variation in the terms and duration of the agreements;
- Agri-food sector 1.76% per year / (3.59% over 25 months
- Electronics and engineering 2.07% per year / (3.44% over 20 months)
The duration of the agreements varied widely with the longest reported deal of 6.0% over 48 months in the Agri-food sector.
I am an accredited mediator with extensive experience of negotiating pay deals for private sector firms in unionised and non-unionised environments.
Contact me if you are under pressure to do a pay deal in 2016!
The European Court of Human Rights has ruled that employers have the right to monitor their employee’s private messages on social media.
The case concerns the use of social media by a Romanian Engineer, Mr Barbulescu. He was fired after his employer compiled a 45 page report on his communications with his fiancée and brother.
Mr Barbulescu claimed that his right to privacy had been violated but the court ruled that “it was not unreasonable that an employer would want to verify that employees were completing their professional tasks during working hours”.
Although the court made it clear that the employee had breached company policy, it added that employers could not indulge in unregulated monitoring of worker’s messages. The court advised that employers should draw up policies that state what information will be collected and how it will be used.
The blurring of the line between work and social life presents the employer with some interesting challenges regarding the individual’s right to privacy in the workplace. Employees have a legitimate expectation of personal privacy which is not overridden by the fact that the phone, laptop, or tablet may be provided by the employer. However, this right may be balanced with the interests of the employer:
- To protect their business and reputation;
- To reduce the risk of theft or damage at the employer’s premises;
- To prevent abuse of social networking sites, e-mail or text;
- To prevent cases of cyber bullying in the workplace.
I received an urgent call from a client – the Managing Director of family run business. He said that he had conclusive evidence that one of his senior managers was stealing from the company, he wanted to sack him and it needed to be done quickly.
He explained that an employee had reported to him that he had purchased a high value product from the senior manager at cost price. The MD had interviewed the employee at length and he was convinced that the employee was telling the truth. The accused manager had worked all his life in the business and was a friend of the MD’s fathers. He had difficulty coming to terms with the situation and felt that the manager had betrayed the trust his family had placed in him.
I conducted a workplace investigation, which included interviews with the employee who reported the incident and I felt that the storey was credible. The accused manager was the last to be interviewed; I outlined the facts of the case as had been uncovered by the investigation and asked him to comment on the events.
The manager confirmed that the transaction reported by the employee had taken place. He went on to explain that he had set up a retail business 5 years previously with the full support of his employer. In fact, the MD’s father had provided him with stock items at cost to support the new venture. Unfortunately the start-up business failed and the manager was left with significant stock which he was unable to sell. After the closure of the retail outlet, he had been advertising the items in the local paper and selling the stock in bits and pieces. This was the explanation for the transaction reported by the employee.
The manager accepted that on first examination the circumstances were suspicious. It was important to suspend judgement to the investigation was complete, at no stage was the manager accused of theft.
Employers are legal obliged to conduct investigations in a variety of situations:
- Allegations of bullying or abusive behaviour – Employers are required to carry out a risk assessment, inform employees how to make a complaint and how the complaint will be investigated.
- In serious disciplinary cases it is often a requirement to investigate the circumstances before deciding the appropriate action.
- Serious accidents at work – the investigation should identify the cause of the accident and make recommendations to prevent future incidents
The employment policy should outline how the investigation will be conducted and the principles that will be applied – impartiality, sensitivity and confidentiality.