Partner in Employment law at Sherrards Mark Fellows, answers some common questions ahead of another heatwave:

Do I have to pay employees who are unable to get into work due to travel difficulties?

Take a look at your employment contracts and Employee Handbook. These might specify whether an employee is entitled to be paid if they are unable to get in due to travel problems. If they are silent, however, then the default position is that the obligation is on the employee to get into work, regardless of any difficulties caused by the weather or otherwise. If they do not attend, they are on unauthorised absence and they are arguably not entitled to be paid.

Be careful, however, if you are going to take this approach. Firstly, there is a potential that the employee can argue that failure to make payment in these circumstances is an unauthorised deduction from wages (assuming this is not covered in the employment contract). The defence to this would be that there was no entitlement to pay as no work was done, but it may be an argument you would prefer to avoid. Secondly, you should assess whether the financial benefit of withholding pay is outweighed by the impact on staff morale and productivity. This is particularly so if the weather and travel conditions are extreme and, even with the best of intentions and efforts, employees are unable to get in.

Above all, you should ensure that your approach is consistent. Ideally, tell staff in advance (in written format, e.g. memo or email) what your approach is going to be or, even better, have an “Extreme Weather Policy”.

Consider whether employees are able to work from home, whether alternative travel arrangements can be made or whether there are other ways around the issues – e.g. travelling outside of peak times to avoid the worst of the heat. Otherwise, clearly explain to employees that either: (a) any time off will be unpaid; (b) time off will be paid but that they are expected to make up the time later; or (c) they can request the time off as paid annual leave or unpaid time off for dependant’s leave (see below). Prior notification is particularly important if you have made payments in the past in such circumstances.

As an aside, be careful if you are trying to insist on employees taking annual holiday retrospectively. Employees will need to agree to this unless the contract specifically allows for you to do this.

 

I have an employee who says they cannot come in because their child’s school has closed due to the heat. What shall I do?

Employees with responsibility for a dependant are entitled to emergency time off in circumstances in which there is an unexpected disruption to childcare. Unless the school closure was announced a reasonable time in advance, such that the employee had sufficient time to arrange alternative childcare, this would probably be an emergency situation and employees are entitled to take time off and not suffer any detriment for doing so.

Strictly speaking, the time off is unpaid (unless the contract of employment says otherwise) but employers may again want to consider the impact on morale that this approach would have. Again, it is important to be consistent in your approach. You should be especially careful where other employees who are unable to make it into the office due to travel are being paid.

 

One of my employees failed to come into work today, blaming the heatwave and travel issues. I think he is using it as an excuse and could have easily come in. Where do I stand?

If you believe that an employee is falsely using the weather conditions as an excuse for absence or lateness, this can be treated as a disciplinary matter. If you consider the matter to be serious enough (e.g. if it is a persistent or blatant case), you should investigate in line with your disciplinary policy and take action as appropriate.

However, in less serious or one-off cases, you may be better placed simply having a quiet word with the employee and letting them know that any further time off will have to be taken as holiday or will be unpaid. Bear in mind that it can often be difficult to prove or disprove an employee’s ability to come into work in these circumstances.

 

Our air conditioning isn’t great. Is there a maximum temperature above which I am obliged to shut the workplace?

In short, no, there is technically no maximum temperature above which people aren’t allowed to work. In offices or similar environments, the temperature should be “reasonable”. You should have thermometers around the workplace so that you can check the temperature – although temperature itself is not the sole issue, since humidity, radiant heat sources and clothing are also factors.

The TUC has lobbied for an upper limit on workplace temperature to be introduced – suggesting that employers be forced to take steps when the temperature inside hits 24˚C. Under the TUC’s proposals, staff could be sent home and employers prosecuted if temperatures reach 30˚C (or 27˚C for those whose work is physically demanding).  However, these proposals are currently not reflective of the law.

If your working environment is getting too hot to be considered “reasonable” then you could be putting your staff’s health and safety at risk. If, having taken steps to try to control those risks, the temperature is becoming dangerous enough to endanger health (e.g. through heatstroke etc) then you would be best advised to shut the workplace.

 

The above provides a general guide to issues that might arise. However, each situation is unique and different considerations may apply in your case. We would therefore recommend that you consult a solicitor, or another suitably qualified person, about your specific circumstances.

To find out more about employers responsibilities during a heatwave, click here to speak Employment Partner Mark Fellows. 

“IR35” – it could almost be mistaken for a character from the latest Star Wars film, and whilst IR35 is not a new concept, it will be hitting the private sector in 2021*. If your business currently engages consultants or contractors operating as part of a personal service company, this is a premiere that you ought not to miss.

What is “IR35”

“IR35” refers to existing legislation that was designed to close a tax loophole whereby an individual could in theory, work as if an employee of an end user client but seek to avoid being subject to PAYE deductions by supplying their services through an intermediary, usually a personal services company. Like the Hokey Cokey, you were either ‘in’ or ‘out’. If inside IR35, you were caught and the individual should be paid via PAYE. If outside of IR35, then the arrangement was regarded as genuine self-employment for tax purposes.

So, what has changed?

Firstly, the old regime required the consultant / contractor to determine their own status for tax purposes, and they generally bore the risk of getting this wrong. With effect from April 2021, and in respect of the private sector, the onus passes to the entity engaging the individual, which in many cases will be the end user who receives the services. The engaging entity will therefore have to satisfy themselves as to whether the consultant / contractor is inside or outside of IR35.

In addition, if the consultant / contractor is inside IR35, and the new rules applies to the entity engaging the individual (see below), then in principle that entity becomes responsible for accounting to HMRC for tax and national insurance in respect of the payments made to that individual. The situation becomes more complicated if a recruitment business is involved, where it supplies the individual to the end user entity and pays the individual directly.

This change of approach already applies to the public sector and insofar as the private sector is concerned, it only applies to engaging entities that are not “small”.

A “small” company is one which satisfies two or more of the following requirements:

• Its annual turnover is not more than £10.2 million.
• Its balance sheet total is not more than £5.1 million.
• It has not more than 50 employees.

How do you know whether a consultant / contractor is ‘in’ or ‘outside’ of IR35?

HMRC have an online questionnaire, known as CEST, which is designed to give you a definitive answer to this conundrum. If the questions are answered honestly, then it can be relied upon in the event of a later dispute. However, some of the questions are difficult to answer, and a possible outcome of CEST is that it is unable to make a determination on the matter!

As it happens, the test under IR35 is similar to (but not the same as) that which applies in employment law, in determining an individual’s employment status. This means that particular focus will be placed on the extent to which the end user controls the consultant / contractor, the extent to which the services need to be performed personally by the consultant / contractor (as opposed to having a right to substitute) and the extent to which mutuality of obligation exists between the parties. It also means that the label that the parties attach to the arrangement is far from determinative.

What should you do?

If you engage consultants / contractors, we would recommend you take the following steps:

• Review those arrangements and consider utilising CEST;
• Ensure that you have a written contract that formalises the arrangement, and is drafted to best protect your business;
• Take specialist advice – your accountant on the tax side, and an employment lawyer on the legal side.

It follows that if you decide that somebody is ‘inside’ IR35 and will be treated as an employee for tax purposes, that equally will make it more likely they will be regarded as an employee for legal purposes, and that carries its own separate implications.

*As of 17th March 2020, the Government announced the delayed introduction of IR35 to the private sector to April 2021.

For further information, please contact Mark Fellows.