Covid-19 news with a HR Twist
June 2015
Why employers should establish an Employee Assistance Program:
Employee Assistance Programs, often referred to as EAPs, are programs offered by many employers to employees to assist them in dealing with personal/delicate issues that may hinder their performance in work related activities or negatively affect their overall wellbeing.
EAPs support employees and their family members by providing services such as counselling or guidance in finding a service that will help the employee through a challenging stage or sensitive issue.
EAP professionals provide assistance to people with a broad range of problems – some examples of these are:
- Overwhelming relationship/family issues
- Mental illness
- Alcohol or drug addictions
- Bereavement
- Emotional distress relating to illness, financial and legal concerns etc.
It is important for employers to make employees aware that the EAP is a voluntary service and that the EAP maintains the confidentiality of the individual availing of the service.
Typically the employer absorbs the costs associated with providing an EAP so it is available free of charge for the employee and his/her family members. Some companies have their own EAP and a dedicated team to deliver the relevant support to employees, however, many companies use a third party EAP provider. There is no obligation on employers to deliver such a program to employees, however, there are many benefits linked with the accessibility of an EAP to employees.
The reasons an employer should provide access to an EAP are as follows:
- Reduced turnover
- Improved rates of absenteeism
- Increased levels of productivity
Having support services like this in place gives employees a sense that their happiness and wellbeing is important to the employer – they feel valued in the workplace and morale and loyalty are likely to improve. Employees are more likely to address their issues/problems if doing so is made easy and does not create an additional expense for them.
To ensure you comply with all employment legislation and to make sure your human resources issues are tackled efficiently contact The HR Company.
Registered Employment Agreements (REA) – News
For decades the pay rates and conditions of hundreds of thousands of workers across several sectors, like electrical contracting and construction, in Ireland have been governed by Registered Employment Agreements (REAs).
REAs are legally binding agreements that govern the pay rates and other conditions of employment for all employees in a given sector.
A Supreme Court ruling yesterday, Thursday 9th May 2013, found the existence of such agreements to be invalid. The ruling outlined that a section of the Industrial Relations Act of 1946 (the Act that provided for the REAs) was incompatible with the Irish Constitution on the grounds that the agreements were not created by the Oireachtas (which has exclusive responsibility for creating laws in this country) but instead by the Labour Court - a Court that does not have the power to enforce the conditions contained within the REAs.
While this ruling came about as a result of an appeal brought by the National Electrical Contractors of Ireland (NECI) – the ruling will have massive implications for all sectors governed by REAs.
The electrical contractors who challenged the REA by which they were bound did so because they said that the REA was created by parties that did not represent the electrical industry as a whole. They felt that because they were not a party to the REA they should not be bound by it – they felt as though the rates of pay dictated by the REA were far in excess of what they could afford and that, for those reasons accompanied by the economic downturn, they were not competitive in tendering for projects. The group are said to be delighted with the five judge Supreme Court decision and say that they will be better able to secure existing jobs.
The NECI spoke out to reassure concerned workers that the problem was not so much that they had an issue with having some sort of wage agreement in place but that they felt they had the right to be involved in a decision making process if they are to be bound by the results of such a process. Any future agreement needs to consider and represent the requirements of both big and small employers alike and not just a subset of the contractors in the sector.
The NECI moved to reassure employees that their intention is not to reduce pay arrangements to the National Minimum Wage level (discussed below).
The Technical Engineering and Electrical Union (TEEU) stated that the ruling does not affect existing pay rates and conditions as they are set out in contracts of employment and the terms of this cannot be altered without consultation and negotiation.
Eamon Devoy, General Secretary and Treasurer of the TEEU said: “There are established Rates of Pay and Conditions of Employment in the Construction and Electrical Contracting Industry and any employer who attempts to undermine these standards will be met with the wrath of the TEEU who will use all means at its disposal to protect our members in the industry. It is worth noting that with the loss of registration the requirement for workers and their unions to go through national disputes resolution procedures was also extinguished and should the employers attempt to take advantage of vulnerable workers we could be in for a rocky road ahead”.
The NECI asked “that the inevitable scaremongering by the TEEU, who will claim that the Industry will descend into chaos, be ignored”.
The National Minimum Wage – Ireland
Under the National Minimum Wage Act, 2000 experienced adult employees (those who have been in any employment in any two years from the date of first employment over the age of 18) are entitled to a minimum rate of pay. Lesser rates are applicable for other categories of employees.
For instance, an employee under the age of 18 is entitled to €6.06 per hour or 70% of the National Minimum Wage. An employer can, of course, pay more than what they are required to pay.
The employee would be entitled to 80% and then 90% of the minimum wage in the first two years of employment over the age of 18.
It is important to note that the referenced two years of employment does not have to have been with the same employer nor does it have to have been in Ireland – Any employment carried out from the age of 18 is reckonable for the purposes of the minimum wage entitlement.
If you employed somebody on the National Minimum Wage (currently €8.65), that specific rate is their pay rate. The National Minimum Wage decreased by €1 to €7.65 for a short period in February 2011 but the previous rate of €8.65 was reintroduced on 1st July 2011.
If the National Minimum Wage was to be reduced again in the future this does not mean employers can simply drop the employee down to the new rate - Employees are entitled to remain on the wage at which you employed them unless you negotiate a new deal with them. It would, however, be acceptable to employ new employees at the new rate.
The text of the National Minimum Wage Act, 2000 and related Statutory Instruments can also be accessed on the website of the Office of the Attorney General at http://www.attorneygeneral.ie/.
For support and advice on all of your human resources issues contact The HR Company and avail of a complimentary Employment Law consultation.
An Employer’s Guide to Annual Leave Entitlements in Ireland
Annual leave is paid time off work that employees are granted by their employers - it can be used for whatever the employee wishes. It is important for employees to recharge the batteries and annual leave helps maintain a motivated and productive workforce. It is essential to note that the employer is statutorily obliged to provide a certain amount of annual leave to his or her employees. An employer can, of course, provide more leave than he or she is obliged to give – if an employer offers more leave to employees with long service histories or employees who exceed targets, for instance, this policy should be clearly defined and should be applied fairly across the board.
Regardless of the employee’s status or length of their service everyone is entitled to annual leave. All time worked is eligible for paid holidays.
Here is an easy guide to assist employers in working out what leave should be allocated to each employee:
There are three methods used to work out leave entitlements:
a) The most common method used is: 4 working weeks in a leave year during which the employee works a minimum of 1,365 hours (Unless the employee has changed employment during that year).
b) 1/3 of the employee’s working week per calendar month of at least 117 working hours (Eg: 1.67 * 12 = 20 days)
c) 8% (.08) of the hours worked by the employee in the leave year (the total is not to exceed 4 working weeks)
In some instances an employee’s leave could be worked out using more than one of the approaches listed above – where this is the case all applicable methods should be calculated and the employee shall be entitled to the highest result. Remember - the maximum statutory annual leave entitlement is four of his / her normal working weeks.
How to calculate an employee’s annual leave pay:
Not everyone works a 9-5 office job and not all employees earn the same gross figure on a weekly basis so here is a guide on how to determine holiday pay due to various categories of employees:
(a) If the employee’s pay is calculated by a fixed rate or a salary then the figure due to the employee per week of paid annual leave is equivalent to the amount he or she received for the normal weekly working hours last worked - This payment includes any regular bonus or allowance (that isn’t based on work completed) - it excludes any overtime pay.
(b) If the employee’s pay is not calculated by a fixed rate or salary but instead by commission, for instance (or based on productivity rates) the amount paid to this employee per week of annual leave should equal their average weekly pay calculated over the 13 weeks prior to their annual leave commencing. (If the employee did not work during that period, the average weekly pay is calculated over the 13 weeks prior to the employee’s last working day before the annual leave commences. This excludes overtime.
In order to accurately calculate the number of annual leave days an employee is entitled to it is necessary to incorporate all hours worked in the calculation including time spent on annual leave (yes, employees accrue annual leave while on annual leave!), time spent on maternity leave, parental leave, force majeure leave or adoptive leave as well as time spent on the first 13 weeks of carer’s leave. Employees do not accrue annual leave while on sick leave, occupational injury, temporary lay-off, or career break.
If an employee falls sick during his or her annual leave this day(s) is not counted as annual leave (once it is covered by a medical certificate) and the annual leave day is kept for them to use at a later date.
It is common practice for an employee to request their desired leave dates and usually, once an agreed period of advance notice is given (allowing the employer to arrange suitable cover etc.), the employer agrees. Annual leave is usually discussed in terms of weeks but, with employer consent, it can be broken down into shorter periods – often days or even half days at a time. It is the employer who approves holidays (it would not work from a business perspective if all employees were to arrange leave at the same time, for instance). The employer is, however, required to take the employee’s family responsibilities and need for rest and recreation into consideration.
This annual leave must be given to employees within the leave year or, with the consent of the employee, within the first six months of the following year. The onus is on the employer to ensure that the employee takes their statutory leave allocation within the appropriate period. Employees may, with the consent of the employer, carry over holidays that exceed the statutory allowance to the next year.
If the contract of employment is terminated and there is unused annual leave in respect of the employee the employer is obliged to compensate the employee for the accrued leave. It is illegal to pay an employee in lieu of the minimum statutory leave entitlement unless the employment relationship is terminated.
How to Improve Employee Engagement and Motivation
As most people know all too well maintaining levels of employee engagement and motivation is crucial in ensuring an efficient working environment… However, it is not always easy to achieve!
Increased motivation is linked to heightened levels of creativity and productivity in the workplace. Employee engagement is very important and treating employees in a proper manner as well as respecting human dignity is cardinal in encouraging morale and contentment in the working environment.
There are many factors involved in preserving employee engagement and motivation – factors such as the employee’s involvement in challenging tasks, accomplishing something that has value/meaning, personal progression and development, learning new skills like teamwork or independence and many more.
Employees are motivated to do better and work harder when they are satisfied in their roles. When they feel as though their career will benefit they will go that extra mile for their employer. Also, when an employee has job security and a basic income that satisfies their financial needs they will be motivated in the tasks/projects that they are working on.
Of course individuals will be influenced by varying issues and, therefore, motivated by different factors. However, being asked to do menial tasks day in day out - no matter who you are - is not likely to encourage a motivated employee and, in fact, is likely to promote a negative atmosphere.
Naturally, basic pay is a motivator – people obviously need to be able to cover their monthly out-goings – and if the basic salary is too low then it can actually have a de-motivating influence. However, money is far from the only thing that motivates employees to work hard... some people are more concerned with getting great work experience than being able to save for a luxury holiday or a new car. Some employees are forward-thinking and see industry-related experience as a way to develop their career. The “overall package” is examined and can be motivational as a whole with a lighter emphasis on salary alone. Similarly, a company with a glowing reputation, or a company with a great brand name or with international links, is likely to attract more interest from prospective employees irrespective of whether the basic pay is below the industry standard or not. If the job is exciting or seen as meaningful then the employee will be less concerned with basic pay. Similarly, if the role offers a bright future for the employee in the way of promotional opportunities or networking links, for instance, this will surpass basic pay in terms of motivation or pull.
Below are examples of some of the different incentives and benefits that employers should pay attention to and consider in an effort to motivate employees:
- Job location or commute is important – whether the place of work is easily accessible and the costs, time and effort etc. associated with the commute.
- Hours of work – how long the employee is supposed to spend in working mode and whether flexi-time or flexibility in location (working from home, for instance) is an option.
- The allocation of annual leave and other similar policies (payment during sick leave/ maternity leave etc.)
- Whether there is a bonus scheme in place and what that bonus might be – for instance, what target the employee has to achieve in order to be eligible for the bonus.
- Pension benefits – these days employees are very concerned with their future financial outlook especially if they cannot save much now.
- Use of a company car is a motivating factor for some as it can save the employee a great deal in terms of fuel, insurance and tax (on top of the cost of the vehicle itself!)
- Smaller incentives like parking, health insurance, on-site childcare, a canteen and accommodation are all motivating factors for employees.
Employers offer a range of benefits similar to those listed above. It is essential for employers to remember that most of the benefits discussed (which are typically provided in addition to an employee’s salary) are subject to income tax. For clarity on this employers should seek advice from the Revenue Commissioners who are responsible for the collection of such taxes on behalf of the Government.
A benefit-in-kind is a benefit that an employee receives that cannot be converted into cash (but has a cash value). A loan given at a special rate would be an example of this as would a company vehicle.
The other category of employee benefit incorporates items like vouchers, holidays, payment of an employee's bills and prizes etc.
All employees who earn in excess of €1,905 per annum must pay tax on the value of benefits and benefits-in-kind.
Taxation of benefits is dependent on the value of the benefit. For instance if an employer provides you with a holiday voucher to the value of €1,000 this is considered €1,000 in additional income for tax purposes and is taxed accordingly.
The rules applying to benefits-in-kind are slightly different – this taxation varies. Generally, the value of the benefit-in-kind is the cost to the employer of providing the benefit less any contribution made by the employee.
It should be noted that special rules apply to the following benefits-in-kind:
- A car or other motor vehicle (An employee can reduce the amount of benefit-in-kind assessed on a car if they incur a certain amount of mileage for business purposes. The benefit-in-kind can be further reduced if an employee contributes to insurance costs, motor tax and petrol).
- A loan provided by the employer (this is usually at a special rate)
- Provision of living accommodation
Benefits that are exempt from tax or can be received tax efficiently are inclusive of but not limited to the following items:
- Provision of bus/train passes
- Bicycle and safety equipment under the Cycle to Work Scheme
- Reimbursement of expenses necessarily incurred in the course of employment
- Lump sum and certain redundancy payments
- Working clothes
- Non-cash personal gifts not related to employment
- Employer's contribution to statutory or revenue approved pension schemes.
It is essential to check with the Revenue Commissioners if you are unsure of how to treat any benefit.
If an employer provides a benefit worth less than €250, PAYE and PRSI need not be applied to that benefit. Only one such benefit can be awarded to an employee within a tax year. Where a benefit exceeds €250 in value, the full value of the benefit will be subject to PAYE and PRSI deductions.
Employment Appeals Tribunal Awards €18,000 in Compensation
Employee who was dismissed while on sick leave (for allegedly failing to discharge his duties as head chef and because of his unacceptable behaviour over a number of months) is awarded a sum close to €18,000 by the Employment Appeals Tribunal under the Unfair Dismissals Acts, 1977 and 2007, the Minimum Notice and Terms of Employment Acts, 1997 to 2005 and the Organization of Working Time Act, 1997.
According to the Employer the Employee in question allegedly displayed aggressive behaviour and appeared for work under the influence of drink. Reports of bullying of colleagues and name calling were filed with the Employer along with incidents of racism and other insults (for instance, calling a kitchen porter “stupid”, “slow” and “a druggie”). The Employee was also accused of throwing a knife at another member of staff - Matters the Employee refutes.
The Employee’s performance was called into question on a number of occasions prior to his dismissal – his failure to have adequate staffing and stock were criticized. A lack of communication and flexibility, in particular in relation to changing his time-off (for example, refusing to come to work on Good Friday when the Munster rugby team was playing) was outlined in an “Official Written Warning” on the 6th of April (the second letter of its kind).
On the 7th of April a dispute arose as to whether the Employee in question arrived for work “drunk”. He was instructed to get a blood test by his Employer. The Employee left the premises and sent a text message explaining that he would be on sick leave for the remainder of the week. Over the next few weeks the Employee sent numerous medical certificates indicating that he was suffering from an ulcer (the Employer was aware of this ulcer from early on in the employment).
On receipt of the “Official Written Warning” dated 6th April (mentioned above) the Employee’s trade union sought a meeting with the Employer as the trade union maintained that the warnings had been issued “unfairly without any consultation or trade union representation”. This meeting was held on the 20th of April in the hopes that issues between the Employer and Employee (who had previously been friends) could be resolved, however, the Employee’s unresponsiveness dissatisfied the Employer and he undertook to consult with his legal team. The Employee believed that the Employer wanted to replace him as he had advertised for a head chef the previous day (April 19th).
On the 26th of April the Employee enquired as to when he should return to work and the Employer replied telling the Employee to start back the following week (May 3rd) but when the expected return date arrived the Employee again produced a medical certificate. Two days later the Employer instructed the Employee to post medical certificates and not to attend the premises, except to return keys, until the Employer had heard from his legal team.
When the Employee furnished medical certificates to cover him for the entire month the Employer wrote to the Employee dismissing him for failure to heed the warnings regarding his behaviour and for arriving to work under the influence of drink as well as throwing a knife at another staff member.
The Employee believed the disciplinary action was taken against him as a result of a complaint that he had made to the National Employment Rights Authority (NERA) a few months prior to the dismissal.
The Employee was dismissed while on sick leave and the Employment Appeals Tribunal found that, based on the medical certificates and an endoscopist’s letter, the Employee had genuine reason for his absence. The Tribunal found that the procedures used by the Employer in dismissing the Employee were “flawed” and “deficient” because neither of the “official warnings” issued to the Employee put him on notice that his job was in jeopardy.
The Tribunal found that the Employer had not investigated the knife allegation in a “fair” manner. The Employee was dismissed without the benefit of a disciplinary hearing and without being afforded the opportunity to respond to the allegations made against him. In addition the Tribunal found that the Employee was not afforded an adequate opportunity to improve between his warning letter and his dismissal (as he was on sick leave during that period).
The Employee was awarded €14,500 under the Unfair Dismissals Acts, 1977 to 2007, €1,538 (being the equivalent to two weeks’ pay) under the Minimum Notice and Terms of Employment Acts, 1973 to 2005 and €1,691.80 (being the equivalent of 11 days annual leave) under the Organisation of Working Time Act, 1997.
In total the sum awarded to the Employee by the Tribunal was €17,729.80.
You might ask how this Employee received such a substantial award given his alleged appalling performance in the workplace...... The Employer failed to follow the correct process when disciplining, and then dismissing, the Employee and therefore left himself open to a claim under the Acts.
This was a very costly mistake on the part of the Employer and one that could easily finish a small business.
This example, along with thousands more, reiterates the significance of complying with Irish Employment Legislation and observing appropriate disciplinary procedures in order to insulate your company from the risk of a claim.
Published on Employment Appeals Tribunal Website – 29th May 2013 – Sealed with the Seal of the Employment Appeals Tribunal.
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Prime Time Investigates Crèches – Employers need to revisit their HR policies to protect themselves
As you are probably aware three crèches between Dublin and Wicklow have come under intense scrutiny in recent days after it came to light that young children under their care were allegedly subjected to inappropriate and unacceptable treatment by staff at the childcare and early learning facilities in Stepaside, Malahide and Rathnew.
An RTÉ researcher, posing as a childcare worker, uncovered the substandard care while working at the facilities. The undercover researcher’s disturbing findings included video footage illustrating manhandling of infants and young children. The report, “A Breach of Trust”, was aired on Prime Time Investigates yesterday (Tuesday 28th May 2013). The claims are currently being investigated by An Garda Síochána and the Childcare and Family Services unit of the HSE.
While the Prime Time Investigates programme focused heavily on three specific facilities it also highlighted failures in the entire childcare industry in Ireland. The researchers acquired a HSE inspection report that showed that a staggering 75% of Irish childcare facilities were in breach of regulations in 2012.
Minister for Children, Frances Fitzgerald, said that the HSE inspection reports into childcare facilities will be published online in the next few weeks.
Understandably, these statistics have caused uproar and have opened up a huge debate on childcare standards in Ireland. Many parents have been very upset by the recent revelations of breaches in child protection regulations. The poor practices exposed in certain crèches are likely to negatively affect the opinion held by many with regard to childcare facilities in Ireland.
These revelations will bring about intense scrutiny from parents of children in crèches all around the country. In order to protect their reputation it is absolutely vital that management take the time to ensure that all employees in crèches and childcare facilities in general are fully qualified for the roles in which they have been hired.
It is imperative that all employees working with children are vetted thoroughly and that all relevant paperwork is in place.
The HSE report from 2012 highlighted serious policy breaches and failures on numerous grounds like the child-carer ratio. It is imperative that employers seek advice from Employment Legislation experts if they need clarification on policies and procedures that they are required to have in place or if they need help in determining whether or not they have the appropriate paperwork on file. It is essential that all facilities are adequately staffed and that management take the necessary precautions to ensure a high standard of protection and care for children at all times.
One suggestion perhaps might be to install a CCTV system to monitor the interaction between employees and children – before doing so, however, a CCTV policy is required – again, it is essential to seek advice from the appropriate body if you are considering such a course of action.
Reports suggest that multiple employees have been suspended and that at least one employee has been dismissed by the crèches named in the report pending the conclusion of the Garda, HSE and internal inquiries.
Employers need to remember that, to avoid any risk of exposure, it is absolutely imperative to follow approved disciplinary procedures prior to disciplining employees. Regardless of the severity of the situation there are steps that need to be followed in order to ensure employers remain compliant with all Irish Employment Legislation. It is vital to follow procedures that are in line with the Labour Court recommendations to insulate your company against the risk of a future claim or fine. To avoid jeopardising the process contact an Employment Law expert prior to initiating any disciplinary action and arm yourself with the appropriate guidance.
Relationships in the workplace – Advice on co-workers relationships.
Employees spend a good portion of their waking hours in the working environment (often with people who share similar interests to themselves) – given this it isn’t a surprise that relationships regularly develop in the workplace.
How employers deal with these relationships is the important element here. Risks for both the employer and the employees exist in these scenarios.
Some workplace relationships turn into long-term, healthy relationships where the couple are very happy with each other. However, often the situation doesn’t end on such a positive note and it can, in certain instances, create a very awkward working environment for the individuals involved as well as other members of the department who are present in the aftermath.
Office relationships can, at times, be a very positive thing for a business – it can encourage high levels of morale in the workplace and that, in turn, can improve standards of productivity and creativity. Unfortunately, however, workplace relationships can also have negative effects. Employee attention could be focused on the relationship as opposed to the duties of the role and this could lead to a decline in productivity or performance which, subsequently, could threaten the company’s success.
Banning relationships between colleagues isn’t the best route to take for a number of reasons (it isn’t really enforceable), however, it is absolutely essential that employers put certain policies in place in order to avoid what could result in a very awkward conclusion.
Clear rules should be devised for two employees who wish to engage in a mutual relationship. To ensure that your company avoids any hints of sexual harassment it is essential to put clear and concise guidelines in place (employers in Ireland are actually obliged to have policies and procedures on bullying and harassment in place).
It might be a good idea to have a rule that restricts employees from having a relationship with a superior in their own department, for instance, stressing that the rule is the same for all and that its function is to protect employees against sexual harassment and favouritism.
Restricting certain behaviour is absolutely paramount as inappropriate behaviour, such as public displays of affection, in the workplace is not acceptable and can compromise the internal culture of the company. Implementing strict rules that leave no room for ambiguity is advisable.
Dignity in the workplace is the right of every employee. It is imperative that you take the dignity at work policy very seriously to protect yourself, as an employer, from a lawsuit and to protect your employees at the same time. The Employment Equality Acts 1998-2011 mean that employers are liable for harassment in the workplace. Harassment is defined as any form of unwelcome/unwanted conduct relating to any of the discriminatory grounds – gender, civil status, family status, sexual orientation, age, disability, race, religious belief and membership of the Traveller community.
Sexual harassment comes under the bullying and harassment umbrella and includes any act of unwanted verbal, non-verbal or physical conduct of a sexual nature. Sexual harassment violates a person’s dignity by creating an intimidating, hostile or humiliating environment for the person.
It is crucial for employers to be aware that they may be held legally responsible/liable for the harassment or bullying that occurs in the workplace – even where they are not aware that this is taking place.
Employers should include an acceptable grievance or complaints outline in the dignity at work policy so that employees are not only aware of what is expected of them but what happens when they breach the policy too.
SEPA – What Employers in Ireland need to know about the changeover
Effective 1stFebruary 2014 the Single Euro Payments Area (SEPA) will standardise the processing of electronic payments in the Euro currency. The objective of SEPA is to make payments via credit transfer or debit card within the area fast, safe and efficient. The aim is that electronic cross-border payments are due to become as simple as paying with cash.
The scheme was established to overcome the technical, legal and market obstacles that exist from before the changeover to the Euro currency. The goal is to create a single market for Euro-denominated retail payments. SEPA will enable users to make cashless payments to payees anywhere within the SEPA zone using a single payment account and a single set of payment instructions.
This will allow for the easy movement of food, services and capital throughout the region. What this means is that citizens cannot only live and work anywhere in the area, but can also benefit from competitively priced goods and services, throughout the region.
The Euro currency came into effect in 1999 as an accounting currency (cash and coins were first circulated in the initial Euro currency countries in 2002). The long-term plan has always been to move away from the fragmented national payment markets and to move towards a European Union wide market that is more efficient.
SEPA will impact all citizens operating/living within its boundaries that hold a payment bank account. Those operating in participating countries will soon be able to make and receive Euro-denominated payments with a standard set of terms and conditions – regardless of whether the payments are made within or across national borders.
People will not be obliged to maintain bank accounts in any one particular country in the region to make or receive payments. An account anywhere in SEPA will be able to make or receive a Euro-denominated electronic transaction anywhere else in SEPA with ease. An Irish person living in France will not have to set-up an account in the host country to pay utilities and rent and so on electronically (as has been the case). SEPA will make life easier in this respect – People will no longer be constrained by national borders for banking and will instead be able to bank wherever suits them within the SEPA zone.
New business rules will be implemented with regard to payments. Along with this a set of common standards and requirements for issuing and executing electronic payment instructions in all participating regions will be introduced.
From 1st February 2014 it will be compulsory for countries to withdraw existing “national only” payment standards/systems and it will be mandatory for members to migrate all electronic payments to the SEPA standards.
SEPA is being rolled out in thousands of banks in the countries and regions included in the scheme - the 27 European Union members (28 with the inclusion of Croatia in July 2013) as well as Norway, Monaco, Switzerland, Iceland and Liechtenstein. SEPA in Ireland is being overseen by the National Payments Plan (NPP) Steering Committee along with a National Payments Plan sub group which consists of representatives of the Central Bank of Ireland, Government, banks, businesses and consumers.
The European Union Commission has made SEPA migration mandatory and businesses, regardless of size, will have to make adjustments to their processes to ensure they comply with SEPA on credit transfers and direct debit payments – A lot of engagement is required with banks and advisors prior to the February 1st 2014 deadline.
For SEPA to succeed it will require active participation from these new payment scheme users – namely public administrators, companies and consumers alike. SEPA will affect the vast majority of people and should not be overlooked. Timely migration is recommended – the deadline is quickly approaching.
When SEPA is effective the cost associated with making a payment outside of your own nation should not be any more than within your own national borders – this will be a huge benefit to both consumers and companies.
It is important to note that payments made in a currency other than Euro and to/from non SEPA countries may still attract foreign exchange charges and/or transaction fees.
Those who currently have direct debits leaving their accounts should experience a seamless transition. However, those collecting payments (the payees) of the direct debits will need to make changes to their internal systems. This is of particular importance for companies.
SEPA will have the biggest impact on companies as the standardised payment infrastructure should open up new possibilities to expand business beyond country borders. Common standards, faster settlements and simplified processing will improve cash flow, reduce costs and facilitate access to new markets further afield than before.
Like consumers businesses will need to use Bank Identifier Codes (BIC) and International Bank Account Numbers (IBAN) to identify their bank and account rather than the current identifiers (National Sort Codes and account numbers). Companies should obtain all relevant details on SEPA standards from their banks – the advice is to act quickly and to make the relevant modifications to existing systems or develop new ones without delay. Information technology system providers should be consulted from the outset as the migration could significantly impact these systems.
It is essential for companies to ensure they are informed on all relevant matters here.
Employers deducting Local Property Tax (LPT) from salary
Effective from 1st July 2013, anyone who has not yet paid, or started to pay, their applicable local property tax (LPT) will have the option to have it deducted from their payroll (or occupational pension) available to them. Those who fail to submit their LPT return or fail to meet the relevant payment obligations will have mandatory deduction at source from salary or pension imposed.
Employers and occupational pension providers alike will be obliged to ensure this facility is available to employees from next month.
If property owners are availing of the option to have their applicable LPT deducted at source Revenue will notify the employer/ pension provider via the P2C (employer copy of the tax credit certificate in respect of the individual employee).
The relevant sum is to be deducted from the employee’s net pay.
The employer is to commence deducting the LPT once he or she has received the relevant P2C (but not prior to July 1st 2013). The P2Cs are due to be issued to employers by mid June. The LPT to be deducted should be illustrated at the bottom of the P2C. The deductions are to be made, on a consistent basis only, over the 6 month period between July and December 2013. If the employee is paid weekly then the LPT deduction should be made weekly and if the employee is paid monthly then the deduction should be applied monthly.
For example if the LPT to be deducted is €300 then an employee who is paid weekly will see €300/26=€11.538 deducted from their weekly net salary (Any rounding should be in favour of the employee) - If an employee owing €300 is paid monthly then he or she is due to pay €300/6=€50 on a monthly basis. Any refunds of LPT will be dealt with by Revenue – Employers are not to make any refunds of this kind.
If the employer receives the P2C detailing LPT after the July payroll has run then the total LPT should be deducted from August through December - the remaining 5 month period.
Employers will have to keep a record of the applicable LPT that they deduct for Revenue and will be required to account for the figures on the Forms P30 and P35 in respect of the employees concerned. The employer will also have to record the appropriate LPT data for employees on their payslips as well as P60’s and P45s.
Where there is a Court Order on file prior to the issuance of the P2C this will take precedence over the LPT deduction. However, if the P2C is issued prior to a Court Order being made then the LPT deduction will preside. Where the Court Order and P2C are issued or made effective from the same date the Court Order takes precedence. The LPT payment, however, takes precedence over all non-statutory deductions.
The Employer/Pension provider cannot take an instruction from the employee to stop deducting LPT from his or her salary – the employer is obliged to deduct the applicable LPT until the P2C shows that no further payment is due. If an employee would like to pay the relevant tax via a different method he or she should contact the LPT Branch and make these arrangements – then the employer will be issued with an updated P2C telling them to stop the deduction from pay/pension. Similarly if the employee feels as though there is a discrepancy in the amount of LPT they are being charged he or she should discuss this with the LPT Branch and if an adjustment needs to be made to the P2C then a revised directive will be issued to the employer.
According to Revenue “Where there are shortfalls due to insufficient net salary in a particular pay period(s) the employer should adjust the amount of LPT to be deducted per pay period (for the remaining pay periods in the year) to ensure the full amount of LPT is collected by the end of the year. Once this is done, the employer will not be required to notify Revenue about the shortfall. However, employers must notify Revenue in writing (e.g. by Secure Email to employersLPT@revenue.ie) where there will be insufficient income to satisfy the employee’s full LPT liability for the year, based on the expected income for the employee.”
Revenue has established a helpline for employers and pension providers alike to assist with their queries on how this LPT deduction at source will operate.
The Employer Helpline is 1890 25 45 65.
Keeping employers compliant in the current business environment
Many businesses are at risk from within. The climate has never been more litigious. This is not just hearsay. The Labour Relations Commission (LRC) is estimated to have over 50,000
cases on its books. Our estimate is that up to 80 percent of Employers will end up paying out.
Why?
Because Employers make mistakes in how they deal with employees. You can't just call
someone into the office and tell them they're dismissed or subject to a disciplinary measure.
We've had cases where a business owner has erupted in a fit of temper and told slacking
employees to go home and never come back. That's a recipe for Employer disaster.
Some - not all, I hasten to add - employees are watching their opportunity. Ninety-nine times out of 100, it's nothing personal - they're just looking for a way to replace income caused by falling rates and hours. Job prospects are slim out there and they don't see much light at the end of the tunnel. So if they can use you to make up the shortfall, they might take the opportunity.
How do you insulate yourself from the risk of paying out thousands of euro in a claim? Here are some tips to take on board:
Be compliant. The National Employment Rights Authority (NERA) is the governing body for employment rights. To be compliant, you must have all your processes in order, right from the terms and conditions onwards. The process of becoming compliant takes you through the many steps along the way. Also, compliance ensures you won't ship a painful fine from NERA.
Understand that, when it comes to employment issues, process is king. You cover yourself by following process. Document what you have done, tell people why you've done things, follow correct disciplinary procedures - those are the nuts and bolts of the matter. Many business owners ride roughshod over the whole area of procedures. They are very vulnerable.
If you don't know employment law inside out, find someone who does. It will cost you money to get the expert advice you need, but the cost of taking a chance can be multiples more. Observe the legislation.
Redundancy is a minefield if you take chances. You must remember that employees now know their rights better than ever before. They have lived through a time when friends, family and work colleagues have been laid off. They have picked up a great deal of information about their rights. We say to Employers "your employees know their rights - do you?" Some businesses are now facing into a second phase of redundancies. In that instance, you can be guaranteed that staff know their rights better than they did for the first phase. If you don't follow process, if you make a false move, it could cost you.
Redundancies are required to keep a business viable. Make your decisions based on what's best for the business - not because you want to get rid of Danny the storeman who you feel hasn't done a tap for years. Before making people redundant, look at the business overall and see what areas are suffering a downturn, what areas are picking up, and how best you should react to changed circumstances.
A Selection Matrix will help to clarify your thoughts and take the personalities out of the decision - and also
ensure that no-one can accuse you of using redundancy simply to take out people you don't like. As a business owner or manager, you are entitled to make decisions that make business sense. So establish the logic of any decision before you make it.
Theft in the workplace – A serious issue for employers
The HR Company aims to assist employers by giving guidance on all HR related topics - here we advise on what to do when theft is suspected in the workplace:
Request for guidance from employer:
I know somebody in my staff is stealing money from the till. I'm pretty sure I know the culprit. What are my options? I have a staff of nine, all of whom handle cash. I don't have closed circuit TV.
As with any accusation of theft, the onus of proof is on the Employer to establish the culprit. Therefore the business needs to have an appropriate policy in place to investigate such allegations. An Employer should have a Right to Search policy in place in their contracts of employment and Company Handbook. If there is no such policy, an employee has the right to refuse a search of their personal items.
To uncover the person responsible for the theft, there should be markers placed on notes and then a search carried out to obtain the proof. If there is CCTV in place, then the recorded evidence should be obtained.
Common Pitfall:
An Employer discovers there is a theft of money and conducts a 'Witch Hunt' of the staff member they suspect, and this staff member can then claim that they are being victimised in the workplace.
Employers often end up paying out thousands of euro for disciplining employees without following appropriate procedures
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