Modern Workplaces consultation: the view from payroll

Diana Bruce

Modern Workplaces consultation: the view from payroll

By Diana Bruce

Back in May, the government launched a four part consultation on Modern Workplaces to explore the pros and cons of four key regulatory proposals.

These proposals comprised:

the introduction of a system of flexible parental leave
a right for all employees to request flexible working
changes to the Working Time Regulations affecting the interaction of annual leave with sick leave and family-friendly leave
measures to encourage equal pay for equal work between men and women

The Chartered Institute of Payroll Professionals has since conducted a membership survey to find out just what concerns and issues these proposals could raise in the reality of the workplace. But, the CIPP's Diana Bruce told our sister publication www.accountingweb.co.uk that she was convinced the red tape the government is continually promising to reduce will once again be on the rise if its proposals come to fruition.

Flexible parental leave

The survey uncovered major reservations over the suggestion that the notification of parental leave be based on a self-certification process, with several members suggesting instead that a form similar to the current MAT B1 (medical evidence showing the expected date of childbirth) be introduced for both maternity and parental leave.

Concerns were also raised that the increased flexibility enjoyed by employees will create real problems when organising cover for such absence. The majority of respondents favoured the suggestion that parents should provide an indication of their full plans for parental leave prior to the child’s birth.

One said: “In the current system it is generally easier to find a temporary replacement for an employee on maternity leave if this covers a substantial amount of time. If they are taking leave as a few weeks here and there, this will put the employer in a difficult position in relation to cover, particularly SMEs.”

The consultation asked if it would be inappropriate to exempt small and medium-sized employers from the provisions and an overwhelming 93% agreed that they should not be . Although recognising that smaller employers may need help and support, CIPP members felt that all employees should be treated the same regardless of the size of the organisation they worked for. Moreover, they believed that such an exemption would be confusing and unfair.

Some 78% of those questioned felt that preventing fraud would be the biggest challenge to administrating the regulations. This was closely followed by 71% who believed that record keeping would be difficult and 51% who believed that compliance would be an issue.

It was also questioned whether the current year’s qualifying period for existing parental leave should be retained or the two types of leave be consolidated to avoid confusion. Three quarters felt that the latter approach was most appropriate. Of those who disagreed, the main reason was that the year qualifying period at least afforded some protection to employers.

But there was a general consensus that it would be difficult to introduce a system that suited everybody, as the statements below reflect:

“The proposals seem incredibly complicated, with the burden once again falling on employers. It is difficult enough to plan shifts etc. taking into account holidays and sickness, without the possibility of extra leave being given.”
“It is essential that employers retain the right to decide on the level of flexibility that is appropriate or possible in a particular role. We already find with the existing arrangements that some returning mothers feel they have a right to choose to work part time with hours to suit them, and are then very upset when they find that the employer can not accommodate this. We have experienced threats of legal action citing sex discrimination on the basis that the situation only arises because they are returning from maternity leave.”
“The government need to give couples and families as much flexibility as possible but the fewer rules involved the better. Every family is different, every family’s finances are different, views on working are different; each family life is very different. The government are headed in the right direction, they just need to stop pigeon holing and let people make their own choices by giving multiple options that fit better to their lifestyles.”

Flexible working

CIPP members also recognised the need to extend flexible working to all employees, which includes allowing employees to make an additional request within 12 months if they expect the need for the original change to last less than 12 months. Once again, there were concerns over the additional burden this would create.

The consultation document acknowledges that flexible working presents an administrative burden for employers. The following member comment captures the key issues that will affect most payroll departments if the business offers flexible working:

“Calculating the pro-rata pay
Recalculating the holiday entitlement (if less days are worked)
Issuing a new contract. (We don't have a separate HR dept)
Ensuring the bank holiday pay is correct
Ensuring the correct rate of statutory sick pay and company sick pay is paid
Calculating the correct value of overtime (Is it at basic rate, time and a half?)
Monitoring timekeeping
Recalculating pension contributions”

Working Time Regulations

Survey respondents were unanimous in their verdict that employee entitlement to reschedule/carry forward leave should be limited to the four week entitlement laid down in Regulation 13 and should not include the extra 1.6 week entitlement under Regulation 13A. Members also agreed with the proposal to amend the WTR to specify the order in which leave is taken.

One contributor said: "As the situation will be very complex, a clear set of rules will prevent disagreements between employers and employees on types of leave and interpretation of what has been taken when.”

The consultation likewise asked whether anyone agreed that there was no merit in amending the WTR to limit the accrual of annual leave during sickness absence to the four week entitlement under Regulation 13. Some 87.5% of those questioned agreed with this proposal despite the possibility of the additional burden for payroll staff.

One respondent said: “The administrative burden will be huge, and that should perhaps be seen as an indication of the fact that the whole matter of accrual of untaken holiday while sick is fundamentally flawed. But the burden is not a reason not to limit it to Regulation 13. It should be underlying principle that matters, not how much work it will be.”

Equal pay

Equal Pay is, in a lot of businesses, more likely to be of concern of the actual employer or HR department than payroll. But some organisations don’t have the luxury or the requirement for a separate HR department, and in all cases it is likely that the payroll department would be involved if a pay audit were imposed.

Worryingly, 20% of CIPP members who responded thought their organisation would struggle to undertake a pay audit because of the lack of grading in some organisations and a high degree of diverse employment in others. We suggested in our consultation response that a government publicity campaign should be considered to highlight the need for such information to be recorded if the proposal was introduced.

The consultation asked if there was agreement with the proposal that if a court decided that a pay audit was required, then the results of the audit should be published. Responses to this question were fairly evenly split, with 55.6% disagreeing with going down the publishing route, the main reason being the need to prevent the salary of individual employees being disclosed.

One contributor said: “Employees themselves are very protective of their remuneration detail and publishing them is likely to cause ill feeling towards an employer, even if they are ordered to do so. There are often good reasons for salary differentials that are not always understood or accepted by employees and this kind of publication could increase staff dissatisfaction and labour turnover.”

Many of the proposed changes are complex – both for employees and for those HR and payroll staff who will need to implement them and advise workers as to what the effects will be. The CIPP has formally responded to the consultation with the findings of the survey and the government plans to publish its overall response later thise year, when we hope to see evidence that it is listening to the views of the very people required to administer these changes.