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EY Accounting - Business Acumen > Module 12 - Employing People > Flashcards

Module 12 - Employing People Flashcards

1
Q

Main types of employment

A

Employees

Workers

Self-employed

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2
Q

Things a business needs to consider if they are going to employ staff

A

Whether business can support the costs

Safe and accessible workplace

Register with HMRC as an employee - set up a Pay As You Earn (‘PAYE’) system

Workplace pensions

Employers liability insurance

Recruitment process

T&Cs

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3
Q

Rights to which an employee is entitled

A

Statutory sick pay

Protection against unfair dismissal

Statutory redundancy pay

Maternity, paternity, adoption and shared parental leave pay

Right to REQUEST flexible working

Rights to preferred payments in event of employers insolvency

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4
Q

What kind of hours can employees work? (Type of hours, not number)

A

Full time

Part time

Temporary

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5
Q

Benefit of zero-hour contract to business

A

Staff on call

No obligation to provide work - good for costs

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6
Q

Benefit of zero-hour contract to employee

A

Don’t have to undertake the work when it is offered

Business cannot stop a zero-hour worker undertaking work elsewhere

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7
Q

Downside of zero-hour to businesses

A

Individuals can refuse offered work

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8
Q

Downsides of zero-hour contracts to individuals

A

Issues obtaining mortgages, loans and even phone contracts

No guaranteed income

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9
Q

What is a worker?

A

Any individual who commits to personally perform any work or services for another party

Whether by way of a contract or other arrangement, but where the work is not on behalf of their own business or under an employment contract

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10
Q

“Workers” are entitled to some rights and protections

A

National minimum wage

Paid annual leave

Rest breaks

Protection against unlawful discrimination

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11
Q

Workers are not entitled to some rights that employees are:

A

Time off for emergencies

Notice periods for termination

No protection against unfair dismissal

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12
Q

If a business hires staff through an employment agency, what will they have to do?

What does this include?

A

Pay an agency fee - includes the workers national insurance contributions and statutory sick pay

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13
Q

If a business hires through an agency, who is responsible for paying the worker? Who has the duty of care for that worker?

A

The agency

(Agency has duty of care for the worker) They also make sure the worker gets their rights under the working time directive

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14
Q

Who is responsible for health and safety of an agency worker?

A

The business

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15
Q

If an agency worker is employed for 12 weeks in the same role, what are they entitled to?

A

The same terms and conditions as someone who is employed directly

Including equal pay and paid annual leave

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16
Q

Why are freelancers distinct from employees?

A

Because they are not performing work under a contract of employment

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17
Q

Why are freelancers distinct from workers?

A

The business will actually be a client to the freelance worker

The freelance worker is providing a service to the business rather than working for the business

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18
Q

Are freelancers self employed?

What are they effectively running?

A

Yes

Effectively running their own business

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19
Q

Is a freelance worker responsible for their own tax affairs?

A

Yes

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20
Q

How may a freelancer be self employed?

A

Either through a sole trader or through a limited company potentially

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21
Q

Are freelancers entitled to the same rights as employees or workers?

A

No

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22
Q

Are freelancers entitled to a minimum wage?

A

No

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23
Q

Is there a responsibility for the business to look after the health and safety of a freelance worker?

A

Yes

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24
Q

Freelancers will typically work under a contract for what?

A

Services

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25
Q

Are there tax advantages for freelancers?

A

Yes

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26
Q

Of the different types of worker, which have the most rights?

A

Employees

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27
Q

What must an employee be provided with? (When joining the business)

When must this be provided?

A

A written statement containing certain terms and conditions of employment

An employees first day of employment within the business

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28
Q

Do employment contracts include both express and implied terms?

A

Yes

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29
Q

Are express terms specifically stated in the contract of employment?

A

Yes

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30
Q

Express terms may include:

A

Basic base salary

Overtime and bonuses

Hours of work

Holiday pay

Sick pay

Any benefits eg medical insurance

Notice for dismissal

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31
Q

Are implied terms of contract stated in the contract?

A

No but are tacitly agreed

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32
Q

Implied terms may include:

A

General terms implied into most contracts of employment

Terms implied by custom or practice

Terms from agreements made with the employer by a trade union or staff association

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33
Q

Is an employment contract beneficial for both the employer and employee?

A

Yes

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34
Q

How can an employment contract be beneficial for the employer?

A

It can help businesses retain its best employees by potential adding terms - to encourage employees to stay

Helps business retain important info - in someone’s contract it may say they cannot transfer valuable knowledge to a competitor

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35
Q

Why may an employment contract come to an end?

A

Completion of contract

Redundancy

Withdrawal of a job

Termination by reason of conduct or capability

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36
Q

How must employers treat employees who have 2 years’ service in terms of dismissal?

What do they need to receive?

What act is this due to?

A

Employee must have a fair reason for dismissal and receive appropriate notice

The Employment Rights Act 1996

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37
Q

Fair reasons for dismissal for employees with 2 years experience

A

Redundancy

Conduct

Capability

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38
Q

If an employer doesn’t have fair reason for dismissal and fair process (for the employers longer than 2 year’ service), what can happen?

A

The employee can successfully challenge the dismissal in the employment tribunal

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39
Q

In some instances can ending a contract early be costly and time-consuming?

A

Yes

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40
Q

What is redundancy?

A

It is where the specific role in an organisation becomes redundant rather than the individual

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41
Q

Can redundancies be voluntary or involuntary?

When would voluntary redundancy be considered by an employer?

A

Yes

Prior to considering non-voluntary

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42
Q

What rights are eligible employees entitled to in the event of a redundancy?

A

Redundancy pay

Reasonable time off to look for a new job or arrange training

Not to be unfairly selected for redundancy

43
Q

Should an employer try to find other suitable employment within the business for an employee whose role is being made redundant

A

Yes

44
Q

Is it possible for to allow an employee to try out another role for four weeks (or more if agreed in writing) without them giving up their right to redundancy pay

A

Yes

45
Q

Considerations for fairly selecting staff for redundancy:

A

Skills, qualifications and aptitude

Standard of work or performance

Attendance

Disciplinary record

46
Q

Unfair selection criteria for redundancies would include:

A

Pregnancy, age or disability

Protected characteristics under the Equality Act 2010

Other criteria would include:

Membership or non-membership of a trade union

Whistle blowing

Health and safety activities

47
Q

If a business is making 20 or more people redundant within any 90-day period, there are collective consultation rules to be followed

A

Notify the Redundancy Payments Service (‘RPS’) before it starts

Consult trade union representatives (or relevant person)

Provide info to the staff about the planned redundancies and sufficient time to consider proposals

Respond to any further questions

Issue redundancy notices once the consultation process is complete

48
Q

Are there set rules when there are fewer than 20 redundancies?

A

No

But it’s good practice to consult employees

49
Q

Are employees entitled to Statutory Redundancy pay?

A

If they meet certain criteria

50
Q

Statutory redundancy is based on?

A

Employees age and length of services and counts back from the date of dismissal

51
Q

Do employees with two years service have the right to raise an unfair dismissal claim, even if the contractual termination clause has been complied with?

A

Yes

52
Q

If employees of less than two years are dismissed can they have potential claims in an employment tribunal?

E.g?

A

Yes

Eg whistleblowing / discrimination

53
Q

What is a frustration contract in employment contracts

A

Unforeseen events make it impossible for one or both parties to fulfil the contract

Eg sent to prison

54
Q

What are vitiation factors of a contract?

A

Vitiation factors are those which will invalidate the contract

55
Q

Examples of vitiation factors

A

Misrepresented information

Mistake

Duress

Incapacity

Illegality

56
Q

Is vitiation of an employment contract rare?

A

Yes, extremely

57
Q

What is repudiation of contract

A

A breach that is sufficiently serious that it renders the contract essentially useless and therefore entitled the innocent party to terminate the contract

Eg employee being refused entry into the building they work from

58
Q

Do businesses need to make sure they’re compliant with data protection legislation?

A

Yes

59
Q

Which act enforces data protection in the UK?

A

the Data Protection Act 2018 (‘DPA’)

60
Q

What does the Data Protection Act 2018 implement

A

The General Data Protection Regulation (‘GDPR’)

61
Q

How did GDPR come about in the UK?

A

It was a European directive that was incorporated into UK legislation at the end of the transition period following the UK’s withdrawal form the EU

62
Q

Is the UK now responsible for updating its own legislation surrounding GDPR?

A

Yes

63
Q

Is anonymised data covered under DPA / GDPR rules?

A

No

No traceability back to the individual or entity

64
Q

A business must ensure that where they control personal information, they meet a set of principles laid out in the legislation which requires that information must be:

A

Processed lawfully and fairly

Obtained for specific and lawful purpose

Adequate, relevant and not excessive

Accurate and, where necessary, kept up to date

Processed in accordance with the rights of data subjects

Information must not:

Kept for longer than necessary

Transferred out of European Economic Area (‘EEA’) (unless recipient country has adequate laws)

65
Q

Remedies available for people if they wish to complain about the way that their data has been processed

A

They must raise the issue with business processing the data

If matter is not resolved, they can go to the Information Commissioner’s Office (‘ICO’)

66
Q

The ICO have the powers to investigate and sanction employers / businesses and include fines of up to

A

€20 million or 4% of annual worldwide turnover (whichever is higher)

67
Q

Does the ICO have powers to search premises and order the rectification or destruction of inaccurate data and issuing information and enforcement notices?

A

Yes

68
Q

Is slavery illegal everywhere?

A

Yes

69
Q

Are all commercial organisations with a turnover of £36 million, or more, required to produce an annual Slavery and Human Trafficking Statement?

A

Yes

70
Q

What does an annual slavery and human trafficking statement set out?

A

The steps they have taken to prevent modern slavery in any part of their business and supply chain

71
Q

Does legislation on Modern Slavery apply in Scotland the same as in England?

A

Yes

72
Q

A modern slavery statement should discuss the following:

A

Commitment to tackling slavery

Organisational structure and supply chains

Who has responsibility for anti-slavery initiatives

Provide links to relevant internal policies and procedures relevant to modern slavery

Supplier due diligence carried out

Overview of KPIs in relation to modern slavery

Staff training on modern slavery

Flag up any awareness-raising programmes

73
Q

Is it compulsory for a business to ensure that it meets minimum wage requirements for its workers?

A

Yes

74
Q

Does minimum wage apply a to casual, part time and temporary workers?

A

Yes

75
Q

Are there different rates of minimum wage in the UK?

Depending on what?

A

Yes

Depending on age / apprentice

76
Q

What is the National Minimum wage? (Description not number)

A

The minimum wage a worker aged 24 and under is entitled to

77
Q

Workers aged 25 and over are entitled to

A

The National Living Wage (really just another name for the National Minimum Wage)

78
Q

Is the National Living Wage and the Real Living Wage the same thing?

A

No

79
Q

What is the Living Wage set at?

A

The cost of living

80
Q

Benefits of paying the Living wage

A

More motivated staff

Better staff retention

Lower recruitment costs

81
Q

The rate apprentices are entitled to depends on what?

A

Their age and how far through their apprenticeship they are

82
Q

Apprentice amount paid is reviewed annually and the government takes advice from who?

A

The Low Pay Commission

83
Q

What is the premise of human rights?

What are human rights based on?

A

There are fundamental rights to which an individual is entitled simply because they are a human being

They are based on dignity and respect

84
Q

Human rights include:

A

Right to life

Freedom from slavery and forced labour

Freedom from torture and inhuman or degrading treatment

Right to a fair trial

Freedom of expression

85
Q

The United Nations created a declaration of human rights, is it legally binding?

A

No

86
Q

The European Convention on human rights (ECHR) is based on what?

A

The United Nations declaration

87
Q

Is the ECHR legally binding?

A

Yes

88
Q

In the UK, the ECHR is enacted into legislation by

A

The Human Rights Act 1998

89
Q

The Equality Act 2010 protects the rights of individuals and advances equality of opportunity for all. It prohibits discrimination on the bases of ‘protected characteristics’, such as:

A 
Age
Race
Gender
Sexual Orientation
Religion or Belief 
Disability 
Marriage / Civil Partnership 
Gender reassignment 
Pregnancy / Maternity
90
Q

What is the purpose of a covenant?

A

To restrict the activity of former employees in order to protect the business’s legitimate business interests

Like document received when leaving Vivid (can’t join another competitor in X months)

91
Q

Are restrictive covenants required to be set out in writing and signed by both parties?

If so why?

A

Yes

To give them the best chance of being enforced

92
Q

What are the main types of restrictive covenant used in employment contracts?

A

Non-solicitation clauses

Non-poaching covenants

Non-dealing clauses

Non-competition clauses

93
Q

How does a non-solicitation clause work (restrictive covenants)

A

Prevents the employee approaching clients/customers/suppliers of the former employer for business

94
Q

How does a non-poaching covenant work (restrictive covenant)

A

Prevents an employee poaching former colleagues

95
Q

How does a non-dealing clause work (restrictive covenant)

A

Prevents a former employee from dealing with former clients’ customers/suppliers (this is regardless of which party approached the other)

96
Q

How does a non-dealing clause work (restrictive covenant)

A

Prevents a former employee from dealing with former clients’ customers / suppliers (this is regardless of which party approached the other)

97
Q

How does a non-competition clause work (restrictive covenant)

A

Restricts the former employee working in similar employment for a competitor

98
Q

For the best chance of being able to enforce restrictive covenants, an employer should only restrict for a reasonable:

A

Time scale (longer than 6-12 months is difficult to justify and wouldn’t hold up in court)

Geography

99
Q

What is often used alongside restrictive covenants?

A

Garden leave

100
Q

Including a garden leave clause within a contract of employment means what?

A

The employee is required to spend all or part of their notice period at home (whilst receiving full salary and benefits)

101
Q

What does a garden leave clause prevent?

A

The employee from starting employment with another company (or competitor)

102
Q

Why would a company do garden leave

A

The employee would no longer have access to company information or systems

Therefore, by the time their garden leave has ended, it is possible that any information they have in the company will be out of date

103
Q

What must be provided within the employees contract of employment for the company to be able to place an employee on garden leave?

A

An express clause

104
Q

What is an agent?

A

An agent facilitates and arranges sales for good and services

Does not take title in goods, unlike retailers or wholesalers

They are paid a commission on the sales they make

Eg travel agents / recruiters

EY Accounting - Business Acumen (16 decks)

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