Key points on trouble-free hiring

Regulatory Background

Recruitment practice has had to change considerably to comply with recent regulations (such as the recent Employment Equality (Age) Regulations 2006 designed to protect candidates from discrimination at all stages of the hiring process.  Furthermore, HMRC’s perspective on what defines the legal status of workers for tax and National Insurance purposes has become much more stringent.   It is vital that recruiting employers ensure they have procedures in place that have been thoroughly checked by a solicitor with employment expertise before they commence any recruitment activity.

A number of law firms operate on a no win/no fee basis for members of the public who may have a legitimate claim against interviewing employers for discrimination and a snapshot of some of the cases heard in the Employment Appeals Tribunal recently demonstrate how costly it can be for employers to cut corners on recruitment procedure and that some investment in legal advice that all hiring managers follow most definitely pays off.

 Larger organisations with HR departments will have a set of procedures in place and regularly take advice from employment lawyers on how these should be updated. With many interviews conducted by managers with no expertise in recruitment practice, HR departments usually organise training on what procedures should be followed and arrange for templates and checklists to be available on the organisation's intranet.

For details of solicitors offering expertise in employment, click here.

Useful sources of information on discrimination include the Equal Opportunities Commission and the Commission for Racial Equality

Recruitment Advertising

Wording of Advertisements

You have to be very careful what wording you use in any form of job advertisement.  Although the Age Regulations do not prohibit advertisements with wording suggesting an age range, the courts may support an unsuccessful job applicant’s claim that they were discriminated against.

To be safe, you should ensure the wording of your advertisement does not refer to a particular sex, sexual orientation, religion, belief, age or suggest any form of disability discrimination. Words like ‘mature’, ‘young’ and even ‘recent graduate’ can cause problems.  There are certain exceptional circumstances on grounds of ‘genuine occupational qualifications’ and employers should take advice on these before hiring.

Where you advertise

You need to give some thought about where you place your job advertisement.  Ideally, advertisements should be placed to attract as wide a field of candidate as possible and be as accessible as possible to large audience.

It is actually unlawful for recruitment agencies to refuse to put forward an individual because a client has asked for particular age range and agencies can find themselves liable on the Age Regulations if they accept instructions form a hiring employer to exclude certain age ranges.

Application forms and selection methods

Application Forms

Again these can be fraught with problems.  Employers should take advice on their application forms and ensure these comply with all discrimination legislation.  Questions about education and job history could be construed as pinpointing the age of a candidate and direct questions about date of birth should not be on the form at all.  However there is a balance between compliance and essential information needed to assess skills and competencies of candidates and a solicitor can provide support on how to achieve this.

Skills and Competencies

Any form of testing for skills and aptitude must be carried out in such a way that cannot be construed as being discriminatory.  For example, any tests that could cause problems to disabled people may well cause problems and you should seek advice again on the balance between compliance and the right skills and competencies.  The courts do expect employers to consider reasonable adaptations to make roles suitable for disabled people.

Interviews

Interviews need very careful handling and should ideally be carried out by more than one interviewer.  Questions relating to age, sex, family arrangements, religion and trade union membership must be avoided and failure to remember this can result in a costly claim of discrimination from someone you do not go on to hire. You should keep notes of interviews, as well as written evidence of the reasons for selection and non selection of the candidates for at least six months after you have completed your recruitment process.

Offer letters, rejection letters and contracts

Candidate checks

Offer letters, conditional offer letters, taking up references and the actual contract of employment can all be minefields for the hiring employer. It is sensible to take advice on all forms of documentation that pass between your organisation and the candidate along with internal records and forms.  Most employers make a conditional offer in the first instance while they conduct necessary permitted checks, such as references from former employers, work permits,  qualifications and Criminal Records Bureau screening. If your organisation works with children or vulnerable people you will need to organise CRB checks.

References

References can give a useful insight into an employee’s past history but employers are increasingly reluctant to commit anything to writing beyond a basic confirmation the individual was an employee for the period stated. For this reason, an informal telephone call may well be more useful.  You should only take up reference that have been given to you with the candidate’s permission, and consult with the candidate when, if at all, you are able to seek a reference from their current employer.

Rejection letters

All unsuccessful candidates should be given the bad news in writing and you should ensure that you have enough written notes of the recruitment procedure to demonstrate why their skills and competencies did not match your specification in the event of a claim. This is usually done once you have a written acceptance from the successful candidate for the job, but in larger organisations where an advertisement has yielded hundreds of replies, the rejection letters to those not making it to the shortlist usually go out first.

Contract of employment

It is not a legal requirement to send out a contract of employment with your firm offer letter but it is good practice to do so.  You do have to issue a basic statement with two months of the individual starting employment with you that covers key points such as pay, benefits, holidays, notice period, job title, place of work and the full names of the organisation and the individual. Your statement can refer to other supporting documents, such as union agreements and you should take advice from an employment solicitor on what should be in your main statement and what can go in accompanying documentation (which can be updated and redistributed).

Employment Status

When you take on an individual to work in your organisation, you need to be very clear about what their legal status is and whether they are allowed to work in the UK.

Employed, agency worker or self-employed

This is an area that has caused huge problems for employers.  Case history indicates that it is all too easy to assume that the freelancer on your premises is self-employed, but may well be regarded as an employee by the courts and for tax and National Insurance purposes.

Failure to identify the correct status of our agency worker, freelance, consultant or casual can lead to some expensive demands from HMRC, not to mention the individual if they make a claim against you as if they were an employee.  An employee has tax and NI deducted at source through the payroll and employers pay an additional rate of NI for each employer.  If a worker is not on the payroll because they claim to be self employed or have come to you through an agency, no tax and NI will have been deducted and this amount will therefore be regarding by HMRC as an outstanding liability if the individual’s legal status is actually that of an employee.

Complications can also arise when employers think they are merely terminating a contract for services and find themselves staring at an unfair dismissal claim.  It pays to identify what sorts of workers your organisation is likely to take on and take legal advice on how to structure relationships with contractors, agencies and service providers so that these individuals are not deemed employees.

It is also advisable to get your accountant to audit your PAYE and service contract records on a regular basis so that if the HMRC inspector does pay a visit, there are no unpleasant surprises.  To find an ICAEW qualified accountant, click here.  For further information from HMRC click here. 

Work permits

Employers have a legal responsibility to check that the individuals they employ are entitled to work in the UK.  Failure to do so is a criminal offence resulting in a large fine for each individual illegally employed.  It is sensible to consult a lawyer specialising in immigration if you are about to appoint a non UK worker.  Although most EU nationals are entitled to work in the UK there are some restrictions on those from the newer Eastern European Member States and it is advisable to check these out.

Further information on who does and does not need work permits can be found on www.workingintheuk.gov.uk.