Sick leave is no holiday!
This issue of holiday entitlements and sick leave is a perennial favourite. It’s a classic case of playing catch up with fast moving (at least for Europe) changes in employment law. We seem to be unable to get any clarity in the UK legal system and progress is very much a zig zag rather than a straight line.
Those kind legal types at Wedlake Bell LLP have issued a useful article on a recent Tribunal case regarding the ability to “roll over” unused holiday entitlements when an employee is off sick. You can click through to the article here.
You’ll see it’s all still a bit of a muddle. Let caution be your watchword and take appropriate advice.
Steve Clark
Don’t leave your pension on auto-pilot!
The media is full of doom and gloom regarding the fact that Annuity rates are at an all-time low. Annuity rates are the factors used by insurance companies to decide how much pension they’ll pay you for your pension savings. Low rates are bad news if you are heading for retirement.
The majority of people getting to retirement rely on buying a pension but remain unaware that over recent years annuity rates have consistently fallen.
As Billy Burrows, director of Better Retirement Group, puts it:
“Annuity rates have been falling almost continuously since 1990. Back then, the annuity rate for a 65-year-old man was more than 15.5%; today it is less than 6.5%, a fall in excess of 50%. In August, annuity income fell by more than £300 a year, or 5%, making this the largest monthly fall on record.”
Pension Airways
Pension planning is a bit like taking a flight. It takes a lot of effort, time and a bit of money to get airborne and on your way to your retirement destination. You need to make sure you know where you’re going, when you are going to get there and that you’ve got enough fuel to get there. You’ll also need to check if there’s anything on your route that’s likely to disrupt you – e.g. bad weather.
If you are some way away from retirement once you are in the air and have reached cruising altitude you can put your plan on “auto-pilot” and check every so often that you are still on the right course.
However, as you get closer to retirement and your final descent you really need to be back at the controls and making all those key decisions and judgements that will help you land safely for your retirement.
My Pension Roadmap
We want to start working with you on your journey towards retirement. That’s why we’ve created our subscription service called My Pension Roadmap. You can read more about it here and here.
We’d love to meet with you or your employees to help you start planning for retirement. Contact us for a free initial meeting to see how we can help.
Don’t leave your retirement plans on auto-pilot – contact us today!
Steve Clark
Cause for concern in German DRA case?
It’s been rather quiet over the summer months in relation to developments on the various legislative issues that are likely to affect our clients’ employee benefit arrangements.
However, now that everyone is back from their holidays we’re beginning to see some interesting stuff appearing. The latest is in relation to the current grey area of the impact of the Default Retirement Age. Our friends at Mills & Reeve have issued one of their hr Law Live bulletins regarding a case heard by our old chums at the European Court of Justice.
You can click through to the original article here.
Although the judgement majors on the case of the German pilots being forced to retire at 60 there is one worrying aspect to it. For those of us regular flyers its worrying that air traffic safety doesn’t seem to be a legitimate reason to force a pilot to retire. The judgement seems to rest on the fact that safety considerations are not similar to the examples of legitimate aims listed in the original European Directive. These are things like employment policy, the labour market, or vocational training objectives.
As Mills & Reeve put it:
“(It) suggests a stricter reading of the Directive on this point than has been adopted by our domestic courts, which will be a worry for employers wishing to use a broad range of aims to justify age discrimination.”
It’s very likely that this is how Default Retirement Age legislation will evolve – by case law and precedent. It’s worth therefore keeping an eye on the stuff being issued by the UK and European courts when you’re framing your own policies.
For my part, my main concern is that the next time I get to the bottom of the aircraft steps at the airport there may be a stair lift installed for the pilot!
Steve Clark
If FTSE 100 employers can mess up pensions this badly what hope is there for us?
My wife Sue has recently been made redundant by the drug company AstraZeneca. This morning we got a letter from AstraZeneca letting us know that they had not paid enough into Sue’s pension while she was on maternity leave. It seems they had only paid their contributions based on her reduced maternity pay rather than her full pay before her leave. All in all it seems that over 900 people like Sue were affected.
When you take into account the internal cost of reviewing the mistake and the cost of compensation I’m sure it’ll run into hundreds of thousands of pounds.
The reaso
n that the AstraZeneca letter struck a chord is that I’ve spent the last couple of weeks advising employers about their duties under the new pension rules. Re-reading the detailed guidance issued by The Pensions Regulator has driven home the scale of the work that’s going to be required for employers to comply.
Take for example the task of identifying your workers. Not as easy as it sounds if you use self-employed contractors, agency workers or have non-executive directors, volunteers or Trustees.
Then you have to split your workforce between three categories of “jobholder” as the civil servants have called them. Then you’ve got make sure that you know when one of your jobholders moves category so you can make sure you do the right thing. I have included a graphic below from the The Pensions Regulator guidance just to give you a flavour:
It’s going to take a major change not only to HR and Payroll systems but also an Employer’s internal processes to track all these coming and goings. So, in essence, the new Rules are as much about compliance as they are the headline extra pension costs.
And that brings me nicely back to the AstraZeneca letter. Whilst it’s nice to get the compensatory payment they’ve made; it shows how badly wrong one of the top 100 quoted companies can get a simple change in process so badly wrong.
The changes required for the new pension rules dwarf the changes that AstraZeneca 
should have made to their maternity policy back in 2003. For smaller employers with limited resources it’s a daunting task. A survey of HR and Finance Directors in June 2011 found that over 40% of those questioned had no idea of the deadline for complying with the new rules.
In the words of the author of the report “It’s heading for a car crash”.
That’s why we’ve already started to plan out the compliance project with our clients. For some the start date is just over a couple of years away.
It’s not too late if you haven’t done anything yet. Click here to contact us set up a meeting as soon as possible.
Steve Clark