Employment law can be a minefield, so keeping up with the regulations is a must for any employer.
On farms, employment consideration often go beyond those of the average office worker, as many jobs require an assessment of physical capabilities that can open up the potential for discrimination claims if not handled correctly.
Working hours also to be quite flexible, and contracts need to reflect this to protect both the worker and employer.
From getting staff paperwork right, to wages and job advertisements, employment solicitors Shona Morton and Matthew Potter look at the main issues that can affect farmers.
See also: Five ways to find good staff at harvest
Contracts of employment
One of the biggest recurring issues on many farms is the lack of a written contract of employment, according to Shona Morton, employment solicitor at Cumbrian firm Burnetts.
Often, but not exclusively, this affects long-standing employees recruited on a verbal agreement many years ago.
“A written contract helps avoid disputes and provides certainty for employers and employees,” she says.
The lack of written evidence setting out key contractual information such as exact start date, notice period, salary or holiday entitlement could lead to difficulties in the event of a dispute or redundancy, she warns.
- There is a legal requirement under section 1 of the Employment Rights Act 1996 to provide employees with a written statement of certain terms of their employment no later than two months after the start of their employment.
- Where there is no written contract, the minimum notice an employer must give an employee is one week for every year of employment up to a maximum of 12 weeks.
- All employees have protection from unfair dismissal after two years’ continuous service, so employers should ensure they have a fair reason for dismissal and have followed a fair process, she says.
- A fair process should include steps prior to dismissal to encourage improvement of conduct or performance (save for cases of gross misconduct, where dismissal can be immediate).
- At the point of dismissal, if the employer does not want the employee to work out their notice, they can opt to make a payment in lieu of notice to an employee (a payment equal to the wages they would have earned working out their notice), after deductions for tax and national insurance.
- In addition to notice, employees must also be paid for the balance of any accrued but untaken holiday, although the employer can ask for this to be taken during the notice period.
- A written contract also helps ensure farmers do not breach the Working Time Regulations 1998 by asking a worker to work in excess of a 48-hour working week. The regulations allow for employees to opt out of the 48-hour limit, and including this opt-out in the contract of employment ensures the employer is not in breach if they require longer working hours from their worker.
- Staff taken on after the abolition of the Agricultural Wages Order (AWO) in 2013 will be covered by statutory employment law (including the new living wage), but those recruited before 1 October 2013 have AWO legacy rights entitling them to enhanced pay, sick pay and overtime rates.
Where accommodation is offered with a job (“service occupancy”), failure to have a formal property agreement in place is a big issue that often only emerges when an employee leaves or is made redundant.
Tips to avoid common employment
- Provide a written contract – it’s a legal requirement
- Are opt-outs from the Working Time Directive needed? If yes, make sure they are correctly in place
- Check for AWO legacy issues
- Observe minimum wage legislation
- Formal agreements should be used for accommodation
- Beware of discrimination against older workers
- Word job adverts carefully to avoid discrimination claims
“Property-related matters are often the most difficult to resolve, as an employee gains rights of occupation from the first day they occupy the property,” says Matthew Potter from Birketts Solicitors.
- Service occupancy should be included in any contract of employment, together with the terms on which it can be terminated.
- Consider whether the employee is genuinely better performing their duties by living in the tied house or could they perform their job equally well if living elsewhere? If the answer is that the tied property is better, then they can move in under a service occupancy. If no, an assured shorthold tenancy should be used and a prescribed form of notice needs to be served with the agreement signed and completed ahead of the employee occupying the property. Failing to do so could mean the farmer finds themselves with a tenant whose rights are significantly enhanced and is then difficult to remove when the employment ends.
- References and pre-employment checks are essential prior to the employee starting, and if these are not obtained or carried out, the contract should make it clear employment can be terminated at short notice during any probationary period.
It is worth being aware of potential issues where staff on the old minimum wage have received a pay rise, but others already paid at or above the living wage have not received a rise, therefore narrowing the pay gap.
“It may not mean employees seeking an 11% pay rise, but may certainly drive up salaries for those seeking recognition for the part they have to play in the success of a business,” says Mr Potter.
- Staff aged 25 or over should be paid at least the national living wage of £7.20/hour, which replaced the minimum wage on 1 April 2016 and rises to £9/hour in 2020.
- Employees under 25 must get at least the national minimum wage for their age group.
Fit to work?
One of the trickiest areas for farm employers is how to manage the replacement of ageing staff no longer physically able to do the job.
While employers and staff will often reach a mutual decision about the right time to retire or reduce workloads, there can be issues when workers feel able to carry on and do not want to leave.
“Workers may insist they are still physically capable, but employers have a duty of care towards staff, so must ensure they are [capable].
“Employers need to be very careful not to expose themselves to a potential unfair dismissal complaint or discrimination claim when assessing this,” says Burnetts solicitor Shona Morton.
- If no mutual agreement for exit can be reached, a formal route is to arrange for an independent medical examination, which will show whether an individual is fit enough to carry on with the duties required by their role, or may recommend lighter duties or reduced hours.
- The definition of disability under the Equality Act 2010 is very wide, covering all long-term conditions that effect the individual on a daily basis. Arthritis, a common condition in older manual workers, is likely to meet this definition and employers have a duty under section 20 of the Equality Act to consider what “reasonable adjustments” they could make to accommodate an individual’s disability needs, such as lighter duties or reduced hours. Failure to do so could result in a potential discrimination complaint.
- The employer only has a duty to make adjustments that are reasonable. If the farm business cannot feasibly accommodate those changes to working conditions, then they can justify declining the request.
- If an employee simply cannot perform the role they are employed to do for health reasons, there may be scope for dismissal on capability grounds, but there has to be a good business case and independent medical support behind the decision.
- Seek legal advice before any discussion with the employee, particularly if there is a risk of an age or disability discrimination complaint.
When dealing with the issue of capability, or any employment dispute where there is the risk of an unfair dismissal claim, one option is to have an off-the-record “protected conversation” where both parties can freely discuss matters and reach a mutually agreeable exit strategy, says Ms Morton. This may also include a tax-free lump sum or “golden handshake”.
- There is no comeback on the employer from such a meeting once the employee signs a settlement agreement (formerly known as a “compromise agreement”) which confirms the agreed terms of exit and includes a waiver of any future legal action against the employer (for example, for unfair dismissal or discrimination).
- In order for any settlement agreement to be binding, the employee must take independent legal advice prior to signing the agreement, which the employer pays for (usually about £250+VAT).
- Agreements should set out what happens to any tied property once employment ends, for example whether the employee is entitled to stay for a given period, or whether they must vacate.
Phrase job adverts carefully
Farmers should be careful when phrasing job adverts to ensure they cannot be construed as discriminatory under equality and human rights guidelines, Ms Morton says.
A female worker may, for example, feel that a phrase such as “stockman wanted” puts unfair bias towards recruitment of a male employee from the outset and could have possible grounds for sex discrimination in the event of any dispute over not being selected for interview or not getting the job, she explains.
New legislation looming?
There is little forthcoming new employment legislation to concern farmers, however experts advise employers to be wary of knock-on effects of wider economic changes, notably the UK’s exit from the EU.
With immigration at the top of the Brexit agenda, labour markets will be one of the first areas to be affected, which could present issues for farms using European labour, says Mr Potter.
Wider economic uncertainty may also affect areas such as bank lending, potentially squeezing financial margins and existing labour further.