Pay in lieu of annual leave & accrued working hours during transition - Feedback - Community Feedback

24 Pay in lieu of annual leave & accrued working hours during transition

23 Nov, 2017 13:36

We are a small charity with a very inexperienced board (trustees/committee of management). We have experienced a difficult 2-3 years of churn and have had a low grade employee acting up for us as manager.

In this time the organisation has grown considerably, but we as a board have failed to bring to pass the necessary organisational restructuring required to take us forward.

We have many grant funders and have not had sufficient numbers of staff to work on our projects. As a result the acting manager has worked excessive hours (55hrs/week normal but sometimes weeks have been as much as 85hrs). The acting manager has been paid 40 hours per week as part of her standard contract under the grant but has had to work on other grants to bring them to completion because we have not allowed additional people to be employed during this period. The acting manager has process all other staff overtime regularly but 6 months ago she gave us her overtime hours. Naturally we knew they worked long hours but it came as a shock that this amounted to £13k. All evidence is there that they have done the work, but we felt uncomfortable with the amount given the annual wage is £19k.

Once the projects were completing the acting manager provide their annual leave and expenses.

The annual leave has been approved and carried over for the last 3 years with all staff have had some annual leave carry over but the acting manager has more than their annual leave entitlement for the year still to take. We as a committee discussed and agreed to pay half and for half to be carried over and used this year.

The expenses were over £1.5k and dated back well over a year back up with all receipts and records to show these were genuine. We couldn't throw stones as we ourselves were late with our expenses.

The chair at the time who didn't agree with decisions then brought in an HR consultant who then advised and blocked all decisions we'd made to date. Stating the following-

HR Decisions:-

1.) It's illegal to pay an employee in lieu of holidays. We understood that we couldn't force the acting manager to take the money but thought it was the most sensible option and our employee agreed to it.

2.) Despite agreeing in principle to pay the additional worked hours because they were in line and budget with grant funds restrictions. The HR and Chair blocked this decision and said there was no contract in place and no specific letters or emails confirming overtime would be approved. Plus the acting manager is awarding more work to themself than any other employee. True but we didn't have other options in place. And no employee asked for more additional work. Now I fear we could be in financial mismanagement as we have already reported back to the funder that we have paid the staff.

3.) The HR said that the policy for expenses was being abused by the acting manager as they were not operating within the standard timescales. However, when we were late with expenses they were approved (all be it they are much smaller amounts).

HR and Chair did this through informal meetings that they didn't give any warning to the acting manager about, nor opportunity for accompanyment. Upon hearing the decision our acting manager asked for all investigatory information to seek understanding of the reversed decisions. Nothing was provided. The manager repeatedly asked for mediation- but HR and Chair refused.

Aside from that we've witnessed the Chair bully and harass the acting manager even publically and ourselves when we raise concern. It just seems so unfair.

We recruited for a permanent manager and given the current situation and treatment our then acting manager didn't apply for the post. Now the ex acting manager is off sick. And has stated that she intends to raise a grievance and go through to Tribunal if necessary. As a result the new manager has changed the locks to the offices and email password of the ex acting manager so as to prevent them gathering sufficient evidence.

We have received letters now claiming-

1.) Excessive working hours- breech of WTR. For hours worked and limited annual leave.

2.) Unlawful deduction of wages.

3.) Failure to pay legitimate expenses.

4.) Being underpaid for acting up. New Manager is now on £32k. Requesting an additional £13k. Supporting this as they were also paid 30% less than some employees they were managing. So at the very least it would be £5k.

5.) Bullying and harassment.

6.) Coercion and conspiracy from Chair, HR and an employee (friend of Chair)- that they have been treated unfairly and unreasonably.

7.) Accused of financial mismanagement of funds.

£16.5k initially asked for has now went up to £35k compensation settlement, plus we are paying them while they are sick.

We are really unsure now of what to do. The HR consultant advised that it was voluntary work and unauthorised, deductions will now be time barred, no requirement to pay expenses and the employee is unlikely to have proof. However I know there have been further wage deductions in the last months of work requested on other contracts.

Also, the HR consultant has been picking up additional payments for recruitment and policies and will get more if grievance, appeals, tribunals happen. So we'll be paying for that to.

A.) Did the HR consultant act appropriately?

It seems like they have come in to be the Chair's bouncer and the advice they gave us and how they prosented it didn't give us any option, but now it doesn't seem as legal as they claimed.

B.) Is it legal to mutually agree with pay in lieu of annual leave with an employee, particularly after the annual leave period has passed?

C.) Is it illegal to pay staff over and above their contract when they appear to have done it for the good of the organisation without a contract or written correspondence to confirm?

D.) Is it illegal to pay expenses which are late and past the accepted period when we have already stretched this for our own needs?

E.) I thought the role of HR was to inform and see procedures and followed not to influence decisions and block employees with a dispute seeking a resolution. Is that true or do you work in other capacities?

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David | 0 Posts

24 Nov, 2017 10:49

Welcome Mr Interested! (Can’t help thinking of those little Mister Men books when writing that, btw ....)

Well, for a start I’d try to change your HR Consultant.

You can get far better advice and guidance on here and if you know where to look from google etc. Your charity doesn’t need them, especially as their ‘advice’ sounds very dodgy to me.

Your new Chief Executive sounds equally questionable, but not nearly enough info properly to evaluate here.

Correct me if I’m wrong, but do I understand it that your charity paid an acting Chief Executive £19,000 pa for a full time ++ role? If that the case and she did anything like a decent job - as it seems rather - then that’s in my book just sheer exploitation and you owe her big time. Just consider the salary difference with the new CEO, which is rather more realistic.

I will ponder the detail you raise and respond accordingly but in one sense the detail doesn’t matter.

Back shortly
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David | 0 Posts

24 Nov, 2017 11:07

In reply to David:
Hi again

Have now had another look and think

Did the position this Acting Manager came from pay overtime? - from what you say re others, suspect it did. Was it made clear when she moved to this Acting role that it would involve changing to completely-unpaid overtime? Assuming not, then contractually there’s I think an arguable case both for payment and for various reasons non payment as a contractual right.

Re holidays, it may be unlawful to pay employees in lieu of their statutory holiday entitlements but the holiday year has been and gone and it’s perfectly legitimate to pay an ex gratia sum to compensate - as it is for the overtime.

Does your organisation wish to keep this particular aggrieved employee and do they want ideally to stay or go?

IMHO most if not all of the threatened Tribunal claims are pretty weak, but I think one way or the other you need to settle things with this employee either via a Settlement Agreement if the employment is best terminated or an agreed ex gratia payment if she stays.
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David | 0 Posts

24 Nov, 2017 11:28

In reply to David:
Oh, and the expenses - contractually, if they’re legitimate and backed by receipts and not expressly time barred contractually then I do think there’s a strong case for a breach of contract / non payment of wages etc claim to succeed if you don’t pay them. By all means issue clear time barring rules for the future and stick to them but if they weren’t there expressly or were customarily waived then you can’t make them retrospective.
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Interested | 0 Posts

24 Nov, 2017 12:32

In reply to David:
Hello David,
I think we'd struggle to get rid of HR consultant. We paid them for the year, and top up for different extras.

Personally, I like the ex acting manager and so do a lot of the service users. She always has time for them and the volunteers.
I know others from the committee like her too, but we are new to all this and with a dominant Chair and HR consultant backing up the Chair we take our places as apprentices (so to speak). The one person not being fired is Alan Sugar/Donald Trump and his A-team.

You are correct. For acting manager her pay was £19k. She asked for a raise whilst acting up, but we said we'd do that after we restructured and gave a 3 month timescale. 2 years on- we've just filled the original position and haven't adjusted the salaries.

New Manager may just be following orders from the Chair following on of their weekly meetings.

I feel we owe her Big Time, but there's only about 50% of the board who feel and then the Chair has casting vote or we get further reports from HR Consultant on what we 'can't do'.

I know they tried to push her out with a settlement £5k and call it quits, but I feel it's insulting and we shouldn't be bargaining. She done the work, can into a difficult situation and did her best. She isn't perfect and has made a number of mistakes but nothing to be trying to throw her out. The Chair clearly doesn't like her and wants rid.

I think her claims are quite strong. We secured grants to do work and then never provided enough personel to be able to complete the work without overtime. So we would have failed to deliver the grants if we hadn't used her and some others from the existing staff team.

Thank you.
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David | 0 Posts

24 Nov, 2017 12:53

In reply to Interested:
Would suggest to the Board that some of you are mandated to talk fully and frankly and without prejudice to this person with a view to a SA assuming that’s what both parties want to happen

Something like £15 to 20 thou in full settlement plus the expenses might swing it?

Far cheaper than defending litigation etc although your ‘consultant’ will doubtless argue otherwise because it’s extra nice little earners for them - sure they themselves wouldn’t even think about getting out of bed for anything like 19K pa !!
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Elizabeth Divver | 0 Posts

24 Nov, 2017 13:56

My first reaction was exactly the same as David’s: dispense with the services of the HR consultant. As that isn’t possible, I will pick up on some of the detail David hasn’t commented on - there’s so much to this.

Is it legal to give pay in lieu of leave? You must ensure that the employee gets their statutory legal minimum leave but can give pay in lieu of taking contractual leave over the legal minimum.

Is it illegal to pay staff over their contractual pay? Of course it isn’t.

Is it illegal to pay expenses presented late? Of course not.

Some questions and comments for your Chair: What do your memorandum and articles of association say about the purpose of your charity? Is the gross exploitation of your staff compatible with your mission? Do you think chasing funding when you aren’t geared up to deliver the funders’ required outcomes without blowing the Working Time Directive into smithereens is the way to run a charity? If your acting Chief Exec hadn’t virtually worked two jobs, you would have had to return the funding, damaging your relationships with funders and adversely affecting your chances of getting more funding in future.

In my opinion, you need to pay the acting Chief Exec for all the hours worked and for the expenses claimed. Then you need to get the staff in place to ensure this doesn’t happen again. And if you can’t afford the staff you need to achieve the outcomes attached to your funding, your charity is not financially viable as currently structured ( and you have may have obtained the funding by false pretences - trusts don’t provide grants unless you have convinced them it will be the best use they can make of their funds).

The Charity Commission has guidance on the role of trustee and on good governance. I would have a browse there.
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Steve Bridger | 0 Posts

Community Manager

26 Nov, 2017 22:38

Hello... whatever your name is. Did you receive my private message from Thursday? Thanks.
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Interested | 0 Posts

27 Nov, 2017 14:18

In reply to Steve Bridger:
Hi Steve,
Will read it now.
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Peter | 0 Posts

10 Dec, 2017 11:32

The HR "Consultant" seems to be trying to select pieces of legislation, out of context, in order to minimise the charity's liabilities and the CEO's problems. Such people are dangerous: Get rid of them, because you certainly will end up in front of a Tribunal if you do not.

I would be highly tempted to dismiss them for incompetence and withhold any further payments, leaving them to argue any breach of contract for non payment against what is very clearly their preceding failure to offer accurate or vaguely competent advice, relating to:

1. It is unlawful for an employer to offer pay in lieu of un-taken holiday, or in place of holiday; what should happen if the holiday has wilfully not been taken (i.e. there has been no sickness or other issue allowing "carry-forward") is that the entitlement is simply lost; however in this case it appears that the employer has been at fault by not ensuring the employee took the holiday, so a claim could be made for that failure, creating problems for the employer. Therefore a payment could be made, perfectly legally, to "settle" that dispute and the sum offered in settlement might be a sum equal to that which would have been paid as wages etc. for the holiday. (Which the employee is at liberty to accept, or reject, as they would any other offer to settle a dispute).

2. It is fundamental to any contract that there is a benefit to both sides. In UK law oral contracts are also binding. Someone under a contract of employment is required (by statute) to be given a record of their expected working hours and the sum they will be paid in for working those hours. Therefore someone working additional hours is either doing so voluntarily (for no pay) or as overtime (for which they are entitled to be paid.

A volunteer must be given the same general workplace protections (and accept the same general responsibilities) as a paid employee. Therefore anyone working in the workplace must, by definition, be doing so with permission and/or authority; this presupposes that someone must know they are there, or that their contractual conditions allow for them being there, as an implication inherent with their position (i.e. it requires they work until their task is finished, rather than only to their nominal finishing time). So either their presence for additional hours has been discussed and approved, or their contract already allows it. In the latter case, as they are a paid employee, they must be paid for the additional hours in accord with the that contract, as their "benefit" under it, unless the employer can provide a record of them declining payment. (I think not). In the former case also the employer would need to produce the person with whom the discussion of their hours being voluntary took place, or some other record of that discussion, or it becomes a question of one word against the other.... except that in this case the "authorising party" for the work to be done would be the employee themselves, thus the situation defaults to their authorising the work being done being itself part of their job..... and thus them having entirely properly authorised themselves to do it, for the contractual "benefit" of overtime, rather than voluntarily.

(...And believe it or not, that argument does hang-together!).

There might be some argument regarding whether they should have authorised themselves, someone else, or anyone at all, to do it (for pay) but as matters stand they are owed payment.

3. Unless their contract specifically excludes expenses being paid after a given period, the sum paid out is due for reimbursement. The Employment Rights Act (1996) section 15 specifically forbids an employer from "receiving payments" from an employee (including management employees), unless an agreement to make the payment has been put in writing and signed in advance of the payment being made. (s15 (1)(b)). A payment made for materials or services benefiting the employer (a legitimate business expense) is a clearly payment "to" (or in place of) the employer and must (subject to the above limitations) be reimbursed in full.

Where (as in this case) expenses have accumulated over a period, but all relate to a single "task" (such as managing the charity's activity) and that task has been continuous, it can be legitimately argued, in default of the expenses being contractually defined as "weekly" or "monthly", that "the expense" must be the collective sum expended on "the task" to the date of submission or its completion, whichever would be earlier, and therefore not related to the date of any single expense being incurred.

4. The role of HR is indeed to inform and to ensure procedures are followed ....and laws complied with.... However that does, by definition, mean that decisions are influenced and, at times, managers (or employees') chosen actions or wishes are "blocked". But the practice of HR is not to selectively distort and abuse law or good practice in order to wrongfully, unfairly or unlawfully advantage the employer, employees, or any third party. We have a Code of Conduct that prevents us doing that.

.....As any half-competent consultant would know.

P
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David | 0 Posts

10 Dec, 2017 12:13

In reply to Peter:
'Mr. Interested' - ???
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Keith | 0 Posts

12 Dec, 2017 10:55

In reply to David:
The one thing I would add is that under trust law there is no real concept of a Trustee being an "apprentice" or learning the job - when you accept the role of being a Trustee and on the Board then you are pretty much fully accountable for decisions from that point forward. You may well have a dominant Chair but you as an individual have duties and responsibilities as a Trustee. If you feel you can not comply with these then resign. If you feel that you can not influence the Chair then resign. You are placing yourself at risk in this way.

Responsibility without power is no position to be in.
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Interested | 0 Posts

12 Dec, 2017 11:17

In reply to Keith:
Keith, I and others from the board have found this out (the hard way). We are in discussions with regulating bodies and also the third sector interface organisations who work on their behalf regarding things done and not done in this situation and others.
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Interested | 0 Posts

12 Dec, 2017 11:32

In reply to Peter:
Thanks for your considered response Peter.
It's still a hot potato and the Chair and some committee members just march onwards, thinking that this will go away.
I've also found out that another frontline member of staff within this same period of transition did not get paid in full for additional hours. Apparently they paid them something 'extra' and wrote this is their letter that here was their toil and unused holidays when their contract ended, but provided no explanation of the breakdown of this 'combined payment'. The worker doesn't seem to have challenged it, as they had to move on, but it feels unfair and unreasonable. And looking at it the decision has been made by Chair and HR alone as I, nor any of my fellow Trustees can recall such a decision or our assignment of such decisions to be made by HR and the chair alone.
The worker will be time barred by now for any claim, but it stinks that some people are so ruthless and tricky.
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Interested | 0 Posts

12 Dec, 2017 11:35

In reply to Elizabeth Divver:
Dear Elizabeth,
Thanks for your counsel. Have you worked in HR with the charity sector before?
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Elizabeth Divver | 0 Posts

12 Dec, 2017 12:00

In reply to Interested:
I currently work for a small group which includes a registered charity and 2 not for profit operations so I am used to working with a board of trustees. Even though the 3 organisations I support are all part of one "family" and we refer to ourselves as a group, the charity is actually legally not associated with the companies. We all share the same mission but the governance structures are not identical. It can make for an interesting life at times. I'm afraid I do agree with the point Keith makes about the personal liability of trustees and hope you all come out of this with the reputation of your charity and its relationship with funders intact..
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