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

Interested

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?

Parents
  • 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
Reply
  • 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
Children
  • 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.
  • 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.
  • 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.
  • in reply to Interested
    Hi there,

    I currently sit on the board of a charity, and I'd add one additional element to all the excellent advise colleagues have already provided.

    Your charity has received funding for this work to have been undertaken. It has been undertaken by this individual, and now the Chair is seeking to not pay out that received funding for that work.

    I don't bandy the word 'fraud' around often but I'd be inclined to in this situation - to underline to your Chair and their HR support just how serious the ramifications of their decision is. Should word get back to your funders that this is how you operate, I suspect your funding would dry up immediately and your Chair - along with other members of the board - may even find themselves facing legal proceedings.