Tuesday 24 November 2009

Changes to the advertising period for the Resident Labour Market test - Tier 2 (General)


The UKBA announced today that the Migration and Advisory Committee’s recommendation that job vacancies should be advertised for longer before a Tier 2 (General) Certificate of Sponsorship can be issued will be implemented on 14 December.

The other recommendations (aside from changes to allowances) will continue to be implemented in April. 

Thus  from 14 December all vacancies will have to be advertised for a minimum of 4 weeks both at Job Centre Plus and as per the relevant Code of Practice.  The exemption for advertising in Job Centre Plus for some senior roles will remain in place.  


Employers will have the option of advertising:

  • for one four week block or 
  • running an advert for separate 2 week periods or 
  • for 1 week plus 3 weeks within a 3 month window. 



If the post cannot be filled by a resident worker identified from the first 2 weeks of advertising, a second advert must be placed to further test the resident labour market. In practice it may be less of an administrative burden for employers to advertise for a consecutive 4 week period.


Adverts which placed before the 14 December will not be caught by this change.

Actions for employers 
  • This change needs to be communicated to everyone involved in the recruitment process so that procedures and systems can be amended  
  • Any impact on timelines for potential candidates should be assessed - going forward Tier 2 applications are going to take at least 2 weeks longer.

Friday 20 November 2009

Worried About Your Company Becoming Insolvent?



Directors of a company on the brink of insolvency should take extra care in carrying out their duties to avoid the risk of liability for wrongful trading under the Insolvency Act 1986. 


In such circumstances it is advisable for directors to do the following:
  • obtain professional advice from a solicitor and/or insolvency practitioner in relation to any major decision taken by the company and insist on such advice being documented;
  • hold regular board meetings at which all directors should be present so that the entire board is aware of the company's financial status;
  • circulate board minutes immediately after meetings as this will provide evidence of whether or not steps taken by the directors minimise the potential loss for the company's creditors for the purpose of avoiding liability for wrongful trading;
  • draw up a list of all possible sources of funding for the company as this will be useful for the board in identifying the time at which the company no longer had any reasonable prospect of avoiding insolvent liquidation for the purpose of avoiding liability for wrongful trading.
  • draw up a timetable for when financial milestones such as new funding levels for the company must be met. The timetable should be strictly adhered to and it should identify the time at which the company's failure to meet a milestone will mean that there is no reasonable prospect of the company avoiding insolvent liquidation.

It is also wise for director's to avoid:
  • letting the company incur any new substantial liabilities until further funding has been secured, with the exception of circumstances where the board considers any such liabilities being essential and in the best interests of the Company;
  • waiting for a winding up petition to alert the board to financial problems and directors should ensure that they have up to date financial information at all times, compliance with financial covenants in arrangements with lenders should also be closely monitored;
  • ignoring events such as creditors putting pressure on the company, the company filing its accounts late or judgments being entered against the company as these could be evidence of insolvency which a reasonable director should have known about;
  • delays in raising a problem with the rest of the board as it is important for the board to take immediate legal and financial advice as soon as a director is aware, or fears, that there is no reasonable prospect of the company avoiding insolvent liquidation;
  • simply resigning to avoid the problem as directors must take every step to minimise potential loss to creditors and if they conclude that the company cannot continue to trade they must implement one of the insolvency procedures.

Making parental leave too expensive?




In April, the Equality and Human Rights Commission (EHRC) published "Working Better" a report calling for significant changes to the statutory maternity, paternity and parental rights regime. 


The report states that the UK's current parental leave policies are the worst in Europe.


The EHRC proposes that family friendly rights are improved in the following way:-
  • The removal of any length of service requirement for entitlement to maternity pay or paternity rights;
  • SMP to be payable for 26 weeks at 90% of salary;
  • A new 52 week period of parental leave with 4 months to be taken by the mother and 4 months by the father and the remainder to be taken by either parent and this to be in addition to existing maternity and paternity leave;
  • The pay for this new parental leave to be either 26 weeks pay at 90% of salary or 52 weeks at 50% of salary.


The current statutory maternity, paternity and parental leave provisions in the UK provide that:-
  • Women are entitled to 1 year's maternity leave, regardless of service, which comprises 6 months' ordinary maternity leave (OML) and 6 months' additional maternity leave (AML). They are entitled to return to the same or similar job after this period, depending on how much leave is taken;
  • In addition, those with 26 weeks' continuous employment prior to the fourteenth week before the expected week of childbirth (EWC) are entitled to up to 39 weeks' statutory maternity pay (SMP). SMP is payable for the first 6 weeks at 90% of salary and for the remaining 33 weeks at the prescribed rate of either £123.06 per week or 90% of salary, whichever is lower;
  • Fathers (or partners) with 26 weeks' continuous employment prior to the fourteenth week before the expected week of childbirth (EWC) are entitled to 2 weeks paternity leave and statutory paternity pay (SPP) which is either £123.06 per week or 90% of salary, whichever is lower;
  • Parents with a year's continuous service are entitled to take 13 weeks unpaid leave before each child's fifth birthday. These rights are supplemented by the flexible working rights for employees who care for children and have recently been extended to those employees who care for adult dependents.

The current parental policies cost the Government £2.07 billion a year and the EHRC estimates that the proposed changes to the regime would cost a further £5.26 billion a year. 


Disregarding the tax consequences, the effect on small to medium businesses of employees taking lengthy periods of leave is a further argument against extending parental leave rights, particularly in the current economic climate.

Saturday 7 November 2009

Humane redundancies


In the current climate it is inevitable that some businesses will not be able to maintain the existing staff levels. However making job losses is never easy and any redundancy programme should be implemented with care.


Not only are there legal and logistical issues to consider, but it can also be upsetting for both sides as it may mean saying goodbye to some long-standing and loyal workers. Here are some guidelines for businesses in this position:
  • Be open minded
    Discuss selection with the wider workforce. Employees may have ideas about how to avoid future redundancies and reduce the need for dismissals.
  • Have a plan
    Plan thoroughly and have a timetable. Make sure you build in plenty of flexibility to ensure all employees at risk have the opportunity to express their views.
  • Look at alternatives
    You may be able to avoid redundancies by temporarily shortening working hours. Most employees would be happier taking a small pay cut than losing their job altogether. Ask for volunteers before you consider compulsory redundancies.
  • Keep talking
    Consultation is the cornerstone of any redundancy procedure. Collective consultation with a union or employee representatives is required where you are proposing to dismiss 20 or more employees within a period of 90 days. Consultation with individuals is required irrespective of numbers.
  • Make it meaningful
    Don't just go through the motions - consultation should involve an exchange of ideas not a pre-determined result! Talk in terms of proposals – nothing is concrete until consultation has concluded.
  • Don't make it personal
    Make sure you use objective non-discriminatory selection criteria to identify those employees at risk. Criteria could include qualifications and skills and disciplinary record. Avoid subjective criteria such as 'attitude'.
  • Take advice
    Making redundancies without going through the proper procedures can lead to expensive employment tribunal claims. Take professional advice at the outset to ensure that you comply with the rules.

UK Immigration Law : Changes to Sponsorship Law


On Friday 7 August, the UK Border Agency (UKBA) issued new guidance notes for sponsors.

They include a number of significant changes that are incorporated into the system with immediate effect. It is important that sponsors consider the new guidance and make appropriate changes as soon as possible. I refer below to the changes which I consider require immediate attention.

Promotions: Classified As Employment Changes

The new guidance states that where a migrant worker is continuing to work for the same employer, but their 'core duties and/or responsibilities change, or where their position in the hierarchy of the sponsoring organisation changes, for example, due to promotion, this is to be treated as a change of employment'.

The effect of this is that in such circumstances the sponsor must issue a new certificate of sponsorship and the migrant must make a fresh application for leave, both actions requiring the relevant fee to be paid. Additionally UKBA states that 'the migrant's application for leave must be approved......before they can start work in their new job'.

Sponsors and migrants should ensure that they carefully consider whether or not any changes require change of employment action, including whether or not a resident labour market test needs to be carried out for the new role. If such action is required and is not taken at the appropriate time, this could cause the employee to be in breach of conditions. This could lead to the employee's leave being curtailed in the future, a ban on re-entry, downgrading of the sponsor rating from A to B (or withdrawal where serious abuse has occurred) and also to employee claims against an employer who has negligently failed to comply with the guidance.
A reminder that in relation to work permit holders, where the permit holder's duties have changed due to 'promotion, demotion or restructuring,' this is classed as a change of employment and requires that a certificate of sponsorship is issued with a fresh leave application.

Click here for information on changes relating to work permit holders.

Recruitment - JobCentre Plus Exemption For Senior Employees And New Stock Exchange Disclosure Rules

UKBA has introduced a new exemption to the general requirement for tier 2 (general) positions to be advertised via JobCentre Plus where the job is in the role of director, chief executive or legal partner, and the salary is £130,000 or above or where there will be stock exchange disclosure requirements.

ICT Employees - Restriction On Direct Replacement Of A Settled Worker And New Rules Relating To Maternity, Paternity And Adoption Leave

New rules have come into effect which restrict the direct replacement of a settled worker by an employee who is entering the UK under the ICT provisions. Interestingly, the guidance makes no reference to the same scenario but where an employee working with permission granted under the ICT provisions of tier 2 or the work permit scheme is already in the UK. This could simply be an oversight by UKBA.

Employers will of course already be ensuring that the replacement of any employee does not fall foul of employment legislation and such care should be adopted in relation to this requirement.
In addition, the general rule that a migrant must have been working for the sponsoring organisation for at least six months directly prior to their transfer - either outside the UK or inside the UK where they had permission to work for the sponsor under the ICT provisions of tier 2 or the work permit scheme - has been amended to take into account migrants who have been absent due to a period of maternity, paternity or adoption leave. In such cases and where the migrant has been employed by the sponsoring organisation for at least six months out of the last 18 months, they can still be employed under the ICT provisions provided all the other criteria are met.

The documentary requirements have not been amended to include evidence that the migrant has been on maternity, paternity or adoption leave.

However, it is advisable that such evidence is submitted with the leave application to demonstrate the reason why the migrant is applying under this exemption.

Allowances - Changes To Level Of Accommodation Costs

UKBA will now take account of accommodation allowances of up to 40% of the gross salary for short-term transfers where:
  • the migrant is applying from outside the UK with a certificate of sponsorship that has been assigned for 12 months or less; or
  • the migrant is applying for an extension that will take the total stay in the UK to 12 months or less.

UKBA has removed the requirement in relation to intent to claim tax relief contained in paragraph 171 of the pre-7 August 2009 sponsor guidance notes.

Salary - Removal Of Requirement To Be Paid In The UK And Guidance On Reduction Of Salary

Salary may now be paid by the sponsor from inside or outside the UK.

Where, due to the economic climate, the salary has been reduced, a change of employment application (and new certificate of sponsorship and leave application) will be required unless:
  • the migrant has current tier 2 leave; and
  • s/he will continue to do the same job, with reduced working hours; and
  • the reduced hours are part of a company wide policy to avoid redundancies; and
  • the sponsor is not treating the migrant more or less favourably than resident workers; and
  • the migrant's pay or working hours do not reduce by more than 30%; and
  • any reduction in salary is proportionate to the reduction in hours; and
  • the arrangements will be in place for no more than one year.

A change of employment application will be required in all other scenarios where salary is reduced.

All salary changes, including the above, must be reported to UKBA via the SMS, other than changes due to annual increments, bonuses, or natural progression within the same job (provided the progression is at the same level and is not a promotion since promotions require a change of employment).

Letter Certifying Maintenance

Where an A-rated sponsor provides a letter certifying maintenance, UKBA now requires that the migrant's certificate of sponsorship reference number is included.

Milkround - Exemptions On Time-Frame For Certificates Of Sponsorship

Where a migrant has been recruited through a milkround, certificates of sponsorship may be assigned within 12 months of the milkround taking place.

Contract Work - New Guidance

Where a migrant worker has been supplied to the sponsor organisation by another organisation on a contract basis, the sponsor will be the organisation which has full responsibility for determining the duties, functions and outcomes, or outputs or the job, the migrant is doing.

UKBA will only approve the issuing of a certificate of sponsorship if it is clear that the sponsor has full responsibility for deciding the above. Where the migrant is carrying out work for a third party on behalf of the sponsor, the migrant must be contracted by the sponsor to provide a time-bound service or deliver a time-bound project on behalf of the sponsor. They may not be contracted as agency workers or to undertake a routine role for the third party which is not related to the delivery of a time-bound service by the sponsor.

Miscellaneous

I have identified the above changes as those which are likely to be most important to sponsors in possession of a tier 2 licence. The new guidance notes also include changes in relation to tiers 4 & 5 and some less critical changes in relation to tier 2 which sponsors should also urgently familiarise themselves with.

Credit Management : Top Tips

Top Tips On Credit Management




Along with a healthy cash flow, good credit management is essential to any business and no company can afford to not take it seriously, especially when the availability of credit is tight. Recession or no recession, any business can compete and even grow just by adhering to a few basic principles of credit management outlined below. 


Get to know your customer 


Knowing your customer is critical when it comes to credit management.


Check the exact name and legal status of each of your customers and credit check new customers where you can. Do not simply rely on credit ratings, ask for references from other suppliers and make your own assessments on the customer's propensity to pay. 


Set out payment terms 


Once you decide to take on a new customer, define your credit policy. Agree payment terms at the order stage and make them very clear. Do not assume that you will be paid on 30 days or end of month following, so set out payment terms in writing and try to obtain written acceptance, ensuring your customer's order does not suggest different payment terms. 


Encourage timely payment


Printing the payment terms on easy-to-understand invoices that go out on time can also help prompt debtors to pay as will the clear setting out of penalties if a payment is late. Another way of encouraging your customers to pay quickly and on time is by offering discounts for prompt payment. 


Get your invoices right


A disputed invoice will not be paid so do not give the customer any excuse to contest the invoice. This requires being on the ball in terms of accuracy such as clearly specifying the goods or services being paid for and being sure to quote the customer order number.


Manage your debtors


Once an invoice has been issued, make sure to keep an eye on your debtors. 


For large or important amounts, telephone before the due date to make sure the payment is still on track. If a payment hasn't arrived, don't be afraid to ask for it. In fact, make immediate contact with the customer and be assertive about when you expect the payment, ensuring they fully understand the consequences of non-payment. 


An accounting package can go a long way to help you manage your debtors as you can list and track the invoices that are overdue and monitor your performance in getting paid.


Chasing payment


If contacting the debtor to try and resolve the issue has not been fruitful then there are various ways you can retrieve payment.


Firstly, consider exercising your legal rights under late payment legislation to charge penalty interest or add debt recovery costs. 


If that doesn't prompt the debtor to pay, then you can hire a specialist debt collector to help you. They have the expertise and time to focus on retrieving the debt. 


If all else fails, then you can always consider taking court action but this should be seen as the last resort as it can cost you time and money.


Effective credit management need not require the in-depth knowledge and skills of a trained accountant. With a few best practice methods in place, you can confidently avoid many of the pitfalls often encountered during a downturn. If it is managed correctly, you will be in a stronger position to enjoy fruitful relationships with customers and ensure your business continues to flourish.

Managing Cash Flow

Managing Cash Flow




Cash is the oxygen for any business and so the saying 'cash is king' has never been as reinforced as it is during an economic downturn. 


With this in mind, the most basic but best business practice any entrepreneur can implement to ensure survival and even success through the credit crunch is maintaining a healthy cash flow. It won't guarantee you a fortune but cash flow management can 

  • unlock capital, 
  • transform your bottom line and,
  • safeguard your future in uncertain times. 



Cash flow is essentially the measure of a business' ability to pay its bills on time and on a regular basis. Therefore, as part of managing your cash, the inflow and outflow of cash needs careful monitoring. Be fully aware of how much you spend and for what, and track your VAT and make accurate returns.


This can be achieved by making sure all aspects of accounting are in order and effectively managed. So keep on top of your bookkeeping right from the start, otherwise you risk forgetting crucial costs or even worse failing to invoice a customer. 


Don't miss payment and tax deadlines to avoid paying fines and save time and money by scheduling recurring invoices and purchases.


Regularly look at your relationships with banks, suppliers and customers and check if you are fully aware of all payment dates and their terms.

Investigate if there is anything that could be modified to help you maintain a healthy cash flow, such as moving key dates and adjusting payment terms. Ensuring customers pay on time or asking them to do it sooner, can improve everyday cash flow as can asking for extended credit terms with your own suppliers. 


Other ways of improving cash flow include ordering less stock but more often and considering leasing fixed assets or getting them on hire purchase rather than buying them outright.


An important aspect of cash flow management is identifying potential cash flow problems before they occur. This can be achieved by forecasting peaks and troughs in your cash balance and keeping an eye on market conditions. 


Cash flow forecasting also helps you to plan borrowing and tells you how much surplus cash you're likely to have at a given time. Many banks require forecasts before considering a loan.


Underpinning all this best practice should be a way of seeing what money is coming in and what is going out, and making sure there is always more flowing in than the latter. This calls for processes to monitor and track how your finances are doing, as well as help you prepare your cash flow forecast, allowing you to update your projections if there's a change in market trends or your business fortunes. This doesn't always require an experience accountant. With the right support and processes, you can operate more efficiently and increase productivity, which will be essential when trying to survive and succeed during these turbulent times.




Friday 6 November 2009

Could you be your own boss?





Had enough in your current job? Want to go it alone? Do you have a great idea? We all dream about breaking free from our 9 to 5 jobs and find joy and self-fulfillment by being our own boss. But is that really enough? I don’t think so.


Unlimited working hours, NO holidays and even less money than before is a real prospect for start ups.


Are you motivated? 


Run your own business and 9 to 5 is not an option, certainly not in the beginning. It is not enough just to want to escape that boring job or unfair boss, you need to be committed to your business and to earning enough money to support yourself and your family.


Can you work hard enough? 


You think your boss was hard on you, then know this, you will have to be even harder on yourself. You can not switch of from work, you will need to network 24/7. In fact sometimes I cannot sleep, I am so deep in planning mode. Which brings me to…..


Do you have your families support? 


They need to understand that their security depends on your success. Going it alone is a big step, going it without your families support or your friends would be too big a step, trust me.


Are you focused and self-reliant? 


You will work alone, you will have to make all the decisions yourself. And believe me when I say, that a bigger company does not make it easier, the buck always stops with you. Don’t think being a CEO is the greatest job in the world, no you get to do all the stuff nobody else did or messed up. It can get very lonely at times. With all these problems and decisions you have to stay focused on your goal.


If you are still reading this, then what are you waiting for? 


Here are some  things you need to think about before committing yourself:



  • You need to get enough money to last for minimum double the time you think, without income.
  • Make a plan for yourself and read it on a monthly basis, you’ll be surprised.
  • Find a suitable business structure, limited company, partnership, sole trader, etc.
  • Most importantly find an good accountant, and get him / her to play with you.
  • Think about your product or service, talk to potential customers and test the water.



Then go and have some fun living your life by the rules of your new boss - YOUR CLIENTS!