By Jackie Kennedy, Director of the HR Consultancy, We Need to Chat.
As a Non-Executive Director of a growth company, you’ll know that you have to evaluate the performance of the senior executives (and their cost too), but there are other critical, often legal, HR agenda items
you should be watching out for. Most growth companies won’t have the luxury of a HR director or manager and certainly not a devoted HR department. Instead, the MD, COO or finance director is probably wearing the HR hat, too, and it can be difficult to keep up with the ever-evolving HR legislation. Here’s a quick checklist of the current HR agenda items non-executives need to know and/or question their executive colleagues about.
1. Pensions auto-enrolment. Auto-enrolment is the buzz word in all HR departments across the UK at the moment and the headache of pensions lawyers who are dealing with the last minute actions of some companies.(The legal bit: Auto-enrolment is the government’s new pensions program following the repeal of the statutory duty on employer to designate a stakeholder pension scheme). It compels all employers to make suitable pensions arrangements for its workers and whereby both the employer and the worker must contribute and automatically enrol (unless the individual worker chooses to opt-out). Although firms with fewer employee numbers have more time to get this in order (implementation for the largest employers started in October 2012 and is being phased in until October 2017 for the smallest of employers), it is time consuming and somebody needs to be dedicated to it.You have to be addressing it now if you haven’t already done so and, at the very least, know your ‘staging date’. It should already be on the agenda for your remuneration policy meeting, so watch out for it. Take note, there is an onerous compliance element for firms, no matter how big or small.
2. As of September ‘Shares for Rights’ was introduced and employees could now become ‘employee shareholders’. What this means is that employers can now give an employee shares in the business in return for the employee giving up some fundamental employment rights (for example, they will give up the right to sue the employer for unfair dismissal and redundancy payments). While the employer must give fully paid up shares to a minimum value of £2000, the benefits include very generous tax reliefs. On the downside, costly administrative charges and the onerous nature of setting it up as well as the legal process may put off some employers. However, it could be a great incentive for retention and succession planning in the workplace (albeit most likely to be for senior management who are less worried about unfair dismissal and redundancy rights and more concerned with tax benefits), so definitely one for the board agenda.
For growth companies this could be seen as a very attractive initiative especially if the company is already using equity to reward their key people.
3. Immigration and the right to work in the UK. Who in the firm is taking responsibility? Who is checking each and every hire and abiding by the stringent documentation checking rules? Onus is on the company, not the recruitment firm if your board is using one. In addition, if you are considering hires from abroad for your specialist areas, the rules on immigration changed some time ago. Ensure your company has the necessary licence to make non-EU passport-holder hires, if that’s the plan. This could affect your recruitment and succession planning strategies so it’s important that somebody in the business has this under control or get a consultant / immigration lawyer to advise. Directors and partners can be personally liable for immigration penalties incurred by their businesses, and in severe cases can face prosecution or be disqualified so it is important to be on top of this.
4. And lastly, one for your own HR house-keeping, your Letter of Appointment. Ensure you can do what you need to do to carry out your Non Exec-Director role. If you are signing a letter of appointment which is a template from a large corporation, watch out for any carve-outs and more importantly take note that what you are currently doing in practice, is what you are permitted to do (for example, has the Company ruled out talking to the shareholders?) Read your letter. If you haven’t signed it yet, make sure your job outline and how you go about your job is explicitly clear (for example, accessing documentation, speaking to shareholders, etc). Also, the larger companies may already have D & O insurance in place for you, but the growth companies may not. Ensure you have insurance. (Editor’s note: Further details of D& O Insurance are available from the First Flight website at https://firstflightnonexec.com.)
But having told you all the HR pitfalls, it has to be said that growth companies are some of the most rewarding to work in. The individuals rarely try to be clever, even though they clearly are. Every day surprises you with something different and a bit out of the box. If you are fortunate enough to work for this kind of enterprise, lucky you. Enjoy it but don’t forget to take a regular peek at HR matters and make sure they get proper Board attention.
None of this information constitutes legal advice. You should get your own legal advice for any concerns with compliance or implementing any policies / procedures. For further information, including details of how to contact Jackie Kennedy for more HR advice, please see www.WeNeedToChat.com.
