There is a raft of legislation dealing with the employment of personnel. An introduction to this is provided in Constructionsite unit Legal Influences which is linked to below. You should visit this unit and familiarise yourself with its contents.
The law is quite specific on the requirements relating to the appointment of people and how they are treated by the employer.
Duties of an Employer
An employer owes the following duties to his employees:
- To provide reasonably safe premises. He is not absolutely responsible for the safety of the premise providing he has done what could be reasonably expected of him to make the premises safe.
- To provide safe equipment, tools and materials. Once again his duty is limited to doing what is reasonable to ensure they are safe.
- To provide a reasonably safe system of work. The employer's organisation must be efficient and co-ordinated to avoid injuries to people engaged on separate tasks. It must also provide reasonably efficient fellow workers.
- To employ proper staff. To treat them with respect and to pay the agreed wages and any necessarily incurred expenses.
Formation of a Contract of Employment
A contract for employment can be either verbal or in writing and is subject to the same requirements as the formation of any contract. Though within 13 weeks the employer must give the employee a written statement of the following matters:
- identification of the parties and the date employment began
- the scale or rate of remuneration, or the method of calculating it, and the intervals at which it is paid
- the terms and conditions relating to the hours of work, entitlement to holidays, incapacity for work and any provisions for sick pay and any pension rights
- the length of notice the employee is entitled to give and receive to bring the employment to an end or the date when a contract for a fixed term is to expire
- a person who the employee can apply for the purpose of redress of any grievance relating to the employment, the manner in which application should be made and the procedure to be followed.
New EU proposals would give temporary workers the same rights as full-time employees with regard to pay, holidays, pensions and other benefits.
The process of subcontracting can be bringing a person or a firm on to a contract to carry out a particular job. This may include the subcontractor providing materials and labour or just the labour to carry out this job, when that job is completed the sub‑ contractor leaves the contract.
Alternatively it may be very similar to employing someone 'on the books', as a contractor can have a worker working solely for him on what appears to be a permanent basis. However, as a sub‑contractor the worker is self employed and contracts out his labour on a contract for a particular job, or on a daily or weekly basis.
It is the subcontractor who is responsible for his National Insurance stamps and tax affairs. He receives no holiday or sick pay, and he can be laid off without redundancy pay, or even notice once his contract is complete.
He also lacks any protection given by the Employment Protection (Consolidation) Act 1978 as amended by the Employment Act 1980.
Deduction of Tax
During the building boom of the late 1960's early 1970's, the Inland Revenue found that a large number of workers were sub‑contracting their labour to contractors who paid in a lump sum without any stoppages. The Collector of Taxes found it extremely difficult to trace and collect taxes due to be paid by these workers.
A tax deduction scheme was therefore brought in for the construction industry which applied to payments made by a contractor to a sub-contractor for work involving construction, installation, repairs, fittings, decoration and demolition. This became known as the "715" which was the number of the certificates used. This was replaced in 1999 by a scheme which required action to be taken whenever a contractor paid a subcontractor. The card (CIS) and certificates that the sub-contractor held depended on whether the contractor paid the sub-contractor in full without making any stoppages or deduct tax on behalf of the Inland Revenue.
The scheme held the contractor responsible to make all deductions required and to pay over any deductions due even if he has not made them from the sub-contractor.
The Construction Industry Scheme (CIS)
This changed in April 2007 and became the current CIS, the main points being:
- There will no longer be any need for CIS cards, certificates or vouchers.
- Contractors must check or ‘verify’ new subcontractors with HM Revenue & Customs (HMRC).
- Subcontractors will still be paid either net or gross, depending on their own circumstances. However, it will be HMRC that tells the contractor which treatment to use during verification.
- There will be a higher rate tax deduction if a subcontractor cannot be “matched” on the HMRC system. This will apply until the subcontractor contacts HMRC and registers or sorts out any matching problem.
- Contractors must make a return every month to HMRC detailing payments made to all subcontractors. This will be sent to the contractors in good time, and it will be completed using existing records.
- Contractors must declare on their return that none of the workers listed are employees. This is called a Status declaration.
- Nil returns must be made when there are no payments in any month. These can be made over the telephone as well as via the Internet or on paper. There will be financial penalties for failure to submit a return.
You can find out more about the new CIS by visiting the website below.
Chapter 9 of the Law for the Construction Industry book listed below looks at Employment Law
The Asylum and Immigration Act 1996
This Act obliges employers to ensure that they do not employ anyone who is not legally entitled to work in the UK. With the increasing amount of movement around the EU and from workers outside the EU seeking work in the UK it is important that a business does not fall foul of this law. Details of this law can be found at the link below.