Sherie Griffiths

June 17, 2009

You’re Fired! – What the new ACAS code means for SMEs

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The article below comes from Karen Woodbridge of Hornet Solutions Ltd – our resident HR specialist-  http://www.hornetsolutions.com.

We’re aiming to explore the issues in more detail in an interview, to be added to the site next month.

 

Sir Alan Sugar’s refrain is now famous but employers must take care if they follow his example.  The average Employment Tribunal unfair dismissal award is £8,000 and the average legal fees, win or lose, another £8,000 so uttering these words could be extremely expensive for your business and I doubt Sir Alan would feel obliged to help out.

 

All change!

 

The old law relating to dismissal was scrapped as of 6th April 2009, now we have the new ACAS Code of Practice.  So businesses can no longer be accused of automatic unfair dismissal for saying these 2 famous words.  However the new Code is several pages long and failing to follow all the steps/principles will be taken into account by the Employment Tribunal, so ignore these steps at your peril.

 

How to dismiss without getting into trouble.

 

It always amazes me that more people don’t dismiss failing employees in their first year of employment.  Businesses have up to 51 weeks to decide an employee is just not working out.  As long as there is no discrimination, health & safety or trade union issues, your employee has no unfair dismissal rights until they have 1 year’s service (this deadline includes the statutory 1 week notice period).  You can dismiss an employee before 51 weeks, even after you previously confirmed they passed probation! 

 

Dismissing after this period can be time consuming, stressful and expensive.  I always ask when the employee problems started and so often the answer is “as soon as they started work”.  This is when you need to follow one aspect of Sir Alan’s approach.  Don’t dither – Do it!

 

Too late?

 

If you have missed the 51 week deadline, you can still dismiss but you must follow the new ACAS Code.  All grievance and disciplinary codes written before 6th April 2009 must be updated.

 

The new code is easy to follow and has a common sense approach.  It doesn’t prescribe forms/paperwork but focuses on ensuring the procedure and decisions are fair and reasonable and the good news for SME’s is that reasonable is determined in relation to the size and resources of the organisation.

 

Unfortunately following the ACAS Code faithfully is still no guarantee that you won’t get hit with a claim because the claim form can be downloaded and lodged for free.  However there is no legal aid for employment tribunals and the free sources of legal support tend to carefully assess the chances of success (eg most legal expenses insurance companies will only accept a case with a 51% or greater chance of success).  So responding robustly to an ET1 (the Employment Tribunal Claim Form) and demonstrating that you followed the ACAS Code, can lead to a case being dropped by the legal team.  Then your employee has to decide whether to pursue the case at substantial cost to themselves because costs are very rarely awarded to either side by the tribunal. 

 

Once you have responded to a claim, ACAS will mediate between you and your employee free of charge so here is another chance to see off a claim without incurring huge costs.

 

This strategy only works if you can prove you followed the ACAS code and your decisions were fair and equitable in all the circumstances.  After the first year of service saying “You’re Fired!!!” will nearly always cost you and your company dearly, no matter what you believe your employee has done.  So always, without fail, act as soon as a problem occurs and never let employee problems persist beyond the 51 week point.

 

 

© 2009 Hornet Solutions Ltd

All Rights Reserved.

 

This article is reproduced with the express permission of Karen Woodbridge whose right to be identified as the author of this work has been asserted by her in accordance with

the Copyright, Designs and Patents Act 1988

This article is intended to provide information only and neither Karen Woodbridge nor Savvy Business Ltd (including its staff and agents) can accept an liability whatsoever for any losses incurred as a result of reliance upon it as anything other than generic information.

Glossary of International Trade Terms – A

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As promised yesterday, here’s more from the latest newsletter from Ray at International Trade Financial Solutions – http://www.inttradefinsolns.co.uk.

 

Today, Ray starts his glossary of common international trading terms.

 

Over the course of the next few issues, I thought that it may be useful to include some of the terms that are often seen in International Trade and a brief explanation.  I cannot promise to include every one – we’d be here for ages but I will try to incorporate some that, from personal experience, I know have caught out both importers and exporters.  I’ll also try to keep things alphabetical, so if anyone wants help on a particular term or expression and I have passed that point in the alphabet, let me know, and I’ll include it in the next available newsletter.

Here goes…..

 

A.

 

Acceptance.

(See yesterday’s post). When applied to Bills of Exchange, it is the act of the buyer [the Drawee] accepting  that the amount quoted on the bill is correct and is a valid sum due from them to the Drawer.  Acceptance is achieved by signing the bill - usually in the form ‘Accepted, for and on behalf of XYZ Ltd, [plus signature & designation]‘.

 

Accepting Bank.

The bank specifically mentioned in a Letter of Credit as being the one upon whom any required  Bill of Exchange is to be drawn.

 

Ad valorem.

Literally, according to value.  Included here since some banks still levy a sliding scale of charges [ad valorem] to some of their International services.  Also important to be aware of minimum/maximum fee levels when comparing the offers of different providers.

 

Advising Bank.

Within the confines of Letter of Credit operations, a  bank, located in the exporter’s Country that handles the Letter of Credit, advising it to the exporter.  Should future

amendments, etc. be needed, these will also usually come through the advising bank.  Note, however, that the advising bank is not necessarily responsible for payment

nor may you be limited to only dealing with this bank when you come to present documents and seek payment.

 

AirWay bill. 

The shipping document used when goods are transported by air.  Unlike a Bill of Lading, it is not a document of title.  AWB’s are issued in multiple copies; it is usually copy 3 that is the one passed to the buyer and which he or his agent needs to present to obtain the goods in the destination Country.

 

Aval, avalisation.

Applies to Bills of Exchange.  Unlike cheques, which are a form of Bill of Exchange, all parties to a Bill have to sign/endorse the Bill.  Where someone whose name does not appear on a bill signs it, they are said to have added their aval or avalised it.  The effect of doing this makes then liable should the bill be unpaid by the other parties.  Often requested of banks by holders of the bill.  A bank avalised bill is almost as good as cash and can be sold to obtain funds and help cashflow.  Often overlooked by sellers.

 

OK, that’s enough.  B’s next time……..

June 16, 2009

The Risk Ladder

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This article is taken from the latest newsletter from Ray Stannard at International Trade Financial Solutions http://www.inttradefinsolns.co.uk.

 

Tomorrow, Ray begins a glossary of terms which are apt to confound and confuse importers and exporters!

 

The Risk Ladder is one way to demonstrate some of the ways in which overseas trade can be financed.  It focuses on the relative advantages and disadvantages, mainly from a cashflow point of view and clearly shows that, usually, what’s best  for one party will be the least favoured for the other.  Such is the way with most trade.  There is always the over-riding aspect of how you get on with your counter party, plus the fact that, in many instances, one party will hold the upper hand in terms of negotiating.  For example, if you have to buy your stock from 1 supplier only, you have a much more limited bargaining hand.  Nevertheless, the Risk Ladder is still a useful tool insofar as it explains the effect of various types of payment/settlement.

From this, you can assess the impact on your cashflow.  This, in turn, helps with finance planning and, if necessary, gives you longer advance notice of any pinch points in your cashflow.

OK, so what is it?  It takes the most common forms of payment options and their appeal [or otherwise] to both an importer and exporter.  Looking at an importer first, your preference is to pay as late as possible – ideally well after you have received the goods and sold them.  However, for the exporter, he wants money up front.  The following payment methods are in

descending order of preference for an importer and ascending order of importance for an exporter.

 

  • Open Account.  Pay after receipt of goods
  • Acceptance Collections.  Payment made by the acceptance of a future dated bill of exchange with all accompanying transport and commercial documents being processed through a bank.  The longer the acceptance term, the more beneficial for the importer, as he has longer to pay.
  • Payment collections.  As above, except that there is no period of grace to pay. The buyer [importer] can only obtain the documents once he has paid for the underlying goods.   
  • Unconfirmed Letter of Credit.  More costly to set up; the importer usually has to put some collateral aside for his bank to agree to issue.
  • Confirmed Letter of Credit.  Even more expensive, but the seller [exporter] has the added benefit that a local bank [in his Country]  has added their name to the payment.

 

[Note that with Letters of Credit, it is the documents and not the goods that determine whether or not payment is forthcoming].

*      Advance Payment.  Exporter is paid before he parts with goods.

 

With all of these, ITFS can help with more explanation, indication of likely costs and all other aspects of their respective uses and benefits.

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