6.1 Working with different employment statuses

Depending on the size of your business and the industry that you
work in, you are likely to deal with many different individuals who provide work or services
for particular activities and there are different ways to categorise the working status of
these individuals.

The modern face of business today relies on individuals of different types and a good Operations
Manager will understand the key advantages of working with different worker statuses, in order to
ensure compliance with employment law and also achieve the right mix of skills in their workforce.

Employed workers

The most common arrangement of all worker types are those employed directly on employment
contracts with the organisation.

These contracts can either be permanent, where the individual is employed on an ongoing basis, or
fixed term, where the contract only lasts for a set duration, usually for seasonal work.

After an individual has worked for you for six months as an employee, you are obliged to provide
them with a written contract of employment, although in practice, you are likely to do this much
sooner. The contract of employment sets out the terms and conditions that apply to both the
employer and the employee, including rights and obligations in relation to areas such as duties, salary, benefits, place and hours of work, employer's reasonable expectations, etc. The contract
should also be signed by both the employee and the employer.

You will find that many of the contractual terms detailed in the contract are protected by
employment legislation.

A good example being:

The minimum wage legislation, which states that an employer must pay an employee a minimum
hourly amount for the work that they do. We will cover in more detail employers' and employees' legal rights across a variety of areas, later in
this module.

There are a number of reasons why companies employ individuals on a contractual basis. Employees
usually constitute the core workforce of an organisation, to which employers can supplement, where
required, with other employment types.

The main benefit of working with employed individuals is that they offer a constant and reliable
source of activity, allowing the employer to plan work in advance and have confidence in its ability to
meet customer expectations. There is also an argument to say that employees are also potentially
more likely to be knowledgeable about and engaged with the business than more peripheral
workers.

Of course, the main drawback to using employed staff is the lack of flexibility that it affords the
business, as there is no option to choose how much and when to use and pay employees and, therefore, the company may pay more for their services, even in quieter periods.

Contractors and sub-contractors

Contractors have a different working relationship with a company than employees, in a number of
ways. Instead of having an employment contract, a contractor will have a contract for services with
an organisation. They may be self-employed, or they may be employed by an agency or another business.

A sub-contractor is an individual who is hired directly by the contractor to carry out a piece of
(usually specialised) work on behalf of them. The key thing to note here is that the subcontractor
undertakes the contract and the work from the contractor themselves, not from the organisation. You may find that the production and manufacturing side of your business works with contractors
and sub-contractors regularly, making use of their specialist skill sets and the opportunity to use
them on an ad-hoc basis, to flex up or down supply where necessary. Similarly to employees, working with contractors and subcontractors can have a number of pros and cons, as detailed below.

Benefits of using contractors and subcontractors

One of the key benefits of working with contractors or subcontractors is the flexibility that it can
offer a business, due to the fact that they can be asked to work only when the requirement exists for
their particular skills.

For example

A small construction company may choose not to employ an electrician and instead, utilise the
services of an electrical contractor for work that requires that skill.

You can hire a contractor for a set period of time to complete an activity or series of tasks, or even
just to provide temporary and emergency cover for employees who are absent from work. This
flexibility is often very attractive to employers.

Following on from this, you may find that cost savings exist by not needing to pay a set monthly
wage as you would to an employee, plus the associated benefits such as annual leave or pension
contributions. You also need not pay employer's National Insurance or PAYE contributions for the
contractor, as they are responsible for dealing with their own arrangements.

Bear in mind, however, that although there are some opportunities for cost savings in this regard, the hourly or daily rate charged by the contractor is likely to be higher than the comparable rate for
an employed person and this may offset the other cost savings.

It is generally the case that contractors and subcontractors are professionals and specialists in their
area, with demonstrable experience in one particular area for different types of client. This could
mean that they have a particularly high standard of workmanship and knowledge in their particular
area, potentially providing preferable insights and skills.

Drawbacks of using contractors and subcontractors

As contractors usually charge a higher hourly or daily rate than you pay employed staff, you should
be conscious that they may cost you more, even if you use them less than employees.

As discussed above, you should weigh this up with other factors that contribute towards the total
cost of an employee, such as tax and benefits.

Choosing contractors with whom you have a good working partnership and who you trust is
important, so that you can have full confidence in their standard of work and reliability and to avoid
being let down.

If your chosen contractor subsequently utilises the services of their own subcontractor to carry out a
piece of work on their behalf, you have little control over them or their work, which can be
potentially problematic if there are quality or workmanship issues for example.

Relying on contractors to do work for you over employed staff can sometimes result in your
employees simply providing more menial work, which may give them less job satisfaction. It can lead
to less of an investment on behalf of the company in areas such as learning and development, which
can sometimes lead to a short-termist culture and a lack of engagement within teams with the aims, objectives and cultures of the business.

Agency staff and zero hours contracts

Sometimes, your business may have a requirement for staff to undertake work of a temporary or ad- hoc nature, but, rather than finding a contractor to do this for you, you may prefer to use the
services of a temporary employment agency to supply you with staff on a temporary basis. This can
be a useful approach, as you are able to retain the flexibility of using staff as and when you need
them, but the agency will cover all of the contractual arrangements on your behalf.

However, you should be aware that the fact that an agency employs the individual working for you
does not mean that you do not have any responsibilities to that individual who is providing a service
to your business.

The Agency Worker Regulations state that, after a 12 week qualifying period, an employer must
provide the same treatment to their agency workers as they do their permanent staff, in relation to
their basic working conditions, such as pay, annual leave, breaks, etc.

In contrast, a zero hours contract is a different type of contractual arrangement between an
employer and a worker, whereby the contract states that there is no obligation on the part of the
employer to offer a minimum number of working hours. By the same token, there is no obligation on
the part of the worker to accept any working hours that are offered to them.

If used correctly and responsibly, zero hours contracts can be useful arrangements, in order to
provide extra resources for peak periods or unplanned staff shortages.

Below are some areas that you should consider, if you plan to use zero hours workers:

* Individuals that you offer a zero hours contract to are not employees, they are defined by law
as workers. They retain some of the same rights as employees, such as the     right to be paid the
minimum wage, receive holiday pay and the right to a safe and discrimination free workplace
for example, although some other rights differ

* You are not allowed by law to prohibit an individual working on a zero hours contract with you
from also working elsewhere. This is called a “non-exclusivity” clause

* Some employers offer enhanced rates of pay for individuals on zero hours contracts, to
compensate for the fact that they often do not receive the same work related     benefits as
employees do, or for the fact that the regularity and volume of work is often uncertain

Managing employed staff

We have already stated that, in most cases, your employed staff will constitute the largest part of
your core workforce. As a manger, you will have certain responsibilities and obligations towards the
staff that you employ, both as a line manager and as a senior figure within the organisation.

Whilst you are likely to have either a Human Resources team or individual to turn to for support in
more complex cases, you will need to have at least a basic understanding of some of the principles of
employment law in order for you to support the individuals who work for you to best effect.

Activity 1

Estimated time: 10 minutes

Take your business, or one with which you are familiar and think of an individual for at least two of
the worker groups that we have discussed in this module - i.e. employee, contractor, agency worker, zero hour worker. Consider their role and duties - is their contractual type the most suitable for them?
Why, or why not - and would you make any changes or improvements?

6.2 Employment contracts

An employee's contract should cover the following information in writing, as a minimum:

* Job title and description of duties. Some organisations prefer to provide a separate job
description alongside the contract, in order to provide more information about the tasks and
activities involved in the role

* Start date of employment  If the contract is for an existing employee who is changing role for
example, the start date of the new terms and conditions should also be included

* Hours of work. This is usually the weekly hours that both parties have committed to, although
overtime may be used to increase these hours on an ad-hoc basis

*  Place of work.

* Hourly or annual salary.The gross salary should be provided, prior to any deductions. You
should also include the method and the frequency with which salary payments are made

* Holiday leave. There is a statutory minimum level of holiday leave that an employer must
provide to an employee, although some employers choose to add to this as a     benefit for staff

* This is the amount of time that both parties must give if they want to terminate the contract of
employment.

6.3 Adhering to statutory entitlements for employees

The law governs many aspects of the relationship between an
employee and an employer and there are a number of laws and regulations that apply to
the employment of individuals.

One of the most important areas is that of statutory entitlements - essentially, the provisions that
you must make for your employees by law. Some of the more common entitlements are listed below, however please be aware that this list is not exhaustive and also, as the law frequently changes in
relation to these areas, particularly around qualifying criteria and monetary amounts, you should
seek specialist HR or legal advice where appropriate.

Statutory Sick Pay (SSP)

You are obliged to pay employees SSP for a set period of time if they are absent from work due to ill
health, providing that they have a certain amount of service and earn a certain amount.

Statutory Maternity Pay, Statutory Adoption Pay and Statutory Paternity Pay

This is commonly abbreviated to SMP, SAP and SPP. All employees are entitled to a set period of
time off work if they or their partner are having or adopting a child, regardless of their length of
service. From a pay perspective, the employer must pay them SMP, SAP or SPP, depending upon
their length of service and earnings.

Pensions regulations

New regulations(The Pensions Act 2008) requires that an employer provides a basic contributory
pension scheme to employees and auto-enrolls them into the scheme, allowing them to subsequently
opt-out if they choose.

Annual leave entitlement

All employees are entitled to a set number of days of annual leave per year, regardless of the length
of service.

You should pro-rata this entitlement in the first and final years of employment and also for part time
staff, to ensure that they receive a comparable benefit.

Some individuals who are classified as workers rather than employees (including agency staff and
individuals who work for you under a zero hours contract) are also entitled to the statutory annual
leave entitlement and you can either allow them to take the time off or pay them out in lieu of it
instead.

Grievance and Disciplinary procedures

It is a requirement that an employer has a documented Grievance and Disciplinary procedure, which
is readily available for staff to access. This policy should cover the statutory and legal basics of these
procedures from the perspectives of both parties.

Working Time Directive or Regulations (WDT)

These regulations state the maximum number of hours per week that an employer can ask a worker
to work, how often break periods should be offered and the rest periods that must be provided.

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Fact
In the 12 months to February 2017, the number of self- employed individuals increased by 114,000, to 4.78 million (15.0% of all people in work).

Source: UK Labour Market - February 2017. The Office for National Statistics.

6.4 More on working with contractors and subcontractors

Here are some more factors to help you when working with
contractors in your business.

Hiring

You can source contractors from a variety of places, such as advertisements and word of mouth
referrals and recommendations from others in the same industry. Usually, businesses tend to work
with the same contractors for prolonged periods of time, or over and over again, once they have
established trust in them.

Checks

These are a vital process if you are using a new contractor, or if you are a contractor using the
services of a subcontractor for the first time. Such checks will give you confidence that they have the
necessary skills and qualifications to perform the role that you are hiring them for.

Another important check is verifying the contractor's qualifications with the appropriate trade and
professional bodies, including their ongoing membership where required. You may also seek
references from other clients that have worked with them in the past, in order to assess their
reliability, standard of work, attitude to work, etc.

Written agreements

A formal, written agreement offers adequate protection for both parties in the contract. This written
agreement is usually known as a contract for services.

A written agreement should contain the following information:

* Information pertaining to the specific work to be carried out by the contractor.Generally, this
includes measurable milestones for the duration of the agreement. A more  specific scope
makes it easier measure quality and success

* Responsibilities that fall to the client and responsibilities that fall to the contractor.For
example, the contractor may be required to provide all of his or her own equipment  and
materials, but the client may be responsible for providing working areas and materials
storage.Every contract will vary in this regard, depending on the nature of the  piece of work
at hand

* Fees payable to the contractor for completed work

* Important legal clauses, such as confidentiality, intellectual property, etc (to be covered in
more detail below)

Fact

There are approximately 903,000 people in the UK who
state that they are on a zero hours contract.

Source: The Of ice for National Statistics (ONS).

6.5 Legal and contractual clauses

A contract for services contains a number of contractual clauses
which you should be familiar with.

Employer's Liability

Any company which employs individuals is required to have appropriate employer's liability
insurance, a mandatory policy in case of any injury sustained by the employee during the course of
their work.

Public Liability

If that business also uses the services of contractors, they will also need appropriate public liability
insurance. The purpose of this insurance is to provide cover for members of the public or clients who
may sustain injury or damage to property because of your business.

Non-disclosure agreements and confidentiality clauses

This clause makes reference to the fact that there will likely be the exchange of confidential
information between the employer and employee/contractor, but that this should not be shared with
any third parties or disclosed anywhere outside of the business relationship.

Intellectual property rights

This clause prevents individuals from copying or stealing any of the personalised parts of your
business, such as its brands, designs, etc. Commonly known types of intellectual property include
trademarks.

If your business designs or makes products which are innovative or is in competition with other
businesses, these clauses will protect people from disclosing key facts about your business that give
it a competitive advantage.

6.6 Managing day to day problems in the workplace

In your role, you are likely to be responsible for managing a team of
individuals - be it employed staff, contractors and/or individuals on other contracts such as
agency or zero hours agreements.

Managing a team can be a skill in itself and a practice that needs experience, expertise and ongoing
development. You may need to be prepared to put some work into becoming a good and effective
manager, as it requires a different skill set to that of your role as an Operations Manager.

To begin with, we have listed some of the common issues that you are likely to come across in your
team.

Communication problems

It is commonly said that communication is one of the most critical components of an effective team, but it is not always easy to achieve it. Many things can lead to poor communication, such as a team
who are new to working together, lack of effective leadership, poor listening skills, or a failure to
understand the job role and/or priorities of others.

It is not always easy to fix problems with communication in a team and it usually takes time and
effort. One of the most important things is to encourage a culture of open communication across
your team or workplace, with regular meetings or opportunities for individuals to ask questions or
put their view across.

If morale in the team is poor, you could consider ways to allow the team to get to know each other
better, both professionally and personally.

Consider your own leadership style in the mix too - do you have a true “open door” policy where staff
can approach you about any concern, problem, or opportunity, or could you inadvertently be
creating a culture of poor communication?

Performance issues

Often, your own observations, feedback from others, or a poor performance in an annual appraisal
will highlight issues or concerns with the performance of a member of your team.

Although this can be a difficult topic to broach with an individual, the key thing to remember is that
the earlier that you discuss the problem, ideally in an informal manner to begin with, the more likely
it is to end up in successful resolution.

The first step is to discuss the matter informally with the individual in question, in order to
understand their take on it. Setting the team member some stretching but realistic targets for
improvement can help them to get back on track and will also require you to regularly discuss and
monitor their performance against them. If no improvement is reached, you may need to consider
taking action in a formal performance management capacity.

Resolving difficulties in your team

As a manager, you will be called upon to take the lead in supporting your team to overcoming any
problems that may arise and helping them to work together to find solutions.Conflict is a common
situation amongst teams and understanding solid methods for resolving conflict will stand you in
good stead, should these issues arise.

Actions:

* The action that must be taken before you can even attempt any solution is to properly
understand all of the facts relating to the dispute. As part of this, you will probably need to
speak to all parties separately, speak to other witnesses or individuals in the organisation and
review any relevant documentation etc, in order to enable you to be clear on the background
and situation at hand

* Next, it is important to find out and effectively manage the different parties' expectations. This
is crucial, as without knowing what is driving individuals or what their expected or desired
outcome is, you will not be able to resolve the matter in the best way. Remember that the key
to most resolutions is compromise.

* Where possible, you should aim to involve all parties in the process of resolution, keeping the
lines of communication open and allowing individuals to input constructively. Discussions
should be calm and positive, with a no blame agreement

Activity 2

Estimated time: 10 minutes

Think about a recent issue within your team, be it a performance concern or a dispute between team
members. Reflect on your part in the handling of the issue and brainstorm any improvements that you might
make in future.

Assignment

Working with Employees, Contractors and Other Workers
Time: 30+ minutes
Hopefully, you took in as much of the information in this module as possible.

Module Summary

The purpose of this module was to explore your role as a people manager further, as this is likely to
be an important part of your overall Operations Manager role.

Our first objective was to provide an overview of some of the different types of individuals that may
work for you - be them employed staff, contractors, sub-contractors, agency workers, or those on
zero hours agreements. The differing nature of these worker relationships give your business
flexibility, to ensure that you have the right mix of skills and experience in your teams.

We went on to look at employment contracts in more detail, specifically some of the key legal
clauses and also the statutory entitlements that your employees may be entitled to, such as sick pay
or maternity leave.

Following this, we covered the role of contractors and subcontractors in more detail, including the
advantages and disadvantages of these types of agreement and the factors to consider in relation to
hiring, pre-work checks, etc.

Finally, we took a look at your role as a manager and some common issues that may arise in your
team, such as communication and performance problems, including some good tips on how to lead
and support your team to overcome problems and disputes.