Get HR working for your regulatory obligations – Revisited

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In her previous article, ‘Get HR working for your regulatory obligations’ Elizabeth Mills posed important questions to provoke thought about some of the issues we may find ourselves dealing with over the forthcoming months in a ‘post FSA’ word. Elizabeth is back again to consider the answers to those questions.

Most would agree we have a lot to contend with making sure we understand fully how we need to change our policies, procedures and working styles to ensure FSA compliance. But with focus and hard work it is achievable.

Success though depends on commitment and hard work from all employees’ not just owners and managers. All have a big part to play in making sure a firm is compliant. After all, you will be in trouble if your staff do not know how to conduct a compliant sale. Of course, with the right training, we can all learn how to act and conduct work activities in accordance with regulation. What is not so manageable is if an employee does not want to change their working style to comply. What do you do then?

Competency

What if one of your employees cannot demonstrate that they meet the Training and Competence (T&C) requirements? For example, cannot pass the required knowledge ‘tests’ or cannot prove themselves to be competent in a role play or observation scenario? What do you do?

You need to take some action here. Until they can prove their competence within these areas, they cannot continue to provide advice.

First, reduce activities and ensure that they are only dealing with matters they can prove they are competent at. Alternatively, provide full supervision from their supervisor/manger (who has demonstrated competence) for these activities. This would involve the supervisor/manager monitoring their performance until the employee either becomes competent, or stops doing the job.

Secondly, work with the individual to review the areas they are struggling with. Why are they unable to demonstrate their competence? Don’t forget that whilst ‘tests’ are a good way of measuring competency they are not the only way. Some individuals just do not suit exam type scenarios and may be perfectly competent to conduct their work but just cannot prove it in a test. Think about other ways to assess them. Also consider what training you can offer to help them bridge their knowledge or skill gap. Record it in their training plan and arrange the training to be carried out.

If you find that despite all of this, and after consulting with the individual, you both agree that full competence has not been reached you could look at changing their role. What are they good at and can they do more of it? What other areas of the business need additional attention and can they be more focused in this direction? In other words, can you change their role to accommodate the activities in which they can demonstrate competence?

This type of action will help you retain good staff within the company whilst ensuring your firm remains compliant. It also reduces the chances of a later claim from an employee you have let go.

If this does not resolve the problem you need to invoke your company’s disciplinary policy. If you do not currently have one, now is the time to get one. This is an important document to have as it will state exactly how your firm will deal with all issues where disciplinary action is required. An important point to note is that, from 1st October this year, it will become statutory legislation to follow a 4 step disciplinary procedure prior to the dismissal of an employee. Failure to do this will automatically result in unfair dismissal so it’s important to spend time on this now. (ACAS are a good contact point for this information.)

As long as the minimum requirements are included you can have any policy suitable for your business. However, a word of warning, if your disciplinary policy covers more than the minimum requirements, you must follow all your procedures. If you do not, the dismissal may well be judged unfair. So follow the KISS principle. Your policy should be straightforward and communicate very clearly what the company will do, step by step, when it deals with disciplinary matters. These procedures should be stated as being ‘non-contractual’.

Disciplinary action of this kind is performance related and so would generally be classed as ‘ordinary misconduct’. At this stage you would hold a disciplinary hearing with the employee to explain the situation from the company’s view point. That is;,the individual has not been able to prove themselves as being competent for the role and so cannot continue in the same capacity. Ask the employee for their comments as to how this can be resolved. Consider all their suggestions and document your discussions.

After the meeting, and only after the meeting, both parties should be clear as to the situation. You can then consider what has been discussed and make a decision as to what action to take. If you feel a warning is required then do this and confirm it in writing to the employee. Be clear to explain the reasons for the warning and state what level of performance is required by a specific date. This part is critical as the employee must be very clear as to the level of performance/competence required. Offer again to provide training in line with what they ask for. Make it clear that if they meet these expectations, disciplinary action will not continue. If they do not, then further disciplinary action will be taken.

If there is still no improvement, you can proceed to a final warning which will follow the same procedure as the first. If by the end of the timescale agreed in the final warning no improvement has been made, you may be able to dismiss the employee on the grounds of underperformance. Don’t forget to provide notice to them in line with their contract of employment, or pay them in lieu if your contract makes provisions for this.

Breach of Procedure

You find a member of staff has breached a company procedure, which in turn means you are in breach of FSA regulation. You are furious and want to dismiss them immediately….but can you?

Don’t be too hasty here. It’s not uncommon for cases to be brought against employers where they have dismissed an employee immediately, without taking the time to fully examine the situation. Having looked into it, they then find that all was not as it seemed. Unfortunately for them, and their cheque book, this came too late – usually at the Employment Tribunal itself.

So, in a situation like this refer to your disciplinary policy and follow it. It should state that you will conduct an investigation to determine exactly what happened. How you deal with the matter will depend on the outcome of this investigation. Conduct a meeting with the individual (and any other employees as appropriate) to get the full picture. Keep a very open mind, do not be judgemental, do not assume you know what the outcome will be and don’t just go through the motions. This is an important part of the process and if you take shortcuts and get it wrong it may well be your bank account that suffers.

After the investigation, go through the findings with the employee. What happens after this really depends on what the breach was, the detrimental effect it had on the company/employees, and the result of the investigation.

If you have sufficient evidence to believe the breach was malicious or intentional, you may well have a case for gross misconduct. In this case you can dismiss summarily without payment in lieu of notice. (A note here, if at the outset you have reason to believe there may have been malicious intentions, you can suspend the employee whilst investigations are conducted. However, this must be on full pay, and the investigations should be started immediately).

If the breach was unintentional, this may be ordinary misconduct and it is likely your disciplinary hearing will result in a first/final warning. Finally, whatever action you take, whether it is informal or formal, please leave a clear paper trail. Should the matter end up before the employment tribunal your lawyers will be very grateful to you.

Refusing Training

A new member of staff is refusing to attend the training workshops they are required to as part of their T&C training plan. They say it is not in their contract. What can you do?

The quick and easy response to this one is to include a clause in your contract of employment, making it a condition of employment for them to attend all relevant training. For your existing employees you may wish to re-issue your contracts; a good idea anyway if they are over 2 years old. If not, you can issue a letter including the need for staff to attend training and ensure it includes wording so the employee is clear it forms part of their terms and conditions.

Amendments to terms and conditions of employment need however, to be done by agreement. If the employee does not accept the new term, an employer can serve notice on the existing contract, and replace it with the new one. The employee could resign and claim constructive dismissal and then you would need to prove how the change was critical to the business.
As you will see, contracts of employment and a good straightforward and effective disciplinary policy are vital to being able to take positive action and protect the firm. Yes, it seems like a long process, but it is such an important one. Its aim is to ensure your employees are treated fairly and have a chance to have their say when something that concerns them is not going well. Take the process seriously and not only will your firm be better protected, you may well learn more about your staff, their abilities, their preferences and, if nothing else, you can use the information to prevent similar occurrences in the future.

Key point about taking disciplinary action:
• Make sure you have a policy and follow it. Having a policy, but failing to follow ALL the procedures you say you will is as bad as not having one at all.
• All warnings must expire at some point. For verbal warnings 6 months is usual and for written, 6 to 12 months. After they have expired the disciplinary process starts from the beginning.
• Verbal warnings should always be confirmed in writing.
• Disciplinary meetings – document all that is said and agreed. Ensure you have someone in the company to take the notes and act as a witness to what was discussed. The employee can, if they choose, have a friend or colleague present and they should be advised on this right.
• Statutory requirements apply from 1 October 2004 – ACAS will be a good source of information.

And finally? The answers to my questions apply to most actions you may wish to take concerning an employee. And do not forget this is a minefield; a pound spent on good advice will save many in the future. It’s always advisable to contact your employment law legal adviser before proceeding with any type of action.

This article was written by Elizabeth Mills, Director, Broker Network
An edited version of this article was published in Insurance Times