Farmers and agricultural businesses are often more used to dealing with and adapting to vast swathes of legislation than many regular commercial businesses. Employment legislation and its impact on rural and agricultural businesses is now more relevant than ever. Some of the differences that separated rural workers from other workers no longer exist. Due to competing legislations applicable to rural and agricultural businesses, employment legislation is probably not given as much attention as it should. I have selected one subject that can reduce significantly three areas of risk for your business.
A good contract can provide protection in many areas:
Pay & benefits: The abolition of the Agricultural Wages Board in October 2013 has given employers of agricultural workers the freedom and opportunity to set their own wage reviews as well as negotiating other terms and conditions. Despite this, many workers remain on the old Agricultural Wages Order rates and without a contract. If this sounds familiar, you will need to review rates of pay so as not to breach the National Minimum Wage. Now is the time to introduce contracts of employment and standardise the different terms.
Many employers have a mixture of employees on vastly differing terms. Time to negotiate! All negotiation needs careful planning and handling but it can be done and may result in significant benefits in the longer term.
Holiday pay: Another reason to implement or review your contracts arises from a recent landmark decision that says ‘non-guaranteed overtime’ should be included when you calculate holiday pay. You can determine what is or is not non-guaranteed overtime by your contract of employment.
The decision limits the application of the calculation to the 20 day annual leave entitlement only (as provided by European law) not the additional 8 days entitlement (applied by UK law). Although back pay for holiday can be claimed, the decision has limited this in that a gap of more than three months in taking holiday will break the chain of deductions. In addition, there’s likely to be a cap of two years on claims for back pay.
There remains uncertainty as to whether purely voluntary but regularly worked overtime should be included in the calculation of holiday pay. Uncertainty remains as to what length of time should be used to calculate average pay. Historically a 12 week period has been used but this will not fit easily with the seasonal nature of many areas of rural work and could result in artificially-inflated holiday pay rates if leave is taken after harvest for example.
Tied cottages: A properly-drafted service occupancy licence and the corresponding provisions within the contract of employment can be worth their weight in gold when it comes to an employment relationship terminating. This is still a common and very costly problem. The consequences of getting this wrong can cost thousands, and in some cases tens of thousands, of pounds.
Employers of rural workers need to ensure that they have properly drafted contracts in place that have been created to cover their specific issues; one size does not fit all!
Sally Togher is a Senior Associate in Raworths’ Employment Unit and is happy to offer a free initial review of your current contract or provide some guidance on what you might need by way of a contract if your business does not have any. Raworths has a Rural and Agricultural team that spans different disciplines within the firm to properly cater for all our agricultural clients’ needs.
To contact Raworths telephone 01423 566666 or visit our offices at Eton House, 89 Station Parade, Harrogate, HG1 1HF. Alternatively, you can email Sally at email@example.com