At a time when firms are taking on more workers, employers need to be careful of the pitfalls and work to build and maintain a workforce

Charles Urqhart

Employers in the construction industry should treat employee relationships as they would a building project: the contract must be designed to specification, the foundations laid, walls built and each relationship maintained to avoid damage and the need for restoration.

In order to lay the right foundations for each employment relationship, the challenge is to consistently follow a fair and transparent recruitment process. For example, in such a male-dominated industry, employers must take care to avoid allegations of sex discrimination.

Liability can be created anywhere in the process: from the language and imagery of job advertisements through to an inadvertently leading question at interview.

Even those individuals who are knocked back at interview can still bring discrimination claims if they believe they were treated less favourably because of their sex (or other protected characteristics such as age, disability, race, religion or sexual orientation) during the recruitment process.

Just because a contract labels an individual as an independent contractor does not necessarily make it so for employment and tax purposes

Contracts of employment and engagement are the walls underpinning each individual worker relationship. However, just because a contract labels an individual as an independent contractor does not necessarily make it so for employment and tax purposes. In the current market, there are an unusually high number of self-employed individuals working in the construction industry - bringing the advantage of reduced National Insurance Contributions (NIC) for employers and NIC and income tax savings for employees.

However, for a number of years, HMRC has been concerned about the number of cases of “false self-employment” within the industry, particularly through the use of onshore employment intermediaries. New laws came into effect in April 2014 to seek to tackle this issue by making the intermediary responsible for accounting for tax and NICs. Further reporting requirements are slated to be introduced later this year which will make it more difficult still to cheat the system.

The challenge for employers will therefore be satisfying HMRC as to the bona fides of the status of their independent contractors or, in the alternative, offering sufficient remuneration so as to encourage would-be contractors to sign up as fully fledged employees.

As employees start arriving at the front door, the next step is to ensure that each individual has the legal right to enter. With workers emanating from across the globe, any offer of employment should be made conditional upon an individual having the right to live and work in the UK.

Illegally employing a foreign national could result in civil and criminal penalties and it is therefore vital that the immigration status of each individual is checked throughout the relationship. The challenge for employers, particularly those with large and fluid workforces, is to create a system that ensures that no one slips through the net.

Individuals do need to escape the building for some fresh air now and again – indeed all workers in the UK (which may include consultants, contract staff and standard employees) have the right to take a minimum of 20 days holiday on top of eight bank holidays each year.

However, following recent European and UK judicial decisions, the pay that workers receive while on holiday must now take account of commission and/or overtime in addition to basic salary. Given the frequency with which overtime is required on construction projects, these decisions could have significant consequences for the industry in terms of worker wages, recruitment, overall project costing and even decisions as to whether to invest in the UK.

Finally, if trust and confidence between employer and employee is not preserved, the employment relationship can fall into disrepair. Workers who raise concerns in relation to health and safety issues should not therefore be ignored, or subsequently treated in any way which may amount to a detriment, as such concerns could amount to protected disclosures for the purpose of the whistleblowing legislation. If a worker is subsequently dismissed or subjected to detriment as a result of blowing the whistle, an employer could face a claim for uncapped compensation in the tribunal.

Employers should remember that employee relationships need constant care and maintenance and if employers adopt this mindset, employment related issues should be minimised. The challenge, of course, is to ensure that this policy is adopted across all work sites and at all levels of seniority.

Charles Urquhart is a partner in Clyde & Co