The hidden cost of employment and the growing obligations of an employer - September 2011
The legal responsibilities for the employment of site staff are one of the most commonly misunderstood areas of residential property management. As these staff are often employed directly by the property owner i.e. the freeholder, the Residents Management Company or the Right to Manage Company, forthcoming changes to legislation will require particularly careful attention
Recently publicised political sentiment may lead us to believe there could be a reduction in the amount of administrative ‘red tape’ surrounding employment obligations. The reverse sadly seems to be the case. It is a popular belief that the increasing levels of bureaucracy have been imposed upon us from Europe, the reality may have more to do with our increasingly complicated world and there is little likelihood that it will meaningfully reduce any time soon.
One clear and significant example of this is NEST; The National Employment Savings Trust. The proposed legislation will compel all employers to set up a pension fund and administer the enrolment of all their employees. The obligation to provide NEST pension will be phased in over time with the largest employers starting in 2013 through to the smallest in 2016. It means of course that RMC’s employing a single member of staff will need to prepare themselves for this requirement.
On the one hand employers may feel that their obligation to administer pension deductions and contribute directly to their employees’ pensions is a major step into a sea of red tape and financial obligation (more tax on employment!) On the other hand we should, collectively, be concerned about the growing lack of financial planning for retirement. The demise of defined benefit pension funds and the fact that personal pension plans are voluntary have not helped this situation. Our government (in common with so many) must do something to encourage saving for retirement as underwriting state pensions while trying to reduce budget deficits is an extremely difficult thing to do. Making the sort of “virtually compulsory” pension saving that NEST will ensure is made seems to be a logical solution.
The cost and complexity of administering employment is difficult enough for companies who have the ability to set up a Human Resources department. Directors of Resident Management Companies who understandably may not have had experience in this area are likely to need the support of their managing agents.
Employment law and the administration of employee management services are likely to become an additional area of complexity for managing agents. Error or misunderstanding in this area, which like Health & Safety management, can easily present themselves, can be extremely costly.
For more information please contact:
Robert Plumb,CEO
HML Holdings plc
020 8439 8529
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