Unravelling Red Tapebusinessdesk.s3.amazonaws.com/_files/documents/oct… · · 2013-10-11... with brand Birmingham growing in strength and Weightmans LLp is committed to making

UnravellingRed Tape

in association with

Managing supply chain contracts. 6

Staying on top on international law. 9

Fee for intervention one year on. 13

Foreign workers. 16

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Helping Midlands manufacturers to navigate the regulatory landscape

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West Midlands SupplementOctober 2013

Easing the burden on business

2ediTOR FOReWORd

contentssponsor foreword: Jane cox, partner at Weightmans. 3 ➔

expect the unexpected. Manufacturing supply chains have become increasingly globalised and while this brings a range of benefits,

there are risks attached when things go wrong. 4 ➔

case study: Black country metals. Faith in the British standard. 5 ➔

chain reaction. although it can be easy to get over excited at the prospect of a game changing contract win, always make sure you fully

understand what you are agreeing to before signing on the dotted line. 6 ➔

case study: simoco group. Staying on top of international law. 9 ➔

The red tape challenge. This government has recognised that red tape is suffocating business growth but has it taken the right

steps to change things and do they go far enough? 10 ➔

Fee for intervention. it has been just over a year since the Health and Safety executive introduced its Fee For intervention scheme. 13 ➔

are you on top of changes to employment law? Midlands manufacturers see the ever-changing employment legislation

landscape as one that’s increasingly hard to navigate. 14 ➔

round table discussion. The law of unintended consequence. 18 ➔

THe law of unintended consequence and how it impacts

on the manufacturing sector is a theme that will be highlighted throughout this latest supplement.

The manufacturing sector, for so long the main victim of recession, is beginning to recover and

the government is keen to see that recovery strengthen.

However, while it talks about improving access to finance and closing the skills gap there is an important factor that keeps slipping through the cracks – regulation.

Many SMes are busy enough just trying to stay in business without having to worry about the burden of the latest red tape.

The various chambers of commerce continually campaign to have this burden eased so that businesses can focus on the matter in hand – generating wealth for themselves and the wider economy.

Steve Brittan, head of a manufacturing SMe and current president of the Greater Birmingham Chamber of Commerce Group, is trying to champion this cause.

He says SMes simply do not have the time available to deal with regulation in all its forms and too often the burden is made worse because there are inconsistencies in the way the legislation is applied and interpreted.

Brittan, who expands on the matter in our round table feature later in the supplement, sums up the situation by saying regulation is all very well if it protects a company but all too often it can have the effect of bogging that company down in a mire of unwanted paperwork – the law of unintended consequence.

Law firm Weightmans, our partner in this supplement, has highlighted the issue and is working with SMes to try and alleviate the burden.

i hope you find the supplement useful.

andy coyneeditor, TheBusinessDesk.com

Suite 223, Cornwall Buildings, 45 Newhall Street, Birmingham B3 3QR.

Tel: 0121 250 5730

Publication editor: Joanne Birtwistle [email protected]

Editor: andy Coyne [email protected]

UnravellingRed Tape



Supporting manufacturing success

3SpONSOR FOReWORd

WHiLST current economic conditions remain

challenging, the headlines about manufacturing business in the Midlands region make for positive reading.

There is talk of investment, construction, innovation and employment, demonstrating an increase in business confidence and a suggestion that the economy might finally be turning a corner. There is a real sense of optimism about manufacturing, with brand Birmingham growing in strength and Weightmans LLp is committed to making its contribution to the success of the sector in this region.

Like many businesses, Weightmans has transformed in the last five years. The firm has grown, despite the recession, thanks to strong strategy and tight financial management. We have grown turnover and staff numbers but also, in response to demands from our clients, we have broadened the range of services and products that we provide and improved the way we deliver our services.

Just like manufacturers, law firms need to identify ways in which they can differentiate themselves in a very competitive market and increasingly quality and price won’t win new contracts. Growth and innovation in the way we work has brought the firm new opportunities and new clients, as well as recognition for the quality of the services that we provide. above all, an emphasis on investment in our talent has culminated in the recently released legal directory, Legal 500, describing our Birmingham office as a ‘dynamic practice’.

We have recognised that our clients want their legal advisers not just to have a good knowledge of the law but also to understand the sector in which they operate and the challenges that they face in making their businesses successful. This has led to us identifying and investing in key sectors, including manufacturing.

We have a long history of working with manufacturers, advising on matters such as supply chain arrangements, joint ventures, health and safety, contractual disputes, insurance and all aspects of the employment relationship.

The workforce is very much at the heart of any manufacturing business with their performance on a day-to-day basis being vital to overall prosperity and success. it can be a real challenge for employers in a tough market to improve profitability but at the same time keep their employees motivated and adequately rewarded. as the economy improves, both retaining key people and securing new talent becomes more challenging, especially

for smaller employers facing competition from larger organisations.

earlier this year we saw the introduction of fees for employment tribunal claims, which will hopefully lead to a fall in the number of vexatious and frivolous cases brought by employees. Listening to our manufacturing clients, however, we understand that the sheer scale of employment legislation continues to present significant challenges in terms of understanding and implementation. in response, we have developed our HR Rely product.

HR Rely provides our clients with HR and employment law support and advice for an annual fixed fee. in addition, we provide free access to a members’ website and regular updates and briefings. This more collaborative approach to legal service delivery has improved both the quality of our service and our understanding of the manufacturing sector.

Jane coxpartner, Weightmans


‘The sheer scale of employment legislation continues to present significant challenges in terms of understanding and implementation.’

click here for more information about Weightmans services, or go to:

http://bit.ly/1bbkh0j




fail to comply with safety measures, 13.5% of european supply chains fail to comply with safety measures - supply chain risk is a global issue which isn’t reserved for non-european countries, as many may assume.

Meanwhile, global economic events have had a tangible impact on revenues, orders and companies’ ability to meet customer requirements.

gLOBaL supply chains have been hit by a host of

unforeseen events over the past few years, which has led more companies to think about how they structure and work with their supply chains.

in 2011, the London riots caused huge disruption to the supply chain of Sony when a main distribution centre was set alight while last year saw adverse weather, including Hurricane Sandy and volcano eruptions, cause disorder.

Supply chain failures due to fire have also been in the news recently, from clothing factories in Bangladesh to the Hynix chip factory in Korea.

However, a new report shows that european supply chains across a range of sectors have the highest level of factory fire risk.

The report, by the Supplier ethical data exchange (SedeX,) found that while only 6.6% of african supply chains

Material security is also rising up the agenda - in terms of scarcity, price hikes, energy and transportation costs- some companies are reporting that goods are taking longer to be delivered because trade ships are running slower in order to save on fuel costs, for example.

Companies’ visibility of supply chain risk has increased as a result of all these events and businesses are starting to think that bringing parts in from one overseas supplier might not always be the best approach, particularly when a component is critical to a product in the supply chain.

4➔

Manufacturing supply chains have become increasingly globalised and while this brings a range of benefits, there are risks attached when things go wrong.

‘supply chain risk is a global issue which isn’t reserved for non-european

countries, as many assume.’

Expect the unexpected

➔


The location of your manufacturing supply chain plants of course depends on where the end user is - manufacturers want to be closer to where they sell. China is not just a producer but a potentially huge market where people are getting richer.

This has led to an increased interest in co-location, and particularly in having bases a little closer to the asian markets, using Singapore as a gateway country, for example.

a multi-location strategy, linked to the trade-off between margin and volume, is also growing in popularity. So manufacturers may have a plant in China, eastern europe and the UK,

for example, with each undertaking different work depending on its value.

This could give a real window of opportunity to build manufacturing capacity in the UK and reverse some of the hollowing out of supply chains seen in the past few decades.

it would provide an important win – win for companies looking to increase control and visibility over key elements of the production process; and the economy, which needs this high value activity to generate sustainable growth.

Of course, it is not practical to expect all of the manufacturing activity that went overseas to come back to the UK. Some

of it is there to be closer to the customer, while the costs of production also play a part.

That balance between risk and cost in relation to the repatriation or nearshoring of overseas manufacturing plants must be carefully considered.

peTeR Mathews is chairman and managing director of Lye-based Black Country Metals, the company he founded in 1986 which today sees exports make up 97% of all turnover.

The experienced exporter, who was involved in the launch of the Black Country Lep, is president of the Midlands World Trade Forum and a past president of the British Metals Federation, has been involved in

international trade since the early 1970s.

But he says he’d find exporting red tape “impossible to overcome” if he was starting his business today.

“it would be practically impossible to

start my business today because of legislation and licensing requirements. and there is a lot of pressure on the recycling sector, with lots we have to adhere to,” he says.

The cost of compliance is a big factor, he says, admitting that the paper chain is part and parcel to the industry.

insurance for doing business in certain countries, particularly

southern europe, can be hard if not impossible to garner, forcing the company to rely on its strong relationships.

“We sell through people we know and who are trustworthy to avoid most issues.

“We sell into five steelworks in Spain but through another merchant, not direct,” he says.

Mathews sees the continuing global economic slowdown as impacting on the terms and cost of doing business globally.

The weakness of the global markets is causing Mathews the biggest concern, as it is resulting in international tariff increases.

“When exporting to india we pay an import tariff they didn’t have six months ago. in other countries, such as Russia, the barriers are there and in China i need a licence from the Chinese government to trade and i have to go to the expense of being inspected in the UK by one of their agencies.”

But despite this he strongly believes that UK businesses must look to overseas opportunities for growth.

“Businesses from all over the world are in the same boat with this – in that

respect it is a level playing field but the UK has the best opportunity against competition as we’re seen as a reliable partner.

“We have to be realistic in the UK that we are part of a global market. We cannot reply on the UK domestic market for the future and must therefore consider difficulties in global markets with the downturn.”

Mathews strongly believes that UK manufacturers do have a point of difference in the global marketplace and are respected for producing quality products.

“There is so much good faith for the British standard. people see we do take notice of regulation and British products and services are seen as being among the best in the world, which is a great plus for us,” he says.

an export member of UKTi, he suggests it is an important port of call for any business that exports but also says businesses must take advice from their bank

“UKTi can help with contacts, advice on financial support or to handhold and make it work – as well as help with the regulatory side of things,” he says. “But part of doing business overseas – and the regulation around it – is currency.”

peter mathewschairman & managing director, Black Country Metals

Black Country Metals – faith in the British standard

CaSe STUdy


the decision is put in the hands of a third party – the court, this leads to uncertainty,” says Tom Collins, associate in commercial dispute resolution at law firm Weightmans.

it can often be the case that parties are not as clear as they thought they may have been on whose terms they have contracted or, indeed, it may be difficult to identify the terms at all.

YOUR company has been offered a major contract

as a supplier that could rocket its growth trajectory. But if you can’t deliver as promised it could also spell disaster for your business.

Not only that, it will have a significant impact down the supply chain, which can be costly for all involved and why the consequences are often severe.

The first thing to do is to read and check – can you deliver what you are being asked to do? if you can’t make the timetable and volumes you will be in trouble.

Urgency is common in the commercial world and this may well mean that sometimes work commences even before a contract has been signed – but this is something to be avoided at all costs.

“Failure to do so may mean a costly dispute if parties fall out and it’s not clear whose terms apply. Where

Collins continues: “Whilst we would be asked to look at the position retrospectively, a manufacturer who wants to seek to mitigate or lessen the impact of a dispute ought to be clear from the outset on whose terms it is contracting and to be able to evidence those terms.”

He adds that businesses need to understand the process of contract formation and in particular the issue of the ‘battle of the forms’ - in essence, a question of who fires the last shot in contractual negotiations to ensure that their preferred terms and conditions apply. This may not always be as

6➔

Although it can be easy to get over excited at the prospect of a game changing contract win, always make sure you fully understand what you are agreeing to before signing on the dotted line.

‘can you deliver what you are being asked to do? if you can’t make the timetable and volumes

you will be in trouble.’

Chain reaction

➔


firm BdO, says that’s because ultimately the responsibility of product quality and delivery is with the end assembler.

“That’s usually very big companies, particularly in an industry such as auto. They are tight on contractual terms and push as hard as possible on supply chain responsibility,” he says.

The vast majority of Midlands businesses will find themselves somewhere in the middle of the supply chain so for them it is crucial to ensure all legal contracts are back-to-back down the chain.

if the company further down the chain is late delivering to you, you want some ability to lay claim for that as someone will be bringing a claim against you.

Weightmans’ Hutchins says: “it is important to manage risk and pass liability down the chain so you are not exposed if someone else doesn’t deliver.”

His colleague Collins adds that parties should also look out for and be wary of any attempt at introducing a pay when paid clause.

“This would in effect seek to provide that the party who has the obligation to pay you will only be obliged to do so when it receives payment from those who have to pay it.,” he says.

Where there are difficulties in hitting a supply date then some agreements will see that supplier obliged to take all reasonable steps to meet delivery

straightforward as it would appear, he says.

“Sometimes, and depending on who you are contracting with, you may have little say or bargaining power. However, manufacturers should try and ensure that they ‘fire the last shot’ by perhaps including their terms and conditions on any acknowledgement of order. The purpose of so doing is to say that you are prepared to contract as suggested – but on your terms. The aim being to get your terms across last without the other side making a counter offer.

“parties may see terms put forward from another party saying its terms prevail over all others. That would in reality only be effective if its terms were in fact the final terms of the contract. parties should beware that another

The same is true when contracting with companies.

“you may want to sue in their home court as that’s where the assets are,” says Hutchins.

The typical notion of the large original equipment manufacturer (OeM) or retailer at the top of the supply chain, squeezing the suppliers is true to an extent.

across all sectors, large companies have been forced to significantly reduce their costs because of the economic situation. if they switch off the tap, or delay payment, that has a direct knock on effect which ripples down the chain.

in complex supply chains, the very large company at the top will want to push as

may seek to ‘bluff’ this position although the term may not in fact be effective.”

Ultimately, when the issue is not clear cut and there is no certainty on the point, then the companies in dispute put themselves in the hands of the court - something Collins says is always a risk.

“To avoid all uncertainty, the courts stress that before embarking upon a course of business with a party, it should be expressly recorded whose terms apply,” he says.

Be clear on what jurisdiction the contract will come under and where disputes may be heard.

“a written agreement can specify that choice of law. depending on that choice parties should take care to ensure you get appropriate advice under that jurisdiction,” says Roland Hutchins, corporate and commercial partner at Weightmans, although choice of law will not overrule local law, he adds.

“a Japanese manufacturer may be under UK choice of law but local laws will still affect what it is doing. it will be obliged to abide by local law and it is incumbent on the customer to get advice in Japan on what those laws may be and how that affects a contractor relationship,” says Hutchins.

much risk and cost down the chain as far as it can.

Richard powell, managing director at supply chain consultancy Crimson & Co, says: “The economic climate has continued to drive an emphasis on price reduction from suppliers to an extreme. The result has been that relationships are confrontational and actually work against collaboration rather than towards co-operation.”

Tom Lawton, the Birmingham-based head of manufacturing at accountancy ➔

‘it is important to manage risk and pass liability down the chain so you are not exposed if someone

else doesn’t deliver.’

Tom lawtonhead of manufacturing, BDO


or catch up on a missed deadline, including use of air freight, which could potentially add hundreds of thousands to the cost.

Hutchins says: “Businesses will try and avoid this because of consequential costs, which could potentially put a supplier out of business. But the client, which might be supplying a supermarket for example, will also face

penalties for non delivery.”

Having contracts stacked up back-to-back is particularly important when it comes to potential product recall or quality issues.

For example, your company might order goods to a particular specification, which

is not then met, yet those goods may travel further up the chain only for the end user to claim breach, with the claim then passed back down the line.

“if you were the party ordering the goods then you need to be clear, and to be able to evidence, what it is you ordered and in what form. Conversely, if you supplied goods to specification and are met with a claim that the specification has been breached you need good evidence of what specification was in fact agreed,” says Weightmans’ Collins.

it is hard to avoid liability if you have a failing product but a company could try to have to written in its contracts that it is able to provide a replacement,

rather than meeting a claim for loss of production, adds Lawton.

“a way to manage that risk is with insurance. Rarely can you insure against the fact you have made a bad product but you can insure against being sued for a loss of profits,” he says.

damage to reputation is harder to protect and the only remedy is monetary compensation.

Hutchins says: “if a supplier is doing something in breach of agreement and its continuation was damaging to the customer you might look for injunctive relief but that is not a contractual right and may only be awarded at the discretion of the courts. instead you can

have a clause that’s persuasive to the courts, stating that parties acknowledge this would be an appropriate remedy.”

in certain sectors, such as automotive, there are signs that the OeMs’ approach is softening in recognition that they need to ensure the security of supply, so while there may be some onerous provisions, ultimately they want to build long-term collaborative relationships and nurture that supply.

Lawton says: “Some are now saying they will cap claims against a company – but it is still a very large amount.”

commerciality and keeping important clients onside, which should be factored into the approach a company takes when dealing with a dispute.

Collins concludes: “if an issue arises you need to quickly ensure you have the paperwork and audit trails to ensure you can ascertain your position and evidence it. Notwithstanding the commercial pressures you may face it is worth sitting back and getting advice so you are clear on what you are going to say and to be sure you are right in what you are going to say.”

When things do go wrong, look for limitations on liability in your terms and conditions.

“One of the terms you may want to rely on is a force majeure clause because some external intervening event may have precluded a party from performing its side of the contract” says Collins.

Hutchins adds that many businesses mistakenly think force majure is common law but a specific contract is needed.

“in contractual terms a provision of force majure - things beyond the party’s control - is required. if something happens it can offer the parties a period of grace to live with a short delay but with an ultimate termination provision if the delay is excessive.”

The clause should list specific items or events to be included/excluded, such as industrial action, but as Hutchins says: “There will always be the next thing that hasn’t been considered but now more and more on the list it will say: ‘including without limitation’.”

The icelandic ash cloud of 2010 is one example where contractual points of law have been argued. Hutchins says in that instance a firm reliant on air freight might have it written into the contract the inclusion of ‘planes being grounded’.

With all the above in mind there still remains one important factor –

‘in certain sectors there are signs that the oems’ approach is softening in recognition that they

need to ensure the security of supply.’

roland hutchinscorporate and commercial partner, Weightmans


eXpORTS account for 45% of radio equipment

manufacturer Simoco’s £40m turnover.

The derby-headquartered business, which employs 180 staff, with 70 based in the Midlands, exports to 30 countries worldwide into public safety agencies, government departments, utilities, transport and oil and gas sectors.

Chief executive ian Carr says it’s important to understand local compliance requirements, particularly when sending engineers into countries to perform services on the products being exported.

“This sometimes necessitates ‘registering to do business’ locally for which in-country professional advice is almost unavoidable. This means we have to be confident in achieving a sufficient level of business to justify the initial set up costs and management time,” he says.

Carr says wherever possible the company will keep processes the same or at least similar globally, whilst at the same time complying with local legislation.

“each month we have to complete an intrastate under eU regulation and this requires significant administrative work in order to present the data in the format required including weights, number of packages and commodity codes,” he says.

Simoco manufactures radio equipment for which many legislative requirements apply, for example to ensure electromagnetic compatibility and to control radio interference. This means all equipment has to be ‘type approved’ in the country it is exported to.

“across europe many of the standards have been harmonised through regulations such as the Radio and Telecommunications Terminal equipment directive and this makes things less onerous. There are similar arrangements in the US and australia but many countries we export to still require individual type approval and this can be costly and time consuming,” says Carr.

To help, the company uses local partners in-country that support the type approval process.

Because Simoco’s terminal devices

contain Lithium battery cells they fall under the dangerous Goods Regulations and the international Civil aviation Organisation (iCaO) regulations for safe transit of dangerous goods by air.

“These are amended from time to time and many countries have specific variations to the rules applied, so it’s another area that we pay close attention to. We employ a dedicated person responsible for health, safety and environmental management. This is a global responsibility and ensures we remain compliant with all applicable legislation,” says Carr.

Carr adds that in a tough global marketplace, with ongoing economic pressures, he is seeing more onerous commercial terms within proposed international contracts as businesses seek to pass increasing amounts of risk on to their suppliers.

“This increases the importance of contract negotiation and, where appropriate, legal advice should be sought,” he concludes.

Simoco Group – staying on top of international law

9➔

CaSe STUdy

ian carrchief executive, Simoco Group


consolidating regulations that apply to business.

Then, in September 2012, it announced that health and safety inspections were to be confined to high risk sites only, resulting in 11,000 fewer inspections each year.

Samantha peace, the Health and Safety executive’s (HSe) director for Wales, the Midlands and the South West, says: “We target proactive inspection where there are greater hazards and where we

maiNTaiNiNG a safe work place is of the highest

importance, yet the volume of regulation that companies, and in particular manufacturers, have to comply with is not only a source of worry for business owners but also impacting business growth.

Recognising the problem, the government has taken steps it says will reduce the burden and streamline the stock of more than 21,000 regulations on the statute book.

The Red Tape Challenge, launched by government in 2011, followed

professor Löfstedt’s report on health and safety regulation, which identified options that could be considered for

know the control of risks is not what it should be. We are not focused on those doing well.

“We are going into businesses where we know there is evidence that people are being harmed, there is a risk there

and it is not being controlled properly.”

The coalition government says the cut in the number of inspections is all part of its drive to reduce the burden on business. However, it will also go some considerable way to help deliver the

10➔

This government has recognised that red tape is suffocating business growth but has it taken the right steps to change things and do they go far enough?

‘We target proactive inspection where we know the control of risk is not what it should be.

We are not focused on those doing well.’

The red tape challenge

➔

samantha peacedirector, Health and Safety Executive


35% budget cut the HSe will have taken by 2014/2015.

and there is a question as to whether the one-in-one-out rule is actually working to simplify and reduce the burden for manufacturers, or rather whether it is merely maintaining the status quo.

Crispin Kenyon, partner and head of manufacturing at law firm Weightmans, thinks the government is genuinely keen on cutting red tape for businesses and that it does recognise the impact it has at a time when the economy needs businesses to grow more than ever.

“With health and safety there is now the one-in-one-out rule – that is happening and they have made progress on Löfstedt aims,” he says.

Business lobby group the Confederation of British industry (CBi) sees the fight to further cut regulation as one of its top priorities.

“in the current climate business owners have to concentrate on running the business in a productive way, not battling with onerous regulation,” says its regional director Richard Butler.

HSe’s peace insists that it is conscious of the economic climate and the need for growth.

“if we inspect a business and there is a problem we will come to a sensible agreement as to how to put it right. There are some things that have got to be done, whereas with others there is scope to give some time.

“it is a discussion and both parties want the same thing – to protect those who

work there. We work with businesses to put that right,” she says.

Complying with regulation places a disproportional burden on SMes because of the cost, time and resources these smaller companies have to devote.

“if we bring in things to benefit smaller companies they will automatically benefit larger ones. it’s medium-sized businesses we should be supporting as they have greatest opportunity to grow in the current climate,” says the CBi’s Butler.

Cuts may have seen the HSe slow its investigation and prosecuting hit rate but businesses can’t afford to take their eyes off the ball, says Kenyon, who agrees that SMes are disproportionately at greater risk than very large companies.

“We’ve been involved with cases where a £6m turnover business was fined £12,000 but then had that reduced to £8,000 on a guilty plea. But then a £500,000 turnover business can be fined £5,000,” he says.

“SMes will take a hit that is more life changing. For them more than anyone it’s important to get their house in order and look at their codes of practice,” he adds.

in peace’s view, companies are concerned not so much with the volume or nature of law - people reflect that health and safety is sensible and necessary, she says - but that sometimes it is not applied consistently.

“Often it is more the fear of what might happen than the reality. We only

enforce a minimum standard but it is important those standards are met as that’s what keeps people in one piece and they are there for a good reason,” she says.

But more than fines, directors are potentially personally liable for prosecution for gross negligence and man slaughter and HSe officers now have the power to send people to prison.

That should not scare people so long as they are taking a proportional approach to the risks of their business, according to peace.

“No one knows those risks better than the business owners. if they take the sensible steps and meet minimum standards they will never be in that position,” she adds.

“it doesn’t happen often and the offences would have to be pretty appalling,” admits Kenyon. “directors are often surprised – corporate manslaughter is against the company – but directors can be prosecuted as individuals for gross negligence manslaughter and if a case is around that area, the CpS will usually pile it all in together.

“We have seen with SMes a greater tendency to prosecute the director and the business. a £50,000 turnover business would likely fold a week later for genuine reasons, so against that they will also have you as a director.”

Health and safety – fast facts- an average of 31 people die a year

in manufacturing.

- There are 4,500 major injuries.

- There are 19,00 injuries a year where people are away from their job for more than three days.

- There were 22,000 inspections in 2012/13.

Source: HSE

crispin kenyonpartner and head of manufacturing, Weightmans

➔


BUSiNeSSeS now have more flexibility in how they manage their provision of first aid in the workplace, following a change in health and safety regulations.

as of October 1, the Health and Safety (First aid) Regulations 1981 have been amended, removing the requirement for the Health and Safety executive (HSe) to approve first aid training and qualifications.

HSe has said the changes are part of its work to reduce burdens on businesses, whilst maintaining standards.

andy McGrory, HSe’s policy lead for First aid, says: “HSe no longer approves

first-aid training and qualifications. Removing the HSe approval process will give businesses greater

flexibility to choose their own training providers and first aid training that is right for their work place, based on their needs assessment and their individual business needs.

“employers still have a legal duty to make arrangements to ensure their employees receive immediate attention if they are injured or taken ill at work.”

information, including the regulations document and a guidance document to help employers identify and select a competent training provider to deliver any first-aid training, indicated by their first-aid needs assessment, is available on the HSe website.

HSe will continue to set the standards for training. While the changes give employers flexibility, the one day emergency First aid at Work (eFaW) and three day First aid at Work (FaW) courses remain the building blocks for first aid training.

Theoretically, if a company complies with HSe guidance, it discharges its duties but the fear for duty holders is that even if they do take due care, staff don’t always pay attention.

“No one deliberately ignores safety requirements to get injured but sometimes they don’t take better care,” says Kenyon.

”What keeps business owners awake is that they can implement all these things but they still end up in court.”

peace agrees that accountability of the individual works both ways and says HSe has in the past taken steps against employees who are not using protection.

“if you have given instruction and given protection, employees need to follow that. if it really is down to the employee then the process is the same: verbal advice, letter, notices and legal proceedings. We can prosecute if an employee is failing to take care for themselves knowingly and also for others,” she says.

Weightmans’ Kenyon says another big worry for manufacturers is that they are breaking health and safety law without knowing it.

He gives the example of the need to supervise sub contractors - as a manufacturer may be responsible as well - something that has been seen in case law.

“if you have sub contractors who are themselves sub contracting, how would you know about that - but that’s the business’ responsibility,” he says.

The HSe has revised all of its guidance, available online, over the last two years in order to make it as easy as possible for businesses to understand what they need to do.

“The website is our key method to provide advice - it has a huge number of visitors and they seem to be finding what they need most of the time,” says peace.

“We have produced a health and safety tool box that makes it very easy to take them through the a-Z and also has particular pages for each industry.

“SMes know the work and the risks of the business well enough to work well from that guidance. Often it is about changing practices not buying equipment.”

Furniture company fined £8k after worker severs fingera STaFFORdSHiRe furniture company has been fined £8,000 plus costs, after an employee severed a finger in an unguarded machine.

The 61-year-old, from Stone, was attempting to clean an edge banding machine at incube’s factory when his left hand was caught by a rotating blade, severing his little finger.

an investigation by the Health and Safety executive (HSe) found that the interlock safety switch on the machine had been defeated, allowing access to the machine while the blade was moving. it also found the company had failed to carry out a risk assessment for the machine since it was introduced in 2010.

incube Limited was fined £8,000 and ordered to pay £1,025 in costs in September 2013, after pleading guilty to a single breach of Section 2(1) of the Health and Safety at Work etc act 1974.

HSe inspector Wayne Owen says: “The woodworking industry has one of the highest incident rates in manufacturing, most of which are caused by contact with moving machinery.

“HSe produces a wide range of free guidance to assist companies in carrying out risk assessments, and ensuring that woodworking equipment is safe to use and that people are properly trained. in short, what happened to this employee was easily preventable had the company appropriately considered the risks from their work processes and most fundamentally, not removed the safety device from the edge bander.”

Changes to first aid regulation


13➔

iT has been just over a year since the Health and Safety

executive (HSe) introduced its Fee For intervention (FFi) scheme, which makes those committing breaches the ones who pay for HSe enforcement and supervision.

Samantha peace, the HSe’s director for Wales, the Midlands and the South West, says: “it came in on the polluter pays principle, rather than the general tax payer paying for those cutting corners and in breach. The further away from that you are the more it costs you to sort.

“it is a level playing field because those that do it correctly don’t want to be undercut by those not investing in health and safety.”

The fees for intervention scheme only applies if there is a material breach – something significant enough that it needs to be put it in writing and then checked that it is put right.

Fees run at £124 an hour and companies are charged for all the time

spent visiting, as well as subsequent letter writing and checking.

peace says the amount charged is governed by the cost of running the department.

“That will change and as it costs less to run HSe that will be reflected,” she adds.

peace admits it is early days and there is still a job to be done in making businesses aware the changes have come in. But she does think it has proven to be an additional incentive for businesses to get their house in order and to respond swiftly.

“There is an immediate consequence to not having run things correctly in the first place,” she adds.

Figures for the first six months since its introduction show there have been an average of 961 invoices a month under the new scheme. However, the second two months saw 27% more invoices than the first two months, while the third two months saw 40% more invoices than the second two months.

Revenue raised during the first six months was £2.67m, with more than 40% of invoices going to the

manufacturing sector.

The average invoice was £464, but six invoices (one a month on average) have been more than £10,000.

“it’s a bit like the police coming in and charging to talk to you,” says Crispin Kenyon, head of manufacturing at Weightmans, who is sceptical about the motivations for the scheme.

“When the scheme was in its trial period the biggest group of interested parties opposed to the scheme was the HSe inspectorate’s union. They saw it as divisive and that people might be defensive or aggressive, but in reality there has only been one instance,” he says.

peace expressly states the scheme - introduced as the HSe has had its budget by 35% by 2014/15 - is not a revenue generator.

“We have a ceiling on the number of inspections so we are not chasing revenue. There is a target to focus on those businesses where risk is prevailing but there are no volumes targets and we find what we find,” she says.

Richard Butler, regional director for the CBi, is pragmatic about the changes.

He says: “The government can’t continue to deliver the same thing for less money and is having to look at a variety of ways of doing things.

“We recognise that we are pushing government very hard but it does have limited resources. i’m still talking to businesses that harp back to 2008, but we are not going to get back to that amount of public spending.”

However, Kenyon warns that manufacturers should be wary of automatically writing a cheque and should at least consider whether an appeal is appropriate not least because of the potential implications further down the line.

“it is easier for a safety inspector to say ‘you are in breach, we will not prosecute but here is a bill for £250’. it’s a bit like penalty points on your license - you’d take a breach notice and pay it but that might mean you could be found liable in any subsequent civil claim.

“Businesses should think carefully, it could be used against them as demonstrating a propensity to offend if they do prosecute.”

Fee for intervention one year on


iF you were asked to draw up a wish list of things

government could do to help the growth of your business, how high up that list would employment legislation reform sit?

While red tape is undoubtedly of concern to businesses, most still cite issues such as access to finance and the ability to find skilled staff as having a greater impact.

indeed, employment regulation is perhaps the one area where UK businesses do - for the time being - have it easier than many european counterparts.

although european Union rules mean that point of difference is slipping away

– something Richard Butler, regional director for business lobby group the Confederation of British industry (CBi) laments – the UK still has some of the most flexible labour laws in europe, a positive for driving business growth.

“Foreign-owned multinationals say the flexible labour laws are a major economic benefit to the UK - and that means investment and jobs. We need a sensible balance so that flexibility can benefit both parties,” says Butler.

But far from seeing the UK as a haven, most Midlands manufacturers see the ever changing employment legislation landscape as one that’s increasingly hard to navigate, taking up more and

more time to ensure compliance and therefore having an impact on their bottom line.

an independent report to government by venture capitalist adrian Beecroft back in May 2012 looked at reducing employment legislation to boost business competitiveness in the UK.

The government has already increased the period someone has to be employed to claim unfair dismissal from one to two years but Beecroft wanted to go further.

Several of his suggestions have since been taken up by government, although recommendations around the

14➔

‘The Uk still has some of the most flexible labour laws in europe - although eU rules mean that

point of difference is slipping away.’

Are you on top of changes to employment law?

➔

richard Butlerdirector, CBI


whether the changes have had an impact.

pressure may be easing up around employment tribunals but pensions automatic enrolment, meanwhile, will have taken its place on most manufacturers lists of ‘things they could do without’.

The system started at the beginning of October 2012 for the biggest businesses, with others being signed up over the following six years.

The CBi’s Butler says that the principle is a good one – everyone should have some kind of pension provision – but, as is so often the case, the implementation leaves more than a little to be desired.

“even huge companies are saying the process for the scheme is very burdensome and that process is virtually the same if you employ four, 500 or 50,000 people,” he says.

“These things start as a good idea but it could be simple to sort by looking at what is appropriate and ways to make implementation easier,” he adds.

Weightmans’ Cox sees the next big issues coming up on the horizon being the extension of family-friendly legislation and potential changes to the current ‘fit note’ system.

From 2015, changes to maternity legislation will mean up to 50 weeks of maternity leave can be transferred to the father, but the government is still consulting on how that will work.

Whilst supportive of the principle of maternity related legislation, many SMes find the costs and practicalities of coping with the arrangements and impact upon their business challenging.

a recent survey found that one in four mothers believe that they were discriminated against at work, either while they were pregnant or following their return to work. Three out of five stated that pregnancy was a problem for their employer.

The amount of family-friendly legislation has grown significantly in the last 10 years. according to Cox, this makes it difficult for employers to keep up-to-date with all the changes.

“as a result there is a mixed level of awareness on what the law is.

introduction of ‘no fault dismissal’, which took all the headlines, have since evolved into settlement agreements.

July saw the introduction of pre-termination negotiations (so called protected conversations), renaming Compromise agreements to Settlement agreements and the introduction of aCaS Code of practice on Settlement agreements.

The CBi welcomed this, saying it will give firms the confidence to have a frank conversation about ending employment on fair terms, without the fear of a drawn-out and costly tribunal claim.

Being able to have protected conversations with staff around career and succession planning would be particularly important for manufacturers who need visibility in to the future to plan their skills pipeline,

put that person through a capability procedure which is not good for anyone and leaves a bad taste. it is poorly thought out legislation,” he says.

“Before they could plan, now they haven’t got that certainty. We are pushing for protected conversations around that.”

Beecroft’s report also looked into applying a fee for tribunal applications, improving the consistency of tribunal findings and reducing the number of cases that result in tribunal.

The CBi said this would be a “real game-changer” for growth, citing the employment tribunal system as the single biggest deterrent to firms looking to hire, with a 58% increase in claims over the past five years.

in the financial year 2011-12, there were

particularly since the default retirement age was scrapped in 2011.

The CBi’s Butler says default retirement age is probably the biggest single issue for manufacturers.

“The potential downside is that many manufacturers have manual or labour intensive jobs and as an employee gets older they potentially get less able to do the job. if someone has worked at a manufacturer for 40 years and at 72 can’t do the job but want to carry on there is a danger the business has to

186,300 employment tribunal claims accepted and the annual cost of the employment Tribunal system was said to be approximately £84m.

earlier this year, the enterprise and Regulatory Reform act 2013 and the employment Tribunal (Constitution and Rules of procedure) regulations 2013 came in.

July saw the introduction of the two-tier fee paying system for employment tribunals, with an issue fee of £160 for minor claims and a hearing fee of £230; and for more complex claims an issue fee of £250 and hearing fee of £950.

Other July changes included the introduction of preliminary hearings, which would combine case management discussions and pre-hearing reviews and judges powers to strike out weak cases.

Jane Cox, partner at law firm Weightmans, says: “employers have welcomed the introduction of tribunal fees and see this as a really positive step.”

She adds that the statistics showing the number of tribunal claims a year on after the introduction of fees will show ➔

‘employers have welcomed the introduction of tribunal fees and see this

as a really positive step.’



There is not only a lack of knowledge of obligations but equally some employers aren’t probably aware of what they can do when dealing with employees who are pregnant or who are on maternity leave,” she says.

The latest proposals to transfer leave between parents might serve to reduce discrimination against women in the workplace because of the burden of maternity costs, but it will also further add to the headache employers already suffer.

“potential uncertainty as to when employees may return to work after maternity leave may hinder employers in business planning and with increasing requests from employees to work flexibly on their return or reduce their hours employers have to look carefully at how such requests can be accommodated or risk potential claims for discrimination in relation to which compensation is unlimited,” says Cox.

in a report on work and health published in July this year, dame

Carol Black reviewed current sickness absence procedures and the use of ‘fit notes’, first introduced in 2010.

“There is talk that the government will bring in third party independent providers to make an assessment of capability, so it is not just down to the Gp. it’s being done to get people back to work quicker because ‘fit notes’ are not really working - Gps don’t have time to run through what an employee may or may not be well enough to do,” says Cox, adding that the review illustrates that workplace sickness continues to be a real problem for employers.

employment reform on its own may not be the biggest block to business growth but it is certainly one area of legislation where businesses can do much to help themselves. prevention, as they say, is always better than cure.

The wide ranging topics covered just within these pages shows how much information there is to keep on top of but to protect your business you have to be compliant and to do that all businesses

must be in the know – ignorance is not a defence.

ian Carr, chief executive of derby-based radio communications equipment company Simoco Group, makes sure its HR team attends specialist training and regular refresher courses. it also employs local HR advice and legal support for any significant changes or serious employee issues.

“Mistakes can be costly so it’s important to make sure you are well informed and follow the correct procedural approach when it comes to HR matters,” says Carr.

The company receives regular updates on employment legislation from its lawyers, Cipd and various HR contacts, attends regular workshops and seminars and gets advance warning of employment changes in the UK to ensure its policies remain up to date.

Carr concludes: “So long as change is well planned and executed effectively, we usually find transitions reasonably smooth to implement, with little impact on the day to day running of the business.”

The basics- Make sure all contracts of

employment are up-to-date.

- Follow your disciplinary and grievance procedures.

- Be aware of the aCaS code on disciplinary and grievances and comply with it.

- Make sure you document events and conversations.

This final point is crucial but often forgotten, according to Jane Cox of Weightmans, who says: “if you don’t keep notes of meetings and back up decisions with clear and easily understood letters it can come back to bite you. Tribunals have huge expectations as to the procedures that employers should follow in relation to dealing with their employees.”

ian carrchief executive, Simoco Group

MaNUFaCTUReRS can need to rely on temporary workers to help them navigate through the peaks and troughs of their working cycle. However, finding the right staff with the right skills, or increasingly the right attitude, is not easy.

Jane Cox, partner at Weightmans, says: “at the end of the day manufacturers simply want people with the skills they need – something they constantly say they can’t find. Then they find that some of those that they do recruit, just don’t have the right work ethic.”

Many companies have a reliance on foreign workers to meet demand at peak times and this can bring its own challenges.

all temporary workers have the same rights as permanent staff after three

months but they have immediate protection when it comes to claims of discrimination, for example.

Companies should always check all staff have the right to work in the UK and have the required documentation.

although there is no legal requirement to provide a contract or policy in another language, it would be prudent to do so to demonstrate that the company has done all it can to ensure staff fully understand their obligations and rights from the outset. alternatively, an interpreter could go through the documents with staff.

as well as an employment contract, this approach should be extended to all information disseminated by the company, and particularly health and safety information.

Managing foreign workers

‘mistakes can be costly so it’s important that you follow the correct procedural

approach when it comes to hr.’

Manufacturing a strong future.

As one of the UK’s leading legal practices in the manufacturing sector, Weightmans offers specialist advice and guidance across a number of key sector areas including food & drink, advanced manufacturing and hi-tech.

We support businesses right along the supply chain from producers to manufacturers, subcontractors to transport and logistics companies.

With a longstanding reputation for the very highest quality advice, we can help you with all your legal needs including:

Commercial contracts in the supply chain

Managing your workforce requirements

Employers’ liability Public liability Commercial debt recovery

Health and safety Real estate Product liability matters Insurance Corporate & commercial Disputes

For further information and to fi nd out how we can work with you, please contactCrispin Kenyon, Partner on 0845 073 9900 or email [email protected]

www.weightmans.com

3342 Weightmans Manufacturing A4 Ad.indd 1 01/10/2013 13:21



Brittan said he had taken the matter up with business secretary Vince Cable during meetings between the two men.

He said that as a result, the government was now considering lightening the burden on businesses by agreeing more flexible rules.

“50-strong companies now have exemption thresholds where the legislation applies – which is something i have been calling for. i’m not sure what legislation they’ll be exempt from but at least it’s a step in the right direction,” added Brittan.

Jane Cox, employment partner at law firm Weightmans, agreed that many employers find the current legislation a real burden but added that a recent survey suggested that many employees still feel that they are discriminated against when they return to work after maternity leave.

She added: “The current legislation doesn’t encourage open and honest discussion between employee and employer about when they want to come back, when they want to take leave and how much it’s going to be.“

Brittan said the whole issue of red tape had to be tackled properly but SMes had to be involved in the process as they were the ones most affected.

“What we at BSa are trying to do is what the government wants us to do and that’s go out and win new

18ROUNd TaBLe

➔

The law of unintended consequence By Duncan Tift

iNFLeXiBLe regulations and an ever-increasing

burden of red tape are preventing manufacturers from capitalising on growth opportunities, firms in the West Midlands believe.

Steve Brittan, managing director of BSa Machine Tools in Birmingham said at our round table discussion, hosted at Weightmans’ offices in Birmingham, that the amount of legislation imposed on small firms was intended to protect them but often it had the reverse effect.

Brittan, who is also president of Greater Birmingham Chamber of Commerce,

said the legislation had created the “law of unintended consequence”.

“in an SMe people just don’t have the time to deal with regulation. i speak for the chamber on this issue. There are inconsistencies in the way things are applied,” he said.

“Take maternity leave for example, where this goes virtually unnoticed in a plc in an SMe it can be a very serious factor. The person concerned – or their partner – could be the main man/woman within that firm and if they opt to have time away then that could be the death of the business.

“This was not was the intention i am sure.”

AttendeesThe

Tony Davischief executive, Medilink West Midlands

crispin kenyonpartner, regulatory services and head of manufacturing, Weightmans

Jane coxpartner, employment, Weightmans

keith Webbhead of large corporate, Barclays

steve Brittanmanaging director, BSA Machine Tools and President, Greater Birmingham Chamber of Commerce Group

grant adamsmanaging director, Sertec Group

rachel eadesupply chain specialist, Manufacturing Advisory Service (MAS)

gerry Dunnemanaging director, Westley Engineering

Jason Wouhradirector, East End Foods and chair of the West Midlands Institute of Directors (IoD)

professor Dariusz ceglarekWMG


business but when to try and legislate for it then that’s when it starts to get difficult,” he said.

Other factors handicapping SMes from doing business remain proper access to finance and the skills challenge.

Brittan said both issues had been highlighted during his meetings with Cable and others. The skills agenda had received special prominence.

“i explained that firms are keen to take on apprentices but the problem is the skills gap. Take the example of my own firm. By the time new apprentices are ready i will have 70% of my workforce over the age of 60,” he said.

“The problem has been that for a long time governments have not got the problem but now that manufacturing is back in fashion because of the growth it can provide then the issue is being considered.”

However, he said the problem was that the country was not generating the volume of apprentices that industry needed.

This approach was supported by Grant adams, group managing director of automotive supplier Sertec.

“We manufacture tubes and welding assemblies to the auto industry, predominantly to Jaguar Land Rover. To give some idea of the growth we have experienced, turnover at the end of this year will be £135m, compared with £41m in 2009.

“This gives an indication of some of the growth we are seeing but that brings challenges in itself. Because of the business we have won from JLR, by 2018 our turnover will be around £200m. We are currently trying to manage that.

“it brings a lot of opportunities but it brings a lot of problems as well,” he said.

He said unlike other parts of the world, industry in the UK was still playing catch-up.

With JLR ramping up production volumes both in the UK and now in China, the demands on suppliers are increasing.

“We employ 750 people and we are going to need an additional 200 by 2018 – we have to know where they are going to come from and we have to know we are going to get support for this,” he added.

Rachel eade, supply chain specialist at the Manufacturing advisory Service, said: “The government is beginning

➔ The round table attendees

‘We are going to need an additional 200 staff by 2018 - we have to know where they are

going to come from.’➔


to understand the issues and they are listening to us but they are going to need people like us (SMes) to explain to them how we are going to make it happen.

“There’s a need for engagement. The world is now very different to what it was like five years ago and in five years’ time it will look different again. The problem is the old models don’t apply any more so the process has to change.”

Tony davis, chief executive of Medilink, West Midlands, said he had recently led a cross-party manufacturing briefing where all these points were outlined.

“access to skills is the issue which scares people the most. The problem is it’s not just about whether you can provide apprentices with the right skills but it’s all about getting them to adopt the right attitude as well.

“What we have to do is identify where the next generation want to go and then we have to overcome perceptions surrounding the industry.

“We have to ask – does government policy support us? also, whether it will allow firms to take advantage of

the opportunities that are presenting themselves,” he said.

Overcoming access to finance issues also had to be a top priority for government, said the panel.

Steve Brittan said part of the problem was that the banks had been badly

“it’s all about talking and bringing the bank in as soon as possible so it can understand all the different complexities involved. We want to have a close involvement with the management teams and to understand the difficult questions such as how to mitigate risk.

“My managers on average look after 25 clients so they spend the time getting to know them and their businesses. it’s a team approach and i make a point of visiting as many firms as possible. We have to lend responsibly.”

The panel also said that Local enterprise partnerships should be given greater responsibility for distributing finance – provided this did not increase the bureaucratic burden.

professor dariusz Ceglarek, of Warwick Manufacturing Group, said the government was trying to devolve powers to the Leps but this wasn’t

affected by the financial crisis and its legacy was harshly impacting on SMe manufacturers.

Keith Webb, head of large corporate at Barclays, said he understood the problems and the banks were trying to make amends.

“We want to look forward. We talk about relations and the team i lead is sector-driven and they are aware of the specific issues and problems affecting those industries and sectors,” he said.

working properly and consequently this was having a detrimental impact on SMes.

Jason Wouhra, director of east end Foods and chair of the West Midlands institute of directors, is a former deputy chairman of the Black Country Lep.

He said: “during my time there wasn’t the clarity on what the remit of the Lep was. as time goes on i hope this will become clearer and the Leps will be given greater responsibility on the funding issue. However, for now, it remains a difficult area.”

eade said she had been working with a couple of firms who were trying to secure funding from their Leps – their applications had eventually being approved.

“However, from the time the application was submitted to the money being received in the firms’ bank accounts, took 19 months. it’s only because of their perseverance that they saw it through,” she said.

“Many would have given up in that time but 19 months is just intolerable – the process has to be quickened up.”

davis summed up the discussion stating: “We have heard that we are turning the corner and going for growth and there are new support structures in place but reducing red tape has not followed it.

“The Leps are adding more layers of bureaucracy and this is what will hold us back in europe because they have very mature policies for this. We have got to re-invent that.

“We have to say to government ‘allow us to take advantage of opportunities’ but sadly with the amount of bureaucracy we are seeing, we are not being allowed to do that.”

‘We are turning the corner and going for growth and there are support structures but a reduction

in red tape has not followed.’

Documents

Unravelling Red Tapebusinessdesk.s3.amazonaws.com/_files/documents/oct… · · 2013-10-11... with brand Birmingham growing in strength and Weightmans LLp is committed to making