Sweepstakes at Work

Why employers shouldn’t be taking a punt on compliance with the Gambling Act.

Although Euro 2012 is now done and dusted, with a plethora of other sporting events coming up this summer, many employees will be keen to participate in office sweepstakes. But what most employers consider a bit of harmless fun may actually be illegal and carry the possibility of a criminal prosecution.
All workplace sweepstakes must comply with the strict provisions of the Gambling Act 2005. Employers need to ensure these competitions are run in a way that means they are exempt from the Act’s regulatory regime.

Lottery v bettingThere are two popular types of workplace sweepstake. The first is where entrants make a payment and are allocated a team or a competitor based purely on chance (picking your team from a bowl, for example). Such arrangements constitute a “lottery” for the purposes of the Act.

It is a criminal offence to “promote” a lottery unless it falls within one of the statutory exemptions or the promoter has a lottery-operating license. Promotion of a lottery is widely defined and includes selling tickets and advertising. Penalties for promoting an illegal lottery are substantial and can include imprisonment and/or a fine of up to £5,000.

In the second type of sweepstake, participants choose the team they wish to support or predict the result of an event (say, predicting the final score of a football match). Such a competition would be classed as “betting” under the Act, which is prohibited without a betting operating license.

Work lotteries Companies that permit or operate sweepstakes may be able to rely on one of the exemptions under the Act. “Work lotteries” are exempt, for example, if they are not run for profit and all proceeds (less reasonable expenses) are paid out as prizes. They must take place on one set of premises, each person taking part must work on those premises, and the lottery must not be advertised outside those premises. Any tickets must be in a form of a document and state the name and address of the promoter, the group of people eligible to buy tickets, that the ticket is not transferrable, and the ticket price. If all of these provisions are met, staff can enjoy the fun without risking their employer falling foul of the law.

BettingThere are two statutory exceptions for betting: “worker’s betting” and “betting otherwise than in the course of business”. For the “worker’s betting” exception to apply, those involved in the betting must all be employees of the same company. Many sweepstakes risk falling foul of this provision, especially where multiple employers are spread throughout the same building. But, provided the betting occurs internally and otherwise than in the course of business (in other words, the sweepstake is incidental to the business of the employer) it will be legal.

Don’t gamble with the lawIf employers or employees are thinking about running a sweepstake at work, careful consideration should be given to how it is operated and promoted to ensure that it does not inadvertently fall foul of the provisions of the Act. Because of the risk of criminal prosecution, HR may want to consider setting out the rules of any sweepstake in writing so organisers can be held accountable afterwards.

Settlement agreements

What looked like a re-naming exercise has become something more complicated

 

 

The Enterprise and Regulatory Reform Bill entered the committee stage in Parliament in June, apparently minus the controversial Beecroft proposal for “compensated no-fault dismissals” but with an additional clause on “settlement agreements”. Business secretary Vince Cable described the agreements as “smart, fair and pro-business reforms” which would “ease the handling of workplace disputes”.

In the original version of the bill, this was just a re-naming exercise – “compromise” was to become “settlement” agreement in various employment laws. But Pinsent Masons partner Christopher Mordue believes they will now represent a more substantial change. Compromise agreements are used right across the board, from small companies to large, and are already “an everyday feature of HR and employment law”, he says.

It does look as if the new-style agreements will be different. Compromise agreements need a dispute to be in progress; it seems settlement agreements won’t. Furthermore, they will not be admissible in tribunal evidence, reviving the “protected conversation” idea. There is also a suggestion that employees won’t require legal advice – currently paid for by employers – before signing.

“If the intention is to make settlement agreements easier, then I can’t see anything else they could do that would be more helpful for employers – that’s the bit in practice that generates expense,” Mordue says. He thinks it would be possible to replace the legal advice requirement with standard information advising employees that by signing the agreement, they end their employment and receive a sum of money in return for giving up the right to a tribunal. “If employees know what they’re doing, there won’t be any disadvantage to them,” he says. “There’s nothing to stop them getting legal advice.”

Strangely, only unfair dismissal is referred to in the statement. “But that would be nonsense,” says Mordue. “An employer wants an agreement to be in full and final settlement of every possible claim – they don’t want one rule for unfair dismissal and another for discrimination claims.”

The committee stage of the bill closes on 17 July and BIS will produce a consultation during the summer.

HR Outsourcing: It’s not all about the money

Cost is often the driver behind outsourcing. But organisations are discovering that this route can also bring other benefits, including better service standards

© Brett Ryder

It is hard to generalise about today’s HR outsourcing market. Some organisations are doing it, some aren’t. Most, particularly those still new to outsourcing, are driven by the need to reduce their costs, but others have their eye on how it can bring broader business improvements.

“It is very difficult to identify clear trends as the behaviour of organisations is so situational,” says Paul Sparrow, director of Lancaster University Management School’s Centre for Performance-led HR. “Even in the same sector you could have two large multinationals of the same type taking fundamentally different approaches because there are so many internal structural factors involved. -Companies are looking at their own circumstances and taking their own decisions.”

One reason that companies are taking a variety of approaches is that they recognise that cost savings and other potential benefits are not automatic – not least because outsourcing can add significant business complexity. This, in turn, means that HR buyers need to take account of internal political and cultural organisational factors when considering whether outsourcing will work in their organisations, says Sparrow. “The cost pressures are still there… but there is no simple answer. HR professionals have to look at their own model, their own organisational culture and then make a decision about the likely benefits that might result,” he adds.

Bharat Vagadia, who is on the board of the National Outsourcing Association, argues that while cost savings are “a given” and remain the driving force behind most deals, buyers at organisations with outsourcing experience are starting to look for other benefits as well. For example, some multinationals see it as a way of standardising processes in areas such as payroll, benefits management and recruitment across all their global locations. “It is more a question of ‘how can you help me make HR more strategic?’ rather than ‘how can you help me save money?’,” he says.

For outsourcing provider Accenture, this change in focus is not happening fast enough. The company recently published a report that concluded that 60 per cent of organisations using HR outsourcing (HRO) do so primarily for cost reasons, while only 20 per cent are what it calls “high performers”, who in many cases have outsourced their entire function. “We were hoping that the number of high-performing business process outsourcing (BPO) engagements would be a little higher – we would like to see the market move a little bit more aggressively that way – but the data is the data,” says Jill Goldstein, HR BPO offering lead at Accenture. What makes that 20 per cent different, she adds, is that they are more connected to the business and they think of outsourcing as something that can be used to do more than move transactional services to someone else’s care. For example, they want to see how it can be used to support business growth.

The people in that 20 per cent usually fall into one of two categories: those with a trusting, collaborative relationship with their provider, who have spent time transforming the part of their HR function retained in house so that its skills and experience complement the outsourcing arrangement; and those who were on a “burning platform” and turned to Accenture for rescue. This second group still counts as part of the top 20 per cent, because the provider defines high performers as those who get the most out of their BPO arrangements. “What motivated them to engage is maybe something that is not as relevant,” says Goldstein.

Some other providers are seeing a change in the motivation of HRO buyers. Philippa Kilgannon, the head of Vista HR services, and Paul Willis, the managed-services director at MidlandHR, both identify a demand for service improvement. “A lot of customers are looking not just to improve costs, although that is always part of it, but for an additional level that allows them to achieve different things,” says Willis.

Kilgannon says: “Buyers are much more strategic about it. Rather than saying ‘let’s outsource all of HR’, they are identifying the services that they do not believe are adding the strategic value to the business that they should.

“They are more specific in what they ask for, they have more commercial awareness and they are more accountable to the business for what they achieve.”

However, Mel Missen, HR vice-president for Europe, the Middle East and Africa at Axciom Corporation, a multinational marketing business, is sceptical about the idea that HR buyers are becoming more strategic but argues that the driving consideration for HR should always be its customers. “It is definitely not about cost saving,” he says. “You can save costs as a consequence, but if you start from that premise you are prioritising the wrong thing. You start with what your customers want, what they value and you look at whether you can offer that internally or externally, and which way brings better value.” Outsourcing some things makes sense, as it frees up resources, allowing in-house HR to concentrate on the areas where it can add most value to the business. “Too many HR teams think about what’s good for them, rather than what it is that their customers want.”
Missen is not a fan of extending the shared-services concept into the employee-relations arena.

Managers struggling with a personnel issue want support from someone with a face, who can provide ongoing advice over the days or weeks it takes to resolve the situation. These are not available over a telephone helpline. “A lot of businesses are looking at HR to be co-leaders, and you can’t do that if you outsource everything,” he says. “Outsourcing makes sense where it adds value and frees up in-house HR to concentrate on what it does best. I look to outsource the staff I regard as transactional because, first, the work can be done mechanistically and, second, you can apply a standard across many different countries and know that it will be met because of the service-level agreement.”

Missen has also outsourced benefit and pension management for a mixture of financial and quality-related reasons. “The cost of the outsourced service is negligible because the provider takes its fees out of commission from end suppliers, so the actual cost to us of outsourcing it is peanuts. And because we are letting experts deal with these things, the employee is actually getting much better value for money.” Staff recognise this, too: pension take-up has increased from less than 50 per cent to 85 per cent since the outsourcing arrangements were put in place.

In the public sector, cost-cutting has not led to the wholesale move to outsourcing that some had expected. “We face a number of years of reducing budgets and that has had an impact on the HR community as much as any other part of the public sector,” says Martin Rayson, president of the Public Sector People Managers’ Association and director of HR and organisational development at the London Borough of Barking and Dagenham.

“Organisations have taken the steps that are necessary over the past few years to drive costs down among their support functions, including HR.

“When we started this process, there was some talk of a rush to outsourcing – but that has not taken place,” he adds. “What organisations have done is to look at how they can reduce cost internally. They have not seen outsourcing as a panacea. They want to take out the cost and keep the savings themselves, rather than seeing any of that saving taken by a third party.

“But we are at a point where future cost savings have to be made, and organisations will look at ways that they can make these reductions, while protecting the quality of the service that they can provide.” These options may include outsourcing, but, says Rayson: “We do not see necessarily one silver bullet that will solve our problems. It’s about looking [at all the options] pragmatically.”