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Archive for the ‘Employment’ Category

When there is a doubt over status of a worker being an employee or self employed the employer must make the correct decision or face potential serious penalties relating to a change in status that can be applied retrospectively. In the absence of comprehensive legislation guidelines have emerged and must be applied to avoid potential unexpected liabilities of tens of thousands of pounds.

The employment status of a worker can be a veritable minefield for an employer if the wrong decision is made. Should an employer decide the status of a worker is self employed and treat that worker as self employed rather than deducting tax and national insurance the employer could be at risk of incurring a major financial liability for tax and national insurance deductions if the status of the worker is subsequently changed following an Inland Revenue enquiry.

If the status of a worker is changed from self employment to employee by the Inland Revenue the amounts paid to that worker would be regarded by the Revenue as not the gross pay but the net pay after deductions of income tax and national insurance. The re-assessment after adding the income tax and both employee and employer national insurance could increase the cost of that worker by more than 50%.

If a workers employment status is determined as incorrect by the tax authority the date at which the employment status was employee rather than self employment would also be determined. Such a status change and the applicable date could be applied several years retrospectively leading to a significant financial burden.

An employer cannot choose the status of a worker as employee or self employed. The status of the worker is dependent upon the rules of engagement and the working practices that ensue. There is also a tendency with long term engagement of self employed workers for circumstances to change and some changes could change the status of that worker from self employment to employee in the view of the tax authority.

The first essential question to be answered by an employer is whether the worker is being engaged under a contract of employment or whose services are being contracted. Due to the potential serious financial consequences of making the wrong decision it is important that the rules of engagement are set out and agreed in writing.

There is no statutory definition of what constitutes a contract of service and what constitutes a contract for services in relation to income tax and national insurance. In the absence of a statutory definition the interpretation of the nature of the relationship is open to debate and previous court judgments.

General rules which would indicate a worker was an employee would include scenarios such as is the work supervised, does someone state when, what and where work is done and how it should be done. Can the worker be moved from one task to another and does the worker work to set hours and paid on a set basis of hourly, weekly or monthly or receive bonuses or overtime payments. The existence of such conditions would indicate employee status not self employment.

There are many other factors which may determine employment status, for example if the worker takes the business vehicle home each day that would indicate employee status. Should the worker provide his own tools and equipment to perform the tasks and bear the costs of doing this then self employment would be indicated but should the employer provide such equipment then workers status is more likely to be interpreted as employee.

Factors which may determine self employment would include the worker using someone else to carry out the tasks at their expense, whether the work contained personal financial risk to the worker, has a fixed price been agreed regardless of time taken to perform the work. Other self employment factors would be if the worker can choose when and how to perform the tasks, whether they also work for other organisations and whether unsatisfactory work has to be corrected in the workers own time and expense.

The conditions under which a worker is engaged may be ambiguous and that can lead to problems as long term self employed workers and the relationship with the employer tends over time to slip into a pattern that might be interpreted as closer to that of an employee rather than self employment. In such circumstances what may have started as self employment may later be interpreted as employment in which case the specter of that workers cost being increased to the business by 50% going back years could become reality.

In all cases where there is doubt over the employment status the final decision becomes one of providing evidence and the weight of evidence for one side or the other. Often individual cases can rest on what may have been regarded as insignificant items at the time. For example granting the worker benefits normally associated with employment such as paid leave and even such items as access to subsidized canteen facilities could weigh the balance in favour of employment.

If an employer has doubts on the status of a worker the rules of engagement should be set out in writing at the outset and clarify the status as employee or self employment. If there is any doubt then the safest practice would be to treat the worker as an employee and deduct income tax and national insurance or engage the worker under the CIS sub contractors rules.

As a rough guide to the financial consequences of making the wrong decision or circumstances changing the status of a worker from self employment to employment without deducting tax and national insurance consider this example.

The worker has performed work for the business for 3 years as self employed and has been paid 25,000 pounds per annum. The normal work pattern is interpreted by the Inland Revenue as that of an employee not self employment.

The Inland Revenue could determine income tax of 5,000 pounds and national insurance of 2,000 pounds should have been deducted plus employer national insurance of a further 2,000 pounds. Over three years the bill for getting the decision wrong could result in an unexpected bill for the employer of 27,000 pounds. For a small business that level of additional cost could be the difference between survival and liquidation.

Many states have enacted “mini-I-9” laws. Employers, especially companies that operate in more than one state, must closely monitor their compliance with the employment eligibility and verification laws for each state in which they do business.

The most common regulation states have imposed on businesses in recent years is requiring employers to use the federal E-Verify system to confirm workers’ immigration status and employment eligibility or work authorization, specifically illegal immigrant employment eligibility, work authorization and immigration status.

E-Verify is an Internet-based system operated by Department of Homeland Security (DHS/U.S. Citizenship and Immigration Services (USCIS) in partnership with the Social Security Administration (SSA). E-Verify is currently free to employers and is available in all 50 states. E-Verify provides an automated link to federal databases to help employers determine employment eligibility or work authorization of new hires and the validity of their Social Security numbers.

Employers or “Designated Agents” (e.g., payroll companies) must register online and agree to the terms of participation to use E-Verify. [Registration includes agreeing to the DHS/Immigrations and Customs Enforcement (ICE) Memorandum of Understanding (MOU). A discussion of the ICE E-Verify MOU is outside the scope of this post.]

E-Verify will soon be required of all federal contractors. DHS is now promulgating “final” E-Verify regs. I present an E-Verify overview and update in this post.

(The National Conference of State Legislatures does a remarkable job of monitoring these new developments and I include a variation of their chart and summary of the new state legislation below.)

Review of Relevant State Laws

State Laws Requiring Use of E-Verify

Arizona
Arizona

The Arizona Fair and Legal Employment Act (HB 2779), enacted in 2007, prohibits employers from knowingly hiring unauthorized workers and requires all employers to use the Basic Pilot Program to verify employment eligibility. It establishes substantial penalties and threatens noncompliant employers with suspension and potential revocation of their business licenses. Effective date Jan. 1, 2008.

Colorado
Colorado HB 1343 (signed 6/6/2006) prohibits state agencies from entering into contract agreements with contractors who knowingly employ illegal immigrants and requires prospective contractors to verify legal work status of all employees. The contractor must confirm that the Basic Pilot Program has been used to verify the status of all employees. If the contractor discovers that an illegal alien is employed, the contractor must alert the state agency within 3 days.

Georgia
The Georgia Security and Immigration Compliance Act, SB 529, covered employment, enforcement, and benefits and was signed by the Governor on April 17, 2006. The bill requires public employers, contractors and subcontractors with 500 or more employees to participate in E-Verify for all new employees beginning July 1, 2007. The law is phased in for public employers, contractors and subcontractors with 100 or more employees effective July 1, 2008; and for all employers by July 1, 2009.

Idaho Executive Order
On December 13, 2006, Governor Jim Risch issued an executive order requiring that state agencies participate in the E-Verify system. Also, all workers employed to the state through contractors must also be from companies that have been verified to have eligible employees.

Minnesota Executive Order
Governor Tim Pawlenty issued an executive order on Jan. 7, 2008, stating that all hiring authorities within the executive branch of state government as well as any employer seeking to enter into a state contract worth in excess of $50,000 must participate in the E-Verify program. The Executive Order’s effective date is January 29, 2008.

Mississippi
Mississippi SB2988 (signed 3/17/08) requires public and private employers to participate in E-Verify. The phase-in period is: all government agencies and businesses with more than 250 employees by July 1, 2008; companies with 100 to 250 employees by July 1, 2009; those with 30 to 100 employees by July 1, 2010; and all remaining companies by July 1, 2011. An employer violating the law is subject to the cancellation of public contracts, ineligibility for contracts for up to three years, and loss of business license for up to one year. The law also makes it a felony to accept or perform employment knowing or in reckless disregard of the immigrant’s ineligibility to work, with penalties from one to five years of imprisonment and/or $1,000 to $10,000 in fines.

North Carolina
All state agencies, offices, and universities must use E-Verify, required by SB 1523 in 2006. This applies to employees hired on or after January 1, 2007, except for employees of local education agencies hired on or after March 1, 2007.

Oklahoma
The Oklahoma Taxpayer and Citizen Protection Act of 2007 (HB 1804) addressed multiple issues: transporting and harboring, driver’s licenses, public benefits, law enforcement and employment. It made it a felony to transport or harbor unauthorized immigrants, with exceptions for health or benefits guaranteed by federal law. It requires public employers, contractors and subcontractors to participate in a federal electronic employment verification system and requires income tax withholding for independent contractors who do not have valid Social Security numbers. The law became effective Nov. 1, 2007.

Rhode Island Executive Order
On March 27, 2008,Governor Carcieri issued an executive order requiring executive agencies to use E-Verify; and for all persons and businesses, including grantees, contractors and their subcontractors and vendors to use E-Verify.

Utah
SB 81 was signed into law 3/13/08. The law address multiple issues, including driver’s licenses, law enforcement, harboring and transporting, public benefits and employment. It requires public employers to register and use the Basic Pilot program for new employees; state contractors must use Basic Pilot effective July 1, 2009. The law makes it a Class A misdemeanor to conceal, harbor, transport or shelter undocumented immigrants, though church, charitable and humanitarian assistance groups are exempted.
Encourages the Use of E-Verify (1)

Tennessee
HB 729, signed into law on June 26, 2007 and effective January 1, 2008 states that employers who “knowingly employ, recruit or refer for a fee for employment an illegal alien” are subject to a temporary suspension of their business license; repeat offenders are subject to a one-year suspension. Employers who comply with the requirements of the current I-9 process or who verify new hires through the E-Verify within 14 days of employment are shielded from sanctions.

One State Limits The Use of E-Verify
Illinois
Illinois enacted HB 1744, which bars Illinois companies from enrolling in any Employment Eligibility Verification System until accuracy and timeliness issues are resolved. Illinois also enacted HB 1743, which creates privacy and antidiscrimination protections for workers if employers participating in E-Verify don’t follow the program’s procedures.

State Laws Targeting Employers On Immigration Status

Current Litigation Over State Laws: Federal Pre-emption
Two lawsuits now making their way through the federal court system could restrict states’ ability to continue to crack down on businesses that hire unauthorized workers. One is a court challenge to the 2007 Arizona employer sanctions law filed by a coalition of Arizona trade groups. In February, a federal judge denied the coalition’s request to delay implementation of the law with a temporary restraining order, and the plaintiffs took their case to the U.S. Ninth Circuit Court of Appeals. Oral arguments are scheduled for this summer and a decision is expected in the fall.

Another lawsuit making its way through the federal courts originated last year in Hazleton, PA, where a local ordinance enacted in 2006 denies business permits to employers who hire illegal immigrants and fines landlords who rent to them. In a ruling issued last summer, a federal judge struck down the Hazleton ordinance, saying it treads on federal terrain and violates illegal immigrants’ constitutional right to due process.

The town is appealing the decision, and the case will be heard in the U.S. Third Circuit Court of Appeals this summer. A decision in this case is also expected in the fall.

If the two appellate courts hand down similar rulings; either both upholding the local laws, or both asserting federal authority, the battle over federal preemption could end there. But if the courts hand down opposing decisions – one supporting state authority and the other backing federal preemption – the debate will likely go to the Supreme Court. The consequence: no clear direction for state lawmakers for at least a year or two.

Many legal experts say the bills being passed in state capitals are not constitutional, and many of the new laws are being challenged in court. The U.S. Constitution gives federal law “supremacy” over state statutes. My personal understanding of the fundamental “pre-emption” issue is that the federal laws do not pre-empt these state laws. Frankly, this is a very complex constitutional issue.

The 1986 Immigration Reform and Control Act (IRCA) explicitly prohibits states from imposing sanctions on businesses that hire unauthorized workers. But one phrase in the 1986 law – a seven-word parenthesis allowing states some leeway in the matter of “licenses and similar laws” – has created a contested gray area.

Many states have taken the IRCA parenthesis to mean they have the authority to suspend or revoke the business licenses of employers who hire unauthorized workers. Businesses and many constitutional lawyers disagree.

“You have this complex overlay of statutes and regulations and court cases, and you’ve got this federalism question of what has traditionally been federal power and what the states can do,” Jan Ting, a Temple University law professor, told the Washington Post. “There could not be an area of law that is less clear than this.”

Because states have until recently stayed away from imposing sanctions for immigration violations, federal preemption has rarely been tested and few court precedents exist.

Private Rights of Action
While E-Verify requirements have so far proven the most popular method to deter the hiring of illegal immigrants, some states are beginning to make use of another tool: giving employees a “private right of action.” Oklahoma was the first state to pass such legislation, in 2007, allowing fired U.S. workers to sue their employers if unauthorized workers were subsequently found to be working in their place. Mississippi, Utah and South Carolina followed with similar provisions this year, allowing fired workers to sue if they are then replaced by illegal immigrants. Some say the laws could open businesses to lawsuits if they employ any unauthorized workers, whether or not they have hired them to replace fired legal workers. Other states are expected to adopt this approach next year.

Also still in place are provisions mandating that all businesses in Arizona enroll in E-Verify and allowing prosecutors to investigate anonymous tips made against businesses alleged to be employing unauthorized workers.

State Felony Laws
Companies should also be concerned about a Mississippi law that makes it a felony for illegal immigrants to accept unauthorized employment. Violators are subject to imprisonment from one to five years and fines of between $1,000 and $10,000. And while the measure seemingly applies only to unauthorized workers, if I had clients who do business in Mississippi I would be strongly cautioning them. I have many clients, both individual and business, where the kind employer assists driving the very good employee to work because the employee does not have a valid state driver license because s/he lacks immigration status. In my opinion a business can be prosecuted for aiding and abetting a felony or harboring a felon under this law.

Oklahoma also imposed felony penalties, in 2007 – in that case, against anyone caught transporting, concealing, harboring or sheltering illegal immigrants in any location,
including any building or means of transportation. Utah, Missouri and South Carolina passed similar measures this year, and many fear the provisions could be used against employers who knowingly hire unauthorized workers.

SERVICES PROVIDED BY PUNJAB EMPLOYMENT DEPARTMENT

SET UP OF PUNJAB EMPLOYMENT SERVICE

At present 49 Employment Exchanges are functioning in the State, 18 as District Employment Exchanges, 25 Town Employment Exchanges, one for Physically Handicapped Persons, 4 Divisional level Employment Offices, one Overseas Employment Cell. The main functions of the Employment Department are detailed as below:

i. Registration and placement of job-seekers in gainful employment.

ii. Providing Vocational and Career Guidance to job-seekers who visit Employment Exchanges as well as to students of Schools Colleges and Universities

iii. Publication and dissemination of occupational and career guidance literature.

iv. Enforcement of the Employment Exchanges (Compulsory Notification of Vacancies) Act 1959.

v. Disbursement of Un-employment Allowance to the educated un-employed registrants.

vi. Occupational Information Unit in Directorate studies and analyses various occupants, collects and compiles occupational information regarding training facilities available in the State.

vii. Collection and compilation of statistics regarding Employment Market Information.

viii. Providing employment assistance and guidance to those persons who are desirous of going abroad for employment, higher education or professional training.

VOCATIONAL GUIDANCE PROGRAMME

The main objective of this programme is to provide guidance and employment counselling to students of schools/colleges and un-employed youth registered with the Employment Exchanges keeping in view their educational and mental capacities, interests, aptitudes and present employment trends. The Vocational Guidance is free and voluntary and is available to all the registrants and the students of schools colleges and universities. 15 Vocational Guidance Units and four Deputy Directors (Vocational Guidance) are functioning in the State.
EMPLOYMENT MARKET INFORMATION

This programme envisages quarterly study of employment situation in the state. The information thus collected is analysed, compiled and submitted to the Director General of Employment & Training, Government of India, Ministry of Labour, New Delhi and State Planning Board for formulating manpower scheme. This programme helps in identifying the changes in the pattern of employment and occupations in the State and extent of shortages and surplus of various types of workers. the programme covers all establishments in Public Sector including Quasi Government establishments and those in Private Sector (Non-Agricultural) which normally employ 10 persons or more.
ENFORCEMENT OF COMPULSORY NOTIFICATION OF VACANCIES ACT-1959

With a view to ensuring proper compliance of the provisions of Employment Exchanges (Compulsory Notification of Vacancies) Act, 1959 and Enforcement Cell was setup in the Directorate of Employment Punjab in July 1974. Its main purpose is to acquaint and guide the employers both in Public and Private Sectors about the provisions and requirements of the said Act to notify all the vacancies to the nearest employment exchange.
UNEMPLOYMENT  ALLOWANCE TO EDUCATED UNEMPLOYED PERSONS

The Government is giving top priority to the promotion of self-employment in the State particularly among the educated un-employed youth. In order to have information about the different viable projects in each District, Department of Employment got the Self-employment surveys conducted through an agency NITCON.
SPECIAL EMPLOYMENT EXCHANGE FOR PHYSICALLY HANDICAPPED APPLICANTS

A Special Employment Exchange for Physically Handicapped is functioning at Ludhiana providing employment assistance to these categories of Physically Handicapped job-seekers i.e. the Blind, the Deaf and the Dumb and the Orthopaedically Handicapped persons of the State, according to their residual capacity, mobility and the degree of disability. Recently, the exchange is given the responsibility of verification of records of employers and placement under PWD Act, 1995.
CAREER LITERATURE/PUBLICATION

A Career Study Centre was established in 1971 in the Directorate of Employment Punjab on the guidelines supplied by the Directorate General of Employment & Training, New Delhi. The main purpose of centre is to prepare Career literature and publications.
OVERSEAS EMPLOYMENT SERVICE
The youth, of Punjab Immigrate to other foreign countries with a plenty of goodwill and technical expertise in their field. Basically they are very dedicated and hard working lot. As a matter of fact, it is on record, that they are contributing a great deal in the promotion of the economy of the country, wherever they are settled. In order to help young men and women in finding a right type of job abroad and at the same to provide best of talented applicants to the Foreign Employers. Govt. of Punjab have strengthened the Overseas Employment Cell by creating a very strong computerised data base, therein all types of applicants are available. Foreign Employers can be provided with candidates according to their requirements at the shortest possible notice.

For more information one can contact the department directly. THIS IS ONLY FOR INFORMATION. NO CLAIM IN ANY CHANGE.

Department of Employment Generation and Training

It is to understand nomenclature has changes not the ACT of 1959

Employment Department, Punjab has changed its name from Department of Employment Punjab to Department of Employment Generation and Training, Punjab.

After the 2nd world war in 1945, for orderly absorption of the released service personnel and other war workers; the need for an organisation to handle this complex problem in a uniform manner was felt and in July, 1945 “Directorate General of Resettlement and Employment ” was set up

In 1947, after partition of the Country this Directorate was entrusted the job of resettlement of a large number of displaced persons (refugees).

In early 1948, the Employment Exchanges were thrown open to all categories of applicants which required transition of Employment Service from a resettlement agency to an all India placement organisation.

On 1-11-1956 the day to day administration of the Employment services was handed over to the state governments. So now the Employment service is the joint concern of the Central and State Governments where the Central Government formulates national policies, standards and procedure to be followed by the Employment Exchanges in the states; coordinates the work of the Employment Exchanges in the states; plans and formulates programmes for expansion and development of the services; conducts training programmes for employment officers and other such works which are required for the betterment of these services whereas State Governments fully control the Employment Exchanges in their respective states.

In 1959 The Employment Exchanges Compulsory Notification of vacancies Act was enacted by the Parliament and after notification of its rules, it came into force from 1-5-1960. Under the provisions of the Act all the establishments in the public sector and all the establishments in the private sector normally employing 25 or more workers are required to notify their vacancies and also render quarterly and biennial returns to the Employment Exchange of their area.

Creation of new Department of Employment Generation A new Department of Employment Generation and Training has been carved out of the Department of Labour and Employment vide Govt Notification No. 18/16/2007-GC(2)/7219 Dated 11-04-2007 and 31-07-2007 with the following main objectives:

To develop a vision, strategy & policy framework for employment generation & training

To suggest measures to derive synergy of the plans and programmes of various departments working directly or indirectly for employment generation and vocational training.
To advise on institutional and organizational mechanism for effective implementation of the action plan for employment generation and the vocational training to make the youth really employable by enhancing their skills and competencies.
To regularly plan, implement, monitor and oversee employment generation action plans in the State and advise on the future steps to be taken.
To facilitate manpower planning and vocational training in all the key sectors of the economy.
Bringing out critical gaps in various services sectors and facilitate addressing these gaps as per the requirement of the national and international market.

To identify and advise on the regulatory aspects of job oriented training policies.
Facilitate establishing more job oriented vocational institutions in the Public Private Partnership Mode in line with the requirement of skilled manpower and enhancing the capacity of the existing institutions.
Harnessing the potential of various self help youth groups and educational organisations of repute.

Present Functions of the Employment Department:   1. Registration of job seekers for placement against notified vacancies. 2. (a) Providing education and vocational information to students, applicants and parents. (b) Collects compiles and disseminates information about various self employment schemes being offered by various departments of the state. The Employment Officer identifies and motivates candidates from the Live Register for adopting self employment as a way of life. (c) Prepares and distributes career literature free of cost to schools, colleges and libraries. Available career literature in English language is also translated into regional language for its better understanding at the grass root level. 3. Under the Employment Market Information programme information of the manpower market is collected and compiled for state and national level planning. 4. The department works for the implementation of various sections of The Employment Exchanges (Compulsory Notification of Vacancies) Act, 1959. 5. Disburses unemployment allowance to Educated Unemployed applicants registered with the employment exchanges with specified terms & conditions as per “The Punjab Payment of Unemployment Allowance to Educated Unemployed Persons Rules – 1978”. 6. Provides employment assistance and guidance to persons desirous of going abroad through its Overseas Employment Cell. 7. A special employment exchange provides employment services to disabled persons by approaching employers and motivating them to employ physically challenged but otherwise eligible applicants. 8. Implements employment related sections of “Persons With Disabilities Act 1995″. New functions and roles of the Department In addition to the present functions, the Department will be performing following new functions:

i) Enhance the employability of Punjab Youth by improving their Vocational and soft skills

ii) Vocationalisation of education system at school and college level and to facilitate Vocational training for school drop-outs and informal sector

iii) Promote Entrepreneurship and self-employment

iv) Prepare Punjab Youth, through rigorous trainings, for employment in Defence services and other jobs based on competitive examinations.

v) Fully prepare Punjab youth for overseas opportunities through enhancement of vocational skills and foreign language skills and by providing emigration assistance.

vi) Upgrade Existing Employment Exchanges to Electronic Employment & Training Bureaus

vii) To make available some of the employment services through Suwidha Centres at District/Subdivision level and Kiosks at village/ town level.

viii) Every University, deemed university and selected institutions to be notified as an e-employment exchange in their respective areas to make their services easily accessible.

ix) Conduct Manpower Survey and Job Survey to assess skill and competency gaps.

x) Vocational Awareness, Counseling and Guidance to Punjab Youth, administering profiling tests.

xi) Identification, Fine Tuning and Design of Training programmes.

xii) Apprenticeship training to be effectively administered and monitored

xiii) Active involvement of C-PYTE in every district for training of youth is important.

xiv) Make it compulsory for all the institutions and selected schools to establish at least 20% to 30% seats on Vocational Education by addition/ conversion

xv) Examination and certification of training and skills

xvi) Liaison for placement of Youth with corporate, recruitment agencies

xvii) Organise Job festivals, job melas, seminars, conferences etc. for job placements

xviii) Foreign Training and Employment Bureau for providing employment assistance, guidance, and training to the Punjab Youth desirous of going abroad for employment and business opportunities in the foreign countries like Canada, USA, Europe, Australia, Middle East etc.

xix) Liaison with foreign manpower ministries and employers

xx) Check on the activities of unregistered agents.

xxi) Pre-Departure cum orientation programme.