Employer Compensation ICESR 2 August 2013 Lieutenant Colonel Steve Caldwell Reserve Forces and Cadets GBR Ministry of Defence

UK Reserve Forces Main Themes Not debate payment to reservists Employer should not be disadvantaged Defence must get value for money Compensation for employer ranges from Nothing Compensation on production of receipts Flat rate payment, irrespective of actual costs Less employers claim than expected

UK Reserve Forces Main Issues/Difficulties Overcoming ignorance of employers Reducing bureaucracy Capturing expended costs Keep it simple - implementing tax relief complicated Looking ahead: The move from pre-planned to contingent mobilisation Uncertain or early demobilisation date

UK Reserve Forces Main Challenges Discussion to be continued within the Workshop Affordability Fairness to employer Return to less certain mobilisation profile Presentations to facilitate debate Australia Netherland Poland United Kingdom + input from Canada

UK Reserve Forces GBR Perspective Financial assistance for Employer only activated when reservist mobilised for operations

UK Reserve Forces No Compensation for Non- Mobilised Service Man Training Days – all Volunteer Reservists Pro rata pay for 19 – 90 days per year. Tax-free Annual Training Bounty - Max £1674 (after 5 years). Paid annual leave. No pension, medical, or housing assistance. Additional Duties Commitment (c500 reservists) Maximum 180 days per year. Pro rata pay and benefits, includes pension and leave. No medical or housing allowance. Full Time Reserve Service (c2,000 reservist) – 3 forms: Work as a regular (active duty) service person Not mobilised.

UK Reserve Forces FR20 Better Balance Financial Proposition Easier to make financial claims FR20 proposes extra £500 per month per mobilised reservist for employers with less than 250 employees

UK Reserve Forces Current Financial Assistance Supported by legislation The Reserve Forces (Call-out and Recall) (Financial Assistance) Regulations 2005 Money available for reservist - Reservist Award Money available for employer – Employer Award and Training Award

UK Reserve Forces Employers Award An employers award shall, subject to a cap of £110 per day, be the amount by which the replacement costs incurred by the employer exceed the relevant earnings of the reservist. Replacement Costs Daily rate of: (a) pay to any replacement of the reservist (b) any – (1) overtime payments to existing employees (2) increases in salary of existing employees where an adjudication officer is satisfied that they are attributable to the absence of the reservist

UK Reserve Forces Example Reservist normally paid £100 per day Additional overtime for 4 men is £20 each per day. Therefore replacement cost = £80 per day. It is less than cost of reservist, so no employer award If total overtime cost = £150 per day Then employer award is £50 per day If replacement worker hired costs £180 per day Then employer award is £80 per day. If replacement worker hired costs £250 per day Then employer award is capped at £110 per day.

UK Reserve Forces In addition… Employer can claim for certain non-recurring costs incurred in replacing the reservist. These are: Agency fees Advertising costs Training Award Where training required on return from mobilisation Complete within 6 or exceptionally 12 months of return

UK Reserve Forces Payment Employer award paid monthly in arrears end of each month Calculated as the daily rate multiplied by the number of days that month that the reservist is absent by virtue of mobilised service Training award must be claimed within 8 weeks of returned reservist completing the training

UK Reserve Forces Employer Claims No clear link between numbers mobilised and number of claims from employers. If the replacement employee is on same or lower wage then no replacement award can be claimed. Employers can use the current labour market situation to their advantage. Historical numbers of claimants are low. In last ten years annual numbers of employers submitting a claim range is employers claimed from mobilised reservists. Equals 2.4%. In FY there were 117 payments made to 67 employers.

UK Reserve Forces Difficult to put a figure on an average claim as claims can vary depending on whether they are for replacement costs or for agency fees and advertising. Amount paid to employers reduced for the last 3 years. FY = £421,000 FY = £376,000 FY = £279, 000 = £70 per mobilisation Evidence suggests that claims are made by smaller employers (SMEs) who feel the loss and associated administrative burden greatest.

UK Reserve Forces Areas to Address Less certainty when reservists will be mobilised for contingent operations No additional payment for employees accepting reservists being on High Readiness Reserve Earlier than expected demobilisation and associated cost of releasing replacement workers