The Real Deal – Employees’ Pay

In real terms, pay is dropping.

A recent report from the Institute for Fiscal Studies (published on 20^th September 2017) has shown that public sector pay is approaching "historically low levels".

New figures show that as a result of Government pay freezes and caps, the average NHS health worker has suffered a real terms cut of almost £2,000 over the past 7 years.

The median average salary in the NHS in June 2017 was £31,526 compared with £29,132 in August 2010. Factor in inflation, and this computes to a real terms cut of £1,985 per year.

The reality in the private sector is worse with wages down by 5% since 2008, compared with a drop of 4% in the public sector. However, initially after the recession, public sector pay grew faster than private sector pay. As a result of restraint in the public sector since 2010, the gap in pay between the public and private sectors has now returned to pre-2007 levels.

This squeeze on living standards isn’t likely to improve anytime soon either, with inflation up due to the drop in the pound following the Brexit vote in June 2016.

Furthermore, the IFS estimated that the decision to lift the cap and increase wages, in line with either inflation or private-sector earnings, would be likely to cost the UK an extra £9bn by 2020 alone.

The Government is however under increasing pressure to lift the cap and announced a wage rise for police and prison officers, but the squeeze still continues for all other areas of the public sector.

Factor into this, the findings of the Low Pay Commission in their recent report (published on 17^th September 2017). This report found that more workers than ever are paid the minimum wage, or close to it. In addition, as many as 1 in 5 low-paid workers may actually be paid less than they are entitled to and this equates to between 305,000 and 580,000 workers. This is at its highest immediately after an uprating of the National Minimum Wage and declines by around half over the 3-6 months that follow.

On top of that, women are more likely to be paid less than minimum wage and are also least likely to complain about underpayment. Two-thirds of those who are underpaid are female. This proportion is known because of HMRC investigations, rather than complaints made by those women who consider that they are being underpaid.

Gender pay gap reporting may help in relation to this, but only for those whose employer has a headcount of 250 or more. So women in low-paid work, working for small organisations, seem to be offered little protection.

While ever inflation continues to rise and uncertainty around Brexit persists it seems likely that pay increases on the face of it could continue to amount to pay cuts in real terms and the squeeze on public sector workers in particular will continue. 

Hannah Boynes - Solicitor

For further information on Employment Rights please visit our website or call 0033 3344 9603 and ask to speak with our Employment Rights team.

Future world of work and rights of workers inquiry

The Business, Energy and Industrial Strategy Committee has launched an inquiry into the ‘future world of work’ and in particular, the 'gig economy' – agency workers, zero-hours work, the use of ‘self-employment’, worker status, low pay and poor working conditions. They refer to the recent Sports Direct scandal and also other organisations with similar poor working conditions.

This is good news. Hopefully, whatever its outcome, turning the lamp onto these types of employers can bring some heat on these organisations with more public attention drawn to the growth of the ‘precariat’ – individuals who work in poor conditions with weak terms and conditions, be it low pay, the absence of paid holiday, sick pay and the like.

My view is that the rise of the ‘precariat’ is nothing new – this country has a history of shoddy employers treating working people poorly and of governments legislating to either counter this, with increased protections (the introduction of redundancy pay in the 1960s, unfair dismissal in the 1970s and the recent(ish) minimum wage in the 1990s) or to aid it, by reducing employment rights (the scrapping of wages councils, the introduction of ET fees of up to £1,200, limits on compensation – all within the last 3-4 years). Since 2010, the move has been to reduce employment protection and to restrict trade unions. My view is that this has encouraged shoddy employers and weakened the position of employees.

Evidence suggests that as a result of the reduction in protections, the equal pay gap is now growing and certain sectors of the workforce, such as disabled people and pregnant women or women on maternity leave, are suffering more, not less, discrimination. I also believe that it has encouraged the growth of the ‘gig economy’ – individuals working in sham ‘self-employment’ situations or in weak zero-hours roles with little control or say about the number of hours they work. This causes illness, harms the economy and damages lives, not least children of adults who work for low pay, on horrendous hours and with uncertain futures.

I’m pleased that the Committee have this on the agenda. Let’s hope for all concerned, not least our children and grand-children, that whatever recommendations are made, they are followed by those in power and a more secure workforce results with more (not less) permanent, well-paid jobs. After all, apart from shoddy employers and obscenely profitable multinationals, how do we as a nation benefit from the rise of the precariat?

The Committee is seeking comments – please do so at:

http://www.parliament.uk/business/committees/committees-a-z/commons-select/business-energy-industrial-strategy/news-parliament-2015/the-future-world-of-work-and-rights-of-workers-launch-16-17

David Sorensen - Partner

For further information on Employment Rights please visit our website or call 0033 3344 9603 and ask to speak with our Employment Rights team.

Mind the Gap – Gender pay reporting rules

The government has published in draft The Equality Act (Gender Pay Gap information) Regulations 2016. These set out the framework for the new gender pay reporting requirements.

So who will this impact?

The reporting obligation will apply to private, voluntary and public sector employers in the UK with at least 250 employees.

What are the requirements?

Employers will be required to publish the following information:-

1. The overall mean and median gender pay gap across their workforce, using an hourly pay rate for each relevant employee. “Pay” for these purposes is defined broadly and includes basic pay, paid leave, maternity pay, sick pay and most allowances such as car allowances, shift premium pay and bonuses. However overtime, the value of salary sacrifice schemes and benefits in kind will not be included as part of the calculation.
2. The difference between the mean bonus payments made to men and women. The number of men and women in each quartile of the employer’s pay distribution. This is intended to illustrate whether female employees are concentrated in a particular way in terms of their remuneration, which would potentially indicate impediments to career progression.
3. Employers will have the option to publish a narrative to accompany the pay gap information.

Where is the information to be published?

The information must be published on a searchable UK website that is accessible to employees and the public and then maintained for at least three years to allow progress to be tracked. The information must also be uploaded to a government website.

Is there to be any ‘penalty’ for non-compliance?

The plan to introduce a civil penalty in the form of a fine has been replaced with a focus on ‘naming and shaming’ the employers who fail to comply. There is no specific penalty for non-compliance at the moment but this will be kept under review.

So what happens next?

The draft regulations are subject to a consultation that will close on 11 March 2016. The draft regulations are scheduled to take effect on 1 October 2016. Employers will be required to prepare a preliminary data snapshot showing the gender pay position as at 30 April 2017 and the detailed pay information must then be calculated and published on a date of the employer’s choosing but by April 2018 at the latest.

It will be interesting to see how the implementation of the Regulations is carried out, if the website will be up and running on time, and also how many Employers will actually feel threatened enough by the “naming and shaming” to even comply with the Regulations.

Samantha Simpson - Trainee Solicitor

For further information on Employment Rights please visit our website or call 0033 3344 9603 and ask to speak with our Employment Rights team.

An extraordinary day in the life of an Employment Lawyer – 29th July 2013

We blogged last month about the legal changes that were expected, but now they have arrived. The 29^th July has brought change – fundamental change. It has also brought with it... mayhem!

Last Monday, for the first time ever, Claimants now have to pay a fee to lodge their claim. A Claimant will pay £160 for a “type A” claim and £250 for a “type B” claim. Hearing fees for those claims are £230 and £950 respectively. Type A claims are meant to be the easier ones, type B the more difficult sort. But which claims are which? Good question – as of this past Monday, we didn’t have a final copy of the Fees Order – it was only in draft form. The final draft didn’t arrive until one day after implementation!

We also had an email from the Ministry of Justice who wrote to us to clarify that, astonishingly, Equal Pay claims, which can be some of the most complex litigation in employment law, are still type A claims – the simpler ones! However, ministers are expected to announce a change to that position shortly. So if anyone has a claim for equal pay they would be wise to issue it now whilst it’s at the cheaper rate. This could add to the surge of claims already issued before Monday by Claimants trying to avoid paying a fee altogether (although that could not be done on-line because the system was down).   We hear that over 500 claims were lodged in the Leeds Employment Tribunal alone on Friday! I think we can expect to wait many weeks for any of the Tribunals to acknowledge our claims. Claimants – expect delays.

Equal pay claims aren’t the only anomaly. A claim for a Protective Award for failing to consult about redundancies is a type B claim, yet the same claim for failure to consult under TUPE (when employees transfer to another employer) is a type A claim! In addition, the guidance suggests that TUPE failure to consult claims and working time claims fall within Band B whereas the fee Order clearly still lists them within Band A. Let’s hope for some clarity on the fee types as soon as possible.

And then we have brand new Claim Forms. We also have a brand new remission scheme, so that people can apply to pay no fee at all or only part of the fee. After road-testing these forms, whilst they look at first ok, we see there are real problems. First of all, it’s not easy for a Claimant to find their form on the Tribunal’s website. You then only have 20 minutes on each page when completing online, otherwise you lose your data. The fee type seems to (wrongly) set itself after only a few questions. It has crashed several times during our tests. There is no way of attaching documents such as additional particulars of claim and there is no way of saving the completed form – you have to print it for your records!

The PDf version of the form is no better. It can’t be saved without a ‘signature’ and once it’s signed it doesn’t seem to let us change it! It doesn’t seem as though we’ll be able to email a copy to our clients for approval and if any changes are required, the full form will need to be retyped. It is going to take some getting used to.

And this is in today’s age of technology!

A further issue that doesn’t seem to have been thought through is the problem of how to pay a fee. The Tribunal system would prefer for us to lodge claims on-line and pay the fee at the same time by debit or credit card.  Claimants themselves might be able to do this but what about law firms paying the fees on behalf of their clients, where the client has a source of funding e.g. a union? There was talk of a Paypal account but no sign of it. If we are to pay a fee on behalf of a client, we will need to send a cheque and rely on the postal system or hand-deliver it with the claim form! If your office is near to one of the allocated hearing centres, hand-delivery seems to be the best option and it guarantees the claim form and fee is received. However, when you act for clients nationally, a trip to Cardiff, London or Glasgow on the day limitation expires is going to be messy!

And aside from fees and new claim forms we have new rules of procedure, a new cap on unfair dismissal compensation, pre-termination negotiations in unfair dismissal cases are inadmissible and compromise agreements are now ‘settlement agreements’ with a new ACAS code of practice.   

What a landscape the government is creating! And what an interesting way of doing it...

Daniel Kindell - Solicitor 

For further information on Employment Rights, please visit our website or call 0033 3344 9600 and ask to speak with our Employment Rights team.

 

Reduction in response time to government consultations

We often, as a firm, voice our collective opinion on government proposals. In recent years, we have spoken out on a number of issues, ranging from the implementation of a cap on trainee solicitors’ wages, to the Jackson Reforms in the field of Personal Injury law and the now imminent introduction of fees in the Employment Tribunals.

We therefore speak from years of experience when we say that clear and considered responses to consultations require a great deal of research and preparation, which can often take several months.

We were therefore alarmed to hear in recent weeks that the government has now introduced new guidance to shorten the twelve week period for which ministers were previously required to consult the public on government proposals to a mere two weeks.

This clearly will make it extremely difficult for interested parties to gather evidence and prepare a reasoned and informed response to policy changes that directly affect us all.

The upshot of this is that, potentially, sections of the public, in particular those with access to fewer resources who will no doubt struggle to meet the two week deadline, will essentially be left without a voice to challenge government policy.

This appears to us to be nothing more than an attempt by the government to suppress opposition.

To place the effect of reducing the consultation period into context, in their response to the reduction of consultation periods the Institute of Employment Rights cite the Enterprise and Regulatory Reform Bill as an example whereby the government introduced, in their words, a “technical amendment” to existing legislation, without consulting the public. This “technical amendment” was to section 47 of the Health and Safety at Work Act 1974, the significance of which is far-reaching as it overturns the law imposing employers’ strict liability for the health and safety of their employees, which has been in effect for 114 years.

The implications of this are that various existing personal injury clients of our firm who suffer from life-long, incapacitating injuries, including one client who lost an eye, and potentially a career, due to faulty work equipment, would in future have been prevented from bringing their claims against their employer.

We therefore share the view of the Institute of Employment Rights and have supported their ongoing petition to the Secondary Legislation Scrutiny Committee to voice our opposition to the government’s blatant attempt to stifle the voice of opposition.

Christopher Ridley - Solicitor

For further information on Employment Rights, please visit our website or call 0113 245 0733 and ask to speak with our Employment Rights team.