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Is it all about zero-hours?

May 1, 2015/in news /by Benjamin Thornber

Is it all about zero-hours? The UK’s political parties have made zero hour contracts part of their electioneering – but how have their manifestos looked at employment issues?

Jobs – and zero-hour contracts – have been at the heart of the UK’s General Election campaign. But as the electioneering reaches its final phases, it is worth looking at how each major party stands on employment law. And given that rhetoric over zero-hours is getting so much airtime – along with the Living Wage – it is strange how little reference is made to it in the main manifestos.

The Conservatives say they accept the recommendations of the Low Pay Commission that the National Minimum Wage should rise to over £8 an hour by the end of the decade. They also want businesses to support the Living Wage and want to take action to eradicate abuses of workers, including exclusivity in zero-hour contracts. It stated it would ‘transform policy, practice and public attitudes’, so that hundreds of thousands more disabled people who want to be in work, can find employment, and more women would be encourage to join company boards.

However, in all this there are almost no firm proposals or commitments, and the Conservatives’ promises make no reference to the employment tribunal system or the fee structure.

Labour have made their position more clear. It states it will increase the National Minimum Wage to £8 an hour by October 2019, and offering tax rebates to businesses which sign up to paying the Living Wage in the first year of a Labour Government.

One clear distinction with the Tories is on zero-hour contracts: “Labour will ban exploitative zero-hours contracts. Those who work regular hours for more than 12 weeks will have a right to a regular contract.” On the employment tribunal fees of up to £1,200, Labour says: “We will abolish the Government’s employment tribunal fee system”. Whether they are referring to just the fee system or fees outright remains to be seen.

The Liberal Democrats will ask the Low Pay Commission to look at ways of raising the National Minimum Wage without damaging the economy. Its manifesto says that it will introduce the Living Wage into all central government departments and their agencies by April 2016. The Lib Dems say they will review the Employment Tribunal fee system to ensure it is not a barrier.

On zero-hour contracts, the party wants to create a formal right to request a fixed contract and consultation on introducing a right to make regular patterns of work after a period of time – but they do not say after how long.

The SNP wants to increase the minimum wage to £8.70 an hour by 2020, and wants to extend the Living Wage. The manifesto says it will ‘support tough action to end exploitative zero-hour contrasts.” That’s hardly a firm policy.

In what seems to be a move to break away from their environment policy areas, the Greens are by far the most progressive on employment law. They want a minimum Living Wage of £10 an hour by 2020, and make the highest wage in any organisation no more than ten times the lowest wage. They will also phase in a 35-hour week, end exploitative zero-hour contracts, and also implement more pro-union legislation.

The fundamental issue about the Living Wage and zero-hour contracts is striking the balance between higher pay and fair employment contracts, versus creating jobs and ensuring flexibility about working arrangements.

The Low Pay Commission seems to have a good record on getting the balance right about increasing pay whilst not destroying job, so it would make sense to follow their recommendations whilst scrutinising whether pay rates could not be accelerated faster than they suggest.

For my money the Labour Party proposal on zero-hour contrast is about right. Banning zero-hour contracts outrights seems a step too far. But 12 weeks should be long enough to establish whether there is a regular pattern of work – and if so the person should be offered a regular contract. The model is based on agency workers’ contracts where in 2009 the law changed to ensure that an agency worker is entitled to the same pay and basic terms as an equivalent permanent employee – and we have not seen any adverse effect on the use of agency workers.

But the whole issue of the Living Wage and zero-hour contracts is not quite as simple as the soundbites suggest. And as we know the governing party does not always deliver on its promises.

Shared Parental Leave – Step to Fighting Inequality?

January 14, 2015/in news /by Benjamin Thornber

Shared Parental Leave – Step to Fighting Inequality?

(A version of this article appeared in The Scotsman on 15 December 2014)

First Minister Nicola Sturgeon set out her stall to business leaders last week with the aim of making Scotland more competitive while finding ways of fighting social deprivation and inequality. In many ways, she is to be applauded for confronting a deep-rooted national problem that is holding back the country’s economy. For business, there is always a fine line between funding the costs to the business of equality measures and making profits. Experts argue that a happier workforce is the best way to improve the nation’s productivity.

One measure that may achieve this are the recent laws that give fathers extended paternity leave rights. These give mums and dads the right to share up to 50 weeks’ leave, and 37 weeks’ statutory maternity pay, for babies or adoptions due on or after 5 April 2015. This will be called shared parental leave and shared parental pay. On the face of it, this achieves the aims of creating more equality rights for parents while not costing any more to business and the taxpayer overall. What’s not to like?

As you would expect, there are some procedural rules on the new regime. Firstly, shared leave cannot be taken within the compulsory period of maternity leave, ie two weeks after childbirth. But fathers can still take their existing paternity leave during this period. The shared leave can then be taken at any time after the first two weeks up until the baby’s first birthday.

There are also some new notice provisions for taking the shared parental leave. For example, employees must first give a non-binding notice of their rights, which includes details of both partners, the expected week of childbirth and how much leave and shared parental pay each employee intends to take. Employees must then give a further notice at least eight weeks before taking a period of leave which confirms the proposed leave dates and division of pay.

The Money

When it comes to being paid, the level of shared parental pay is the same as for statutory maternity or paternity pay – currently, £138.18 per week – provided employees earn the lower earnings limit – currently £111 a week. This means that in almost all cases, the woman will take her maternity pay for the first six weeks because she is entitled to 90% of her normal pay during this period. So when it comes to cost, businesses will not have to pay any more than they do now.

Managing Absence

The difficulties will be more related to planning absences. Unlike with pregnant employees, employers will not have the same advanced warning that male employees may be planning to take some shared parental leave. Also, unlike maternity or paternity leave, the new rights can be taken in three separate continuous or discontinuous blocks (eg a week-on, week-off arrangement). Although employers can refuse a request for a discontinuous pattern, they cannot refuse continuous requests. We may therefore see leave being used like additional holiday entitlement with employees taking shorter spells of leave when it suits them. Planning for this could be tricky.

But overall, what will be the impact of the new rules and how many fathers will take advantage of the extended paternity rights? Where the mother is the main breadwinner, you could see fathers taking the shared parental leave. This might help to reduce the stigma of fathers working less and spending more time looking after the children.

Interestingly, the Government only expects there to be an uptake of between 2% and 8% by fathers who qualify. This is a paltry figure compared to the nearly 40% of fathers who take up their current two-week paternity leave entitlement. On these predictions, shared parental leave can hardly be said to be a huge advance on the fight against inequality.

The reality is that the provisions make absolutely no difference to the joint income of the family where the earnings of both partners are fairly low. In this scenario, the mother often goes back to work much sooner than she would wish because the statutory pay is too low. For these couples, it will not matter whether the father or mother takes the statutory pay as they will still struggle financially.

What would have a much bigger impact on inequality would be to increase significantly the statutory pay level of £138.38. Alternatively, the period in which the mother gets paid 90% of her earnings could be extended from six weeks to three or four months. This would give mothers much more incentive not to go back to work during this period.

But these kinds of measures would cost either the taxpayer or businesses much more than the new shared parental leave provisions. The real difficulty is that seriously tackling inequality involves serious money. The challenge to the First Minister will be to see whether the Scottish Government can indeed implement a pro-business and pro-equality agenda that has a significant impact in both spheres.

Being Paid To Go On Holiday: Do You Include Overtime?

November 21, 2014/in news /by Benjamin Thornber

Being Paid To Go On Holiday: Do You Include Overtime?

Continuing to be paid whilst taking holiday from work has been a long standing right. Until recently employers were entitled to base holiday pay on basic working hours only, and not on the amount of basic working hours plus overtime. For employees who regularly worked overtime, this meant that their holiday pay would be substantially less than their normal weekly pay.

In a recent decision, however, the Employment Appeals Tribunal (EAT) has determined that if overtime is compulsory, or if it is voluntary where the overtime is worked regularly or to a regular pattern, then the average overtime payments should be included as “normal” pay for holiday pay purposes.

Many people do work regular voluntary overtime. For example, a typical working week may amount to 36 or 40 hours a week, but with regular overtime a worker may work between 45 and 55 hours a week. These workers can now look forward to a higher rate of holiday pay based on their basic pay and regular overtime pay.

In most cases it will be obvious whether the overtime payments are regular or not. Under the Working Time Regulations 1998 (WTR) the reference period is taken to be the average normal pay over a 12 week period before holiday is taken. But what if there is a high amount of overtime only during a certain period, eg in the run up to Christmas? Would this be considered part of normal pay? Well, maybe, on the basis that it is predictable every year. If so, the 12 week reference period under the WTR would need to be amended. But, unfortunately, for now the position remains unclear about this situation.

There are two important caveats to the EATs judgement. The first is that the overtime pay can only be included as part of holiday pay for the 20 days’ statutory holiday, and not the extra 8 days’ public holiday (9 in Scotland) or any extra amounts of contractual holiday. The second is that the EAT has limited the ability of workers to claim previous holiday pay which did not include overtime payments. Before the judgment, there was the possibility of back pay claims going back years. But now it seems that the furthest back a claim can go is 12 months – although the EAT has given leave to appeal this aspect of the judgment so we do not yet know the final position on this.

The Government has already set up a task force to consider the consequences of the judgment. Already, however, there are accusations that it is employer-biased given that there are no representatives from trade unions or employee groups. In the long term, one possibility may be that employers seek to reduce the level of overtime payments and the overall amount of overtime used.

Employing non-UK workers? Don’t fall into the discrimination trap

August 15, 2014/in news /by Benjamin Thornber

Employing non-UK workers? Don’t fall into the discrimination trap

(A version of this article were published in the Scottish Licensing Trade News , and in the Fife Business Journal (p13))

There’s a lot of political talk about curbing immigration. But the fact remains that much of our economy relies on overseas workers either from inside outside or outside the European Union (EU). And none more so than the licensing trade.

From a discrimination angle, all non-UK workers who have the legal right to work in the country (which includes all EU nationals) have the same level of protection against discrimination at work as, say, black or Asian UK nationals.

Our discrimination laws have real teeth. A worker who is discriminated against because of his race or nationality is entitled to an award of injury to feelings up to £30,000, and also to an award for loss of earnings which is not limited or capped. Not only that, but in order to defend discrimination allegations an employer is effectively required to prove that they did not intend to discriminate: proving that you did not do or think something is no easy matter.

So how do you not discriminate against workers from other nationalities? The easy answer is that you treat all workers in the same way: provide the same work opportunities, give them the same terms of employment and benefits, and treat them in the same way whilst at work. Do that, and in principle you won’t have a problem. Most employers will instinctively say that this is exactly what they do – so what’s the issue?

The trouble comes when you have to show to an independent observer (ie an employment tribunal) that your decisions were not in any way influenced by race or nationality. If you have not properly documented your decision-making process, it’s going to be much harder to show that a decision was not discriminatory in any way.

In practice, this means that you should have transparent and documented processes for all aspects of employment. This ranges from decisions about recruitment and promotion, any disciplinary action you may take against employees, and in particular any steps taken towards dismissing an employee.

Ideally this requires having written policies and procedures in place – and following them! You could also consider implementing diversity training to managers as this helps to show you take your responsibilities seriously.

Isn’t all this just more red-tape (time, paper-work and expense) for small employers? There is some truth in that. But even if you don’t have policies or training in place, at the very least you should make a note of the reasons for your decisions in a style and format which can be understood by someone else reading it. You never know when you may be required to justify your decision in the future, and having a written reference point is invaluable.

And in any event the rigour of a going through a proper documented process can lead to better decision making, be it taking on the right person or letting go of a worker who is not performing.

In the end of the day, we all want the best people to work in our businesses irrespective of their race or nationality. Discrimination law is about being able to show that’s exactly we’ve done.

Dads – want to take more time off to look after the baby?

August 15, 2014/in news /by Benjamin Thornber

Paternity Leave

Dads, want to take more time off to look after the baby?

(A version of this article was published in the Fife Business Journal, which you can read here)

The world’s changing. From having no rights to spend time with their newborns a few years ago, dads now have significant rights to take time off work and get a minimum amount of pay. What’s more, dads’ rights are becoming nearly the same as mums’.

Just think about where we have come from. In the old days, a mum got no maternity leave from her work and in many cases even had to give up her job when she got pregnant. Over the last 30 years, mums have been given more and more maternity leave rights and pay. Now they can have 1 year off work, and 9 months’ (39 weeks’) statutory maternity pay (SMP), currently £138.18 a week, or 90% of average weekly earnings if that is less than SMP. If average normal pay is higher than SMP, the first 6 weeks of leave is paid at 90% of normal pay. Some employers – usually bigger companies or public sector organisations – are more generous with the pay.

Only since 2003 have dads get in on the action. But only in a small way to start with. They were given the right to 2 weeks off around the time of the childbirth which had to be taken in a one week or two week block. Unlike mums during the first few weeks, they are only entitled to the statutory pay, not 90% of their normal pay. The paternity rights also apply to adoptions.

Things changed significantly in 2011. Since then, dads can take up to 26 weeks’ extra paternity leave, starting from 20 weeks after childbirth and up until the child’s first birthday. The child’s mum must have gone back to work and have stopped receiving SMP. Dads will then get the remainder of the statutory pay up until the end of the 39 week statutory pay period. They have to give 8 weeks’ notice to their employer and must give certain details about the date of childbirth, the relationship to the mother and that the leave is to take care of the child.

The latest proposal is that the dads will be able to take up most of the joint maternity/paternity leave during the first year other than the first two weeks after childbirth, where the mum is the main breadwinner. This proposal is due to come into effect in 2015, although it has stalled in government.

How many fathers are taking advantage of these new rights? In a 2013 survey by Opinion Matters, 40% of dads chose not to take any paternity leave at all. The same survey showed that dads wanted more flexibility from work and the ability to work part-time, but that they have real concerns about damaging their prospects at work and the social stigma attached to working less and spending more time looking after the children.

But put another way, this means that 60% of dads do choose to take paternity leave. This shows that laws can change habits and attitudes. We may not be at Scandinavian levels of stay-at-home dads just yet, but we’ve moved a long way in 13 years and this trend is set to continue. Will you take your full paternity leave?

Shared Parental Leave – Step to Fighting Inequality?

The Money

Managing Absence

Paternity Leave

Dads, want to take more time off to look after the baby?

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