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London’s gender pay gap worst in the UK

The Office for National Statistics published data this week that shows London as a region has the widest gender pay gap in the UK. Currently, women working full-time in London earn 14.6 per cent less than their male colleagues. In the past twenty years the gap has narrowed only slightly from 15.1 per cent. In contrast, during this same period the pay gap in Wales and Scotland has gone from 17.5 per cent and 18.4 per cent to 6.3 per cent and 6.6. per cent respectively.

Among part-time workers however, women on average earn more than their male counterparts. The gap is narrowest in the South-East where women earn 3.1 per cent per hour more than men. This is down from 1997 when women typically earned 9 per cent more, indicating that men’s wages have grown quicker in this area.

The variation for part time workers in both the public and private sector is stark. In 1997 women working part-time in the public sector earned 6.1 per cent less. This gap has now widened to 22.3 per cent. The position has in fact reversed in the private sector where women earned 2.2. per cent less than men two decades ago and now earn 2.6 per cent more.

Although the gender pay gap reporting obligations introduced this year are certainly a step in the right direction, these latest statistics show that much work is still needed if the gender pay imbalance is to be improved in London and throughout the UK.

London’s gender pay gap worst in the UK

National Minimum Wage Increase

Workers aged over 25 will receive an inflation-busting increase of 33p an hour in their national minimum wage. An above-inflation pay rise of 4.4 per cent starting April 2018 is over the 3 per cent rate of inflation which is in place at the moment. Following this, full-time workers will receive a £600 annual increase.
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National Minimum Wage Increase

Autumn Budget – employment provisions

The Chancellor has spoken and presented his first Autumn Budget.
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Autumn Budget – employment provisions

The Real Living Wage has increased, but is it actually benefitting employees?

Earlier this week it was announced that the Real Living Wage has been increased from £8.45 to £8.75 per hour across the UK and from £9.75 to £10.20 per hour in London. The changes have been driven largely by inflation, higher private rents and transport costs, and the new figures have been calculated to reflect the actual cost of living required in order to sustain a decent quality of life in the UK and London.

However, the Real Living Wage remains voluntary, unlike the mandatory National Living Wage put in place by the Government. Further, despite more than one thousand employers signing up to pay the Real Living Wage since Living Wage Week last year (including Google and Ikea), 5.5 million people across the UK (comprising 21% of the workforce) are still being paid less than the Real Living Wage. One of the criticisms of the Living Wage campaign was that it targeted sectors that do not tend to have significant numbers of low paid staff – as such, it may not, as yet, have had the desired impact for those who need it the most.

Further, there have been questions around how employers are offsetting the additional cost of meeting the Real Living Wage – some employers have cut overall pay packages to mitigate the costs of increased pay, for example stopping overtime rates and cutting back hours. As such, the overall benefit being passed to employees is, in some cases, questionable.

On a more positive note, the increase in the Real Living Wage will see more than 150,000 employees get a pay rise, as more than 3,600 employers have now signed up to pay the Real Living Wage since it was introduced. Among these is Heathrow, which is set to become the first Real Living Wage airport by the end of 2020.

The Real Living Wage has increased, but is it actually benefitting employees?

Publication of gender pay details

To date most companies have been slow to release details of their gender pay gap with only 176 companies publishing their data.

With some 8,800 yet to reveal their figures, Theresa May has called for more companies to report on their gender pay gap to address the inequality in the workplace. She said that, “the gender pay gap isn’t going to close on its own” and that “we all need to be taking sustained action to make sure we address this.” Nevertheless, the only Government Department to have so far published their figures is the Department for Education which has a gap of 5.9%.

So far a handful of City businesses have published details of their gender pay gap and the results are as anticipated with reported median gaps of between 24% and 35.7%.

The Prime Minister’s announcement comes in the wake of a report, published by the World Economic Forum, which showed that the UK has dropped from a ranking of 9th in the world to 15th in respect of its gender gap. This ranking comes after a study from the Chartered Management Institute which showed a 27% pay gap among the UK’s 3.3 million managers, where men outnumber women three to one.

While the gender pay gap reporting obligations are an important step in the right direction, it seems that much work is still needed to reduce the gender pay imbalance in the UK.

Publication of gender pay details

Pay cap lift for police and prison officers

The 1% cap on public sector pay rises in England and Wales (which came into force in 2010) is to be lifted. The first professions to benefit will be police officers and prison officers. The government has announced that for the 2017/2018 FY police officers will receive a 1% pay rise plus a 1% bonus and prison officers will get a 1.7% rise, both of which will be funded from existing departmental budgets.
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Pay cap lift for police and prison officers

Fulton and anor v Bear Scotland Ltd

The EAT has confirmed that a gap of more than three months between non-payments or underpayments of wages breaks the ‘series’ of deductions for the purpose of bringing an unlawful deductions from wages claim. In the context of holiday pay, what this means is that where there has been a gap of more than three months between underpayments of holiday pay, the earlier payments in the series will be time barred, although the Tribunal may exercise its discretion to extend time.

Fulton and anor v Bear Scotland Ltd

Its all change in employment law in April…

April is a key month for employment law changes and this April is no different. 6 April is “D-Day” for a number of significant changes. By way of reminder:

1 April

  • National minimum wage – the National Living Wage (for workers aged 25 and over) increased from £7.20 to £7.50 and there were also changes in the other bands.

Weeks commencing after 2 April

  • Cap on a week’s pay  – the cap on a week’s pay (which is used in statutory redundancy pay calculations for example) increased from £479 to £489.

5 April and onwards

  • Gender pay gap reporting – employers with 250 employees should have collated their relevant data on the first annual “snapshot date” yesterday. Today the work on calculations can begin! Private employers have a 12 month window (4 April 2018) before calculations must be published on the employer’s website and the relevant government website. Remember that public sector employers have a earlier snapshot date (31 March), their calculations need to be published by 30 March 2018 and every four years thereafter.

From 6 April

  • Unfair dismissal compensatory award – the statutory cap increases from £78,962 to £80,541.  Don’t forget that the cap will be one year of the employee’s gross salary if lower.
  • Apprenticeship levy – UK employers in the public and private sectors with annual wage bills of £3 million or more have to pay their monthly levy payments;
  • Immigration skills charge – employers who sponsor workers under tier 2 will have to pay £1,000 per year, or £364 if they are a small employer or a charity;
  • IR35 – new rules apply to public authorities paying personal service companies or other intermediaries. The public authority will need to make tax and National Insurance deductions as appropriate;
  • Salary sacrifice – relief on benefits in kind provided via salary sacrifice arrangements is being scaled back for benefits entered into from today.
Its all change in employment law in April…

Dealing with personal relationships in the workplace

It has recently been reported in the press that John Neal, the CEO of the Australian headquartered insurance and reinsurance company QBE, had his annual bonus cut by twenty per cent (which equated to AU$550,000 or £340,000) for failing to disclose a personal relationship with his executive assistant. The decision to cut his bonus was taken despite what QBE described as a “commendable year [during which he] delivered a strong full year result”.  It has been reported that Mr Neal’s executive assistant was also executive assistant to the board.  QBE requires executives to disclose workplace relationships under its executive code of conduct.

Workplace relationships are common. Employees necessarily spend significant time together, and in many cases will have common interests.  Some employers view these relationships as a positive.  For example, one of the UK’s largest independent travel agencies is known to have produced well in excess of 100 marriages.  However, workplace relationships can be a distraction, can fuel gossip and can sometimes complicate decision making.  To be clear as to their expectations, employers should consider the circumstances in which workplace relationships may be inappropriate, and may wish to put in place a policy on them.  Any policy should strike a balance between an employee’s right to a private life, and the employer’s right to protect its business interests.  In most cases, this is likely to include a requirement that an employee discloses any workplace relationship that may give rise to a conflict of interest or a breach of confidentiality.  It should also be made clear to employees that they must not allow personal relationships to influence their conduct in the workplace.

Mr Neal’s case is an extreme example.  As CEO, he was clearly obliged under the executive code of conduct to disclose any personal relationship with a colleague.  Mr Neal has himself admitted that he did not do this, and that he could see that it might cause damage to the company’s reputation.  It is important to remember that the issue here was not the relationship itself so much as Mr Neal’s failure to abide by the code of conduct, and disclose it.  Whilst it has been reported that Mr Neal’s executive assistant has decided to leave QBE, it is understood that no action was taken against her, presumably because she was not subject to the code of conduct.  It is unlikely to be appropriate for employers to take steps to reduce bonuses, or take disciplinary action against an employee, simply for having a personal relationship with a colleague.  Such steps may be appropriate though, where an employer has a policy on workplace relationships which an employee deliberately disregards.  As always, when making a decision to reduce a bonus payment in any circumstances, an employer should consider whether the terms of the bonus scheme allow it to do this.  Failure to do so might lead to a claim for unlawful deduction from wages, or breach of contract.  The specific terms of the bonus scheme which applied to Mr Neal are not known.

Dealing with personal relationships in the workplace

Holiday pay includes commission (still)

Given the high numbers of potential holiday pay claims that British Gas has waiting in the wings it is unsurprising that following its loss at the Court of Appeal British Gas tried to appeal the decision to the Supreme Court. By way of brief reminder, the Court of Appeal found in Mr Lock’s favour and ruled that his holiday pay should include commission.

However the Supreme Court has refused to grant British Gas leave to appeal and has remitted the case back to the employment tribunal to determine the amount that should be paid to Mr Lock. It is hoped that the employment tribunal will make it clear how exactly the commission element of holiday pay should be calculated, as currently there is no clear guidance as to what the correct reference period should be.

There is speculation as to whether, following Brexit, this EU-derived right will continue. However at this stage this is a moot point as until the UK leaves the UK (which is likely to be at least two years away) companies and courts will have to uphold this right. So for the foreseeable future companies need to make sure that holiday pay includes commission.

(To see our previous blog post about the Court of Appeal hearing please click here)

Holiday pay includes commission (still)