We round up the latest employment news.
Low Pay Commission told to take cost of living into account when setting NMW rates
The Department for Business and Trade has issued an updated remit for the Low Pay Commission (LPC).
In line with the Labour Party’s manifesto pledge, for the first time, the LPC has been asked to consider the cost of living when recommending future national minimum wage (NMW) rates. It has also been asked to propose a new rate for 18 to 20-year-olds which will narrow the gap with the National Living Wage (NLW) paid to workers aged 21 and over.
The government has repeated its pledge to create a single adult rate, although it has not set out a fixed timetable to achieve this.
The LPC is expected to submit its recommendations for the NMW and NLW rates by October 2024. If the government accepts their recommendations, new rates will come into force in April 2025.
Fire and re-hire code of practice updated
On 30 July, the government released an updated version of the guidelines. This version included a statement that was present in the draft submitted to Parliament, but was somehow omitted from the final published version. This statement, which is located in paragraph 52 of the updated guidelines and pertains to the conditions of re-employment, reads:
“The employer should ensure that the only terms which are changed are those which have been subject to the information-sharing and consultation process, and should not use this as an opportunity to make any further changes”
The government also made a number of minor edits.
Minimum service levels strike laws will be repealed
As expected, the government has announced plans to repeal the Strikes (Minimum Service Levels) Act 2023.
New legislation on tips allocation to come in force
From 1 October 2024, the Employment (Allocation of Tips) Act 2023, also known as the "Tips Act," will make it unlawful for employers to withhold tips from their employees.
The Act mandates that tips must be distributed fairly among workers, and a statutory Code of Practice on Fair and Transparent Distribution of Tips will also come into effect on the same date. These new regulations introduce significant practical changes that employers in these industries need to be aware of.
We explained what steps employers need to take to comply here: Paying staff tips: government publishes further guidance for employers (irwinmitchell.com)
Government meets with unions and bosses to get buy-in for its labour reforms
The Deputy Prime Minister and Business Secretary recently met with business leaders and trade unions to discuss the government's proposals to Make Work Pay ahead of the Employment Bill which is expected to be published in October.
The government has said that it is keen to ‘develop a new relationship of collaboration’ with unions and business and will invite representatives to other meetings so that they can share their insights.
Separately, the government has said that it is committed to delivering the plan in full and is identifying the most appropriate way to do so which may include non-legislative and secondary legislative routes as well as the Employment Bill.
Workplace sickness has cost UK businesses £30 billion over last five years
A recent report by the Institute for Public Policy Research (IPPR) reveals that the annual hidden cost of employee sickness in the UK has surged by £30 billion since 2018. The majority of this increase, £25 billion, stems from reduced productivity due to employees working while they are ill, with only £5 billion attributed to an increase in sick days.
UK workers are among the least likely to take sick days compared to other OECD countries, and often work when they are ill. On average, employees experienced a productivity loss equivalent to 44 days due to working while ill, an increase from 35 days in 2018. Additionally, they took 6.7 days off for sick leave, up from 3.7 days in 2018.
This trend is more prevalent among marginalised ethnic groups and those in lower-quality jobs. The report highlights the need for a healthier work environment to boost productivity and protect workers' well-being.
IPPR proposes a pro-business health plan, including tax incentives for companies improving workforce health, new regulations, and compulsory health reporting for businesses. This approach aims to create a healthier, more prosperous economy.
New EHRC report highlights racial disparities
The Equality and Human Rights Commission (EHRC) has submitted a report to the UN Committee on the elimination of racial discrimination, which highlights employment and pay gaps experienced by ethnic minority groups in England and Wales.
Key findings on employment:
- Pakistani and Bangladeshi groups have the lowest employment rates in Britain
- The employment gap between these groups and White British people has significantly narrowed from 2011/12 to 2021/22
- Unemployment rates for Pakistani, Bangladeshi, and Black groups are 8.7%, 8.8%, and 9.5% respectively, compared to 3.6% for White British people in 2021/22
- Factors contributing to the employment gap include cultural-religious reasons, discrimination, literacy issues, and low educational attainment, particularly among the Gypsy, Roma and travelling communities.
Key findings on pay gaps:
- Bangladeshi and Pakistani workers respectively earned 17.7% and 9.3% less than White British workers in 2021/22, though there are signs of improvement over time
- Black workers are paid 7.8% less on average than White British workers
- The pay gap may be influenced by differences in qualification levels, geographical location, and access to mentors, role models, career support programmes, and professional networks.
The EHRC recommends that the UK and Welsh governments improve data collection on employment gaps and introduce mandatory reporting on ethnicity recruitment, retention, and progression for large employers.
Review of IT and engineering sectors
The Home Secretary, Yvette Cooper MP, has asked the Migration Advisory Committee (MAC) to conduct a comprehensive review of the IT and engineering sectors. This initiative aims to address the UK's reliance on international recruitment, which the government views as indicative of labour market weaknesses and skill shortages.
The review will consider training, pay, and working conditions in these sectors and will assess how they have adapted to these challenges, including examining the impact of the shortage occupation list.
The MAC is expected to report back within the next nine months.
UK labour market update
Despite economic challenges, the job market has remained relatively stable.
Latest figures from the ONS reveal a slight drop in the unemployment rate compared to a year ago, alongside a modest rise in both overall employment and the number of payrolled employees.
- From April to June 2024, the UK employment rate was estimated at 74.5%, which is lower than the previous year's estimate but has increased in the latest quarter
- The number of job vacancies in the UK fell by 26,000 from May to July 2024, reaching 884,000. This marks the 25th consecutive decrease in reported vacancies
- Annual growth in average regular earnings for employees in Great Britain was up 5.4% from April to June 2024.
Small increase in the number of UK job vacancies
The latest data from the Recruitment & Employment Confederation (REC) and Lightcast Labour Market Tracker reveals a 2.4% increase in the number of active job postings in the UK for July 2024, compared with the previous month.
The biggest increase in vacancies was for ‘large goods vehicle drivers’ and the largest decrease was for ‘delivery operatives’ followed by primary and secondary school teachers.
FTSE 100 CEO pay rose in 2023
The High Pay Centre has released its latest analysis of FTSE 100 CEO pay for 2023, revealing a continued increase in executive remuneration. The median pay for FTSE 100 CEOs rose to £4.19 million in 2023, up from £4.1 million in 2022. Despite a slight reduction in the pay ratio, the median CEO still earns 120 times the median UK full-time worker's salary.
The report also highlights gender disparities, with female CEOs earning a median of £2.69 million, significantly less than their male counterparts. The High Pay Centre argues for the need to have regulatory reforms to control pay, include workforce representatives on remuneration committees and enhance rules about pay transparency.
Read more – August 2024
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