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December 6, 2015

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Vulnerable workers: Tories boldly go where Labour and the Lib Dems feared to tread

WARNING: This blog post contains words of praise for the Tories.

This post should have appeared on Hard Labour a couple of months ago. However, when I realised what I would be saying, I had to undertake a course of cognitive behavioural therapy. But I’m all right now.

Between 2000 and 2013, while working as employment policy officer at Citizens Advice, I wrote a deadly boring series of research and policy reports arguing for a consolidation of the three main labour market enforcement bodies – the Gangmaster Licensing Authority (GLA), the Employment Agency Standards Inspectorate (EASI), and the HMRC minimum wage enforcement team – into a single Fair Employment Agency fit for the 21st century, with the legal powers and resources to “root out the rogues” without imposing unnecessary regulatory burden on the great majority of compliant employers.

In the reports – and in any number of shorter articles, parliamentary submissions, campaign leaflets, and conference presentations – I noted that, all too often, vulnerable workers are too fearful of further victimisation or dismissal to issue an employment tribunal claim, the principal means of enforcing most statutory workplace rights. And, as a result, rogue employers can profit from exploitation with near impunity.

From the outset, my proposal was firmly opposed by the Great Protector of workers’ rights, the TUC. Protecting workers’ rights is a job for the trade unions, not government, I was told. And union membership was now growing so rapidly that all workers would be unionised by the 26th century. Well, all workers in whatever remained of the public sector in the 26th century, anyway.

However, as few if any of the tens of thousands of vulnerable, exploited workers seeking advice from CABx would live to cheer the arrival of the TUC’s cavalry, I plodded on. Occasionally, I would win over a key policy actor – the then Equal Opportunities Commission, the Institute for Public Policy Research, the trade union Unison – only to watch them get nobbled by the brothers and sisters at the TUC.

Then, in early 2006, the Labour government became interested, announcing – in a DTI policy document, Protecting vulnerable workers, supporting good employers – that “we need to ensure that vulnerable workers are not mistreated but get the rights they are entitled to.” Policy officials at the DTI (or was it BERR by then?) made encouraging noises. And in 2007 I was invited to join a Vulnerable Worker Enforcement Forum, chaired by the employment relations minister. This included senior officials from the enforcement bodies (including the HSE), as well as officials from each of their sponsoring departments, and my friends at the TUC were there to ensure nothing significant ensued.

Sure enough, when the Forum concluded in August 2008, having decided to do little more than create a single telephone gateway to the enforcement bodies – the Pay & Work Rights Helpline, since abandoned and rolled-up into the Acas helpline – the minister, Pat McFadden MP, told me that, while he agreed a Fair Employment Agency was a great idea, he couldn’t be arsed with all the inter-departmental wrangling that would be involved in setting one up. (To be fair to Pat, what I think he meant was “Gordon Brown won’t let me, and I can’t spend two years arguing with him”).

Fast forward to 2011, when (I’m told) the Coalition’s first employment relations minister, Ed Davey MP, used to wave a copy of my last report for Citizens Advice on the issue at BIS officials and demand to know “what we are doing about this.” Not a lot, seems to have been the answer, and in July 2012 a ministerial review of “the existing workplace rights compliance and enforcement arrangements, to establish the scope for streamlining them and making them more effective” quietly concluded that a single agency “would not provide significant benefits to workers.”

However, the idea appears to have stuck around in someone’s head, because in October 2014, at the Liberal Democrat conference in Glasgow, then business secretary Vince Cable MP quietly announced that his party’s manifesto for the May 2015 general election would promise a new Workers’ Rights Agency combining the remits of “the minimum wage enforcement section of HMRC, the working time directive section at the Health & Safety Executive, the BIS Employment Agency Standards Inspectorate, and the GLA.” According to Cable, this “joined-up enforcement approach” would “ensure the minority of unscrupulous employers who break the law do not get away with undercutting other employers who play by the rules.” So, there would be significant benefits to workers after all.

In the event, Cable’s clumsily-named Workers’ Rights Agency didn’t make it into his party’s 160-page manifesto, though when asked about this his then junior minister Jo Swinson tweeted “the idea’s still there.” By which Ms Swinson appears to have meant “the idea’s now been stolen by the Tories.”

For, while the Tory manifesto was as silent on the idea as those of the Liberal Democrats and Ed Miliband’s pathetically timid Labour – of six references to ‘enforcement’ in the Tory manifesto, five are to enforcement of immigration law, and one is to “tackling aggressive parking enforcement” – within a few weeks of his Clegg-free return to Downing Street, David Cameron announced the creation of “a new enforcement agency that cracks down on the worst cases of exploitation.” And Part 1 of the Immigration Bill – which earlier this week I watched being hand-delivered, all tied up in green ribbon, from the Commons to the Lords – establishes “a new statutory Director of Labour Market Enforcement, responsible for providing a central hub of intelligence and facilitating the flexible allocation of resources” between “enforcement of the national minimum wage by HMRC, the regulation of employment agencies by [EASI] and the licensing of legitimate labour providers by the GLA.”

OK, ‘Director of Labour Market Enforcement’ isn’t as snappy as Fair Employment Agency. But if it looks like a duck, waddles like a duck, and quacks like a duck, it probably is a duck. Indeed, it’s clear from the joint BIS and Home Office consultation exercise – which ends on Monday night – that the Director of Labour Market Enforcement not only looks, waddles and quacks like a Fair Employment Agency, but actually is my Fair Employment Agency in all but name.

The consultation document states that “the Director will have a high public profile as a leadership figure for labour market enforcement and against exploitation of workers,” and will “set out an effective and coordinated plan to promote compliance in areas where the intelligence indicates a threat of labour exploitation or greater levels of non-compliance. The Director will also need to be able to call on any of the enforcement bodies to assist in the implementation of that plan.”

Furthermore, the Director’s strategic plan will “set out, for the financial year ahead: the priorities for enforcement; the outcomes required from the enforcement bodies; and the budgets for the enforcement bodies, within the total envelope of available funding.” And “once approved by Ministers … the plan will be the starting point for all of the work of the three enforcement bodies [my emphasis].”

So, eat your heart out, brothers and sisters of the TUC. What Labour’s Pat McFadden and Gordon Brown couldn’t be arsed to do when they had the chance, and what the Liberal Democrats couldn’t even find space for in their 160-page tome of liberal do-gooding, the Tories are now doing, just like that.

Sure, it’s unfortunate they’re using an Immigration Bill to do so, and naturally a lot will depend upon that ‘total envelope of available funding’. But if the new Tory Government had simply wanted to diminish (or even abolish) the GLA, EASI and minimum wage enforcement, it could quite easily have done so without going to the trouble of creating its Director of Labour Market Enforcement, and without proclaiming its determination to “bring to justice those who are exploiting workers [and] stop such exploitation happening in the first place.”

So, well done you Tories. And now I’m going to go and lie down for a bit.

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November 11, 2015

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The Independent: It isn’t, are you?

Having spent three decades banging my head against the brick wall of government policy-making, and trying to persuade our famously independent press and media to pay just a teeny weeny bit of attention to important issues of social and legal injustice, it never fails to amaze me how easy it seems to be for businesses with no evident goal other than their own enrichment to get their name and the services they offer in the paper. Indeed, sometimes those businesses make it look so easy that I’m simply left wondering what it is that I’ve been doing wrong for 30 years.

Take the Manchester-based Peninsula Business Services, a “consultancy firm providing advice to companies primarily on employment law and health and safety.” This is a firm so deeply committed to justice and corporate social responsibility that, last month, it told the Justice committee of MPs that the employment tribunal fees introduced by Equality Dave and his minions in July 2013 have “improved access to justice for all.” Yes, really. Not only that, but the fees “have, in the main, improved the quality of the claims presented at tribunal.” Which – duh! – explains why the success rate has gone down.

And I suppose that, given such insightful analysis, we shouldn’t be surprised that it is Peninsula Business Services that newspapers of record such as The Independent turn to for comment at times of national crisis. Times of national crisis such as the departure of Zayn Malik from One Direction, the staging of the Rugby World Cup, and the existential challenge of – cue scary music – Black Friday. Woooooo.

“Black Friday: employers fear online shopping will spur productivity meltdown” screamed the headline in yesterday’s (online) Independent. Yes, productivity meltdown! And how did the Independent learn of this approaching business armageddon? Well, “almost 8,000 employers have called a leading employment law consultancy in the last three days after being overwhelmed by holiday requests for November 27, or Black Friday. Peninsula Business Services said that many employers feared office productivity would be hit by online shopping after most of these holiday requests had to be denied.”

Not only that but, according to Alan Price, Employment Law Director of Peninsula Business Services, “employers were right to feel concerned about holiday requests and internet usage” over Black Friday. “With the Internet being an integral tool in the working environment and with every employee having access to it, unauthorised conduct can spiral out of control and policing employees’ Internet usage can feel like an overwhelming task”. Mr Price urged employers to “make sure their HR policies are up to date by throwing shed-loads of money at Peninsula Business Services”. [Yes, I made that last bit up]

PBS Black Friday

And, it has to be said, 8,000 is quite a lot of worried employers. It’s certainly 7,300 more than the nearly 700 “anxious employers” that, according to The Independent, called Peninsula Business Services over the weekend before the start of the Rugby World Cup in late September. “It’s almost as though the Rugby World Cup has cast a spell over rugby fans, causing everyday life to stand still, consequently resulting in employees forgetting that they have an obligation to the company they work for,” said Alan Price, who urged overwhelmed employers to get “an implemented up-to-date policy regarding expected conduct during sporting events by throwing shed-loads of money at Peninsula Business Services.”

PBS RWC

And 8,000 – or 7,953 to be precise, as Peninsula are in the press release that, thanks to the obliging Personnel Today, we are able to read in full – is a lot more than the 220 calls that, according to the always on-point Independent, were made to Peninsula in March this year by “workers asking for compassionate leave following the news that Zayn Malik had quit One Direction.”

As ever, Peninsula’s Alan Price was on hand to tell the Independent‘s Jenn Selby that “it was a situation you just couldn’t make up. While I sympathise with One Direction fans, I hardly think this qualified as compassionate leave.” Clearly something of an expert on pop music as well as employment law, Mr Price went on to “draw comparisons between the event and that of the big parting of ways of Robbie Williams from Take That in 1996, where [Peninsula] again experienced a huge spike in calls from concerned bosses.”

Hang on, I thought the Zayn Malik-related calls were made to Peninsula by “workers asking for compassionate leave”, not their bosses. Pah, who cares about such details, this is a time of national crisis, employers are overwhelmed by people skiving, everyday life is at a stand still, and PRODUCTIVITY IS IN MELTDOWN.

PBS Zayn Malik

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Are hairdressers really *that* bad at paying the NMW?

With the Workers’ Party – or is it the Party of Equality? – leaving no stone unturned in its titanic struggle to “end discrimination and finish the fight for equality in our country”, last month saw the Department for Business, Innovation & Workers’ Rights name & shame another 115 minimum wage (NMW) rogues. Well, another 113 NMW rogues, once you exclude the two businesses – London-based Danhouse Security and Scottish business C & R Tyres – the Department had already named & shamed for the very same breaches of the NMW, in November 2014 and February 2015 respectively.

How hard can it be to manage an Excel spreadsheet? Too hard for the mandarins at BIS, obviously.

The inclusion of Monsoon Accessorize for the retailer’s failure to pay an average of £72.68 to 1,438 of its employees predictably dominated press and media coverage, but otherwise the list of 113 was much like all previous rounds of naming & shaming in being comprised almost entirely of small fry – many of them very small fry indeed. Excluding Monsoon Accessorize, the average underpayment (and so financial penalty) was £2,537.65, and the average underpayment per worker just £1,124.53 (that is, less than the £1,200 that the Party of Equality thinks it is entirely reasonable to charge low-paid workers to pursue a tribunal claim for race, sex or other discrimination). And, excluding the 1,438 Monsoon Accessorize employees, NMW underpayments were recovered by HMRC for just 255 employees of the other 112 firms.

In 53 of all 113 cases, the total underpayment (and so financial penalty) was less than £1,000, and in all but 15 cases it was less than £5,000. In 77 of the 113 cases, just one worker was underpaid, and only in 13 cases were five or more workers underpaid by the employer. Lucky the Coalition government upped the maximum penalty to £20,000 per worker, eh?

And, as with previous rounds of naming & shaming, the list of 113 was dominated by local hairdressers & beauty salons (25); pubs, cafes and hotels (16); and second hand-car dealers (8). I know – not least because former BIS mandarin Bill Wells keeps telling me – that the NMW apprenticeship rates might be difficult for small hairdressing business owners to fully understand, but does that really explain HMRC’s apparent obsession with the sector? And when-oh-when are BIS going to start naming & shaming some of the 100+ social care employers that, back in April this year, then BIS minister Jo Swinson said HMRC were then investigating? (Yes, Bill, I know, there is absolutely no abuse of the NMW in the social care sector, the authors of all those reports saying the opposite are simply deluded).

So – not that Gem will notice, she’s far too busy fighting HR wars with her lightsaber at #CIPD15 – here’s an updated chart, showing the 398 NMW rogues named & shamed by BIS to date, by sector.

NMW Nov 15

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October 22, 2015

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New finding: 98% of #ukemplaw research is rubbish

Regular readers of this blog – hello Mum, hello Gem – will know that I have a bit of an allergy to PR masquerading as ‘research’, and am not averse to poking fun at the law firms, recruitment agencies and even charities unashamed to grab a media headline or two with an eye-catching but wholly bogus statistic. But today I came across an example of this disreputable genre with a comedic value that puts it in a class of its own.

“Shared parental leave: Most fathers in the UK aren’t taking up the chance” was the plain-speaking headline above an article by the evidently statistically illiterate Radhika Sanghani in today’s Telegraph online. As Ms Sanghani explains:

Just two per cent of British companies have seen a significant uptake of shared parental leave since the new law came into effect in April. Previously only mothers could take a year’s worth of maternity leave while fathers were entitled to two weeks, but now both parents can share up to 50 weeks of leave. The change in law was praised by parents in April when it came in but so far few have made use of it.

Out of 70 companies polled, only a handful said many of their employees had taken advantage of the new law, though 38 per cent said they’d seen interest and momentum was building.

Seventy employers! Out of 1.2 million. Who could possibly have put together such an unimpressively sized and no doubt randomly selected survey sample? Step forward ‘family friendly working’ consultancy My Family Care and law firm Hogan Lovells, who jointly conducted the ‘research study’ but, strangely, don’t appear to have yet seen any reason to put their research report (and its explanation of their methodology) on their websites. So we can only guess how their sample of 70 firms is representative of all “British companies”.

Meanwhile, the HR specialists at Personnel Today were taking a similar line on the, er, ‘research’. And, over at the Daily Mail, the ‘research’ was seen as sufficiently robust and revealing to go with the headline “New dads don’t want shared parental leave”. Because men not taking shared parental leave simply isn’t exciting enough for the Daily Mail. It has to be because they don’t want it. Well, why would they?

But we do at least have the Mail’s business reporter, Rosie Taylor, to thank for revealing the ‘research’ data from some of the 70 surveyed employers that we would no doubt see in the My Family Care and Hogan Lovells research report, if only they had thought to actually publish it. So we learn from Ms Taylor, for example, that Citi bank “which has 10,000 UK employees, saw 11 fathers apply for shared parental leave within the last six months, taking an average of 16 weeks off.” And professional services company Accenture said “22 employees out of a work force of 10,000 had asked for an average of between 18 to 20 weeks off under the scheme.”

And you have to agree: those figures are truly pathetic. Just 22 – and a paltry 11! – applications in six whole months. Out of 10,000 employees! What on earth were Vince Cable and Jo Swinson thinking, introducing such an unwanted scheme?

But … hang on. How many applications for shared parental leave could a company like Accenture expect to receive in a six-month period? Well, according to the Equality & Human Rights Commission, just under 500,000 working women give birth every year, and there are 14 million women in the UK labour force. So, assuming that half of Accenture’s 10,000 employees are female, the company could expect about 180 employees to go on maternity leave every year – or about 90 every six months.

Which means that, over the last six months – the first six months of the new scheme – about one in four (25%) of Accenture’s qualifying male employees took up their right to shared parental leave. Yet the Coalition Government’s own prediction was a take-up rate of just 2-8%. Jo Swinson would have given her right arm for a take-up rate of 25% within six months of the law coming into force. Far from ‘not wanting’ shared parental leave, men are practically fighting each other to take some.

Somehow, the crack researchers at My Family Care and Hogan Lovells failed to spot that they had stumbled upon a policy goldmine (yes, I’m joking). But it’s too late now. The Daily Mail has been briefed by the My Family Care and Hogan Lovells press officers, and it has spoken: MEN. DON’T. WANT. SHARED PARENTAL LEAVE.

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September 24, 2015

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NMW enforcement: David Cameron ramps up the rhetoric (but not much else)

Late last month, prime minister David Cameron used an article in the Times – Parliament is just so yesterday, dahling – to announce that he is putting enforcement of the so-called national living wage (or increased national minimum wage rate for workers over the age of 25, if you prefer) from next April at the heart of his ‘One Nation’ agenda. According to the Guardian – for ideological as well as financial reasons, I am physically unable to read the Times – the prime minister wrote that the national living wage will only work if it is “properly enforced”. And, to that end, “a new labour market enforcement director will be appointed to ensure that firms comply” with the new rate of £7.20 an hour for the over 25s.

Somewhat surprisingly, none of the crack political correspondents reporting the prime ministerial ‘announcement’ spotted that this represents something of a policy climbdown by Cameron. As recently as May this year, he and other ministers were talking of creating “a new labour market enforcement agency” to “crack down on the worst cases of labour market exploitation”, including non-payment of the national minimum wage. Now, that “new agency” has shrunk to just one extra, director-level official. Woo hoo.

On the plus side, Cameron reportedly said his Government will “significantly increase” the budget for enforcement of the national minimum wage, which has already seen welcome increases under the Coalition, from a miserly £8.3m in 2013/14, to £9.2m in 2014/15, and £13.2m in 2015/16. At a time when departmental budgets are being slashed, such increases are not to be sniffed at. Unfortunately, the prime minister gave no indication of the size of the further “significant increase” he has in mind.

Furthermore, the rate at which financial penalties for non-compliance are calculated will be increased from 100% of the underpayment, to 200% (though the current maximum penalty of £20,000 per underpaid worker will remain). And there will be a new team in HMRC to “take forward criminal prosecutions of those who deliberately don’t comply” – in recent years, such (relatively expensive) prosecutions have been even rarer than they were under the last Labour government.

To “unscrupulous employers who think they can get Labour on the cheap”, wrote the prime minister, “the message is clear: underpay your staff, and you will pay the price.”

So it’s surprising that, since the general election in May, ministers have ‘named & shamed’ just one tranche of 75 unscrupulous employers found by HMRC to have breached the minimum wage. For some 50-60 such employers become eligible for ‘naming & shaming’ each month and, as recently confirmed by BIS in answer to a parliamentary question by Jo Stevens MP, the failure to ‘name & shame’ more than 75 since the last tranche of 48 in March means there is now a growing ‘backlog’ of more than 500 unscrupulous employers that BIS has yet to ‘name & shame’. Will it ever do so? We should be told.

Indeed, in late July, BIS announced an effective amnesty from both financial penalties and ‘naming & shaming’ for those NMW-breaching employers that self-report to HMRC. So much for ‘paying the price’ for underpaying your staff. Understandably perhaps, BIS ministers appear somewhat reluctant to say how many unscrupulous employers they have let off ‘paying the price’ since July.

All in all, the message is not quite as clear as the prime minister would have us believe. Underpay your staff, and you might pay the price. Or you might not.

Looking at the details of the tranche of 75 employers ‘named & shamed’ in July, it’s easy to see why Cameron’s announcement did not include any increase in the maximum penalty per worker, as not one of the 75 had to pay anywhere near £20,000 in penalties. The average total underpayment (and so penalty) was just £2052.86, and the average underpayment per worker just £1247.37. In 37 of the 75 cases, the total underpayment (and so penalty) was less than £1,000, and in all but ten it was less than £5,000. In 46 cases, just one worker was underpaid, and only in five cases were ten or more workers underpaid by the employer. One case involved 57 workers, and another 46 workers, but the underpayment per worker in those cases was just £71.41 and £6.61 respectively.

As with previous tranches of ‘naming & shaming’ then, we’re talking about relative small fry – the local hairdressers, beauty salons, pubs, cafes and second-hand car dealers. Indeed, looking at all 285 unscrupulous employers ‘named & shamed’ to date, it does seem that HMRC sees hairdressers and beauty salons as easy targets for keeping its ‘strike rate’ up. Then again, among the 14 hairdressers and beauty salons in this tranche were five of the ten employers found to owe more than £5,000.

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The latest quarterly ET stats in three charts

Yesterday saw the publication by the Ministry of Injustice of the latest set of quarterly ET statistics, covering the period April to June 2015 (i.e. Q1 of FY 2015/16). This is no longer as exciting an event as it used to be, back in the first half of 2014, when each new set confirmed the dramatic and sustained impact on claim/case numbers of the hefty, upfront fees introduced on 29 July 2013. But for wonks like me the statistics are still of great interest, not least for what they tell us about the trend in claim outcomes, which in turn tells us quite a lot about the ‘rough justice’ effect of fees. So here are a few charts, covering what I see as the most interesting aspects of the statistics.

ET case numbers now appear to have stabilised

For obvious reasons, there was great variation in the monthly number of new ET cases in the summer of 2013, linked to the introduction of fees, and in the spring of 2014, linked to the introduction of ‘mandatory’ early conciliation by Acas. However, the figures for Q1 of 2015/16 suggest that case numbers have now stabilised, at about one-third of pre-fees levels.

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Some 50,000 single claims/cases have already been ‘lost’ to fees

In July, when dismissing Unison’s appeal against the High Court’s rejection of its two applications for judicial review of the fees regime, Lord Justice Underhill stated: “It is quite clear … that the introduction of fees has had the effect of deterring a very large number of potential claimants.” And we can easily quantify that “very large number”, by comparing the actual number of single claims/cases against the number we could have expected, had fees not been introduced in July 2013. To do so, we simply need to generate projections allowing for (a) the “historic downward trend” in case numbers that began in 2010/11, but which ministers either failed to spot or ignored in 2012, when deciding to introduce fees; and (b) the introduction of Acas early conciliation, which was intended to bring about a 17 per cent reduction in the number of claims, in April/May 2014.

Clearly, that “historic downward trend” may not have continued at a constant rate (or even at all) into recent quarters, and the actual impact of Acas early conciliation appears to have been more modest. So the following chart sets out two alternative projections (one low, one high) of single claim/case numbers. I won’t bore you now with the detailed assumptions behind each projection, but if you’re keen to know just get in touch.

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Based on these projections, and ignoring multiple claimants (the numbers of which are not so predictable), Underhill LJ’s “very large number of potential claimants” deterred by fees was somewhere between 47,350 and 52,200, as of 30 June 2015, and continues to rise by some 5-6,000 every quarter (so, at the time of writing, might well be approaching 60,000). Furthermore, based on historic case outcome trends, about 80 per cent of those 47-52,000 workers would have obtained a favourable judgment on or settlement of their claim, had fees not been introduced.

There is still no evidence to support the Grayling-Hancock theorem

According to the Grayling-Hancock theorem – which seems unlikely to win The Fields Medal for its authors – every single one of those 47-52,000 single claims/cases ‘lost’ to fees was a “vexatious”, “bogus” or otherwise unfounded claim that should never have been brought in the first place. Yep, every single one – for there has been absolutely no ‘rough justice’ as a result of the fees.

However, were it the case that all (or even just most) of the 47-52,000 single claims/cases ‘lost’ to fees  were “vexatious” or otherwise without merit, then we could expect the overall success rate of claims to have risen substantially in recent quarters (the average age of a concluded case is about nine months, so the vast majority of claims determined in recent quarters will have been issued after July 2013).

Yet, as the following chart shows, the overall success rate has fallen steadily in recent quarters, from 79% in 2013/14, to just 62% in the last quarter of 2014/15. Yesterday, I tweeted a hastily-constructed chart showing that, in Q1 of 2015/16, the overall success rate leapt to 75 per cent – how they must have cheered in the Ministry of Injustice!

However, on closer inspection of Tables 2.2 and 2.3 of the official stats, we can see that this figure was substantially inflated by unusually high proportions of equal pay claims being conciliated by Acas or withdrawn (80 per cent, compared to 40 per cent in Q1 of 2014/15), and of unfair dismissal claims being conciliated by Acas (69 per cent, compared to 32 per cent in Q1 of 2014/5). And, of course, outcome figures are given in terms of jurisdictional claims, not cases, so are easily skewed by one or two large multiple claimant cases. If we remove those two jurisdictions from the picture, then the overall success rate in Q1 of 2015/16 falls to 62 per cent – the same as in the previous quarter.

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Clearly, we’ll have to see (when the statistics are published in December) what happens in Q2 of 2015/16, but I think it’s fair to say that, at the time of writing, there remains no evidence whatsoever for the Grayling-Hancock theorem.

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One in 10 #ukemplaw statistics are rubbish. Or is it six in 10?

I’ve written here more than once before about the seemingly growing practice by law firms and others of using eye-catching statistics based on ‘quick and dirty’, dubious or even non-existent research to grab a few headlines for their organisation. All too many journalists – in both mainstream media and the specialist press – seem to lack a critical eye, and to simply regurgitate ostensibly ‘shocking’ statistics without question or analysis. And this week has been a bumper week, with no fewer than four questionable research ‘findings’ on different aspects of the labour market making headlines.

On Wednesday, the BBC, Guardian, Independent, Daily Mail and others reported that 58.8 per cent of UK university graduates are working in jobs that do not require a degree, according to research commissioned by the Chartered Institute of Personnel & Development (CIPD). This startling figure was the lead news story on BBC Radio 4’s flagship Today programme, though it appears no one at the BBC thought to query the spurious precision – are the good people at CIPD quite sure it’s not 58.7 per cent? – or to ask how many UK university graduates had actually been surveyed for the research, and when.

The 29-page CIPD report is wordy and no doubt worthy, and there’s no question as to its academic credentials. But you have to dig quite hard to discover that the 58.8 per cent figure is based on data from just one question in a 2010 European Social Survey, namely: “how many years of education someone would need to be hired for their current job”. To arrive at the 58.8 per cent figure, the CIPD researchers then assume “15–16 years of education as the minimum indicator for a graduate job”. That is, they were probably a graduate. But hey, let’s stick 58.8 per cent in the press release and see how it goes. Bingo!

Later the same day, the Daily Telegraph reported that, according to new research by Citizens Advice, 460,000 workers – one in 10 of the 4.6 million self-employed in the UK labour force – are cheated out of holiday pay, sick leave and pensions because “businesses have wrongly hired them as self-employed”. For its 22-page report, Citizens Advice surveyed a total of 491 of its clients, through two separate surveys (one online), and then determined from their answers that one in 10 “are on ‘bogus’ [self-employment] contracts, and should rightfully be appointed as company staff”. (Based on my 13 years at Citizens Advice, I’m surprised it’s only one in 10, but that’s another matter).

Then, on the basis that the “scale” of these 491 responses “provides a statistically-valid representation of the UK self-employment market (at a 95% confidence level, with a plus or minus 4% margin of error)”, despite the respondents to the online survey having self-selected, the Citizen Advice wonks extrapolate their ‘one in 10’ to the 4.6 million self-employed, do a few quick sums to show how much that is costing HM Treasury in lost National Insurance payments (£314m a year), and – Bob’s your uncle! – they have a headline in the Daily Telegraph and a piece on BBC TV’s supposedly cerebral Newsnight (at 20m15).

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Except that, as any fule kno, and as – somewhat bizarrely – the very next sentence in the report acknowledges, Citizens Advice clients are not representative of the national labour force. On average, they are lower paid, lower skilled, work fewer hours, and – crucially – are far more likely to be working for an unscrupulous or ‘rogue’ employer. Furthermore, as already noted above, the online survey collected data from self-selecting respondents (the ‘methodology’ section of the report doesn’t even break down the number of respondents for each of the two surveys). Fortunately, not all journalists are as unquestioning as those at the Telegraph or Newsnight, so (for example) there is no mention of Citizens Advice’s ‘bogus’ 460,000 figure in the FT’s coverage of the report.

Come today, and the Independent reports that “zero-hours contracts make up one in four offers to [the] jobless”, according to research by recruitment website Glassdoor UK. However, a quick glance at Glassdoor’s own press release reveals that the ‘research’ says no such thing. According to that press release, 23 per cent of the 1,001 “unemployed people” surveyed online by market researchers Opinion Matters for Glassdoor in May reported having been “offered a zero-hours contract”. Which begs the obvious question: when, and how many times, were they offered such a contract?

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The press release doesn’t say, and there is no link to any actual report that might explain the research methodology, so I contacted Glassdoor. They replied with a generic statement from Opinion Matters on how they ‘recruit’ such respondents: essentially, respondents are remunerated for being part of a panel that completes any number of surveys emailed to them by Opinion Matters. So we have no way of knowing whether, and if so how, the 1,001 respondents are representative of ‘unemployed people’, even if we can agree on a definition of ‘unemployed’ (e.g. unemployed and seeking work).

Glassdoor also sent me a spreadsheet containing the survey data. This shows that the question asked was simply: “Have you ever [sic] been offered a zero-hours contract”. So, the ‘finding’ that 77 per of the 1,001 respondents have never been offered a zero-hours contract – despite 299 (one in three) having been ‘unemployed’ for longer than three years, and 38 for more than a decade – tells us nothing at all about the proportion of job offers made to ‘the jobless’ in 2015 that are zero-hours contracts.

But it is the middle of the Silly Season. Which perhaps explains why leading law firm Slater & Gordon thought it a good idea to press release its new research with a claim that “almost six in 10 people have witnessed or suffered bullying in the workplace”. Again, there is no link to any actual ‘report’ that might explain the research methodology – despite the press release explicitly referring to “the report” – so I contacted Slater & Gordon to ask for a copy. They told me that the research report exits, but cannot be shared “externally at this stage as some of the details are commercially sensitive”, and referred me to the generic methodology of market researchers Censuswide, who conducted the survey of 2,000 of their 69,000 (remunerated) panel members for Slater & Gordon. And, subsequently, Censuswide told me:

We used an online quantitative methodology to achieve the overall 2,000 sample base of UK workers. In terms of this sample being robust enough to represent the UK workforce, based on the latest employment data from the ONS, there is a total of 31 million workers across the UK. With this in mind, a sample size of 2,000 is considered to be robust and representative (working to a low margin of error of 2.2% and a confidence level of 95%).

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In short, Citizens Advice, Opinion Matters and Censuswide all appear to have worked on the highly questionable assumption that sample size alone is sufficient to ensure that their survey findings are representative of – so can be extrapolated to – the whole labour force. Which perhaps goes some way to explaining why the pollsters got it so wrong in May. For we know that, even if Citizens Advice surveyed all 30,000 of the self-employed people it advises through its “local offices” each year – Citizens Advice Bureaux seem to be a thing of the past, thanks to a recent brand makeover – the findings could still not be extrapolated to the national labour force. And how do we know that there isn’t a correlation between becoming a remunerated Censuswide panel member and having been bullied at work in the past, or between being ‘unemployed’ and becoming a remunerated Opinion Matters panel member?

Which is not to say that there are such correlations. We don’t know one way or the other. But if researchers don’t publish and explain the methodology used for their ‘research’, they must expect at least some people to question their headline-grabbing findings. And, perhaps more importantly, to question what they have added to the debate on labour market issues and appropriate policy responses.

[Postscript: Yesterday evening, Hetan Shah, executive director of the Royal Statistical Society, got in touch via Twitter to draw my attention to this fabulous “new free online stats course for journalists” that the Society has launched “to reduce just this kind of thing”. Managers at Citizens Advice might want to get their policy researchers to complete the course, too.]

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July 13, 2015

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Will BIS meet the compliance challenge of Osborne’s Not-A-Living-Wage?

So, George Osborne so enjoyed his upstaging of Labour on the minimum wage in January 2014 that he cunningly reprised it as the final flourish of last week’s Budget – without bothering even to consult the Low Pay Commission, that will now have the job of translating the Chancellor’s political con trick into a workable plan. (And, according to the House of Commons library, that may well require new primary legislation).

In the days following the Chancellor’s flooring of Harriet Harman in the Commons, there was a small tsunami of newspaper comment pieces and blog posts seeking to analyse the deeper consequences, both political and economic, of the move. Among the more sanguine assessments were those by former Resolution Foundation wonk James Plunkett (The UK’s minimum wage just grew up) and the LSE’s Alan Manning (The National Living Wage: a policy experiment well worth trying), while even the Living Wage Foundation managed to utter a welcome through gritted teeth.

For all this hullabaloo, Osborne’s second minimum wage coup actually didn’t advance very far on his first. In January 2014, he asserted that the UK “economy can now afford” a minimum wage rate of £7 per hour. Now – a full 18 months later – he wins acres of news coverage for committing to a rate of £7.20 from April 2016. Never have so many journalists and wonks got so excited over a difference of 20p.

Whatever, a rate of £7.20 from April 2016 is still a hike of almost 11% from the current rate of £6.50 (due to rise to £6.70 in October). So I was just a little surprised that it wasn’t until Sunday – when the Observer carried an outstanding take-down by Gavin Kelly of the Resolution Foundation – that I saw any commentator give more than passing attention to the potentially significant compliance challenge this will pose for some employers, especially in sectors such as social care where – it is commonly agreed – non-compliance is already systemic. Gavin Kelly notes:

When it comes to employers, many sectors should be able to absorb this wage hike relatively easily, despite inevitable carping. But it will pose a severe challenge in some, above all in social care, where endemic low pay means two-thirds of all care workers currently get paid less than today’s [real] Living Wage. The truly heartening news is that more than 700,000 should now receive a pay rise. The worry is that if more public funding is not forthcoming to accommodate this increased wage bill we can expect an escalation in law-breaking by employers dodging their pay responsibilities, and an intensification of service rationing for the vulnerable.

So, was there anything meaningful in the Budget to address this “severe [compliance] challenge” and likely “escalation in law-breaking by employers dodging their pay responsibilities” from April 2016? No, there wasn’t [but see comment by Craig Gordon and my response]. Indeed, as welcome as any significant hike in the minimum wage rate (except for the under 25s) must be, it’s very hard to see any underlying strategy on the part of the Chancellor, beyond providing a deeply cynical fig leaf for his poverty-inducing slashing of tax credits.

Indeed, two months after taking office, the new crop of ministers have yet to give any indication that they consider compliance with the minimum wage to be much of a priority. It is now four months since BIS named any ‘NMW rogues’ under the ‘naming & shaming’ scheme revamped by the then (Liberal Democrat) ministers in October 2013. Which – according to the answers given by BIS to parliamentary questions tabled by Ian Murray in January and Caroline Lucas this month – means there is now a ‘backlog’ of some 340 employers to be added to the 210 named & shamed to date (under the revamped scheme, all employers issued with a Notice of Underpayment by HMRC get named & shamed, regardless of the circumstances and size of the underpayment involved).

At the end of his answer to Caroline Lucas, BIS minister Nick Boles states that BIS “expects to name more employers shortly.” Which does at least suggest that ministers have not completely given up on the naming & shaming scheme. But either the next BIS ‘naming & shaming’ press release will be very long indeed (the largest to date included just 70 NMW rogues), or ministers will have to be more selective than the scheme provides for (e.g. naming only the ‘worst’ offenders among the 340+). And, from April 2016, that choice is likely to be even more stark.

 

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July 7, 2015

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Lies, damn lies, and Acas statistics?

One variant of the phrase usually (but erroneously) attributed to Mark Twain is that there are liars, damned liars and experts. Which is fine with me, because I claim no expertise in anything. So the first thing that struck me this morning, when casting an eye over the latest early conciliation statistics and independent evaluation report released by Acas, is that the good people in Euston Tower happily describe themselves as the “workplace expert”.

Not that I dispute that description, and it’s probably worth stating at the outset that, like most people with an interest in workplace dispute resolution, I welcomed and supported the evolution of the early conciliation regime provided for in sections 7 to 10 of the Enterprise & Regulatory Reform Act 2013 from the pre-existing, Acas pre-claim conciliation service. An employment tribunal claim should always be a remedy of last resort, and any provision by the State to help resolve disputes without recourse to a time-consuming, stressful and costly tribunal claim is to be welcomed. So I’m glad that, 12 months after implementation of the early conciliation regime, Acas feels able to proclaim the regime a “success, with high take-up and satisfaction rates”.

However (go fish, Mr Gove), the second thing that struck me this morning was the high number of early conciliation notifications (or ‘cases’) over the first year of operation – 83,423 – relative to the number of tribunal cases over the same period and, indeed, in previous years. In 2012-13, the last full year before the introduction of fees in July 2013, there were just 60,040 tribunal cases (single claims/cases + multiple claimant cases).

So – in a desperate and probably doomed attempt to keep Gem Reucroft happy – I have put the quarterly Acas figures into the following chart. The green columns show the actual number of tribunal cases (single claims/cases + multiple claimant cases), while the blue columns show my projection of the number of tribunal cases we could have expected, had both fees and ‘mandatory’ early conciliation by Acas not been introduced. As previously discussed on this blog, this assumes a continuation of the modest ‘historical downward trend’ in single claims/cases that started in 2010, and about which the Ministry of Injustice – having somehow failed to notice it in 2012 and 2013 – now has so much to say.

More controversially, perhaps, it also assumes that the sharp drop in multiple claimant cases in mid-2013 was largely coincidental to the introduction of fees, and simply reflects the slowing down (and confinement to Scotland) of what the Daily Mail would call The Equal Pay Claim Gravy Train. So it includes the actual number of multiple claimant cases.

Finally, the orange columns show: (a) the average number of Acas pre-claim conciliation referrals, in each quarter up to Quarter 4 of 2013-14 (as I can only find annual statistics); and (b) the number of early conciliation notifications (or ‘cases’) in each quarter since April 2014. And from this we can see that the number of early conciliation notifications far exceeds not just the actual number of tribunal cases, but also the number of tribunal cases we could have expected, had both fees and early conciliation not been introduced. Indeed, in each of the two most recent quarters, the number of notifications was almost twice the number of tribunal cases we could have expected.

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From which we could perhaps conclude that Acas might well be hoovering up, and spending resources dealing with, a fair number of ‘disputes’ that would not have resulted in the issuing of a tribunal claim in any case. We probably need to take account of the number of voluntary pre-claim conciliation cases successfully resolved by Acas in the past before we do reach such a conclusion, but the chart suggests we may need to take a long, hard look at the assertion that the early conciliation regime introduced in April 2014 has been a “success”, at least in terms of reducing the number of tribunal cases (i.e. the principal aim of the policy).

Acas states that the independent evaluation research “found that nearly half of all claimants (48%) who used early conciliation either reached a formal settlement or were otherwise helped by Acas to avoid a tribunal claim”. But if that 48% figure is applied to the total number of notifications in the two most recent quarters (45,498), the resultant number of potential tribunal cases left over (23,659) is only marginally different to my projected number of tribunal cases over those two quarters (23,526), had fees (and early conciliation) not been introduced. In other words, take fees out of the picture, and the introduction of ‘mandatory’ early conciliation by Acas appears to have had little if any impact on the number of tribunal cases.

As noted by Darren Newman on Twitter (in response to the original version of this post), there is some evidence in the evaluation research report that Acas is indeed now hoovering up a significant number of cases that would not have resulted in a tribunal claim. The researchers found that one in four (24%) of claimants described their reason for making an EC notification as “being that they ‘Just wanted to see if a settlement could be reached, and did not have a desire to submit an employment tribunal claim'” (see page 33 of the report).

Anyway, not being an expert, I’ve probably missed something rather obvious here. So I await a gleeful email or direct message from Michael Reed, following which I will rewrite this post.

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May 21, 2015

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CBI minions of the world unite, you have nothing to lose but your credibility!

If a week was once a long time in politics, it’s now no time at all when it comes to thinking up new legislation. For a week was all it took for renowned Star Trek fan Sajid Javid, newly promoted from culture to business secretary, to master his brief and decide that what Britain really needs right now is another small business and enterprise Bill. Not just any old small business and enterprise Bill, mind, but an “ambitious” small business and enterprise Bill. And this less than two months after the last small business and enterprise Bill – which clearly wasn’t anywhere near ambitious enough – reached the Statute Book.

According to Tuesday’s BIS press release, the Starship Enterprise Bill will:

“Help make Britain the best place in Europe to start and grow a business, and help create two million jobs over the next five years, so that more people have the security of a regular pay-packet. Unless, of course, they are employed on a zero-hours contract. Ha ha ha, beam me up Scottie.”

Yes, I made that last bit up. But the Bill really will “cut red tape for business by at least £10 billion over the next five years” and “create a Small Business Conciliation Service to help resolve disputes [especially over late payment]” – these being pledges in the Conservative Party Manifesto 2015.

Fortunately for Mr Javid, he didn’t have to spend any of his first week in 1 Victoria Street working out exactly how the Bill will cut £10bn worth of red tape for business. No, that’s not how policy-making works these days. Mr Javid left it to junior BIS minister Anna Soubry to explain:

“This will be a no nonsense Bill [unlike the last one!] to back small businesses and help create jobs, giving financial security and economic peace of mind to hard-working people across the country. We will be asking businesses for evidence in the coming weeks and months. We want them to be our partners in identifying and scrapping needless burdens at home and in Europe.”

Yes, that’s how evidence-based policy-making works these days. You – the one-week-old cabinet minister – decide to have a Bill, then you hunt around for evidence to justify said Bill. They didn’t tell us this on my MSc in Public Policy, but hey.

To be fair to Mr Javid and his colleagues, a Small Business Conciliation Service doesn’t sound such a bad idea. I just wonder whether there will be fees for small businesses to use the Service. And whether those fees will be anywhere near £1,200. That would only be right and proper, after all. Why should hard-working taxpayers have to bear all of the cost?

As for how to cut that £10bn of red tape, I imagine Ms Soubry’s inbox is already filling up with lengthy emails from Sir Michael Rake and his numerous minions at the CBI. Because, on Wednesday, while being skewered by Sarah Montague on the BBC Radio 4 Today programme (start at 2:34:55), Sir Michael blustered that we desperately need to cut Red Tape because “where [employment] rights are so extensive it leads to employers not being willing to employ people, that is not helpful to anyone”. And who could argue with that?

Later that morning, I tweeted the CBI to ask them which employment rights, exactly, are currently “leading to employers not being willing to employ people”. And also to ask them to explain what it is that causes the “inflexibility in being able to adjust your workforce to changing circumstances quickly enough” that, apparently, so concerns Sir Michael. Needless to say, I didn’t get any response, but it seems reasonable to assume that it’s not the statutory right to four weeks’ paid holiday that Sir Michael has in mind. Could it be the legal right not to be subject to unfair dismissal?

Well, I guess it could be. But, if you are an employer, and minded to employ one or more extra members of staff, you will know (unless you are a complete idiot, in which case you probably shouldn’t be an employer) that you have no less than two years to decide whether you’ve made the right decision, before those employees qualify for legal protection against unfair dismissal. That is, you can get rid of them as quickly and as unfairly as you like, as long as you do it within two years of hiring them. And, even if you decide that you made the right decision in hiring them, but circumstances somehow change for the worse after two years, you can still dismiss them (or make them redundant). You just can’t do so without following a fair procedure. And how hard can that be for titans of industry with their gene-based, wealth-creator superbrains?

Even if you’re a regular, non-superbrained oik who somehow made it to being CEO of a wealth-creating company, it wouldn’t take you (or your unpaid intern) long to discover that, these days, the risk of facing an employment tribunal claim for unfair dismissal, however badly you treat your human capital units, is … well, negligible. Since the introduction of upfront tribunal fees of £1,200 in July 2013, and the introduction of Acas early conciliation in April 2014, the number of unfair dismissal claims has fallen by two-thirds, to fewer than 13,000 per year.

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Yep, that’s fewer than 13,000 unfair dismissal claims per year, from a workforce of some 26 million. Put another way, each of the UK’s 1.2 million employers now faces an unfair dismissal claim – maybe well-founded, maybe not – about once every century, on average. But, according to the superbrained, wealth-creating Sir Michael Rake, that is still far too often for our entrepreneurial classes to cope with. So we must cut Red Tape now! Over to you, Sajid.

Copyright Steve Bell 2015/All Rights Reserved e.mail: belltoons@ntlworld.com tel: 00 44 (0)1273 500664

Copyright Steve Bell 2015/All Rights Reserved e.mail: belltoons@ntlworld.com tel: 00 44 (0)1273 500664

[Many thanks to the great Steve Bell for granting me permission to use this image.]

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