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.

 

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.

Acas

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.

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.

UD

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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Busy day at work: the next Minister for #ukemplaw should not be a part-timer

The polls still suggest a close result but, with the Tory campaign in disarray and their supportive press barons suffering a collective nervous breakdown, I’ve started to feel vaguely optimistic that the next BIS employment relations minister will be a talented Labour MP such as Gloria De Piero, Stella Creasy or – if he survives the SNP tsunami – the excellent Ian Murray. And the reported remarks of Labour’s Lord Falconer, that the shadow cabinet has “very, very few” machinery of government changes in mind, has set me thinking about just how long a ‘to do’ list the new BIS minister would find waiting for them on their desk at 1 Victoria Street.

Because, as easy as it is to criticise the Labour manifesto for its lack of ambition on employment law-related reform, and the woolliness (ET fees) and/or daftness (zero-hours contracts) of some of its specific policy pledges, there’s actually quite a lot for a new Labour employment relations minister to be getting on with. In their first 12 months in the job, she or he will need to devote time and energy to some or all of the following work strands:

  • Working out how to translate the high-profile manifesto pledge to “ban the abuse of zero-hours contracts” into meaningful policy action;
  • Initiating the promised process, jointly led by the CBI and TUC, for agreeing reforms to the ET fees regime and – seemingly – the ET system more generally;
  • Working out how to implement a package of woolly pledges to enhance enforcement of the minimum wage (increased fines/penalties for non-compliance, a role for local authorities, a reformed/beefed up Low Pay Commission, and a possible new emphasis on criminal prosecutions);
  • Launching a consultation on “allowing grandparents who want to be more involved in caring for their grandchildren to share in parents’ unpaid parental leave”;
  • Developing a plan to “tackle exploitation in the care sector as a route to protecting staff and improving standards”;
  • Responding to the findings of the Equality & Human Rights Commission’s inquiry into pregnancy and maternity discrimination in the workplace (originally due out in March, but postponed until after the election);
  • Working out how to translate the pledges to “tackle undercutting by rogue employment agencies”, including by “taking action to crack down on rogue agencies that exploit workers illegally for profit”, and to “extend the Gangmasters’ Licensing Authority approach to cover sectors where there is evidence of high levels of migrant labour and exploitative working practices” into meaningful policy action; and
  • Preparing a Bill to legislate as necessary in relation to these and other strands of work.

That’s quite a ‘to do’ list for anyone to cram into five days a week, let alone someone who has a second job as a constituency MP. Yet the position of BIS employment relations minister has always been both a junior and a part-time role – the remit of the Parliamentary Under Secretary of State for Employment Relations and Consumer Affairs currently covers, in  addition to employment relations: Post Office and postal policy; consumer policy and consumer affairs; competition policy; corporate governance; company law; social enterprise; Insolvency Service, including company investigations; and BIS better regulation, efficiency and reform agenda.

So, if Labour are serious about “supporting firms to win the race to the top, not get dragged into a race to the bottom”, perhaps one minor ‘machinery of government’ change they should consider is separating employment relations and consumer affairs, and appointing a Minister of State for Employment Relations. Some of of the above work strands will involve tricky negotiations with HM Treasury, the Ministry of Injustice and other departments, and on ET reform the minister will no doubt need to bang heads together at the CBI and TUC, so it would be handy not to be at the very bottom of the ministerial food chain. And promoting the position to Minister of State level would widen the talent pool from which to select what should be a prominent voice in any Labour government formed after 7 May.

Postscript: As if I hadn’t made the case well enough above, today the following photograph emerged, showing that the current holder of the post is too exhausted from her ministerial duties to notice that her campaign team are holding her placards upside down.

Nosnims

 

Manifesto mania: NMW enforcement not a job for the Home Office

So, we’ve had the Labour manifesto. And the Labour manifesto for Work, the Labour manifesto for Women, the Labour manifesto for Young People, and the Labour manifesto for Black and Ethnic Minority communities. I imagine before 7 May we’ll have the Labour manifesto for Dog Owners, and the Labour manifesto for People Who Listen to the Archers. But today it seems we will get the Labour manifesto for Home Office officials.

According to a report in the Guardian, the main feature of this will be a new “Home Office investigative unit” to target “the illegal exploitation of migrant workers”. This will consist of a “team of more [than] 100 police officers and specialists from the Gangmasters Licensing Authority”, who will be given “new powers to stop the abuse of workers and increase the prosecutions and fines of employers who breach employment laws”.

It’s far from clear how much this new unit will cost, but the Guardian reports “it will be paid for by levying a charge on non-visa visitors to the UK which is expected to raise £55 million”. And the unit will have “one overriding duty”:

To stop the abuse that makes the working families of Britain poorer. This new unit will have the powers and funding it needs to increase the prosecutions and convictions of Britain’s worst employers: those who exploit workers and drag down the wages of everyone else.

All of which glosses over the fact that we already have not one but four public bodies (or units) with much the same overriding duty: the aforementioned Gangmasters Licensing Authority, the national minimum wage (NMW) enforcement unit of HMRC, the BIS Employment Agency Standards Inspectorate (EAS), and the working time directive unit at the Health & Safety Executive. And, to access one or more of these bodies, you have to contact a fifth: Acas.

All of these bodies/units are severely underfunded: HMRC currently gets just £12 million a year to enforce the NMW, the GLA just under £3 million, and the EAS is about five people. And, if you were a government minister with a blank sheet of paper and some £15 million to spend on ‘tackling Britain’s worst employers’, you wouldn’t design a system with four (or five) separate bodies or units. You might, as Vince Cable suggested last year, create a Workers’ Rights Agency (or, say, a Fair Employment Agency), with “the powers and funding it needs” to tackle Britain’s worst employers. (Sadly, that suggestion hasn’t got much further than the inside of Dr Cable’s head, but at least he and the Lib Dems are thinking on the right lines).

So, if you are a new minister on 8 May, charged with the same remit, and have as much as a further £55 million to spend, you really shouldn’t create yet another public body (or unit). And YOU CERTAINLY SHOULDN’T PUT IT IN THE FUCKING HOME OFFICE.

headdesk

[Postscript: here’s the Labour press release on Miliband’s speech]

 

Are there really no votes in employment rights?

So, the longest general election campaign in history – it surely started at least 12 months ago – has at last reached its final phase, with the three main political parties publishing their manifestos over a frantic three days at the start of this week. This blog’s founder, the fantabulous Sean Jones QC, has put his sanity at risk (so that you don’t have to) by ploughing through their combined 330 pages and documenting every last relevant policy commitment in the Hard Labour Guide to #ukemplaw Election Pledges. But I can’t resist adding a bit of (highly) subjective commentary.

Overall, it’s hard to avoid concluding that all three main parties see no great electoral advantage in trying to improve the working lives of some 30 million people. In 330 pages, there is just one mention of ‘flexible working’, and even that is just a reference (by the Lib Dems) to the Coalition’s extension of the right to request FW in 2014. Labour and the Liberal Democrats each use the word ‘exploitation’ in relation to workers just once, and the Tories four times – but five of those six uses of the word are in relation to migrant workers. Zero-hours contracts get six mentions by Labour, two by the Liberal Democrats, and one by the Tories, but there are no new ideas on how to tackle the exploitative use of such contracts. Despite the Coalition having handed the EHRC £1m to investigate “systemic” maternity discrimination, the issue gets just one brief mention (by Labour). And there is no mention anywhere of unfair dismissal.

Disappointingly, there is no space in the Liberal Democrats’ whopping, 160-page tome for Vince Cable’s October 2014 promise of a new Workers’ Rights Agency to “revamp efforts to enforce employment law and tackle the exploitation of workers” by 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.” Perhaps I shouldn’t have pointed out that this was my idea. [Since I wrote this post, Jo Swinson has responded to a tweet from Sean Jones, saying “the idea still there” – ‘there’ presumably being the inside of Vince Cable’s head.]

Regular readers of this blog – hello David, Gem, Michael, Paul and Peter! – will not be surprised to hear that the first object of my skim reading was the issue of employment tribunal fees. The Tories let the cat out of the bag by claiming credit for “reducing the burden of employment law through our successful tribunal reforms” – that’s not what they said about their hefty, upfront fees at the time – and Labour can only find space for a tweaked, two-sentence version of the pledge previously set out in its Manifesto for Work:

The Conservatives have introduced fees of up to £1,200 for employment tribunal claimants, creating a significant barrier to workplace justice. We will abolish the Government’s employment tribunal fee system as part of wider reforms to make sure that affordability is not a barrier to workers having proper access to justice, employers get a quicker resolution, and the costs to the tax payer do not rise.

However, as noted previously on this blog, this raises at least as many questions as it answers. And note that the Manifesto for Work’s “costs to the taxpayer are controlled” has mutated to the arguably more restrictive “do not rise”.

Somewhat surprisingly, the Liberal Democrats are even more parsimonious on the subject of what their BIS employment relations minister, Jo Swinson, recently described as “one of the most high-profile debates around employment law in the last Parliament”. Their manifesto manages just a wishy-washy half sentence:

We will improve the enforcement of employment rights, reviewing employment tribunal fees to ensure they are not a barrier.

Whoopie doo. The Liberal Democrats devote more space to a promise of legal protection for bumblebee nests. Clearly, worker bees are more important than workers to a Liberal Democrat economy.

On the plus side, all three parties pledge to work to close the gender pay gap. The Tories say they “want to see full, genuine gender equality. The gender pay gap is the lowest on record, but we want to reduce it further and will push business to do so: we will require companies with more than 250 employees to publish the difference between the average pay of their male and female employees”. Similarly, a Labour government would “go further in reducing discrimination against women, requiring large companies to publish their gender pay gap and strengthening the law against maternity discrimination” – though there’s no indication of how they would do the latter. The Liberal Democrats only have enough space to say they would “work to end the gender pay gap, including with new rules on gender pay transparency”. The voting public could be forgiven for not realising that  little if any of this is new, mandatory gender pay gap reporting having been one of the last actions of the Coalition.

More positively, all three parties commit to the national minimum wage, and it’s especially heartening to see the Tories confirm they “strongly support the [NMW] and want to see further real-terms increases in the next Parliament”. They go on to expose the pathetic timidity of Labour’s promise of £8 per hour from October 2019, by stating: “We accept the recommendation of the Low Pay Commission that the [NMW rate] should rise to £6.70 this autumn, on course for a [rate] that will be over £8 by the end of the decade”. This is accompanied by a pledge to increase the tax-free Personal Allowance from £10,600 to £12,500, so that “those working 30 hours on the minimum wage pay no Income Tax”.

However,  as the FT’s John McDermott notes, this pledge is “less than it seems”, as a minimum wage rate of £8 per hour by the end of the decade would mean £12,480 per year for a worker on 30 hours per week. So, “give or take £20, [a Personal Allowance of £12,500] won’t make any tangible difference”. In any case, most workers on the minimum wage work fewer than 30 hours per week, so already pay very little if any Income Tax. And then there’s National Insurance.

Much the same can be said of the Tories’ other eye-catching move to outbid Labour’s core childcare offer (an expansion of “free childcare from 15 to 25 hours per week for working parents of three and four-year-olds, paid for with an increase in the bank levy”) with a pledge to “give families where all parents are working an entitlement to 30 hours of free childcare for their three and four year-olds”. This pledge is costed at £350m, which sounds too good to be true – and it is. As Sarah Hayward, leader of Camden council, points out in a splendid demolition job, the Tories have previously ‘costed’ Labour’s less ambitious pledge at £1.5bn (Labour’s own figure is £800m). So, to deliver 50% more extra hours than Labour for just £350m, “the quality of the childcare would need to be so appalling that no right-minded parent would ever subject their child to it”.

Elsewhere, the Liberal Democrats re-iterate their offer of an extra four weeks of paternity leave, but only at the current, lousy rate of pay (£138 per week, or just 60% of the NMW), and Labour repeats its February 2015 pledge of an extra two weeks, paid at a much more respectable £260 per week. And, in Labour’s separate Manifesto for Women, issued two days after the main event, there is an interesting promise to “consult on allowing grandparents who want to be more involved in caring for their grandchildren to share in parents’ unpaid parental leave, enabling them to take time off work without fear of losing their job”. This has been welcomed by the CBI, and represents a significant and well-deserved win for Grandparents Plus, which has mounted a sustained campaign on the issue.

And that’s about it. I just hope that, in 2020, at least some of the political parties will bear in mind the axiom that less is more. Because I just don’t think Sean Jones could survive 330 pages again.

NMW naming & shaming: frying the small fry?

On Tuesday, in what might well prove to be her last significant act as BIS employment relations minister, Jo Swinson named a further round of 48 employers found by HMRC to have breached the National Minimum Wage (NMW). The BIS press release notes:

Between them, the companies named owe workers over £162,000 in arrears, and span sectors including fashion, publishing, hospitality, health and fitness, automotive, care, and retail. This latest round brings the total number of companies named and shamed under the new regime to 210 employers, with total arrears of over £635,000 and total penalties of over £248,000.

With this sixth round of naming & shaming coming just four weeks after the last one (of 70 employers, on 24 February), and just two months after the one before that (of 37 employers, on 15 January), it’s clear that the rebooted regime that came into force in October 2013 has finally ground up through the gears to reach full speed. And, were there not a general election on 7 May, we could expect this pattern of monthly BIS press releases, each naming some 50 employers, to continue from now on. Accordingly, now seems a good time to take stock of what has been achieved to date, and what that tells us about HMRC’s enforcement of the NMW more generally. So I’ve been crunching the numbers.

Perhaps the most striking – and significant – aspect of my number crunching is that the numbers are pretty small. Although the 210 named & shamed employers between them owed a total of £638,100 to a total of 5,396 workers, some 72 per cent (3,863) of those workers were underpaid by the three worst-offending employers (in terms of number of workers underpaid, though not necessarily the total or average arrears owed). In 121 (58 per cent) of cases, the employer had underpaid just one worker, and only in 12 cases had the employer underpaid 20 or more workers.

Similarly, in 180 (86 per cent) of cases, the total arrears owed by the employer was less than £5,000, and only five employers owed total arrears of more than £20,000 (the current maximum penalty imposed by HMRC in addition to payment of the arrears owed, which is otherwise set at 100% of the total arrears owed). Even more strikingly, overall, the average arrears owed per worker was just £118.25, or just 0.6 per cent of the new maximum penalty of £20,000 per worker provided for in the Small Business, Enterprise & Employment Bill, on the verge of receiving Royal Assent.

Indeed, only 30 employers (14 per cent) owed arrears of more than £2,000 per worker, and only two employers owed arrears of more than £10,000 per worker (NB in both cases, there was only one underpaid worker). In most cases, the sum owed per worker was relatively small: 104 of the 210 employers owed arrears of less than £500 per worker.

The impression that HMRC’s enforcement net is catching mostly small fry is reinforced when we breakdown the 210 employers by sector. From the following chart (which shows only those sectors with two or more of the 210 employers), we can see that 41 – almost one in five – of the 210 employers are hairdressers or beauty salons, and 37 (18 per cent) are a pub, restaurant, cafe or hotel. Only three care homes or home care firms have been named & shamed to date, and in those three cases the arrears owed per worker were just £178.76, £162.81, and £87.68 respectively. Yet, as noted previously, there is broad agreement that at least 200,000 of the social care sector’s 1.5 million workers are unlawfully paid below the NMW.

Name&shame

Yes, there are a few household names among the 210, including (in this week’s round) French Connection UK, Foot Locker, 99p Stores, Pizza Hut, and Bounty (UK) Ltd, which produces the ‘Bounty Packs’ handed out to new mothers. But most such cases appear to involve what Jo Swinson calls “irresponsible mistakes”, rather than the employer “wilfully breaking the law”. French Connection, for example, owed an average of £44.78 to 367 workers, while fellow high street fashion retailer H&M owed an average of just £4.82 to 540 workers.

All in all, the detail behind the headline numbers suggests that whoever has Ms Swinson’s job after 7 May should do rather more than simply decide whether to continue with the monthly BIS naming & shaming press releases. It’s time that HMRC’s enforcement net started catching some of the bigger (and nastier) fish in Britain’s minimum wage rogue lake, as well as the small fry. And that may well require new priorities, new strategies, and (even more) new money.