Has the Low Pay Commission jumped the shark?

It is a truth not previously acknowledged that one way to unite the TUC and CBI in outrage is to suggest that the Low Pay Commission has outlived its original purpose, and that control of the national minimum wage (NMW) rate might now be best reclaimed by the people we elect to run the country.

I know this because, late on Tuesday evening, after a day of ever more surprising media reports of machinations within the Coalition over a possible ‘inflation-busting’ hike in the NMW rate, I was impertinent enough to make such a suggestion on Twitter.

Within a few minutes, my tweet had prompted sharp responses from both Nicola Smith, Head of Economic & Social Affairs at the TUC, and Neil Carberry, Director of Employment & Skills at the CBI.  This in itself was intriguing, as neither Nicola nor Neil had previously exhibited any great inclination to respond to anything I might have said or written.  But what most tickled my interest was the degree of solidarity Nicola and Neil showed in seeking to pour a large bucket of cold water over my impertinence.

Every year since 1999, the Low Pay Commission has laid waste to a small forest in producing an inch-thick report on the NWW that is read by few if any outside a small circle of NMW policy geeks (and the handful of unfortunate civil servants charged with drafting the government’s response).  In my last job I had a whole shelf of these reports, and laid across a road they would easily have stopped a marauding tank.

But have these hefty reports, and the existence of the Commission itself, done much in recent years to improve the plight of the five million or so workers in the UK economy who now languish on low pay?  The Commission is, after all, the Low Pay Commission, not the Minimum Wage Rate Commission.

Well, with all due respect to the hard work and undoubted integrity of the individual members of the Commission, I’m not sure that low paid workers have been terribly well served by the Commission in recent years.  A succession of paltry, below-inflation NMW rate increases since 2009 have resulted in an hourly rate some 45 pence below what it would be if it had risen with the cost of living since June 2010.  The critical issue of enforcement of the NMW has been woefully neglected.  And where has the Commission been in debate about the shocking growth of in-work poverty?

How dare I even think such heresy! “Over time NMW workers have done better than both inflation AND wages”, retorted Neil Carberry.  However, as the Low Pay Commission itself noted in its 2012 report, “most of the real and relative increases in the minimum wage occurred as a result of the comparatively large up-ratings from October 2001 to October 2006. Since that time, the adult rate of the minimum wage has risen more or less in line with average earnings, but has lagged price increases”.  The largest up-ratings were in 2001, 2003 and 2004, and those relative hikes were entirely justified given the excessively cautious (i.e. low) rate at which the NMW was introduced.

Nicola Smith, meanwhile, was even more extravagant about the recent influence of the Commission: “without the LPC would we even still have a NMW?”  Well, yes, I’m sure we would Nicola, as I don’t think even Nick Clegg could have convinced his MPs, let alone his party membership, to tolerate abolition of the NMW itself – always assuming that the Liberal Democrats would have needed to take such a stand.  Any mooting of abolition by deep blue Conservative ministers would have faced strong internal opposition from MPs and think tankers such as Matthew Hancock, Guy Opperman, Robert Halfon and Ryan Shorthouse.  And, as of this week, Conservative ministers and MPs of all shades of blue are madly trying to outbid each other both in their regret for their party’s past opposition to the NMW, and in their personal enthusiasm for a substantial hike (of as much as £1.00 per hour) in the NMW rate now.

So, given where we are now, with all three main parties scrabbling to position themselves as the shoutiest champion of the NMW, what are the “very big risks to ending the Commission approach” that so alarm the TUC and CBI?  Apart from, that is, the terrible risk of the TUC and the CBI having a tad less direct influence on government policy.

Well, I’m not sure that I can see any significant risks. The Commission and its plodding, bipartisan approach were products of the excessive caution and timidity of the first New Labour government in relation to any policy that might possibly fetter corporate power.  And, in the early years of the NMW, that approach undoubtedly served a valuable function: to take the politics out of the NMW whilst it bedded in.

But to my mind the NMW is now safely cemented into the UK’s labour market policy architecture.  In the words of the Conservative pressure group, Bright Blue, “there is now a strong academic consensus that a sensible minimum wage does not cause unemployment.  Firms adapt well: reducing profits or pay differentials, or boosting productivity”.  And, armed with data, analysis and advice from civil servants, advisory bodies and political advisers, our elected politicians routinely take positions on, and make decisions about, any number of economic issues at least as consequential as what the NMW rate should be.  In short, the Low Pay Commission has – just like the Happy Days of my youth and Sherlock last weekend – jumped the shark.

It’s time to put politics back into the National Minimum Wage.

Party Politics – A Re-Appraisal Of Corporate Entertainment For The Festive Season

Once upon a time, in a land far far away (the 1980s), Christmas parties were an excuse for a good old knees-up, staggering amounts of inebriation, wildly inappropriate conversations, and for drunken staff to get anything off their chest to the MD safe in the knowledge that he (and in those days it almost always was a ‘he’) was too pie-eyed either to recognise them at all or as a minimum, to remember the incident the following day. If anyone even made it into work the next day, that is.

Of course, some things cannot (and, perhaps, should not) last and, like an outrider for the Four Horsemen of the Apocalypse spotting a town ripe for plunder, a keen employment lawyer one day identified Christmas parties as a ‘marketing opportunity’. Nowadays, if you want to know when Christmas is approaching, rather than simply waiting until your city looks as if it has been invaded by an army of incoherent yet smartly dressed zombies, you just have to wait for the first ‘Christmas party’ blog, article or newsletter warning you of the obvious pitfalls of allowing your staff a moment’s respite from a year of trying to do more with less, good economic news which has somehow not reached their employer and the nagging fear that their teenage children will now never, under any circumstances, leave home.

However, what was once original is now tired – indeed crowds of lurching suited zombies thronging the streets trying to find a nightclub that will let them in have instead been replaced by their equivalent in prose, with lawyers and HR consultants simply re-writing and re-working the same undead warnings. These may have been ‘original’ and ‘new’ and possibly even “trendy” during the 80’s and early 90’s but now they simply remind those in HR of what they already know – that no matter how you ‘set the tone’ or remind people of their responsibilities, if someone is going to be an idiot at a Christmas party, you can’t stop them. Now, as then, combining someone else’s alcohol, institutional cooking, and the eternal but nonetheless baseless belief that you will become more attractive as the evening goes on, is a recipe for trouble. But you knew that, right?

Courtesy of website Hereisthecitynews.com we can however add some new blood to the usual pre-party cautions: don’t talk about work, it advises, ask for a raise or steal the cutlery. No twerking, adultery or drunken use of the photocopier either. No wonder, perhaps, that a recent survey by life-and-pensions group Metlife reports that over 70% of UK workers would sooner have the money their employer spends per head on the Christmas bash than the party itself. And that is not just the old and jaded among us – the party spirit has also left some 65% of 18-24s preferring the cash, though that may be more a comment on their recent pay progression than a general cooling on the festive frolic front. After all, how could a little post-tax cash really compare with the boost to the spirits occasioned by watching your senior management forfeit their dignity on the dancefloor, a spectacle which discretion and good timing can now ensure is preserved forever on Youtube? What pleasure can mere money give you relative to the knowledge that at the end of the evening you will not have to wear black tie again for another year? You might discover that some of your management/employees are quite decent people, even if they have done their best to hide it over the preceding year. And in the end, do remember the wise words of US writer PJ O’Rourke: “After all, what is your hosts’ purpose in having a party? Surely not for you to enjoy yourself; if that were their sole purpose, they’d have simply sent champagne over to your place by taxi”.

So no holier-than-thou fliers this year. HR has a right to enjoy the Christmas party too, and if you do see the first stirrings of trouble in a dark corner of your chosen venue, you will know immediately the sensible and professional thing to do – run.

Update on ‘Cliffs and Claims’

EMPLOYMENT TRIBUNAL CLAIMS

POST-FEES

UPDATE

 

 

 

In my earlier post I analysed the figures that the Government published on 18 October 2013, a few days in advance of the judicial review hearing challenging the introduction of fees for bringing employment tribunal proceedings. My analysis showed significant drop in the number of claims being submitted. The drop was far greater than the Ministry of Justice’s analysis appeared to suggest. The MoJ’s line was that “Employment Tribunal receipts were around 40,000 for July – September in line with historical quarterly trends [my emphasis].

My analysis was that once you get past the distorting effect of the 29 July 2013, when fees were imposed, claims had dropped by over 75%. (By ‘distorting effect’ I mean where there is a specific date for fees to be introduced, it will have the effect of many claims being submitted early, to beat the fees, with a corresponding decrease in claims immediately after that date).

One big caveat that was attached to the figures by the MoJ was that they were preliminary figures and subject to revision at a later date. That was a fair point, especially given that a claim is not “accepted” until the fee is paid, or remission granted. Inevitably with a new system – and a government one that involves IT – there will be delays and errors. Claims submitted with applications for remission of fees may have been caught in the system, unable to be included in an earlier count.

The MoJ has published its updated figures today. Very little has changed for the current year, but –  surprisingly – quite a lot has for last year.

In reviewing the figures for the current year, we are most concerned with quarter 2, being July to September 2013. Unhelpfully the information published by the MoJ does not follow the same format as that published in October. No information is given on the number of single claims submitted, so I am not able to revise my analysis on those (a drop of from over 4,000 claims per month on average, to  just 1,003 this September).

We do have figures for multiple claims. The provisional figures showed 1,034 multiple claims accepted in the quarter; the revised figures show 1,061, a modest revision. Unfortunately, a month-by-month breakdown is not given so a similar comparison as in my last post cannot be done.

One can also look at “receipts” for the quarter. In my view this is not as good a measure as single or even multiple claims, but we can at least see to what extent there have been revisions from the provisional figures. The figures in October showed receipts of 38,963. Today’s revised figures show receipts of 39,514. A modest increase of about 1.4%.

Therefore, now we have the revised figures, we can see that very little has changed. The number of claims remains significantly down following the introduction of fees.

What is curious is what has happened to the figures for 2012/13. These show a significant downwards revision. In July and October 2013 figures were published for 2012/13. These showed the following:

 

2012/13

Apr-

Jun

Jul-

Sep

Oct-

Dec

Jan-

Mar

Annual Total

Total Claims Accepted

51,463

47,614

45,240

63,715

208,032

The figures published today show a significant difference:

 

2012/13

Apr-Jun

Jul-Sep

Oct-Dec

Jan-Mar

Annual Total

Total Claims Accepted

40,305

47,789

45,710

57,737

191,541

No note or explanation is provided in the commentary that accompanies the figures. It would be unusual for such revisions to be of this size and made so late. Needless to say, enquiries are being made.

If one wanted to show a consistent downward pattern in employment tribunal claims since, say, May 2010, then it would certainly be helpful to revise 2012/13 down by at least this amount. I’m not being cynical and I’m sure there’s a perfectly reasonable explanation…………..

@AlexLock

 

 

Including Commission in Holiday Pay

The Advocate General’s opinion given in Lock v British Gas Trading Ltd & ors is that commission payments should be included in a worker’s holiday pay. If this is followed by the Court then frankly it is going to cause chaos.

The opinion relies heavily on the Court’s decision in Williams & (many, many) others  v British Airways to the effect that pay in respect of annual leave must correspond to the ‘normal remuneration’ received by the worker in so far as that remuneration is ‘intrinsically linked’ to the performance of the worker’s tasks and has a degree of permanence.

In Lock’s case, the employee received commission on sales made which was paid in arrears once a sale had been completed. This meant that Mr Lock did get paid commission when he was on holiday, but that pay was in respect of work he had done before his annual leave began. His complaint was that since he was not able to earn commission while he was on holiday then his future pay would be lower than if he had not been on leave.

The Advocate General accepted that commission was intrinsically linked to the work Mr Lock did and that although it varied from month to month it was an inherent part of his overall remuneration and had the necessary degree of permanence. A failure to take commission into account was capable of deterring Mr Lock from taking his annual leave – all the more so since it made up about 60% of his total remuneration. On that basis the AG concluded that commission did have to be included in calculating Mr Lock’s holiday pay, with the suggestion that he should receive the average amount of commission paid over a representative reference period.

Has Lock really lost anything?

It seems to me that the key flaw in this is that it assumes that if Mr Lock worked for 52 weeks in the year rather than 48 he would make an extra four weeks’ worth of sales. But simply as a matter of common sense that will not be true. There will be quiet periods when the clients themselves are on holiday and so unlikely to close a deal and Mr Lock will also organise his time around the fact that he will be taking holiday at various points over the year. There may well be cases where commission is earned at a constant rate per hour of work done – telesales might work like that – but sales jobs based on closing more complicated deals and building relationships just don’t work that way.

British Gas argued that the commission paid to Mr Lock was based on an annual sales target which took holiday into account. The AG said (para 43 &44) that there was no clear evidence for that and that in any event that would breach the rule against rolled-up holiday in Robinson Steele. I think that misses the point. This isn’t about rolled-up holiday, but about how many sales you would expect a good sales person to make over the course of a year and working out a commission scheme accordingly.

Implications

If this AG opinion is followed then things are going to get pretty complicated. I can think of all sorts of ways in which an employee might try to ‘game’ the system to make sure that no commission would normally be paid during a holiday period, so as to maximise the windfall when the holiday pay is calculated and has to include a sum representing commission. Also, I don’t quite see how just paying an average commission payment during the holiday period itself will work. Mr Lock would normally be paid during his leave for the commission he had earned before taking his holiday. It is his subsequent wages which suffer – when he is paid after his holiday and has lost the opportunity to be paid commission in respect of work he would otherwise have completed. When would that actually need to be paid?

I would love to hear suggestions about how commission schemes could be made to comply with the AG opinion. Whatever the eventual outcome of this case, however, we clearly need to revisit the whole definition of a week’s pay for the purposes of the Working Time Regulations. The definition we have in the Employment Rights Act just isn’t up to the job anymore. I’m sure BIS would be grateful for any suggestions in the comments about how we can define a week’s pay in a way that the CJEU will accept, and which normal mortals can actually understand.

Mba, Article 9 and the test of Indirect Discrimination

Ms Eweida, you may recall, is the British Airways employee who wanted to wear a cross on a necklace over her uniform so that others could see it. She considered that that was a religious belief. Over-simplifying, doing what she wanted to do meant a breach of her employer’s dress code. Ms Eweida complained that, amongst other things, she was the victim of an act of indirect discrimination.

The test of indirect discrimination is now to be found at Equality Act 2010s. 19. The constituent elements of the test are:

  1. A provision, criterion or practice (“PCP”) must be applied to the claimant;
  2. The respondent must apply it (or the Tribunal must be satisfied that they would apply it) to people who do not share the claimant’s protected characteristic (in this case, holding the belief);
  3. The PCP “puts, or would put, persons with whom [the claimant] shares the characteristic at a particular disadvantage”;
  4. The PCP puts or would put the claimant at that disadvantage; and
  5. The respondent cannot show it to be a proportionate means of achieving a legitimate aim”.

In the domestic proceedings Ms Ewieda failed at the third hurdle. She could not establish that there were others who shared her particular belief. This is often referred to as the requirement for a “group disadvantage”. Solitary disadvantage, the Court of Appeal found, was insufficient. Denied a domestic remedy, Ms Eweida went to the European Court of Human Rights. Again, rather over-simplifying, the ECtHR decided that the wearing of a crucifix in the manner proposed by Ms Eweida amounted to a manifestation of religion falling within Art 9(2) of the Convention:

Freedom to manifest one’s religion or beliefs shall be subject only to such limitations as are prescribed by law and are necessary in a democratic society in the interests of public safety, for the protection of public order, health or morals, or for the protection of the rights and freedoms of others.

The Court decided that the interference with the manifestation was not, in the particular circumstances, proportionate. The UK should have protected Ms Eweida’s right to manifest her religion and had failed to do so.

Whilst the reasoning was clear it left unaddressed a very significant question. The claim had not failed because the Court of Appeal had decided that the PCP could not be justified; it failed because it could not be shown to have had the necessary indirectly discriminatory effect. The question of justification did not arise. So was the effect of the ECtHR’s decision that element 3 of the statutory test was to be regarded as incompatible with Article 9.

The Court of Appeal has now addressed this question in its decision in Mba v Mayor and Burgesses of the London Borough of Merton. Mrs Mba wanted to obey the Fourth Commandment and refrain from working on Sundays. The Council needed to provide care 24 hours a day and seven days a week to those living in the children’s home at which Mrs Mba worked. Having accommodated her desire not to be rostered on Sundays for a period, the Council decided that it could no longer continue to do so. Following an unsuccessful grievance, Mrs Mba resigned.

It was accepted that the requirement to work Sundays was indirectly discriminatory. The argument was focussed on issue 5 above: whether the justification defence was available. There was no dispute that the Council had a legitimate aim so that the argument was focused, narrowly, on the question of proportionality. It was not a case, therefore, directly concerned with what one might call “the unresolved Eweida question”.

The Employment Tribunal had, in assessing proportionality, taken into account three specific factors. Only one matters for present purposes: the Tribunal had taken into account the fact that sabbatarianism was not, in its view, a “core component of the Christian faith”. A lot of Christians work on Sundays.

Christians might take the objection that judging what religion requires by what adherents actually do is a misguided exercise. We are all sinners. The Court focused on a rather different issue: whether the number of people affected was relevant to justification.

Maurice Kay LJ decided that that the Tribunal had erred in its approach to justification. It should not have been asking how many Christians were affected. It should have been looking at the extent of the impact on sabbatarians, i.e. those who shared Ms Mba’s particular belief. Once one was satisfied that others were affected adversely (so as to jump hurdle 3), the number of those affected was not something that was relevant to the assessment of proportionality. He specifically did not place reliance on either Article 9 or Eweida which he considered to be a case that was “entirely fact sensitive”.

Elias and Vos LJ took a different approach – one that depended upon the impact of Article 9. Patrick Elias (whom I adore with a near religious fervour) tackles the unresolved Eweida question head on. He says the “group disadvantage” requirement (ie, hurdle 3) cannot be read down. Reconciling the domestic legislation with the Eweida decision will in practice, therefore, either take a differently minded Court of Appeal, the Supreme Court or legislation. Article 9 could be used, however, to determine how the proportionality question should be answered. The effect of Eweida was that:

It does not matter whether the claimant is disadvantaged along with others or not, and it cannot weaken her case with respect to justification that her beliefs are not more widely shared or do not constitute a core belief of any particular religion.

Both Elias and Kay LJJ took the view that the smaller the group that shared a claimant’s belief the easier it should be to accommodate it. If number of adherents was a relevant issue, therefore, it had the opposite effect to that which the respondent might have supposed.

With all three judges deciding that the Tribunal had erred in law, did Mrs Mba win? Nope. It was decided that since there was in practice no way of accommodating Mrs Mba’s beliefs, the outcome would have been no different even if the Tribunal had adopted he correct analysis.

Saving Private’s Jobs

Back when I was working at FRU, one of the potential volunteers asked me about whether FRU did Reserve Forces cases. I kind of muddled through because unfortunately at the time, I didn’t really know about them. For those few occasions when you’ve felt that an employee’s been treated so badly it ought to be criminal, you might have Parliament on your side. Unusually dismissing a reservist because he has been or might be called up is a criminal offence.

Reservists generally have the same employment rights as any other employee, and the THE has an excellent summary of some of the rights and obligations for employers of reservists. The Reserve Forces (Safeguard of Employment) Act 1985 is considered in that summary, but the act gives them some more and is almost certainly one of the least used pieces of employment protection legislation. In a recent Freedom of Information request, the MoJ confirmed that in the financial years from 2008-09 to 2012-13, there were 12 applications from reservists for reinstatement or compensation under the act and only 5 hearings were held.

The 1985 Act creates reinstatement committees and sets up statutory appeals from these committees to an umpire, apparently on law and fact. In practise the umpire will be the president of the EAT ex officio. Reinstatement committees can order employers to reinstate army restate reservists and/or pay compensation when the right to reinstatement conferred by the act has not been complied with. Failing to comply with an order of the reinstatement committee is also a criminal offence.

In summary, the rights conferred are:

  • The right to at least 26 weeks reinstatement to an occupation not less favourable to the reservist on terms not less favourable than they were originally employed on;
  • If for any reason it is not (or ceases to be) “reasonable and practicable” to continue a reservist’s employment, they are entitled to the “most favourable occupation” on “the most favourable terms and conditions” which are reasonable and practicable. In effect if there is other work they can do, they should be allowed to do it;

An employer can defeat these rights if more than 6 months pass from the end of a call up before they present themselves for work again. It can also be done if the reservist refuses to take up the job without reasonable cause, or if the reservist fails to notify the employer what they rely on as reasonable cause in writing (s1 (4)). There’s also some unusual limitation periods to bring claims. In practice most claims are likely to need to be brought within 13 weeks of an application (or renewal of an application) to be reinstated, although the somewhat different wording to most employment statutes causes some confusion if it is 13 weeks or the usual 13 weeks less one day.

There’s very little case law on the act. Since it came into force in 1985, I have been able to find only two appeals to Umpires from the reinstatement committees. Ironically, in both Slaven v Thermo Engineers Ltd UKEAT/0568/91  and James v Meterological Office UKEAT/1350/00 the president of the EAT thought the case before them was the first one brought to the umpire. James only really helps with the somewhat onerous requirement to renew applications to be reinstated in writing every 13 weeks in order to have the right to complain to the reinstatement committee. This leaves only a single case on the substantive law in Slaven which is somewhat limited in scope to not offering alternatives after a redundancy, although certainly helpful in setting out burdens of proof for the different stages in cases.

Presumably, an employer could show that it would be not reasonable and practicable to take a reservist back if they were dismissed for gross misconduct, it is as yet apparently untested whether the reinstatement committee would require actual proof or adopt the “honest and reasonable belief” test from unfair dismissal. My gut feeling tends towards the latter as it probably isn’t reasonable and practicable to take back an employee who the employer has justifiably lost all trust and confidence in.

It would require an employer with a somewhat unhealthy appetite for litigation to take a chance on any of the other traditional reasons for dismissal though given the lack of case law, especially with the priority given to reservists for other jobs even where a dismissal was not for redundancy. The phrase “reasonable and practicable” has an attractive sound to employment professionals used to dealing with ET claims out of time, but the “and” in the act as well as the judgment in Slaven suggests a disjunctive tests with an employer needing to get over both hurdles to win rather than a composite question of “reasonable practicability”.

You might not come across many reserve forces employees in your time advising clients, but if you do, this stuff is worth knowing. The additional protections available to them, along with the more severe penalties for employers who get it wrong in some situations are probably likely to help with settlements for claimant lawyers. For respondent advice, the lack of case law and there being no power to award costs is probably likely to make any reinstatement committee defence something of a nightmare, but hopefully forearmed is forewarned.