Equal pay: Private sector “hoping the problem will go away”

Gender

The private sector has yet to engage fully with the intensifying issue of equal pay claims, Nick Robertson, partner at employment law specialists Mayer Brown has told HR magazine.

He reported that despite the “straws in the wind” indicating claimant lawyers are starting to look at this area, the majority of organisations are currently “hoping the problem will go away”.

“This is a remuneration issue that is getting bigger day by day. Equal pay has long been a big issue in the public sector, and it is unlikely the private sector can escape the same scrutiny for much longer,” said Robertson.

“One of the major indicators of change for the private sector is the big supermarket case currently underway,” he added, referring to the case currently being brought against Asda by female workers claiming they are not paid the same as male workers.

Robertson said that political pressure around the issue is also intensifying. A bill to give the government powers to force big business to reveal their gender pay data has been passed, and some parties’ manifestos suggest they might be “even more aggressive” on the issue, said Roberston.

He said: “Many people argue that the equal pay gap is not as bad as the statistics claim, but it comes back to if they won’t do an equal pay analysis how do they know? If you don’t know whether two jobs are of equal value or not how do you justify your pay rates or work out how you would assemble a defence, to show that the pay differential was justified? If you leave it until the claim comes in, then you will be scrambling to work out whether your position is defensible, which goes to the heart of handling such claims.”

Robertson added that a significant hurdle in kick-starting an audit is CEO buy-in.

Employment law professionals within organisations are interested but it’s a question of them convincing their boards. It takes time and money to do anything about this so it’s a time-consuming process to persuade a board. And boards may worry about what happens if they identify a problem, and how feasible it will be to sort out, and how expensive it will be to sort it out, as opposed to how expensive it will be to ignore the problem.”

ECJ Ruling on Collective Consultation

The European Court of Justice has handed down its decision in the Woolworths and Ethel Austin cases. The decision is that:

Where an undertaking comprises several entities, the term ‘establishment’ in the directive on collective redundancies must be interpreted as referring to the entity to which the workers made redundant are assigned to carry out their duties

The term “establishment” is relevant to the legal requirement to collectively consult where an employer is proposing to dismiss as redundant 20 or more employees with a period of 90 days or less. If the obligation to collectively consult is triggered this means that minimum consultation periods will apply and that dismissals may not take effect before the expiry of the relevant period. Another important consequence of the collective consultation rules applying is that if they are breached the employer will face a sanction of the “protective award” of up to 90 days gross actual pay for each affected employee.

The ECJ ruling clarifies that when establishing the headcount of proposed redundancy dismissals this headcount must be at a single “establishment” which means individual workplace (the entity to which the workers made redundant are assigned to carry out their duties) rather than the employer’s headcount as a whole. Essentially narrowing the circumstances in which the obligation to collectively consult will apply.

The background to this recent ruling is that the EAT had decided in 2013 that the term “establishment” should be given the wider meaning and apply to employer headcount as a whole (drawing more redundancy situations into collective consultations). The ECJ has therefore referred the case back to the Court of Appeal which will likely result in the EAT decision being reversed.

Employers will see this as good news due to the fact that it clearly narrows the scope for collective consultation obligations to apply. However, it does mean a return to uncertainty as defining the entity to which the workers are assigned to carry out their duties is not necessarily straight-forward. We will have to await the decision of the Court of Appeal and hope for some clarity.

Salary negotiations increase as job market heats up

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HR directors are now more willing to negotiate salaries to attract top job candidates, according to research from recruitment specialist Robert Half UK.

The research found that two-thirds (67%) of HR directors are more willing to negotiate salaries with leading job candidates than 12 months ago.

The study also revealed an increased preference for being upfront about salary. While historically candidates have been dissuaded from mentioning their potential pay, especially early in the recruitment process, 21% of HRDs now believe it is appropriate for applicants to initiate remuneration discussions when they apply for a role or during the first interview.

Adding to this picture was the finding that around one in 10 (7%) HRDs now feel the company should always be the first to initiate financial discussions, with only 28% saying candidates should wait until the final interview or offer stage before raising the issue.

“In the current hiring market companies need to move fast to secure in-demand talent, as candidates are receiving multiple job offers. Employers who are able to act quickly during recruitment and are prompt in providing applicants a competitive job offer are more likely to secure skilled professionals,” said Phil Sheridan, UK managing director of Robert Half.

On how and when hiring managers should broach the subject of pay, Sheridan added: “There is no one best way, however, HR directors have the opportunity to do so by providing the salary band when advertising the role, during the interview process, or in the job offer. Either way employers should be proactively benchmarking remuneration levels so they remain competitive when discussing salary and benefits with potential candidates.” 

The study also predicted 5.6% wage increases for existing employees in the next 12 months.

Half (49%) of HRDs said they are operating in a job market where salaries are rising, with none reporting a deflationary wage environment.

HRDs highlighted that employees demonstrating willingness to learn and advance would be most likely to secure a pay rise (41%). Other reasons included the time period since the individual’s last raise (32%), their technical competency and measurable output (31%), followed closely by tenure in the organisation (30%).

Hot topic: data protection regulation, part two

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Updated EU data protection regulation may impose restrictions on the use of employee data. This could mean businesses have to pay fines and sanctions of up to 5% of annual turnover if they misuse employee information.

Does this regulation prove using employee data is an intrusion of staff privacy? How can HR strike the balance between making the most of data and protecting employees’ privacy?

Today Hayley Fisher (pictured), people director at Thomsons Online Benefits, has her say.

An employee’s right to know how their data is processed lies at the heart of these reforms. With the correct system in place, employee data can be used to help recruit, retain and reward staff, without invading employee privacy.

Cookies are used online to tailor the adverts we see based on our search history. In a similar way, an integrated benefits management platform is more intuitive to an employee’s needs, suggesting relevant partner benefits when they add their family’s details to a system, for example.

Data storage need not be an intrusion of privacy if it is done in the correct way. Some businesses may need to amend their current policies and practices to comply with the changes in legislation. With the new fine structure being much larger for failing to comply, it’s vital that both internal and external controls exist.

Ensuring the correct data controls are in place via a third party platform results in the best outcome for both employers and employees. Employers are protected against possible breaches, while employees see that their company cares about their data and privacy. Furthermore, the platform can integrate tasks to minimise the chances of the same data being sent to multiple sources, or insecure spreadsheets being sent around manually.

Large sets of data can be used more efficiently to target communications to groups of staff too, making workplace benefits and information more relevant and engaging.

Perhaps the most important thing for employers to remember is to be transparent in how they use and store employee data.  It is crucial that this is communicated clearly from the outset.

Read part one of the HOT Topic here.

This article is published courtesy of HR magazine.

Hot topic: Data protection regulation

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Updated EU data protection regulation may impose restrictions on the use of employee data. This could mean businesses have to pay fines and sanctions of up to 5% of annual turnover if they misuse employee information.

Does this regulation prove using employee data is an intrusion of staff privacy? How can HR strike the balance between making the most of data and protecting employees’ privacy?

Today, Sarah Henchoz, partner at Allen & Overy, gives her view.

“Privacy matters to employees. How you collect their personal data is of great concern to them.

But how you operate as a business is increasingly dependant on your ability to process such data. Smart use of data (including big data) will impact on recruitment decisions, compensation and benefits, mobility of your workforce and structural growth; ensuring you remain both an employer of choice but also an advanced and profitable organisation.

The proposed new regulations on data protection will impose greater restrictions on how data is processed, but they will also bring great opportunity for HR professionals. Employees will need to give express consent for their data to be processed so you will need to start thinking about how consent has been obtained to date and how you will do it going forward – it will no longer be possible to rely on a signature at the end of a contract.

Have you been clear as to the purposes for which you collect employee data? How will you address future purposes given the speed of innovation? You will need to make sure employees have sufficient information about the intended purposes so that their consent is valid, but at the same time create flexibility for the business to explore new initiatives without having to go back for further consent.

Do you process data across borders, manage it centrally or do you engage with third party processors? All of this will become much more heavily regulated and therefore you will need to reassess existing arrangements and third party agreements to ensure they adequately protect information.

Companies that start planning for this now will not only be in a much stronger position to use the data they collect for strategic purposes, but will also gain their employees’ trust by being transparent about how they plan to protect privacy. This increases staff engagement, making it a win-win for everyone.”

This article is published courtesy of HR magazine.

UK employees expect to work past 65

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Around three in five (61%) UK employees expect to work beyond the traditional retirement age of 65, according to a survey by Canada Life Group Insurance.

Only 12% say that they would not work past the age of 65 under any circumstances, and one in five (22%) said that they will definitely continue to work as they get older.

Almost nine in 10 respondents (88%) cite money worries as the reason they are likely to work beyond 65. A third (32%) say their pension savings will not be sufficient to fund retirement, while 14% feel unprepared for retirement and are unsure how long their money will last. More than one in 10 (14%) believe they cannot rely on a state pension.

Despite them being heralded as a great gain for retirees, just 6% believe pension freedoms will mean they won’t have to work for as long as previously thought.

“The recent recession has no doubt taken a toll as employees accept that their current savings and pensions are unlikely to cover the cost of retirement, but improvements in health also mean that people are able to work longer,” said Paul Avis, marketing director of Canada Life Group.

“The younger generation have been particularly hard hit by the recession, and [are] wise to the fact that they will enjoy a less generous pension scheme and have a longer life expectancy than their parents or grandparents,” he said, referring to the survey’s finding that 69% of those aged between 21 and 30 believe they will work after 65, compared to just 50% of those aged 50 to 60.

“As such, it is imperative that employers adapt accordingly to offer appropriate benefits and flexibilities to support their entire workforce. Especially in light of the fact that an ageing workforce is likely to suffer from a greater number of health issues.”

Getting to grips with shared parental leave

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Shared parental leave offers a tantalising opportunity for true equality between working parents.

Biology has often been blamed for inequality in the boardroom. The fact that women have to take time out to give birth, and then often to look after the baby, was used against them to justify the lack of women at the top. But as of 1 April, this perceived barrier will be removed, thanks to the introduction of shared parental leave legislation (SPL), which will give men and women almost equal access to parental leave.

Under the new law, couples are able to divide almost all of the traditional maternity entitlement between them. The only exception is the first two weeks, which mothers legally have to take off to recover from the birth. Parents can take the leave separately, at the same time or overlap it, depending on what suits them and their circumstances. It doesn’t have to be taken all in one go either. As a result, employees can return to the office for an all-important client pitch or deadline and then go back on leave.

It’s no surprise that Jo Swinson, minister for employment relations and consumer affairs and women and equalities minister, is a fierce proponent of the new law. While she admits that take-up of additional paternity leave has been low, Swinson predicts SPL will fare much better. “One of the biggest differences is the flexibility of the shared parental leave policy,” she says. “[Parents] weren’t able to take leave at the same time under additional paternity leave.”

She does have some personal experience. She gave birth to her first son in December 2013 and returned to her ministerial responsibilities after six months of maternity leave. She says it is difficult for couples if one partner has to return to work when the baby is only two weeks old. “Personally, for me, I feel like two weeks after a birth is incredibly soon to suddenly not have the whole family around.”

Swinson hopes the new legislation will help to address some men’s concerns that taking more time off will harm their career prospects. “There’s a lot of anecdotal evidence that suggests men often feel like they have to keep quiet about their family responsibilities,” she says.

However, Hayley Fisher, people director of software company Thomsons Online Benefits, isn’t quite convinced the new law will go far enough in helping remove the stigma associated with being a family man. “I’ve heard lots of comments like: ‘most men aren’t going to do this anyway, are they?’ and, ‘it’d be career suicide if people take more time off’. The cultural acceptance of it is going to be a huge challenge for HR teams,” she believes.

Lloyds Banking Group is tackling this by raising awareness of male role models who are successfully juggling high-flying careers and family life. “This will include men at all levels so that their colleagues can see that it is possible for men to take time out and return without a negative impact,” says Fiona Cannon, group director of diversity and inclusion at Lloyds. “We are also encouraging our male employees to join our parenting network, where we can offer support and advice, and connect them with other working fathers so they can share their experiences.”

Deloitte, one of the ‘big four’ professional services firms, also considers itself a trailblazer in terms of the benefits it offers to working parents. It is offering attractive enhanced shared parental pay to match its maternity and paternity pay packages. Employees with more than two years’ service will be entitled to 16 weeks on full pay, 10 weeks half-pay and 13 weeks statutory pay.

The firm hasn’t just got to deal with the financial burden, says Stevan Rolls, UK head of HR at Deloitte. “It’s definitely going to be a massive pain, there’s no question of that.

It’s complex [and] it’s administratively tricky.” But he says the reason Deloitte has opted for enhanced pay is “to pursue the spirit of the legislation rather than the letter. It’s looking into it and saying, ‘what’s the aim here?’ It’s to encourage working parents to take time off together and spend quality time with their families and then return to the workplace.”

It’s helpful from a talent retention perspective, he admits. “From a business perspective, you want to keep talent preserved in the organisation and to be positive and engaged. What you don’t want is somebody at work who thinks ‘this firm stopped me spending time with my kids at a critical point.’”

What’s more, it was only right the firm matched its generous maternity and paternity pay, Rolls points out. “We’ve enhanced our maternity pay and our paternity pay to a level that we think is quite good – why wouldn’t we offer that under shared parental leave? It’s not a, ‘why do we have to?’ it’s more, ‘why wouldn’t we?’

But for smaller companies with shallower pockets, allocating budget to enhancing Shared Parental Leave pay is tricky – especially when there aren’t yet any examples of best practice, says Gill Crowther, HR director at Nominet, the co.uk domain name registry. “Our strategy on benefits is to try and position our benefits package between the median and upper quartile, but when you don’t know what the marketplace is going to do that’s really, really difficult to do,” she says. “I’d love to be leading edge on this but I think if I was leading edge I might be bleeding edge.”

Mark Butler, a lecturer in UK employment law at Lancaster University and a qualified barrister, predicts that the reluctance of small and medium sized businesses to offer enhanced pay will drastically affect take-up. “If companies can’t afford to offer enhanced provisions in any way, and restrict it to the statutory £139.58 shared parental leave pay, then how many people can actually afford to take time out of the workplace – not least with another mouth to feed?” he argues. “That’s one of the biggest weaknesses of all our family-friendly policies in the UK: they all look great on the face of it, but you’ve actually got to be able to afford to take it.”


What every HRD should know about board governance

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A place at the boardroom table has long been seen as the ultimate goal for HR professionals. The reality is that they are less likely to do this in their own organisation, but have an increasing chance of achieving it as an NED elsewhere.

The numbers work against the HR director being appointed to the board of their own organisation. The executive membership of a board generally consists of the CEO and the CFO as the board members, occasionally with a plus one – often a COO or the MD of a significant business area.

The UK Governance Code, published by the Financial Reporting Council, the statutory body that ‘owns’ it, recommends that boards consist of at least 50% independent NEDs, after the executive members and any non-independent NEDs. The HR director is therefore in a highly competitive queue for board membership alongside their executive colleagues.

However, as an independent NED for another organisation, the HRD becomes part of the solution rather than the problem, and can bring to the board a sought-after set of diverse capabilities, skills and knowledge to meet the business and governance challenges companies are facing.

So what is good governance?

Good governance reads like an HR manifesto. It is regarded by the shareholder community and regulators as the hallmark of a high performance organisation. Good governance requires that everyone in the organisation, from the top down, knows what is expected of them,understands the standards of conduct and ethics with which they must comply, while articulating and overseeing the delivery of the business, within a strong strategic vision and a context of robust financial control.

Crucial to good governance is that the executive management securesbuy-in to corporate values. An open and honest boardroom attitude towards shared ethics and how to implement them effectively is essential to ensuring that the rest of the organisation understands and acts according to those values.

The chairman and the board are specifically seen by the regulators as setting the tone for the rest of the organisation: “The board should set the company’s values and standards and ensure that its obligations to its shareholders and others are understood and met.” (FRC, UK Corporate Governance Code, supporting principle A.1).

The Code and governance framework

The main principles of the UK Governance Code and the governance framework cover five key areas.

  • Leadership – The board is collectively responsible for the long-term success of the company, with the chairman ensuring effectiveness and with NEDs providing constructive challenges and helping to develop proposals on strategy.
  • Board effectiveness – The board should have a balance of skills, experience, independence and knowledge. With appropriate induction and refreshing of skills and knowledge, it should be provided with timely and accurate management information, and there should be a formal and rigorous annual evaluation of the board, the committees and individual directors.
  • Accountability – Boards should present a fair, balanced and understandable assessment of the company’s position and prospects, determining its risk appetite for achieving its strategic objectives, while maintaining sound risk management and internal control systems.
  • Remuneration – Levels of remuneration should be sufficient to attract, retain and motivate directors of the quality required to run the company successfully, but avoid paying more than is necessary. A significant proportion of executive directors’ remuneration should be structured so as to link rewards to corporate and individual performance.
  • Relations with shareholders – There should be a dialogue with shareholders based on mutual understanding of objectives.

Good governance affects everything a company does, from policy to operation. As it informs and improves the HRD’s effectiveness in their day-to-day role so, in turn, the HRD’s areas of expertise can help colleagues to understand how best to implement the company’s overall strategic plan.

This article is published courtesy of HR magazine and was written by Helen Pitcher, chair of Advanced Boardroom Excellence, a consultancy that focuses on individual and collective director effectiveness

The General Election – what do the parties’ manifestos say about employment rights?

With the General Election only a matter of weeks away, the main political parties’ have all released their manifestos. While employment rights might not always get the biggest headlines, all of the parties address employment rights in their manifestos, all have made specific pledges on matters affecting workers and there are some interesting proposals.

We have sifted through the manifestos to bring you a summary of what you might expect in possible employment law changes in the next Queen’s Speech, depending on who wins the election. With opinion polls suggesting that the election race is going to be very tight, clearly there is a chance that all these policies could be watered down depending on whether coalitions are formed and between whom. We have not included the pledges made by the SNP, the Greens or Plaid Cymru, but clearly if they are part of any coalition they could also have a big say on any of the policies below.

There is very little detail in relation to some of the parties’ proposals and therefore it can be difficult to gauge the potential impact of their proposals.

That said, all parties seem to agree that changes need to be made in relation to zero hours contracts and therefore legislation on this can be expected whoever is successful. Possibly the most striking potential change is Labour’s pledge to scrap the Employment Tribunal fees.

The main employment-related policy pledges are as follows:

Labour

» Abolish Employment Tribunal fees
» Increase minimum wage to £8 per hour by October 2019
» Introduce a tax rebate system for employers paying the Living Wage
» Introduce the right to a regular contract for zero hours workers who work regular hours for more than a 12 week period
» Prohibit exclusivity clauses in zero hours contracts
» Introduce compensation to be paid by employers for zero hours workers whose shifts are cancelled at short notice
» Large companies to be required to publish their gender pay gap
» Strengthen the law against maternity discrimination
» Double paternity leave from 2 to 4 weeks plus £100 pay increase

Conservatives

» Proposals to make the minimum wage £8 per hour by 2020
» Stop abuse of zero hours contracts
» Require companies with more than 250 employees to publish the difference between the average pay of their male and female employees
» Substantial changes to voting rules on strike action

Liberal Democrats

» Introduce a single national minimum wage for 16 to 17-year-olds in work and first year of apprenticeships
» Create a formal right to request a fixed contract and consult on introducing a right to make regular patterns of work contractual after a period of time working under a zero hours contract
» All central government departments and agencies to pay the Living Wage from April 2016
» Introduce “Name blank” application forms for public sector jobs
» Require companies with more than 250 employees to publish details of the different pay levels of men and women in their organisation
» Introduce a new “Workers’ Rights Agency” to improve the enforcement of employment rights
» Review Employment Tribunal fees to ensure they are not a barrier to justice
» Protect the rights of trade union members to have their subscriptions, including political levies, deducted from their salary

UKIP

» Introduce a fixed contract after a year for zero hours workers
» Introduce a Code of Conduct for the use of zero hours contracts
» Repeal the Agency Workers Directive
» Allow British businesses to choose to employ British citizens first

Once the election has finished and either a majority or coalition government’s Queen’s Speech has been delivered we will update you again on the finalised plans that might become legislation.

How closely should employers monitor staff?

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Employers have been using analytics for some time to understand what makes their staff tick. They have more data than ever on employees, and more tools and technology with which to analyse it.

But should we monitor people who work for us in the same way we monitor machinery and equipment? Can their behaviour be predicted, or even manipulated, in the same way? Is it even ethical to try?

Radio frequency identification tags allow companies to track their staff’s movements around the workplace and even monitor sound waves to identify how stressed or relaxed they are when they speak. In one trial, a retailer was able to increase sales by 15% after they noticed that the presence of a staff member in certain areas of the store had a high impact on products sold, while in other areas it had very little effect.

But the devices aren’t limited to businesses whose staff regularly move around. In a seated office environment, they record how long an employee is at their desk; how long they spend interacting with other staff; who they talk to; the distance they stand from each other during conversations; and their enthusiasm in meetings.

It may sound Orwellian, but how it is received by staff will probably depend on the way it is used. If utilised as a disciplinary tool it is sure to fuel resentment. But when used to gain an overview of the company, it will generate fewer complaints and more useful insights.

Bank of America, which uses ‘smart badges’ to track employee movements, claims to have improved performance metrics by 23% andstress levels (measured by analysing workers’ voices) by 19%, simply by allowing staff to take their breaks together.

Wearable technology is responsible for an explosion of data, which can be harnessed by employers to promote staff wellbeing. Take the ‘Up’ band, which monitors sleep patterns. Not only can it wake you when you are in a light rather than deep sleep phase (irrespective of when you set your alarm), but it’s also perfect for anyone who travels extensively for business. If you are in two or three different time zones a week, it will tell you the optimal time to have a power nap and even calculate the length of the power nap, waking you at the right time for you to recharge more quickly.

But the flip side is the company has collected a huge amount of data about the individual wearing the band – everything from their calorie consumption to the amount of exercise they do and their sleeping patterns. Would staff regard that as intrusive? Would they trust the company not to abuse their personal data?

As in so many areas of data and analytics, that depends on how personal data is used. There are far more useful (and less provocative) uses for employee data collection and analysis, than enforcing discipline over who takes the most toilet breaks. If, instead, an employer uses it to encourage them to sleep on the job it is unlikely they will get many complaints.

This article is published courtesy of HR magazine and was written by Bernard Marr (pictured), chief executive of the Advanced Performance Institute