News and views

The new equal pay rules will require employers in the private and voluntary sectors with at least 250 employees to publish information about the pay of their male and female employees.

Writing in The Times, David Cameron said: “When my daughters, Nancy and Florence, start work, I want them to look back at the gender pay gap in the same way we look back at women not voting and not working – as something outdated and wrong that we overcame, together.”

Compulsory gender pay reporting is being introduced via section 78 of the Equality Act 2010, which allows the Government to make regulations that “require employers to publish information relating to the pay of employees for the purpose of showing whether… there are differences in the pay of male and female employees”.

The initial consultation on gender pay reporting is seeking views on how employers will have to present gender pay gap information. Options include:

·         a single overall gender pay gap figure that captures the difference between the average earnings of men and women as a percentage of men’s earnings;

·         separate gender pay gap figures for full-time and part-time employees; and

·         differences in average earnings of men and women by grade or job type.

The gender pay reporting consultation also asks for views on:

·         giving employers the opportunity to provide additional narrative to put the figures in context, explain any gender pay gaps and set out what remedial actions the business is taking;

·         how often employers will have to publish gender pay information (for example, annually);

·         employers’ estimates of the cost and time needed to analyse and publish the figures; and

·         any risks or unintended consequences that warrant dropping or modifying the gender pay reporting requirements.

 

Posted by: Jade Sweeney

Tolga Akmen/LNP/REX

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A new minimum wage of £7.20 per hour will be introduced next April for all working people aged 25 and over, the Government has announced.

In his first purely Conservative budget, George Osborne said that “Britain deserves a pay rise and Britain is getting a pay rise”.

The “national living wage” (NLW) will be compulsory and the Low Pay Commission (LPC) will recommend future rises, with the Government aiming for it to reach £9 an hour by 2020.

Osborne said that the Office for Budget Responsibility (OBR) claimed the national living wage would have only a “fractional” effect on jobs. The OBR said that by 2020 there will be 60,000 fewer jobs as a result of the national living wage, but almost one million more in total.

“Britain deserves a pay rise and Britain is getting a pay rise” – George Osborne

The OBR has estimated that the cost to business will amount to 1% of profits. To offset that cost, the Government is cutting corporation tax to 19% in 2017 and 18% in 2020. Small firms will also benefit from a cut in their national insurance contributions.

“From 2016, our new Employment Allowance, will now be increased by 50% to £3,000,” announced Osborne. “That means a firm will be able to employ four people full time on the new national living wage and pay no national insurance at all.”

 

National living wage vs national minimum wage
Source: HM Treasury calculation based on OBR forecast

The national minimum wage currently stands at £6.50, rising to £6.70 in October. For those aged 25 and above, their hourly rate will rise to £7.20 in April 2016, an 11% hike on the current mandatory pay rate.

Alongside the Budget, the Government published an entirely new remit for the LPC.

To ensure that the rate of the NLW is set at a sustainable level and continues to take account of broader economic conditions, the LPC’s remit will require it to set the NLW in a way that reflects the growth in median earnings.

The LPC’s remit in relation to the NMW, which will now only apply to those under 25, will remain unchanged.

The Government will ask the LPC to set out how it will reach 60% of median earnings by 2020; based on OBR forecasts.

Also announced in today’s budget:

·         Public-sector pay awards will continue to be 1% per year for the next four years.

·         Osborne confirmed that the personal income tax allowance will increase to £11,000, with the aim of reaching £12,500 by 2020. The higher rate income tax threshold will rise to £43,000.

·         The Government said that it will actively monitor the growth of these salary-sacrifice schemes and their effect on tax receipts.

Budget 2015 reaction

The current UK Living Wage, set by the Living Wage Foundation is £7.85. And the rate in London is already £9.15. Rhys Moore, director of the Living Wage Foundation, said it was “delighted” that more than 2.5 million workers will receive a much needed pay rise. However, he asked, “Is this really a living wage?

“The Living Wage is calculated according to the cost of living whereas the LPC calculates a rate according to what the market can bear. Without a change of remit for the LPC, this is effectively a higher national minimum wage and not a living wage.”

John Cridland, director-general of the CBI, said: “This is a double-edged budget for business. Firms will welcome measures to balance the books and boost investment, but they will be concerned by legislating for wage increases they may not be able to deliver.”

Mark Beatson, chief economist for the CIPD, said that while the OBR claims the national living wage will have little net effect on employment, their forecasts rely on assumptions about future productivity growth that have proved wrong to date.

“This policy will only deliver higher pay without significant job losses if it is accompanied by a drive to increase productivity in low pay sectors such as retail, hairdressing, hospitality and the care sector – and that will need more than delivery of apprenticeship numbers or employment subsidies via the national insurance contributions system,” he commented.

 

Posted by: Jade Sweeney

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Facebook is to increase the minimum wage to $15 an hour in the USA for its contractors and suppliers, among a host of other benefits announced this week.

These new standards will include a minimum of 15 paid days off for holidays, sick time and vacation. For those workers who do not already receive paid parental leave, there will also be a $4,000 child benefit payment for new parents.

 

Posted by: Jade Sweeney

Changes to pension legislation over the past five years have led UK companies to prioritise compliance requirements over the traditional drivers of retirement benefits, according to research published this week.

The “FiT for Retirement” report from Towers Watson shows that more than half (56%) of the companies surveyed claimed that compliance was one of their top defined contribution (DC) pension priorities.

Only 38% of companies named their workers ability to retire as a top priority and even fewer listed competitiveness (31%) and attraction and retention (30%) as drivers of pension provision.

Pension priorities on XpertHR

Employment law manual: Pensions – future developments

Phil Percival, head of Towers Watson’s FiT Age programme, said: “Currently, compliance is crowding out employers’ ability to focus on retirement adequacy.

“This is perhaps not surprising given the barrage of changes the industry has seen in the last decade, including the introduction and subsequent reductions of the annual and lifetime allowances, greater focus on governance, auto-enrolment, the end of contracting-out and now the new DC pension reforms.

“Such a flurry of change is preventing companies from focusing on the real reason for providing pension plans – either for the employer, in terms of attraction and retention, or, for the employee, in terms of their ability to retire.”

When asked to list what they think their organisation’s main pensions objective will be in the future, “workers’ ability to retire” and “competitiveness” were listed by nearly two-thirds of companies, while just one in five claimed that they would still focus on compliance.

This raises concerns that with not enough companies focusing now on ensuring their employees have adequate pension provisions, many employees will realise too late that they are unable to retire when they originally intended to, and will have to remain in the workplace longer. Percival believes that this will impact employers in terms of workforce planning, benefit costs and succession planning.

He said: “With the number of people in employment aged over 65 already doubling in the last 10 years, employers need to make sure that they understand the financial situation of their workforce in order to gauge the extent to which workers will be able to retire. With this understanding, they can start to help employees more effectively plan for retirement at a time of their choosing, as well as planning their own workforce requirements in the near future.”

 

Posted by: Jade Sweeney

“Data and analytics are what’s needed to keep HR ahead of the pack.” This is according to David Green, director at Cielo, who chaired April’s conference in Canary Wharf, London.

Posted by: Jade Sweeney

The revelation by the New York Times last month that in the S&P 1500 there are more CEOs named John than there are womenneatly sums up what we all already know: the glass ceiling is as solid as ever. Diversity targets are one way to influence the demographics of executive boards, but quotas won’t address the underlying bias against women as leaders .

In the 1970s Virginia Schein introduced the concept of ‘think manager, think male’  to sum up society’s tendency to associate managerial roles with traditionally ‘male’ traits such as assertiveness and confidence. More recent theories maintain that men are preferred for stereotypically masculine jobs which require these so-called ‘agentic’ characteristics, to do with independence, control and dominance, while women are preferred for jobs which require ‘communal’ traits such as empathy, kindness and emotional expressiveness.

These automatic associations may go some way to explain why women are so scarcely represented in leadership; not only do those doing the hiring assume males are better suited for the job, but women may hesitate to apply for senior roles which require stereotypically male characteristics. Recently several HR leaders have spoken to me about their attempts to remove gender-biased adjectives from job descriptions in order to attract a more balanced pool of candidates. They’ve found that advertising for a “dynamic, driven, results-oriented manager” yields a far more male-dominated pool than an advert for a “compassionate, thoughtful, approachable manager”, which attracts more female applicants.  Removing such leading adjectives would go some way to putting women on a more equal footing, in that they’re less likely to self-select themselves out of the running. But it’s far more difficult to address the inbuilt bias of those making the hiring decisions.

A recent report published in the Journal of Applied Psychology analyzed the results of 111 studies  into gender bias in the workplace published between 1970 and 2012, with data from over 22,000 participants overall. It examined the preference for male job candidates on decisions to do with hiring, promotion, compensation, competence and job performance, in a range of occupations and industries. There was a pro-male bias across all jobs, especially those considered ‘male dominated’ (as determined by the ratio of males to females employed in that occupation at the time of the study), but there was no bias towards female candidates for stereotypically ‘female’ occupations.

Interestingly, male raters had a much stronger pro-male bias than did female raters, indicating that the lack of women leaders could be a self-perpetuating issue . Male leaders are likely to be making the hiring decisions, and men have a greater preference for hiring men – one instance of the similarity attraction bias, in which we unconsciously gravitate towards people similar to ourselves.

So what can be done? Increasing the amount of information about each job candidate had an unclear effect; while in some cases it reduced the amount of pro-male bias, in other situations it increased it, especially when the information was ambiguous – i.e. it didn’t indicate whether or not that individual would succeed in the role. When extra information is ambiguous, it increases the cognitive load on the decision-maker, making it more likely that they’ll revert to relying on gender stereotypes. But when extra information clearly indicated that a female applicant was highly competent and suited for the role, the amount of pro-male bias reduced to almost zero, suggesting that females especially should provide context-relevant information if they wish to be promoted into senior roles.

One thing that did make a difference was whether or not the rater was motivated to make accurate, careful decisions. When participants were held accountable for their decisions, in that they were expected to justify them, when they believed that their decisions would have real-life consequences, or when they were reminded about norms of fairness in the organization, they made less biased decisions.

This meta-analysis underscores the fact that gender bias is complex and insidious. Nobody making a hiring decision would admit to preferring male candidates, but 22,000 people’s unconsciously biased choices say otherwise . Educating decision-makers about these natural, inbuilt biases, expecting them to explain and justify their judgments, ensuring that they have a vested interest in the outcome and advocating a social norm of fairness across the organization are all good starting points if we want to see more female names among all those Johns.

 

Posted by: Jade Sweeney

National Grid won the Nationwide Inspiring the Workforce of the Future Award

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Twelve public- and private-sector organisations have been recognised for creating equal and inclusive workplaces for women at the Opportunity Now Excellence in Practice Awards 2015.

The awards ceremony took place last night at the Hilton Park Lane, during Business in the Community’s Responsible Business Week, and was attended by more than 500 business leaders.

Now in their 20th year, the awards recognise and celebrate public- and private-sector organisations that are committed to making a difference for women at work.

 

Posted by: Jade Sweeney

Video interviews encourage candidates to tell their story

Video interviews have been slow to take off, but are now gaining ground thanks to a new cloud-based service, says Cath Everett. 

While it may seem a bit gimmicky and sci-fi on the surface, one cloud-based service that piqued lots of interest at the HR Tech Europe show last month was a video-interviewing tool called HireVue.

HireVue is based in the US, in Salt Lake City, Utah, where it still generates the majority of its revenues. But, although it was set up in 2004, it only arrived on UK shores at the start of last year.

This puts the human back into the process.” – Jim Kleijnen, Hirevue

It has already picked up a number of high-profile customers though, including accounting firm Grant Thornton, and energy drink manufacturer Red Bull UK, which uses the product to develop a talent pool that it can search through when needed.

 

Posted by: Jade Sweeney

The judgment in the important employment tribunal decision Lock v British Gas Trading Ltd, which deals with the inclusion of commission in holiday pay, has now been published.

On the return to the UK employment tribunal from the European Court of Justice, the employment tribunal has applied an extra subsection to the Working Time Regulations 1998 to make them comply with the Working Time Directive.

The subsection provides that the holiday pay of a worker whose pay normally includes commission should be varied to reflect the amount of work done.

 

Posted by: Jade Sweeney

As Barclays CEO Antony Jenkins takes his first annual bonus since joining the bank in August 2012, despite a legacy of problems, is this a fair reflection of good performance? Reward expert Justine Woolf considers the the true role of performance-related bonuses in this current turbulent climate. 

Barclays made the headlines again recently with CEO Antony Jenkins taking his bonus of £1.1 million, despite the fact that the bank is preparing to pay fines and penalties for rigging foreign exchange markets.

Surely this makes a mockery of the idea of bonus in its true sense – that is, a payment made to reflect good performance? How can you say that a person leading an organisation that is under scrutiny for poor practices and is currently anticipating a wave of fines should still get rewarded and recognised?

The theory should be that if you haven’t performed or achieved what was agreed, you shouldn’t receive a performance bonus. But is it always that black and white?

The biggest challenge is knowing why you are awarding a performance bonus. From a headline-grabbing perspective at least, it feels wrong that a boss gets recognised through a bumper payout when profits are down owing to impending fines.

Stormy waters

In the case of Jenkins, I suspect that while Barclays continues to feel the repercussions of past misdemeanours, the remuneration committee most likely felt it justifiable to pay him a performance bonus this year to recognise the work he is has done so far steering the bank through stormy waters, and to incentivise him to stay and continue to turn the bank around.

This demonstrates how the aim of a bonus and what it is there to achieve has become muddled over time. Many organisations find themselves rewarding performance twice; through performance-related base pay and a separate performance-related bonus.

So why bother having a bonus at all? The answer is, partly, because they are so ingrained. It is a brave employer that takes away an element of the package that is almost regarded as a right or status symbol.

Bonuses also give organisations flexibility – they should be discretionary, not an automatic right, so employers have the opportunity to pay or not pay based on their performance criteria. They do not add to the bottom line, they are generally not pensionable, they do not inflate salaries as one-off payments.

 

Posted by: Jade Sweeney

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