United Kingdom: Latest working life developments – Q4 2017

Brexit talks and the EU (Withdrawal) Bill, easing the pay cap for some NHS staff and tougher action for non-payment of the national minimum wage are the main topics of interest in this article. This country update reports on the latest developments in working life in the United Kingdom in the fourth quarter of 2017.

Brexit Negotiations

On 15 December 2017, EU leaders announced that sufficient progress had been made in the first phase of Brexit talks in order to allow negotiations to move on to phase two discussions about Britain’s future outside the bloc, with particular focus on the trading relationship.

Concerns over employment rights post-Brexit

The European Union (Withdrawal) Bill is progressing through Parliament. This Bill will repeal the 1972 European Communities Act that took the UK into the EU and will copy all existing legislation into domestic law on the day following Brexit. Elements of the Bill have proved controversial, specifically the Government’s plan to create ‘Henry VIII clauses’ to ‘correct the statute book where necessary’ through secondary legislation/regulations following Brexit without full parliamentary scrutiny and debate. This will include employment and equality law. However, the Labour Party and the trade unions have argued that ministers should be able to change EU-derived workers’ rights only through primary legislation and with full debate.

The Bill reached the Committee Stage in the House of Commons on 14 November 2017, with the process finishing on the 20 December. However, the Labour Party’s attempts to prevent the government from using Henry VIII clauses to amend, repeal or modify employment and equality rights was defeated by 12 votes. The government conceded that ministers ought to be required to ‘make a statement before the House in the presentation of any Brexit-related primary or secondary legislation on whether and how it is consistent with the Equality Act 2010’.

Public sector pay cap relaxed for some NHS workers

Since 2013, public sector pay rises have been capped at 1%, which was supposed to last until 2020. However, on 22 November 2017, following the Government’s lifting of the cap for police and prison officers on 12 September, the Chancellor announced in his Autumn Statement that he would remove the 1% pay cap for nurses, midwives and paramedics. Extra funding for this is to be provided, but will be released on the condition that any deal increases productivity within the NHS and is ‘justified on recruitment and retention grounds’. No actual pay rise was detailed; this will be determined by the relevant pay review body. Thus, it remains to be seen whether these NHS workers will receive a pay rise in real terms, or whether the increase will be behind both inflation and private sector earnings.

Latest employment and average weekly earnings figures 

In December 2017, the Office for National Statistics (ONS) announced that from August to October 2017, the number of people in work fell by 56,000 to just over 32 million (PDF) compared to the previous three months. The employment rate (the proportion of people aged from 16 to 64 who were in work) was 75.1%; lower than for May to July 2017 (75.3%) but higher than the same period of the previous year (74.4%). Moreover, the number of people aged from 16 to 64 not working and not seeking or being available to work (economically inactive) increased by 115,000 to 8.86 million (an inactivity rate of 21.5%). However, the number of unemployed people also fell, by 26,000 to 1.43 million in the three-month period ending October 2017, although the unemployment rate remained at 4.3%.
 Latest estimates show that the average weekly earnings for employees in the UK in real terms (adjusted for price inflation) fell by 0.2% including bonuses, and fell by 0.4% excluding bonuses, compared with a year earlier.

Calls for tougher action on employers not paying national minimum wage

In December 2017, the Department for Business, Energy and Industrial Strategy released the latest list of employers who paid less than the minimum wage. The list ranks 260 employers in terms of the amount they were obliged to give to 16,000 workers in back pay after being found to have breached their minimum wage obligations. The businesses named included retailers Primark and Sports Direct, which ranked third and fourth respectively. 
However, the GMB union pointed out that no criminal prosecutions had been initiated against employers since the government began its ‘naming and shaming policy’, arguing that it was not an effective deterrent. The Unite union stated that the figures constituted the ‘tip of the iceberg’.

Commentary

Despite the government’s weakened position following the June 2017 election, it managed to get the European Union (Withdrawal) Bill through Committee Stage in the House of Commons with only one defeat, with Labour’s proposed amendment on future employment and equality rights being unsuccessful. The Bill is now expected to go through the report stage and third reading on 16 and 17 January, before heading to the House of Lords at the end of the month. However, the government’s weakened parliamentary position doubtlessly contributed to its relaxation of the pay cap for some categories of NHS workers. The official figures on employment levels seem to suggest that the UK’s jobs boom may have come to an end with the employment rate slipping by 0.2 percentage points, while the decrease in unemployment was attributable to a rise in economic inactivity.

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