HR Newsletter #120 June 2018

Employment Update

Self-Employed Status

The Supreme Court recently declared the plumber from Pimlico Plumbers was “a worker (a casual / zero – hours contract) and not as his contract said “a self-employed independent contractor”. This is a significant case for any employer engaging self-employed contractors.  The key points that led the court to conclude this were:

1. He worked 40 hours per week for Pimlico Plumbers
2. He was not allowed to work elsewhere
3. He had a restrictive covenant preventing him from being a plumber in London for 3 months after he left
4. He had to use their branded/liveried van
5. He had to wear their branded uniform
6. He had a Pimlico Plumber identity card
7. There was no right of substitution if he was unavailable

The court decided that he was required to personally provide services to the employer and because of this point - he was a casual worker and not self-employed.  This conclusion was arrived at primarily because:

1. there was no substitution clause and substitution was not an effective/usual part of the contract
2. the plumber (from the paperwork) was predominantly required to provide service personally

Businesses engaging self-employed contractors as part of their staffing – are being advised to review the detail of their arrangements in light of this ruling.  Follow for a detailed copy of the ruling and commentary.  

Pensions: Staff Opt-Outs

Workchain, a Company based in Derby, whose 2 directors actively encouraged their temporary staff to opt out of their NEST pension in an attempt to save the company money have pleaded guilty at Derby Magistrates court. The Directors (and 3 other senior staff) used the staff members’ own passcodes to enter their NEST accounts and opt them out of their pensions so that the company would avoid paying their Employer’s Pension contribution. The sentencing is due to take place on 28^th June and, under the Misuse of Computers Act, they may face up to 2 years in jail.  

Gender Pay Reporting

From April 2017 companies of >250 staff have been required to monitor and calculate their gender pay gap data. The first results were scheduled to be published 12 months after these regulations came into force (April 2018). The bulk of the data has now been published (by over 10,000 companies) and there have been some surprises. Employers in the Private and Voluntary Sectors:

• 78% of employers pay men more than they pay women
• 8% have no pay gap at all (both men and women receive equal pay)
• Median pay gap = 9% (i.e. women are paid 9% less than men)

Public Sector Organisations:

• 90% of employers pay men more than they pay women
• Median pay gap = 18% (i.e. women are paid 18% less than men)
• NHS, Universities and government bodies having significantly high gender pay gaps

 

Gender Pay Reporting Calculations

The following is a reminder of how to complete these calculations required under the Gender Pay Reporting provisions: Mean Gender Pay Gap

1. Sum up all the Male hourly rates of pay and then find the average (mean) male hourly rate of pay.
2. Sum up all the Female hourly rates of pay and then find the average (mean) female hourly rate of pay.
3. Complete the Mean Gender Pay Gap calculation as follows:

Median Gender Pay Gap

1. Rank all the Male hourly rates of pay and then find the middle (median) male hourly rate of pay.
2. Rank all the Female hourly rates of pay and then find the middle (median) female hourly rate of pay.
3. Complete the Median Gender Pay Gap calculation as follows:

Mean Gender Bonus Pay Gap

1. Add up the total amounts paid in bonuses, to men, over the past 12 months (using the definition of bonus pay described in Note¹ above).
2. Divide this amount by the total number of relevant male employees. This will then give you the average (mean) bonus for men.
3. Add up the total amounts paid in bonuses, to women, over the past 12 months.
4. Divide this amount by the total number of relevant female employees. This will then give you the average (mean) bonus for women.
5. Complete the Mean Gender Bonus Pay Gap calculation as follows:

Median Gender Bonus Pay Gap

1. Rank the amounts paid in bonus to men, over the past 12 months (using the definition of bonus pay described in Note¹ above) then find the middle one (the median).
2. Rank the amounts paid in bonus to women over the past 12 months then find the middle one (the median).
3. Complete the Median Gender Bonus Pay Gap calculation as follows:

Average Bonus (proportion of staff who receive bonus)

1. Sum up how many men were paid a bonus¹ in the past 12 months.
2. Divide this number by the total number of relevant male employees² to give the reportable figure i.e. % of men who were paid a bonus.
3. Sum up how many women were paid a bonus¹ in the past 12 months.
4. Divide this number by the total number of relevant female employees² to give the reportable figure i.e. % of women who were paid a bonus.

General Note: each of the above are headcount, not FTE, calculations to arrive at the averages.

Note¹: “Bonus pay” is any remuneration relating to profit sharing, productivity, performance, incentive or commission whether in the form of money, vouchers, securities, securities options or interests in securities. It excludes pay which counts as ordinary pay, overtime pay and redundancy pay or other termination payments. Pay in the form of securities, securities options and interests in securities should be treated as being paid to the employee at the time it gives rise to taxable earnings or income, and in the same amount as that attracting the tax liability.

Note²: “relevant” refers to the number of employees at the snapshot date – 5^th April each year.

Quartiles

1. Rank pay for all staff.
2. Break the ranking down into quartiles (i.e. top 25%, 2^nd 25%, 3^rd 25% and bottom 25%)
3. Calculate the percentage of Men and Women in each of these quartiles
4. Report these findings in a table using the following format: