Week Starting 26th July

FSB Urges Government To Put Brakes On Employment Legislation

The Federation of Small Businesses (FSB) has responded to news that the government is considering new rules on temporary workers, striking employees and bank holidays by urging ministers to put the brakes on employment legislation.

There are now 26 acts relating to employment on the statute books. The FSB, (Britain’s biggest business organisation) says small employers desperately need a period of legislative calm to get to grips with recent changes.

The FSB’s 2004 member survey reveals the difficulties posed by employment legislation.

The majority of entrepreneurs see the volume (66 per cent), complexity (59 per cent) and rate of change of employment legislation (56 per cent) as a major obstacle to growth.

And any further regulation – such as those agreed at last weekend’s Labour Party National Policy Forum – could damage labour force flexibility.

The FSB argues that there should be a period of stability in the next parliament to allow employers and employees alike to get to grips with the current rights and responsibilities.

John Walker, FSB Policy Chairman said: “Small businesses employ over 50 per cent of the private sector’s employees, some 12million workers. But most small firms do not have a Personnel Manager or HR Department so any increase in administrative burden can have a direct influence on their ability to create jobs.”

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‘Google’ Accused of Age Discrimination

‘Google’, the internet search company, has been accused of age discrimination and is facing a lawsuit in California brought by a former executive.

Brian Reid, aged 54, was Google’s director of operations. He claims he was sacked because he was considered too old and didn’t fit their youthful corporate culture.

According to Reid, Google routinely discriminates in its recruiting, hiring and employment practices against those aged 40+. The average age of their 1600 employees is below 30 and less than 2% are aged over 40 he alleges.

Google is planning to ‘defend itself vigorously’ against Reid’s claims. In the era of ‘ethical investments’ what, if any, impact the case might have on the $3.8 billion the company is expecting to raise from their planned stock market flotation later this year, is not clear.

Meanwhile, anyone for ‘Ask Jeeves’ ……

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Number of Workless, Working Age Households Falls Slightly

Despite the focus on welfare-to-work programmes, the number of workless, working age households in the UK only fell by 28,000 (to 3.01 million) in the year to Spring 2003, although it has fallen by 150,000 since 1999.

The number of working age people in workless households was 4.25 million and the number of children in workless households was 1.86 million, 1.29 million of whom are in lone parent households.

The highest percentage of workless household is in Inner London (24.8%), the lowest is in the South East region (11.4%). The figures are contained in a report just published by the Office of National Statistics (ONS).

N.B. A ‘working age household’ is defined by the ONS as a household that includes at least one person of working age and a ‘workless household’ is one that includes at least one person of working age where no one aged over 16 is in employment.

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Fixed Retirement Ages Should Go

Nine out of ten people surveyed think older workers should be able to choose when to retire according to a new poll from ICM/Age Concern.

The poll was conducted with a cross section of people of all ages to coincide with the publication of a new report ‘Choose, not Lose, the Right to Work’ by Age Concern.
It also found :-

• 86% of those surveyed disagreed that employers should have the right to get rid of anyone over 65, solely on the grounds of age.
• 72% thought fixed (mandatory) retirement ages belong to the past and are old fashioned and unnecessary.
• 68% disagreed that older workers should retire to make way for younger workers.

Chambers Call For A Mandatory Retirement Age & Citizens Pension

The British Chambers of Commerce (BCC) have thrown their hat into the ring about what needs to be done to reform the UK’s pension systems. The recommendations contained in their ‘Revitalising the UK’s Pension Partnership’ paper include:-

• Sweeping away the current state pension system and replacing it with a single, flat-rate citizens’ pension.
• Providing tangible financial incentives to encourage employer contributions to occupational pensions.
• Establishing a mandatory retirement age of 65 and gradually increasing it along with the state pension age as longevity increases.
• Raising the minimum retirement age to 55 on a sliding scale before 2010.
• Fully examining the potential virtues of multi-employer occupational pension schemes.
• Rejecting compulsion in favour of a voluntary system that provides individuals with a real incentive to save.
  

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New Commission On Women and Work

Tony Blair has announced the creation of a Women and Work Commission to examine the problem of the gender pay gap and other issues affecting women's employment.

The Women and Work Commission will look at the following issues:

• how men's and women's education and skills affect which jobs they can get;
• promotion and career progression - the 'glass ceiling';
• women's experiences in the job market before and after having children;
• the different experiences of women working full-time and part-time.

The gender pay gap currently stands at 18% for full-time workers and 40% for part-time workers.
Trade and Industry Secretary and Cabinet Minister for Women Patricia Hewitt said:

"Making progress on the gender pay gap is a key priority because we have to draw on the skills and talents of all potential workers - men and women. Women have the right to expect a fair deal in the labour market."

The Women and Work Commission will be chaired by Baroness Margaret Prosser and will begin its work in Autumn 2004, reporting to the Prime Minister within twelve months. It will make recommendations on what the Government can do to reduce the pay gap and give women fair opportunities at work.

The CBI has welcomed the announcement. John Cridland (their Deputy Director-General) said, "This Commission is welcome. Unfair discrimination should be stamped out but so far too much of the argument about the gender pay gap has been too simplistic.

"This is not about big payouts for City sex discrimination cases. It is about examining the circumstances of working women up and down the country.

"If the Commission is going to have any impact it mustn't get hung up on discrimination by employers. That is only a small part of this problem. Much more important are the career choices women make which leave them concentrated in lower paying sectors and women's traditional caring responsibilities which restrict their options and interrupt their careers.

"Employers want to play a constructive part in finding answers for the long term and will be pleased that the Commission is to examine the whole picture."

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Pre-Election Deal Should Give Thousands New Holiday Rights

Hundreds of thousands of employees, many working for small businesses, should benefit from a deal struck between the Labour Party and union leaders which could give them an extra 8 days annual leave. This is because employers will no longer be able to count bank holidays as part of the statutory four-weeks’ holiday.
The deal was struck at the Labour Party’s National Policy Forum over the weekend which secured the party vital funding and a united front from the trade unions for the general election campaign.
The unions also managed to secure agreement on extending European directive employment rights to temporary and agency workers and planned legislation on corporate manslaughter.

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Week Starting 19th July

CRE Gives Thumbs Down To Single Equality Commission

In a move that appears to have come as a surprise to many in the ‘equalities’ community, the Commission for Racial Equality (CRE) has unequivocally rejected proposals for the new Commission on Equality & Human Rights (CEHR).

The new CEHR would be a ‘one stop shop’ for anyone facing any kind of discrimination. This means it would be responsible for overseeing not only the new strands of equality legislation (sexual orientation, religion and belief, and age) but would take over the responsibilities of the 3 existing Equality Commissions (i.e. Equal Opportunities Commission, The Disability Rights Commission and the Commission for Racial Equality).

Earlier this year the DTI set up a Taskforce to advise it on a Single Equality body and has published a White Paper called ‘Fairness For All’. TAEN was a member of the Taskforce.

Trevor Phillips, chair of the CRE said, “As far as we are concerned this is the wrong proposal at the wrong time. But we want to remain engaged in the debate on the best way forward for equality.”

The expectation is that the other two existing Commissions and business leaders will come out in favour of the White Paper proposals. In which case the Government will go ahead and announce the enabling legislation in the Queen’s Speech this autumn. The CEHR would most likely come into effect in 2007.

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Company Pensions Issue Just Won’t Go Away

Another week for mixed news about company pension schemes…

Virtually no sooner than the Government commits to stump up £40 million to help 65,000 workers whose company pension schemes have gone bust before the new Pension Protection Fund comes into effect, than another 40,000 current and former workers seem likely to find themselves in the same position.

Those in question all work (or worked) for the car component manufacturer Turner & Newall whose pension scheme has a £875 million shortfall and whose American parent company - Federal Mogul – has been in U.S. Chapter 11 bankruptcy protection since October 2001. Now Federal Mogul’s administrators have frozen the
T&N pension fund and it seems likely it will be wound up altogether. If this happens it will be the biggest closure of its kind and the Government will come under strong pressure to increase the £40 million it is making available.

Earlier in the week it was reported that the pension funds of the UK’s FTSE Top 100 companies still have a shortfall of £65 billion and that despite the stock market improving over the past year, many of the shortfalls actually increased.

On the brighter side – at least for a few - a new report from consultants Watson Wyatt suggests there are a ‘hard core’ of employers who still firmly believe in offering final salary schemes to new, as well as existing, employees. Nearly half of those doing so say that it gives them a competitive advantage in recruiting new staff and 75% say they are doing it because employees value the benefit.

The report also highlights that more employers are turning to so-called ‘hybrid schemes’ in which employers and employees both share the risk as well as the cost.

At the start of the week the CBI issued a 22 point action plan on pensions aimed at companies, individuals and the government. It said employers and individuals should save more into pensions – at least those who could afford to – and called on the government to increase incentives to save. It said the basic state pension should be increased to the level of the Pensions Credit and that to fund it the state pension age should rise to 70 over the decade to 2030. The Government quickly kicked thess last suggestions into the long grass and said it had no intention of raising state pension age.

Finally, a report by Accenture/NOP found that nearly half (46%) of 1000 adults they surveyed across the UK are not saving for retirement at all and will rely on the basic state pension. Asked what they would do if they were given an extra £100 a month, only 4% said they would save for retirement. Many more said they would spend it on holidays or indulge in retail therapy.

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‘Press the Red Button’ For Jobs

An innovative new pilot programme is just getting underway which allows people with interactive digital TVs to access Jobcentre Plus vacancies.

‘Job Channel’ offers all NTL/Telewest/Sky subscribers direct access from the comfort of their own (or somebody else’s ?) home. However it only carries details of Job Centre Plus vacancies within a 15 mile radius of Central London.

The pilot began at the end of June and the roll-out is being staggered via the various digital TV providers. The Telewest service went live on 21st June, the SKY service went live on the 15th July and the date for the NTL service is yet to be confirmed. The pilot runs through till the end of March 2005.

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Collapsed E-University Bonuses “Scandalous”

In Spring 2003 a new online university – called UkeU was set up. It was a joint venture between the Government, 12 universities and private industry.
This ‘virtual’ university was designed to allow students to sign up for, and do degrees at various UK universities.

Over £60 million pound of public money was put into UKeU before the plug was pulled in February after only 900 students had signed up. Not surprisingly its collapse is being investigated by a House of Commons committee.

Now a row has broken out about bonuses paid to 31 senior staff – including £45,000 paid to the Chief Executive, John Beaumont, on top of his £180,000 salary.

Barry Sheerman, chairman of the House of Commons Education Select Committee said that the bonuses were ‘”scandalous” in the light of UKeU’s failure but lawyers have advised they must be paid.

The UKeU’s collapse follows the failure of the Individual Learning Accounts scheme two years ago. The Conservative party have attacked the “incompetence of the Department of Education and Skills in implementing their initiatives.”

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Significant Increase In Employment Tribunal Applications

Last year there was a 17% increase in the number of employment tribunal applications registered. They rose to 115,042 from 98,617 in the previous year. However much of the increase was due to 7000 sex discrimination applications lodged relating to the Jobcentre Plus dress code case.
Employment tribunals have powers to determine nearly 70 different types of complaint, including complaints of unfair dismissal, race, sex and disability discrimination, unlawful deduction of wages, breach of contract and redundancy pay. In 2003-04 the most common types of complaint were:

• Unfair dismissal (37,644)
• Unauthorised deduction of wages (20,853)
• Sex discrimination (14,284)
• Working Time Directive (11,218)
• Breach of contract (8,195)
• Redundancy pay (4,210)
• Redundancy - failure to inform and consult (4,159)
• Equal pay (3,217)
• Disability discrimination (2,764)
• Race discrimination (2,830)

The outcomes were: 37% of cases settled through Acas, 31% were withdrawn, 14% were successful at tribunal, 10% were unsuccessful at tribunal and 8% were 'disposed of otherwise'.
Several new jurisdictions were added during the year. ‘Unfair discrimination on grounds of flexible working’ came into force in April 2003 and two new jurisdictions of ‘unfair discrimination on grounds of religion or belief and sexual orientation’ in December 2003.
The information is contained in The Employment Tribunals Service’s Annual Report and Accounts (2003-04).

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Employees’ Skills & Competencies Key In Redundancy Selection

According to a new IRS Employment Review survey, the skills and competencies of employees are more important than the job they do when it comes to selection for redundancy.
The survey which covered 89 private and public sector employers reveals that nearly 9 out of 10 (87%) had made employees redundant in the past two years - totalling 8,041 people – some 8% of the total number they had employed.
Two thirds of the employers surveyed did not report any productivity improvements as a result of the job losses and 6 out of 10 found the redundancies had led to lower staff morale. A smaller, but significant number also believed the redundancies had led to a loss of organisational skills and organisational memory in their workplaces.
Other key findings :-

• 76% of the employers surveyed had used compulsory redundancies and 41% had used both compulsory and voluntary redundancy approaches.
• Nearly 1 in 4 (24%) of employers said they use a straightforward “last in, first out” (LIFO) method of selection for redundancy.
• For those employers (60% of the sample) who use attendance as a criterion, certified absence appears to count against an employee in the selection process almost as much as unauthorised absence. Most employers (81%) said that leave covered by a doctor’s certificate would count against an employee and 87% said that self-certified leave would do so.
• A majority of employers (86%) indicated that they would provide reasonable time off or as much as staff need to look for employment elsewhere.
• Almost half (46%) the respondents reported that more workforce cuts were expected over the coming year.

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Week Starting 12th July

Recruitment Intentions Remain Strong

Several reports this week confirm employers’ recruitment intentions remain strong. The CIPD's second quarterly HR Trends and Indicators survey finds that :-

• More than 4 out of 5 employers (81%) responding to the survey intend to recruit staff this summer (June-August 2004).
• 40% of respondents expect to be employing more staff by the summer of 2005 against 17% expecting to employ fewer: a positive balance of 23 per cent, up from 19% in the spring quarter survey.
• Almost half of respondents anticipate recruitment difficulties over the summer months and a third expect retention difficulties.
• More than a fifth of respondents reported having no applicants for vacancies.
• Over 40% found lack of specialist skills required was one of the main causes of recruitment difficulties while lack of experience and applicants wanting more pay were also common reasons given.

Asda, the supermarket giant, has announced its looking to recruit a further 8,000 ‘permanent temps’ for its ‘seasonal squad’ which provides cover for staffing peaks and troughs. The seasonal squad contracts allow staff to work an annual, rather than weekly, number of hours. The over 50s are one of the groups Asda are actively targeting.

The latest set of Employment figures released this week showed that whilst there was a drop of 29,000 in the number of people in work over the past 3 months, the underlying trend in employment is still up. There were 28.3 million people in work between March and May and the overall employment rate remained at 74.7%. The number of people claiming Jobseekers’ Allowance dropped by nearly 10,000 in June.to 850,900. The proportion of the population who are economically inactive (those who do not have a job but are not actively seeking or immediately available for work) has risen by .1% over the past year to 21.4%.

According to the Office of National Statistics there were 643,000 unfilled vacancies in the 3 months to June – up by 10% on the same period last year.

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Over 100,000 Public Sector Jobs To Be Axed

In unveiling his latest 3 year Spending Review, Gordon Brown, the Chancellor of the Exchequer, has announced he is looking to axe over 104,000 public sector jobs. The money saved will be used to improve frontline public services.

Commentators remain sceptical about whether the cuts will be achieved. They point out that over half a million public sector jobs have been created since the Labour Government came to power in 1997 and that an additional 350,000 jobs are already planned.

However Brown remains adamant the cuts will go ahead and some £350 million has been earmarked to cover the redundancy costs.

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Top Public Sector Pensions Exempt From New Tax Rules

One of the most contentious issues for (some) businesses around the reforms to the rules governing occupational pensions has been the new £1.5 million ceiling being put on individual’s pension pots. Under the new rules, pensions over this amount will face a surcharge of 55p in every £1.

Imagine the reaction therefore to the news that senior civil servants, judges and MPs are set to escape the new rules. According to The Guardian they will escape the tax surcharge after the Government refused to delete a clause in the Finance Bill allowing public sector officials extra protection for their current pension rights.

One rule for us, another for the others….?

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The Positive Contribution of Adult Learning

New research confirms participation in adult learning has positive effects on a wide spectrum of health and social outcomes.

The researchers focused on people in the 33-42 year age bracket and found the positive outcomes included changes in exercise taken, increased life satisfaction and racial tolerance, increased political interest, number of memberships and changes in voting behaviour. The researchers concluded that participation in adult learning is an important driver for change in the lives of learners but interestingly the outcomes were greater in magnitude from the first and second course taken, compared to additional courses taken.

‘The contribution of adult learning to health and social capital’ research was conducted for the Centre of Research on the Wider Benefits of Learning.

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Public Sector Still Suffering From Image Problem

At a time when the public sector is still recruiting heavily, a survey by the on-line recruitment company Totaljobs.com has found the public sector continues to have an image problem with jobseekers.

82% of jobseekers still view the public sector as bureaucratic, two thirds thought it doesn’t have a modern outlook and regard it as an ungenerous employer, whilst 1 out of 2 were concerned about limited job prospects. Over two thirds (69%) believed the private sector pays better and nearly half (44%) think the private sector is better at promoting the benefits it offers prospective employees.

On the plus side, 70% believed public sector employers looked after their staff and 48% were attracted to its flexible working hours.

Keith Robinson from Totaljobs commented, “The public sector needs to address its long-standing image problems, if it wants to attract talented, ambitious employees…The perception that public bodies provide employees with a better work-life balance could easily help them make-up lost ground…”

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Week Starting 5th July

Fudge On Retirement Ages Being Proposed

To see TAEN's published letter on this subject, Click Here)

According to the Financial Times, Ministers are considering a compromise to end the present impasse on the issue of retirement ages for the forthcoming age discrimination regulations. The proposal would give individuals the ‘right to request’ working beyond the age of 65, whilst giving their employers the final say on whether they can stay or must go.

Up till now Ministers at the DWP are on the record as favouring the abolition of mandatory retirement ages (the age at which employers can insist their employees retire) whilst Ministers at the DTI appear to have been more inclined to accept the proposal – strongly pushed by employers organisations - of setting a retirement age of 65 with flexibility for individuals to retire before or after – by agreement with their employers.

The disagreement has been holding up publication of the draft regulations – although the Government still insists the legislation will come into effect on 1st October 2006. (see story below).

The ‘right to request’ approach was the one used in last year’s Flexible Working regulations giving parents of children under 6 (or disabled children under 18) the right to ask for flexible working. Employers can reject the request if there is a ‘business justification’ for doing so.

The ‘right to request’ compromise would be a fudge – which might be why it could appeal to Ministers. Certainly employers’ organisations have quickly welcomed it.

David Yeandle of the EEF (Engineering Employers Federation) told the Financial Times “A right to request (working on) at 65 might well be a way forward.”

TAEN ‘s position is that we want to see mandatory retirement ages abolished. We believe mid and later-life employment and training decisions could be transformed if the shadow of retirement was removed and taken out of consideration. Other countries – such as Australia – seem to have done it successfully and without a welter of recriminations and tribunal cases.

As David Yeandle will be one of the speakers at TAEN’s Annual Conference in London on October 14th, it should make for an interesting discussion. As should the following…

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Employers’ Ad Hoc Approach Towards ‘Retirement’ Decisions

Employers’ organisations (such as the EEF) argue mandatory retirement ages are needed to efficiently and strategically manage such things as ‘retirement with dignity’, succession and pension planning. Therefore new research showing that managers, driven by short-term commercial or organisational pressures, usually adopt an ad hoc approach that leads to inefficiencies and lost opportunities in human resource management, is likely to prove inconvenient to their argument at the very least.

‘The impact of employer policies and practice on the process of retirement‘ report from the Joseph Rowntree Foundation found that although employees may express preferences about retirement, final decisions are made by the employer under constraints imposed by the pension fund provider and by past custom and practice.

The researchers from the University of Kent who conducted the research report .…’final decisions about retirement still largely rested with the employing organisation. This discretion, combined with the complexity of provisions for different groups, left many respondents (both managers and employees) confused about the basis for decisions. Some people were offered favourable deals while others in similar circumstances were not’.

They also found / confirmed that :-

• Few employees have a good understanding of pensions. Better financial education would help people plan their retirements more efficiently.
  
• Most employees supported the idea of abolishing normal retirement ages as they are seen as arbitrary and unfair. It was generally felt that retirement decisions should be made on an individual basis, taking into account the needs of both the organisation and the employee.
  
• A large proportion of managers and employees like the idea of reducing workloads in the run-up to retirement. They also liked the idea of a 'flexible' retirement with employees drawing some pension while continuing to work reduced hours. The ability to take up such options, however, is likely to be affected by an individual's financial circumstances.

The researchers conclude…’attempts by governments to encourage people to work for longer must recognise that the context in which people negotiate retirement is an organisational one. They may have little personal discretion over the timing and manner of their departure from work. Urging individuals to change their behaviour will not be sufficient if organisations are not similarly encouraged to reappraise their management of older workers

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Age Legislation Still On Timetable

The Government is still insisting its on timetable for bringing in the age legislation by 1st October 2006.

Replying to a question in the House of Lords from Baroness Greengross about when the Government intend publishing the draft age regulations, Lord Davies of Oldham, a Government spokesman said, “…the Government are currently reviewing the timetable for future consultation on the legislation…..We are doing so in the light of our clear commitment to give those with rights and responsibilities as much time as possible to prepare for the new legislation coming into force. We remain on course for the legislation coming into force on 1st October 2006. We shall announce the new timetable as soon as possible.”

So it looks like if push-comes-to-shove, employers may not get the two years to prepare for the legislation they were originally promised. Which makes it all the more important they start taking steps now to identify and stamp out any overt or covert age discrimination in their HR policies and practices.

Research released this week by the Equal Opportunities Review says that many employers are underestimating the impact of the forthcoming legislation. 70% of employers say they are not concerned about the impending changes, even though almost 50% of employers do not have a policy on age diversity or age discrimination in place and few monitor promotion and training decisions by age.

The report confirms that many employers are delaying changes because they are waiting to see the detail of the new legislation.

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New Chairman Brings Added Fizz To The LSC

The Learning and Skills Council has a new chairman. Chris Banks takes over from Bryan Sanderson just as the LSC emerges from a major bout of restructuring which has seen a substantial move towards regionalisation, accompanied by a substantial reduction in staff.

Chris Banks, Chief Executive of Big Thoughts Ltd (a food and drink company), has been a member of the LSC’s National Council and Chair of its Young People’s Learning Committee and Chair of the London Employers’ Coalition for New Deal.
He was Managing Director of Coca-Cola Great Britain from 1997-2001.

The Learning and Skills Council is responsible for all post-16 education – with the exception of Higher Education. It handles an annual budget of £9 billion.

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Myopic Recruitment Practices Forcing Starting Pay Levels Up

Recruitment agencies report that the difficulties they have attracting suitable candidates for permanent jobs are continuing to drive up starting salaries.

The latest NTC Research Report on Jobs says that “Higher salaries were linked widely to continuing strong demand and rising skill shortages amongst available candidates.”

The strongest demand for staff is in engineering, construction, clerical/secretarial, nursing and medical care.

The CIPD’s recent Retention & Recruitment Report 2004 (reported in last week’s news) found that whilst 85% of employers were having difficulty recruiting staff, only 25% were targeting ‘under-represented’ groups such as ‘older workers’ as a possible solution. Short-sighted or what ?

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