Mind the (Gender Pay) Gap

While I don’t suppose it will protect me from accusations of ‘mansplaining’, I am going to preface this blog with two pre-emptive statements. Firstly, I am wholly committed to eliminating sex discrimination in the workplace, unequal pay, and the gender pay gap. And I have devoted a fair bit of my working life to that end, not least by making the case for public policy that facilitates and supports more shared parenting and eldercare, and that ensures effective access to justice via the employment tribunal system for workers subjected to discrimination or other unlawful treatment at work.

Secondly, I burn no candle for the ‘lifestyle’ retailer Oliver Bonas. I do shop there fairly often, mostly to buy jewellery as gifts for female friends and lovers*. So yeah, I like some of their stuff. But until last week I knew little more about the company than the location of two or three of its stores.

However, I am one of those doomsayers who have long expressed doubts as to whether the particular gender pay gap reporting regime which came into force in April 2017 – under which organisations with 250 or more employees have to publish gender pay gap data by 4 April this year (or 30 March this year for public sector employers), and annually thereafter – will do much if anything to change employer behaviour in a way that will reduce the overall gender pay gap (GPG).

This is partly because, as I noted in 2014, when policy wonking for Working Families, “discriminatory pay by employers is just one of several factors behind the gender pay gap, and is quite possibly one of the least influential, overall (which is no consolation if you are one of the all too many women subject to such discrimination).” Occupational segregation, and the substantial impact on women’s earnings of taking time out of the labour market to have and care for children, are arguably more influential factors. But it’s also because, as employment lawyer and blogger Darren Newman noted earlier this month, the Tory/Liberal Democrat Coalition-devised GPG reporting regime:

“requires absolutely no meaningful transparency about who gets paid what or how employers reward employees.  Instead we get some very selective statistics, shorn of all context and telling us next to nothing of any use.

And that is assuming that the figures being reported are even accurate. The Financial Times has done some really good work picking apart some of the more suspiciously improbable entries on the Government website. Just wait until there are more than 9,000 entries – how on earth will you be able to tell whose figures are accurate and whose aren’t?”

Given our doubts about the value of the data required by what we regard as a deeply flawed GPG reporting regime, some of us doomsayers have also worried aloud about the scope for misuse and misrepresentation of that data. Because, of course, unlike unequal pay, having a gender pay gap is not unlawful. And for good reason: at the level of an individual employer, as opposed to the economy as a whole, the existence of a gender pay gap is not necessarily sinister or indicative of poor practice, let alone of unequal pay.

So, much like President Jed Bartlet, I was shocked but not surprised when, the weekend before last, the Labour MP and tireless campaigner for gender equality, Jess Phillips – of whom I happen to be a big fan – used Twitter to call on women to boycott the retail chain Oliver Bonas, simply because of the company’s mean GPG of 9.6%, and median GPG of 1.4%, as listed on the Government’s gender pay gap reporting database and reported by the media.












Oliver Bonas’s mean GPG figure of 9.6% is in fact somewhat lower than both the national average (a mean GPG of 18.1% for all employees) and those of more than half of the 630 employers who have submitted the required gender pay report to date. As noted in the BBC report pictured by Jess in her tweet, for example, the Co-Operative Bank has reported a mean GPG of 30.3%, and a median GPG of 22.6%, but as far as I can tell Jess hasn’t called on women to switch to another bank.

Indeed, among the 630 employers, there are 132 with a mean GPG of more than 20%, and 38 with a mean GPG of more than 30% – including Virgin Money, the Office for Nuclear Regulation, and Price Waterhouse Cooper (PwC), one of the eight employers held up as examples of good practice on publishing gender pay information in the Government’s July 2015 consultation that led to the new regime.

And, if Jess thinks women should be “voting with their feet” in respect of a 9.6% mean GPG, then presumably women should also be avoiding the Home Office (10.1%), the Crown Prosecution Service (10.6%), Cambridgeshire Police (10.9%), the RNIB (11.8%), West Yorkshire Fire & Rescue Services (12.0%), John Lewis (13.9%), the National Gallery (14.4%), and the Health & Safety Executive (22.9%).

But in any case it is really not clear to me how boycotting a Living Wage employer with a workforce that is 83.6% female (and a part-time workforce that is 90.9% female) is supposed to benefit women, especially those who wish to work part-time in order to balance work with childcare and/or eldercare.

Nor is it entirely clear to me what Jess and others, including the former Coalition minister Jo Swinson, expect senior managers at Oliver Bonas to do that they aren’t already doing (or trying to do) – on Twitter, Jo said the company has “more to do, obviously” and that “obeying equal pay law is not sufficient”. That’s quite a statement. As the company notes in the gender pay gap report published on its website, it’s senior leadership team is 76% female, and

“As a lifestyle retailer, we predominantly attract female applicants resulting in our part time employee population being 90.9% female. [One] contributing factor to our [GPG] is that 72.3% of our Website Fulfilment and Warehouse teams are males who work full-time. We have worked hard over the last few years to encourage more male managers and team members to join our business.

Similarly, we have worked to increase the number of females working in our Warehouse and Web Fulfilment teams and continue to make good progress in these areas. We are planning on continuing to focus on creating a workforce across all areas of our business for 2018.”

In the circumstances, it seems harsh if not grossly unfair to pick on – and call for a consumer boycott of – a company that, given the nature of its business and customer base, seems to be working reasonably hard to avoid having an arguably near-inevitable gender pay gap. As Maya Forstater, visiting fellow at the Centre for Global Development, noted in response to Jess’s call for women to boycott the retailer Phase Eight, along with Oliver Bonas, Phase Eight is a “boutique-style women’s fashion retailer with high customer service – few staff in each store, bringing alternative sizes into changing room, giving opinion on outfits etc. – how many men want the job?” And there is absolutely nothing in the gender pay gap data to suggest that there is any unequal pay at Oliver Bonas (or, on the face of it, at Phase Eight, but I am resisting commenting on that company as I have not delved into their data or GPG report).

More to the point, perhaps, how – or why – does Jo Swinson, the driving force behind the new GPG reporting regime (and of whom I am a massive fan), conclude that Oliver Bonas has “more to do, obviously [sic]”? The clear implication of this statement is that any significant deviation from a mean GPG of 0% is somehow ‘wrong’, and that corrective action must be taken until that deviation is eliminated.

But does that also apply to the 90 organisations that have reported a negative mean GPG (i.e. in favour of their female employees)? Does the Equality & Human Rights Commission, which reports a mean GPG of minus 7.5%, have more to do? Or is that not so obvious? And what about the 50 organisations that report a mean GPG of between -1.0% and 1.0%? Do we give them all a gold star? Because among them I count at least four social care providers, and four cleaning companies. Oh, and the UK armed forces.

In short, transparency is all well and good, but not if it generates misinformed or groundless criticism of employers (and lets ‘bad’ employers off the hook). Because that can only lead to perverse incentives and a real risk of counter-productive outcomes in the years ahead. As Darren Newman noted in his tweeted response to Jess’s boycott call, “if a council contracts out its cleaners to Capita, its [gender] pay gap will fall”. And a private sector business unfairly threatened with a consumer boycott might well be tempted to do the same with a predominantly female/part-time/relatively low paid section of its workforce.

By the same token, ostensibly good gender pay gap figures don’t necessarily mean that all is fine and dandy in that organisation when it comes to gender diversity. A few days after Jess’s call for women to boycott Oliver Bonas and Phase Eight, prime minister Theresa May’s shambolic reshuffle of cabinet and other ministers was the subject of much critical analysis, with headlines such as “May’s reshuffle shows diversity and equality are not priorities” (Financial Times) and “Was Theresa May’s reshuffle really good for women?” (Stylist).

Yet, according to my number crunching – in line with the Government’s guidance to employers on how to calculate their GPG figures, and using the ministerial salaries published by the Government – following the recent reshuffle the Government as a whole (i.e. all 121 cabinet, middle-ranking and junior ministers, in both the Commons and the Lords) has a mean GPG of 5.0%, and a median GPG of 0%.

Furthermore, that 5.0% figure is slightly inflated by the fact that ministers in the Lords receive a lower total salary than their counterparts in the Commons, as their higher ministerial salaries do not fully compensate for them not receiving an MP’s salary of £76,011 (Lords ministers are not entitled to claim Lords Attendance Allowance). Among the 96 ministers who are an MP, there is a mean GPG of 4.9%, and a median GPG of 0%.

And, if we exclude the unpaid government post of Second Church Estates Commissioner (held by Dame Caroline Spelman MP), the mean GPG among Commons ministers falls to a fairly ‘impressive’ 4.0% (relative to, say, Oliver Bonas). Of the 630 organisations in the Government’s GPG reporting database, 447 have a mean GPG greater than 4.0% (and let’s not forget that many of those with a lower or even negative mean GPG only do so because they employ very few women).

Similarly, among the 22 full cabinet ministers (i.e. excluding the six middle-ranking ministers who attend the Cabinet), there is a mean GPG of 4.0%, and a median GPG of 0%. And, if we exclude Baroness Evans, the leader of the Lords (and the only Lords minister in the Cabinet), there is a mean GPG of minus 1.1% (that is, in favour of the women), and a median GPG of 0%.

But does this mean Theresa May has cracked gender diversity among the ranks of government ministers? No, it doesn’t. Of the 121 ministers, 82 (68%) are male, and just 39 are female. And, of the 96 ministers in the Commons, 66 (69%) are male, and 30 are female. Only six (27%) of the 22 full cabinet ministers are female.

To my mind, the new GPG reporting regime hasn’t got off to a terribly great start. And I fear things can only get worse.

* Sadly, there are in fact no female lovers. I made that bit up.

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NMW enforcement: 500% of nothing is still nothing

On 28 December, as I was travelling to Wet Wales for New Year, Sarah O’Connor of the Financial Times – surely the best employment correspondent of recent years, who has now moved on to a wider investigative brief – reported the view that Sir David Metcalf, the Director of Labour Market Enforcement, has been expressing publicly for some time now: that the financial penalties imposed on employers for breaching the national minimum wage should be substantially higher.

“There’s a trade-off here, in that if you’ve got plenty of resources [to inspect employers] you don’t need high penalties, and if you haven’t got the resources then you’ve got to have a stronger penalty [as a deterrent],” said Sir David. “My own view is we’re low on both.”

As the Low Pay Commission notes in its September 2017 report, Non-compliance and enforcement of the National Minimum Wage, the financial penalties “are a key part of the enforcement scheme, making sure that underpaying employers are suitably rebuked, and acting as a deterrent to other employers”. And, since 2010, the penalties have been increased several times.

The current penalty rate is 200% of the total arrears owed to workers, up to a maximum of £20,000 per worker, but that rate only applies to underpayments made since 1 April 2016. For underpayments made between 7 March 2014 and 1 April 2016, the penalty rate is 100%, and for underpayments made prior to 7 March 2014 it is 50%. And the total penalty is then reduced by 50% for prompt payment (within 14 days).

Sir David told the Financial Times that, while he would call for more resources for the enforcement bodies in his forthcoming enforcement strategy, especially for the Employment Agencies Standards Inspectorate (EASI), he believes minister are unlikely to want to “pump vastly more money” into the enforcement regime as a whole. As a result, the financial penalties need to be higher.

“That’s the point about the trade off: If you have not got the resources then you need heavier penalties. For the life of me, I can’t see that double the wage arrears, given the probability of inspection is once in 500 years, is anywhere near enough”, Sir David said. “Five times” the wage arrears might be a better figure, he suggested.

And this was followed by a statement by Sarah that “the total amount of [financial penalties] in 2016-17 was £3.9m, much less than the £10.9m of wage arrears that were identified by HMRC.”

However, there is one simple reason for that glaring discrepancy, not noted by either Sir David or Sarah: no penalties at all were imposed in relation to £6.0m (55%) of the £10.9m. Because, as noted repeatedly [Shurely ‘boringly’? Ed] on this blog, that £6.0m was in fact identified by employers, not HMRC, under the self-correction mechanism quietly introduced by HMRC in 2015 – and self-corrected arrears attract no penalty. In other words, penalties were only imposed in relation to £4.9m of the £10.9m. And the total amount of penalties was £3.9m, rather than £4.9m or even £9.8m, because most of the underpayments were made prior to 1 April 2016, so attracted a penalty rate of 100%, or even just 50%, rather than the current rate of 200%.

In the case of Argos, for example, we know from press reports in February 2017 that the arrears for which the company was named & shamed by BEIS in August relate to underpayments that “date back to 2014”, when the penalty rate was 100% (or just 50%, for underpayments made before 7 March that year). Those February 2017 press reports further noted that financial penalties of “nearly £1.5m” had been imposed on Argos (reduced to “£800,000” because the company “paid up within 14 days”), and in August the company was named & shamed for having underpaid 12,176 workers a total of £1.46m.

Interestingly – to this wonk, at least – those February 2017 press reports also stated that Argos was having to pay a total of £2.4m of minimum wage arrears, not £1.46m, to “more than 37,000 current and former shop workers”, made up of “12,000 current employees and more than 25,000 former staff”. In other words, it looks as if Argos was found by HMRC to owe £1.46m to £12,176 current workers, for which the company was named & shamed by BEIS and hit with £1.46m of financial penalties, but also self-corrected (or, at least, self-identified) a further £0.9m of arrears owed to some 25,000 former workers.

We don’t know for certain, because the self-correction mechanism is shrouded in secrecy and BEIS has repeatedly refused to identify any of the 169 employers that we know – from the Answers to four parliamentary questions tabled by Caroline Lucas MP in relation to the last four rounds of naming & shaming – self-corrected (or, at least, self-identified) arrears totalling some £4.1 million, owed to 71,766 workers.

As noted previously [I’ve warned you about this. Ed], most if not all of those 169 employers are relatively large employers. And, by definition, they are the worst offenders. But they are not paying the full penalty rate (whether that be 200%, 100%, or 50%) on all of the underpayments that they have made to their workers.

So, push for higher financial penalties if you want, Sir David. But please do consider also whether it is fair that the biggest, baddest baddies get to pay no penalties at all on a proportion of the underpayments they have made to their workers, and then get to further reduce the penalty by 50% simply by paying promptly.

In the meantime, here’s a nice photo of an Andy Goldsworthy-style pebble tower I made on a beach in Wet Wales.


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Minimum wage, minimum shame?

On 8 December, the Department for Business, Energy & Industrial Strategy (BEIS) named & shamed another 260 employers for non-compliance with the national minimum wage. Inevitably, press and media coverage of this round of naming & shaming – the 13th since the scheme was rebooted in 2013 – focused on the list being topped by the household-name retailers Primark and Sports Direct.

Primark had somehow managed to underpay 9,735 of its workers a total of almost £232,000 (an average of £24 per worker), but this sum was dwarfed by the combined total of £946,612 that Sports Direct and two employment agencies supplying workers to the controversial retailer’s Shirebrook warehouse had failed to pay to a combined total of 4,362 workers (an average of £217 per worker).

That combined total of £0.95m is the third largest sum of arrears owed by any of the 1,539 employers named & shamed by BEIS to date, and accounts for 54% of the £1.76 million collectively owed by the 260 employers named in this round. But it is still someway short of the £1.74m owed by the London-based security firm TSS Ltd, named & shamed by BEIS in February 2016 and featured as a case study of ‘wage theft’ in the recent Middlesex University Business School research report Unpaid Britain: Wage default in the British labour market.

Indeed, as in previous rounds, the great majority of the 260 appear to be small fry: all but 13 owed less than £10,000 of arrears, 225 (86%) owed less than £5,000, and 137 (53%) owed less than £1,000. Only 36 had underpaid ten or more workers, 199 (76%) had underpaid fewer than five workers, and 120 (46%) had underpaid only one worker. Of the 40 hairdressing businesses, 32 owed less than £2,000, and 26 had underpaid only one or two workers. Similarly, of the 58 hospitality businesses, 43 owed less than £2,000, and 37 had underpaid only one or two workers.

To put this round of naming & shaming in context, the Low Pay Commission noted, in its September 2017 report Non-compliance and enforcement of the National Minimum Wage, that 784 (61 per cent) of the 1,279 employers named & shamed by BEIS as of August 2017 had underpaid just one worker. Only six of the 1,279 employers had underpaid more than 1,000 workers.

However, as with the three previous rounds of naming & shaming – in August 2017, February 2017 and August 2016 – what the BEIS press release failed to say is that 39 of the 260 employers also paid further arrears totalling £1,011,190 to 21,495 workers, under the so-called self-correction mechanism quietly introduced by BEIS/HMRC in 2015. Once again, this information was only elicited by a written Parliamentary Question by Caroline Lucas MP (aka my boss).

That £1.01 million is almost twice the £0.58 million of arrears owed by the 256 named & shamed employers other than Primark, Sports Direct and the two employment agencies supplying workers to Sports Direct. And it’s more than six times the £0.15 million collectively owed by the 120 employers who had underpaid only one worker. But no financial penalties have been levied on that £1.01 million of arrears, and none of the 39 have been named & shamed for their share of it. Indeed, the identity of the 39 remains a secret.

In the last four rounds of naming & shaming, a total of 1,049 employers were named by BEIS for collectively owing some £5.2 million to 47,336 workers. And, according to the Answers given to the parliamentary questions tabled by Caroline Lucas, 169 (16%) of those 1,049 employers paid additional, self-correction arrears (for which they were not named & shamed) totalling some £4.1 million, to 71,766 workers. Which suggests that those who paid self-correction arrears include the very worst offenders.

As noted previously on this blog, such self-correction arrears now account for the bulk of the arrears recovered for workers, directly or indirectly, by HMRC enforcement of the minimum wage. But is it fair that the very worst offenders are thus able to minimise both their ‘shame’ and the sum of penalties imposed? Do the public not deserve to know the full extent of an employer’s disregard of the law? And, given the scale of the non-compliance involved, why are none of the self-correcting employers facing criminal charges?

To date, ministers have got away without having to provide answers to these questions. But with each new round of naming & shaming, the pressure to provide answers – and to review the naming & shaming scheme – is going to grow. For, as the Low Pay Commission noted in its September 2017 report on enforcement, the naming & shaming scheme is “helping to raise the profile of enforcement activity and awareness of workers’ rights”.

Perhaps it would do so even more if the public, and employers, were told the full truth.

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Wish you were here, Minister

Batting for the ‘have nots’ rather than the ‘haves’, lefty policy wonks like me don’t get to claim many policy wins – we spend most of our professional lives banging our world-weary heads against very well constructed brick walls. I think I can count only three substantive policy wins in 30 years – and one of those was later reversed, without ever being implemented, by a New Labour Home Secretary with a different view to his predecessor. So, allow me a moment to revel in the prospect of a fourth.

Once upon a time, a long, long time ago – September 2000, to be precise – I researched and wrote a report for Citizens Advice, Wish you were here, about the evidently widespread denial of paid holiday and owed holiday pay by employers. I didn’t manage to sneak any Pink Floyd lyrics through the approval process, but the report did conclude that a surprisingly wide range of employers – not just pubs, hotels, restaurants, shops, care homes, hairdressers, and cleaning companies – were failing to meet their legal obligations, under the Working Time Regulations 1998, in respect of paid holiday. And I noted that, to do so, employers were using a range of excuses and devices, including:

“falsely stating that the worker does not qualify [for paid holiday] because s/he is ‘only’ a part-timer or that there is no paid holiday ‘in this line of work’, claiming simply that the employer ‘cannot afford’ to give paid holiday, and making inadequate adjustments to workers’ pay in lieu of [untaken] paid holiday.”

Noting both that “the only means of enforcement [of the right to paid holiday] is to bring a complaint to an employment tribunal”, and that “the evidence from [the casework of] CABx shows that many workers are reluctant to initiate such a complaint – or even to approach their employer – for fear of suffering victimisation by their employer and even of losing their job”, the report recommended that “the Government establish new, proactive enforcement mechanisms” in respect of denial of paid holiday and unpaid holiday pay.

You will no doubt be shocked to learn that New Labour ministers were not sufficiently impressed. More accurately, they couldn’t give a toss. So, four years later, I had a Groundhog Day moment when researching and writing a further Citizens Advice report, Still wish you were here. I haven’t kept a copy of that one, but as far as I can remember it was just the 2000 report with new case studies. Well, Citizens Advice weren’t paying me very much.

New Labour ministers were no more impressed by that report than they had been in 2000, and only one person at the TUC took any interest (a point I will come back to). So, in 2011 – there having been a change of government, and having exhausted the report title potential of Pink Floyd’s seminal song – I researched and wrote yet another Citizens Advice report, Give us a break! That’s lefty policy wonking in a nutshell: year after year, running over the same old ground.

Somewhat unoriginally, this report noted that “evidence from the casework of CABx continues to suggest that tens of thousands of the most vulnerable workers in the UK economy are losing out from inadvertent or deliberate non-compliance with the legal minimum paid holiday entitlement”. For example:

Gina had worked full-time as bar staff in a pub for the previous two years when she sought advice from her local CAB. During this time, she had never received any pay slips or contract of employment, and had taken very few holidays or breaks from work as her manager had told her that she was not entitled to paid holiday. Over the recent few months, her monthly wages had been steadily reduced, and when she had challenged her employer about this he had said that he had been told by his accountant that Gina was “overpaid”.

Further noting that the right to paid holiday was not directly enforced by any of the enforcement bodies lying behind the (since abolished) Pay & Work Rights Helpline established by the Labour Government in late 2009, the report set out the following CAB casework statistics, indicating that denial of paid holiday (or owed holiday pay) affected many more workers than denial of the rights covered by those enforcement bodies.

And again, somewhat unoriginally, the report recommended that the Government establish “a simpler, more accessible alternative to the employment tribunal system” for enforcement of the right to paid holiday. Boring!!!

Not surprisingly, perhaps, Coalition Government ministers were no more moved to act upon the report’s findings and recommendations than their New Labour predecessors had been. (Though I am told that the then employment relations minister, Ed Davey of the Liberal Democrats, used to regularly wave a crumpled copy of Give us a break! at his civil servants and demand to know “what we are doing about this”).

Fast forward six years to the publication, in July this year, of the Taylor Review of Modern Working Practices, and its conclusion that non-compliance with the right to paid holiday (and owed holiday pay) is a serious and widespread problem. Well, blow me down. How we found, the same old fears, wish you were here.

Seventeen years on from Wish you were here, the Taylor Review recommended that HMRC take responsibility for enforcing paid holiday (and also Statutory Sick Pay) for the lowest paid workers, alongside the minimum wage. And it further recommended that the Government “consider whether other pay-based protections, such as the protection against unlawful deduction from salary, are also state enforced for the lowest paid workers”. Do I not like this?

Then, last week, I had the great pleasure of watching my old mate, Nick Clark – the only person at the TUC in 2000 and 2004 who had taken note of and supported my reports for Citizens Advice – making waves with a brilliant, Trust for London-funded research report (jointly researched and written with Eva Herman) for Middlesex University Business School, Unpaid Britain: wage default in the British labour market. This concludes that at least two million workers experience non-payment of wages or holiday pay each year, that those unpaid wages amount to at least £1.3 billion per year, and that the unpaid holiday pay amounts to at least £1.8 billion per year.

That pleasure (you probably need to be a policy wonk to understand) was then enhanced when, at the launch of the Unpaid Britain report, the Director of Labour Market Enforcement, Sir David Metcalf, noted that “it is arguable that HMRC should be enforcing holiday pay. Certainly, someone should be enforcing holiday pay.”

So, today, it was good to see a cross-party group of MPs – including the Conservative Robert Halfon, Labour’s former shadow business secretary Chuka Umunna, and the Liberal Democrats’ deputy leader and former Coalition business minister Jo Swinson – call on Sir David to address the Unpaid Britain research findings and Taylor Review policy recommendations in his forthcoming strategy for improving enforcement of workplace rights.

Am I about to top my long, sad ‘career’ with a fourth substantive policy win? Have I secured a walk-on part in the war? Or just a lead role in the cage? Time will tell.


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To name & shame, or not to name & shame, that is the question

In August, the Department for Business, Energy & Industrial Strategy (BEIS) named & shamed another 233 employers for non-compliance with the national minimum wage. Not surprisingly, press and media coverage of this round of naming & shaming – the 12th round since the scheme was rebooted in 2013 – focused on the list being topped by the household-name retailer Argos, which somehow managed to underpay 12,176 of its workers a total of £1.46 million.

This is, indeed, the second largest sum of arrears owed by any of the 1,279 employers named & shamed by BEIS to date, though still short of the £1.74m owed by security firm TSS Ltd, named & shamed in February 2016. And it accounts for no less than 74% of the total of £1.97 million collectively owed by the 233 employers named in the August round. Indeed, as in previous rounds, the great majority of the 233 appear to be small fry: all but nine owed less than £10,000 of arrears, and 190 (82%) owed less than £3,000.  All but 17 had underpaid fewer than ten workers, and 115 (49%) had underpaid only one worker.

As with the February 2017 round of naming & shaming, ten sectors are represented in the BEIS/HMRC spreadsheet that accompanies the press release: Agriculture (5 employers); Childcare (17); Cleaning (2); Employment Agencies (4); Food processing (1); Hairdressing (59); Hospitality (50); Leisure, Travel & Sport (2); Retail (22); and Social Care (9).

As with the February 2017 round, however, no fewer than 62 (27%) of the 233 named employers are categorised in the BEIS/HMRC spreadsheet as “Non low-paying sector”. Yet simple internet research quickly reveals that these 62 employers include three in Childcare, three in Social Care, four in Construction, and 13 in Building Services. Maybe BEIS should have a word with HMRC about the quality of its categorisation.

More interestingly, and as with both the February 2017 and August 2016 rounds of naming & shaming, what the BEIS press release failed to say is that 48 of the 233 employers also paid further arrears of £1.27 million, to 18,201 workers, under the so-called self-correction mechanism quietly introduced by BEIS/HMRC in 2015. This information was only elicited by a written Parliamentary Question by Caroline Lucas MP (aka my boss).

That £1.27 million is 2.5 times the £0.51 million of arrears owed by the 232 named & shamed employers other than Argos. But no financial penalties will have been levied on that £1.27 million of arrears, and none of the 48 have been named & shamed for their share of it. Indeed, the identity of the 48 remains a secret.

Yet it seems reasonable to assume that most of the 48 are relatively large employers  – hence the payment of self-correction arrears to 18,201 workers, 17 times the 1,088 workers to whom the 232 named & shamed employers other than Argos between them owed arrears. More to the point, the 48 clearly include the worst offenders.

As the following two tables show, such self-correction arrears now account for the bulk of the arrears ‘recovered’ from employers through enforcement of the minimum wage, and cover far greater numbers of workers than direct HMRC enforcement.

With the revelation, in September, that HMRC has written to 3,000 firms deemed to be at “higher risk” of non-compliance with the minimum wage, offering them an effective amnesty from financial penalties and naming & shaming if they fess up and self-correct the arrears owed, this imbalance seems set to become even more pronounced.

All of which begs the question, is it fair to name & shame (and impose financial penalties on) dozens of hairdressers and pubs for underpaying one or two workers a relatively small sum, when large, household-name employers can avoid both financial penalties and being named & shamed for the underpayment of comparatively vast sums to hundreds or even thousands of workers? By rights, that £6m of arrears self-corrected in 2016/17 should have attracted financial penalties of up to £12m.

Is it fair that the very worst offenders can evade the punishment handed out to non-compliant small fry? For it beggars belief that, almost 20 years after the introduction of the minimum wage, such extensive non-compliance by large, well-resourced businesses is due to technical error or misunderstanding of the law.

I’m not sure it is fair. It seems more like the slings and arrows of outrageous fortune. Maybe it is time for ministers to review the naming & shaming scheme.

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ET fees: the backlash starts

The much belated but very welcome victory for common sense and the common law – the latter being a fairly straightforward legal concept seemingly long forgotten by the allegedly planet-sized brains in the High Court and Court of Appeal – delivered by the Supreme Court on employment tribunal (ET) fees in July was always going to generate a backlash from the more intellectually-challenged sections of the employer lobby. For Pavlov’s dogs had nothing on these monotonous motor mouths.

Step forward Mark Littlewood, the rather grandly named Director General of the Institute of Economic Affairs, a once influential but now mostly ignored think tank.

On 28 August, Littlewood used an article in the Times to have a pop at the HR profession. And, in this prize example of propaganda masquerading as informed opinion, Littlewood made two stand-out statements about the cost to employers of dealing with ET cases.

One of these statements – a supposedly “illustrative” but absurdly atypical example of an ET case in which an unidentified employer allegedly spent £50,000 on legal fees alone to defend a claim worth just £15,000 – was swiftly and ably tackled by employment lawyer and blogger Darren Newman. In a nutshell, it’s easy to see why the employer now insists on anonymity. Who would want to admit to being so stupid as to be so badly scammed by dodgy lawyers?

(In fairness, I should acknowledge that, on Twitter, more than one employment lawyer vigorously defended their right to charge a client £50K to defend an ET claim worth just £15K. The words of Mandy Rice-Davies come to mind.)

However, my eye was drawn mostly to Littlewood’s claim that:

The average cost of defending tribunal litigation is calculated by the British Chambers of Commerce to be about £8,500. With more than 80,000 such applications [sic] every year, businesses [sic] are shelling out £700 million in legal fees alone. Given the Supreme Court has recently struck down the government’s policy of charging a modest fee for complainants, we can expect this number to rise.

And you do not have to be a maths genius to see that Littlewood got his ‘£700m’ figure by multiplying £8,500 by 80,000 (to get £680m, then – as will become clear later – adding a bit for ‘inflation’, because the BCC’s £8,500 figure dates from 2011). For this is the clear meaning of the first two sentences of the paragraph above. Certainly, no other figures are cited in that paragraph, and Littlewood did not demur when Neil Carberry of the CBI indicated on Twitter that ‘80,000 x £8,500’ was how he interpreted Littlewood’s £700m figure.






However, leaving aside the fact that the BCC’s figure of £8,500 is more than twice the £3,800 figure cited by Coalition government ministers when seeking to justify their proposal to introduce ET fees in 2011, so might be just a teeny weeny bit over-egged, the key point here is that the BCC’s figure of £8,500 relates to the average cost of defending an ET case, not an ET claim. And, in 2016/17, according to the official tribunal statistics published by the Ministry of Justice (see Table C1 of Annex C), there were 18,119 – not “more than 80,000” – new ET cases (single claims/cases + multiple claimant cases).

And £8,500 x 18,119 is £154m.

Yes, Littlewood makes the classic rookie error of confusing ET cases, and ET claims. He’s not the first to do so, by any means – Vince Cable made the same mistake when he was business secretary in the Coalition government – and he surely won’t be the last.

There is also the fact that approximately one-third of all ET cases are brought against an employer in the voluntary or public sectors, not a private sector business. And, in such cases, there is no direct cost to ‘businesses’. So, that £154m is more like £100m. Or £46m, if you prefer the Coalition Government’s £3,800 cost per case to the BCC’s £8,500.

And £46m is quite different to £700m.

On Twitter, I sought to draw Littlewood’s intention to these facts, pointing out that even my teenage kids could find the official ET stats online. Littlewood’s response was to try and paint me as an evil parent for introducing my teenagers to government statistics. And, when I queried whether he was drunk when tweeting that response (at 00.13am), he first tried to suggest that the official ET statistics are false, then blocked me. At which point, I suggested on Twitter that Littlewood might have a rather small willy.

A few days later, Littlewood somewhat proved my point by sending a two-page letter of complaint to my employer, demanding an apology for my tweets.

By that time, it having proved impossible to get Littlewood to explain or evidence his £700m figure via Twitter, I had submitted a formal request for a correction of Littlewood’s article to the Times. And, on 15 September, I received a response from Rose Wild, the Feedback Editor at the Times. This rejects my request, and sets out the following justification for Littlewood’s £700m figure:

The number of claims moving to a full tribunal hearing is 18,119. However, even cases that do not move to full tribunals still impose significant costs on defendants.

The British Chambers of Commerce estimated in 2011 (from 2010 research) that the costs for defending a tribunal case was at least £8,500 on average. This number has been attributed in the article.

Therefore: Costs for tribunal applications [sic] that are argued before full tribunal: 18,119 x 8,500 = £154m

Costs for tribunal applications [sic] that are not argued before full tribunal: 70,357 x 5,400 = £380m

Costs for tribunal jurisdictional complaints: 55,172 x 2,700 = £149m

Total for tribunal claims: £683m

Since these figures are from 2011, adjusted for inflation the total would be more like £800m.

Curiouser and curiouser! Given the repeated use, as in Littlewood’s original article, of the meaningless term ‘tribunal applications’, it seems reasonable to conclude that this laughable new explanation of Littlewood’s £700m figure was written by none other than Littlewood himself, and that the Feedback Editor has simply swallowed it wholesale.

The first thing to note is how far Littlewood has now rowed back from his original “more than 80,000 applications” figure. Now he says there are more than 140,000 ‘applications’ (18,199 + 70,357 + 55,172 = 143,648) a year causing a cost to businesses. So, why did he not use this figure in his original article?

The second thing to note, of course, is that 18,119 is not “the number of claims moving to a full tribunal hearing” in 2016-17. As noted above, it is the total number of new cases (single claims/cases + multiple claimant cases). And only a minority of these cases will go to a full tribunal hearing – the great majority will be settled without a full hearing, and others will result in a default judgment (again, without a full hearing).

That aside, the first (£154m) of the three elements of Littlewood’s alternative total of £683m can be accepted as the total cost to both businesses and the public sector in 2016-17, if – and, as noted above, it’s a very big ‘if’ – one accepts the BCC’s cost per case figure of £8,500. But the second (£380m) and third (£149m) elements are simply fanciful.

We can only guess where the figures of 70,357 and £5,400 come from, or what they represent, as they are neither explained nor sourced. Suffice to say, all the tribunal ‘applications’ (or cases) that “are not argued before [a] full tribunal” are already included among the 18,119 cases cited in the first (£154m) element of Littlewood’s total of £683m.

The third (£149m) element of Littlewood’s total of £683m is no less fanciful. Again, the figures of 55,172 and £2,700 are neither explained nor sourced, but there is simply no rational basis for adding the “cost of tribunal jurisdictional complaints” to the first element of £154m, as all such costs are already allowed for in the BCC’s average cost per case of £8,500.

Finally, the ‘adjusted for inflation’ total of £800m is either a typo, or inflation has been a lot higher since 2011 than I had previously noticed.

In short, the £380m and £149m figures that Littlewood adds to £154m in order to get the spurious total of £683m are simply creative figments of Littlewood’s imagination. Theresa May would be impressed, and I expect to see Littlewood put in charge of the Brexit negotiations any day now.

Does any of this matter? Well, in one sense, no. But, if we are to have a debate about how the ET system should be funded, if not by justice-denying claimant fees, then we need that debate to be based on facts, not the highly imaginative ramblings of controversialist Director Generals of fringe think tanks. [Significantly, perhaps, since I published this post the justice secretary, David Lidington, has declined to rule out re-introducing ET fees at some level in the future.]

So, I have renewed my request to the Times for a correction of Littlewood’s article, and await a further response from the Feedback Editor. I will update this post (or start a new one) when I receive that response.

Update [30 October]: So, the Times published a correction to Littlewood’s article on 17 October (but ‘forgot’ to tell me). If you look really, really hard, you might even be able to see it.

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ET fees: Supreme Court dumps on Clarke, Cable & Grayling






👏❤️💋 Supreme Court judges 💋❤️👏

👏👊😍 Adam Creme, Shantha David & Unison 😍👊👏

👏👊😎 Dinah Rose QC & Michael Ford QC 😎👊👏

👏👍😇 Caspar Glyn QC, Sean Jones QC, Darren Newman, Abi Adams & Jeremias Prassl 😇👍👏

😱⚠️ Ken Clarke, Vince Cable & Chris Grayling. SAD! ⚠️😱



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