Living Wage Week

Published byJohn Grant

3rd November 2016

The Living Wage Foundation has declared this week to be ‘Living Wage Week’. At the centrepiece of this is the announcement that the Living Wage has been increased to £8.45 per hour (£9.75 in London). This is a voluntary wage and is different from the government’s National Living Wage which stands at £7.20 per hour for workers aged over 25.

Low pay has been an issue of growing prominence in recent years and an ever-growing number of employers have been signing up to the voluntary Living Wage. These include big names such as Google, Barclays, KPMG and Unilever. Advocates of the Living Wage argue that it boosts productivity and aids recruitment and retention of staff.

Given that it is Living Wage Week and various issues involving remuneration and pay have been in the news of late, we felt we should take this opportunity to bring some of these matters to your attention.

Holiday Pay

The latest decision from the Court of Appeal in British Gas v Lock was released last month. The case concerns how commission and overtime payments are to be included when calculating holiday pay.

We now know that a worker’s holiday pay is to be calculated in accordance with their “normal remuneration”. The case law so far has indicated that performance based commission payments, non-guaranteed overtime and voluntary overtime may all be included as “normal remuneration”.

On the other hand, the cases so far have made no effort to frame an appropriate reference period for framing such payments. Matters are ongoing, however, and British Gas v Lock is likely to be appealed further to the Supreme Court. This may yet provide further clarity and we shall, of course, keep you updated on developments.

Self-Employment and the “Gig Economy”

So called “sham self-employment” has been high on the news agenda of late.

It follows the successful tribunal claim by a group of Uber drivers, supported by the GMB, that they were not self-employed contractors and should, in fact, be considered employees of Uber.

The drivers argued that they did not have discretion in how to operate their business and that Uber’s system resulted in them working long hours at often well below the minimum wage.

Uber has said it will appeal the ruling that the drivers were not self-employed. However, its consequences may well be wide ranging. Drivers could have claims for back pay and be entitled to holiday allowance, sick pay and auto enrolment to pension schemes going forward.

Other companies have also come under scrutiny. The parliamentary Work and Pensions committee has reported delivery firm Hermes to HMRC over claims it paid couriers as little as £3.50 per hour.

HMRC’s Executive Chairman Edward Troup commented that “we are committed to tacking false self-employment” and that the taxman will endeavour to make sure that companies “pay the appropriate tax, national insurance contributions, interest and penalties”.

Continued Fallout from Brexit

Britain’s vote to leave the European and the subsequent crash in the value of the pound are set to hit both workers and employers in the pocket.

The National Institute for Economic and Social Research (NIESR) projects that inflation will raise to 4% by the end of next year. This represents a quadrupling from the current level and is double the Bank of England’s inflation target.

With wages currently only rising at around 2% per annum there is likely to be signifant pressure placed on household budgets. Employers may well come under scrutiny should they fail to peg wages to the rise in inflation. Firms who set their wage according to either the government’s National Living wage or the Living Wage Foundation’s figure should be braced for increases in both.

Should you have any queries about the living wage, or anything to do with employment law, please do not hesitate to contact a member of the WJM employment team on 0141 248 3434.