PERSONNEL COMMITTEE THE LIVING WAGE

Transcription

1 HERTSMERE BOROUGH COUNCIL PART I Agenda Item No 5 DATE OF MEETING: 30 April 2015 PERSONNEL COMMITTEE Document Reference No PER/15/08 THE LIVING WAGE The report provides information about the implementation of the Living Wage by local authorities in the East of England region and the implications of requiring contractors, including agencies providing temporary staff, to pay their employees the Living Wage. 1. RECOMMENDED THAT: 1.1 The findings of the EELGA Survey on Living Wage implementation set out in paragraphs 3.1 to 3.2 be noted. 1.2 The transcript of the LGA Living Wage Podcast attached at Appendix A be noted. 1.3 The potential options for implementation of the Living Wage by Hertsmere B.C. set out in paragraphs 4.1 to 5.2 be noted. 1.4 Feedback from consultation with staff and the views of the Local Joint Committee be noted. 1.5 The option recommended in paragraph 5.2 be agreed subject to consideration of the feedback from consultation with staff and the LJC. 2. INTRODUCTION 2.1 The Living Wage campaign was launched in London in In 2011 Citizens UK set up a standard model for setting the UK Living Wage outside of London. At the same time, Citizens UK launched the Living Wage Foundation and Living Wage Employer mark. Some facts about the Living Wage are set out below: The UK Living Wage for outside of London is currently 7.85 per hour. The UK rate is set annually by the Living Wage Foundation and calculated by the Centre for Research in Social Policy at Loughborough University. The London Living Wage is currently 9.15 per hour. The London rate is set annually by the Living Wage Foundation and calculated by the Greater London Authority, it covers all boroughs in Greater London. 1

2 The Living Wage figures are announced simultaneously in the first week of November of each year. Living Wage Employers are expected to implement the new rates as soon as possible and within six months of the annual announcement. To gain accreditation with the Living Wage Foundation, employers need to apply the Living Wage to contractors staff as well as their own directly employed staff. 2.2 The National Minimum Wage set by the Government s Low Pay Commission is currently 6.50 per hour, which is 1.35 below the hourly Living Wage rate. 2.3 All directly employed staff in Hertsmere, other than apprentices, are paid rates above the Living Wage and apprentices are paid above the National Minimum Wage, which is more than twice the national apprenticeship rate. 3. BACKGROUND AND CONTEXT 3.1 Questions about the Living Wage have been put to the Council meetings in September 2014 and February The questions posed and the resolutions made are set out below for reference: 3.2 Question to 17 September 2014 Council Meeting Although this Council pays the vast majority of its employees the living wage a small number of our employees who work for our waste management service, because they are temporary workers on contract, receive below this rate for the first 12 weeks of their employment. The Labour Group feels that this Council should discuss the proposition that the Living Wage (currently 7.45) is extended to this group of workers. RESOLVED that prior to the renewal of contract with agencies for the employment of temporary staff, the Personnel Committee receive a report on the payment of the living wage for temporary staff employed by this Council. 3.3 Question to 25 February 2015 Council Meeting At the 17 September 2014 Council meeting the Labour Group put an item of Opposition Business to the Council regarding those employees of the Council who were not receiving the living wage during the first 12 weeks of their employment. It was agreed by the Council at that meeting that the situation would be investigated to determine how these employees could receive the living wage. Could the Portfolio Holder please report to the Council the result of these investigations and what action is being taken to bring these employees in line with Council policy to pay all our employees the living wage? Councillor Bright, responding on behalf of Councillor Goldstein, 2

3 advised Members that the minutes of the Council meeting in September 2014 indicated the Council s wish for a proposal to be brought before the Personnel Committee setting out the pros and cons of making the proposed change and that a report was being prepared for the Personnel Committee meeting on 30 April 2015 for that purpose April 2015 Council Meeting Business The published agenda for the Council meeting on 29 April 2015 includes the following: At the September 2014 Council meeting the position of those few remaining council employees who did not receive the living wage was discussed and it was agreed to review their contractual status and the report is we believe coming to the April Personnel Committee. However there are still people working in this building on a regular basis who do not receive the living wage and that is the cleaners. Whilst not directly employed by the council they are working for us. The Labour Group feels that the council should review the situation and determine what steps can be taken to achieve the living wage for this group. 3.5 The questions put to Council on 17 September 2014 and 25 February 2015 focused on the position of agency workers in the first 12 weeks of assignments with the Council, some of whom received a rate of pay below the Living Wage until such time as they achieved parity status under the Agency Workers regulations (after 12 weeks). An undertaking was given to bring a report to this Committee setting out the implications of paying the Living Wage to all temporary staff on assignment with the Council. This report does this by setting out the results of research conducted by the LGA on the implementation of the Living Wage by local authorities, together with the analysis of the specific implications for Hertsmere B.C. based on local data. 3.6 The business being put forward to the Council meeting on 29 April 2015 is not exclusively focused on the position of agency workers but widens the scope of the issue to the employees of other contractors such as the company providing cleaning services for the Civic Offices. The research carried out to date addresses the questions that had been posed about agency staff and a response to the subsequent, wider question about contractors staff will require additional research to be conducted. 4. IMPLEMENTATION OF THE LIVING WAGE IN LOCAL AUTHORITIES 4.1 The LGA website has a podcast on the Living Wage, a transcript of which is attached to the report at Appendix A. According to the LGA about 100 local authorities pay the Living Wage to their directly employed staff and 22 of those have accreditation with the Living Wage Foundation. Two case studies are presented, one of which is an 3

4 accredited Living Wage employer (Oldham Council) and the other is committed to paying all directly employed staff the Living Wage but not seeking accreditation (Epsom and Ewell B.C.). These two positions reflect one of the most common differences between local authority approaches to the Living Wage, with many seeing the requirement to impose the Living Wage on contractors as a step too far. 4.2 The East of England Local Government Assembly conducted a survey in March 2015 to update knowledge of the implementation of Living Wage by authorities in the East of England region. The main findings of the survey are set out in Table 1 below. Number of LAs in the Eastern Region surveye d by EELGA responses to the ELGA survey accredited LW employers (+3 that have implemented LW but accreditation not specifically confirmed) LAs paying LW to directly employed staff but not accredited LAs paying LW both to directly employed staff and to agency staff from Day One LAs not yet implementing and no firm commitment or political decision Number of LAs who have decided not to pursue LW LAs surveyed undecided whether to pursue LW Number of LAs paying LW to directly employed staff as a result of existing pay scales 5. IMPLICATIONS FOR HERTSMERE B.C. 5.1 On the face of it, there do not appear to be major implications arising from making a formal decision to pay the Living Wage to all directly employed staff in the Council, since no point in the pay scales is currently below that level. However, the LGA Podcast makes it clear that such a decision needs to be considered in the wider context (see the section Main factors that local authorities should take into consideration ). For example, although our lowest pay point is at present comfortably above the Living Wage, this could change, as recent increases to the Living Wage rates have outstripped increases in both national pay settlements and our local pay awards e.g. in November 2014, the Living Wage rate went up by 20p to 7.85 per hour, representing an increase in the order of 2.5%. As the gap narrows, the possibility arises that our lowest pay point could fall behind the Living Wage rate. Whilst the Council would undoubtedly wish to keep its pay structure under review and take such action as appeared necessary, it may wish to consider carefully the potential impact that making a formal commitment to the Living Wage could have on the autonomy of its local pay determination, since coming out of the National Agreement many years ago. 5.2 Seeking accreditation as a Living Wage employer would have further implications for the costs of services due to the requirement that the Living Wage be paid to contractors staff as well as our own directly employed staff. Among the majority of 4

5 local government employers in the East of England region, there appears to be little appetite to take this step and in Hertsmere, the potential financial implications would need to be carefully costed before taking a firm decision to do so. 5.3 The question raised at Council in September 2014 and February 2015 was about the option to pay the Living Wage to agency staff on temporary assignments with the Council. Since the Council s pay structure does not include any grades that pay below the Living Wage, agency workers already benefit from this under the requirement to pay them a parity rate after 12 weeks on assignment with an employer (Agency Workers Regulations). In March 2015 EELGA was requested to ask a supplementary question in their survey about the payment of Living Wage to agency temps from their first day on assignment i.e. in the first 12 weeks, before the requirements of the Agency Workers Regulations take effect. Only three authorities confirmed that they do this. A further three authorities said that they don t employ agency temps at the levels where the Living Wage would be an issue. However, these authorities are not accredited Living Wage employers and it may be the case that they do not use agency temps at these levels because the relevant services have been outsourced. 5.4 Research has been carried out in Hertsmere on the implications of paying Living Wage for agency temps in their first 12 weeks on assignment. In 2014 all agency temps were procured through Manpower and almost all of these were being used regularly and had achieved parity status under the Agency Workers Regulations. However, at the end of 2014, the Council stopped using Manpower as a Master Vendor and since then a number of other agencies have been supplying temps on rates below the Living Wage in the first 12 weeks of assignment. In the month of January 2015, 15 agency staff worked on assignment at a rate below the Living Wage for a total of 1,602 hours. The costs of paying those hours at Living Wage rate, inclusive of the agency on-cost is estimated to be in the region of 2, Multiplying the cost implications for January by 12 would indicate a potential annual cost in the region of 32,400, which would be an unwelcome addition to the cost of Council services at a time when the authority will need to face the financial constraints applying across local government. However, it is actually problematic to extrapolate a likely annual cost implication in this way, as the month of January is probably unrepresentative, due to the impact of the transition from Manpower as a Master Vendor, whereby there was a peak of new agency temps coming through other agencies who were therefore not achieving the parity rates. It is anticipated that the data for April onwards would possibly be more representative, as many of the newer agency temps would have been on assignment for 12 weeks and achieved parity status by then. The figures for April will be analysed as far as is possible and a verbal report on this aspect will be made to the committee on 30 April. However, it may actually be fairer to monitor the situation for a further few weeks to ensure the analysis is not skewed and then provide an update report to the Committee in June. 6. OPTIONS FOR HERTSMERE BOROUGH COUNCIL 6.1 There is no compulsion to implement the Living Wage and the LGA has made it clear that this is a matter for local determination. The options available to councils are 5

6 spelled out in the LGA guidance on Living Wage (November 2013) and are set out in the extracts reproduced below. Extracts from the LGA Guidance on options for councils: 6.2 Taking all these factors into consideration, it is recommended that the Council continues to monitor all pay factors including the position relative to the Living Wage without committing to accreditation as a Living Wage employer. It is also recommended that, in light of the most recent question to Council, further research be conducted into the cost implications of requiring contractors, including agencies which supply temporary staff, to pay their employees the Living Wage. 7. FINANCIAL AND BUDGET FRAMEWORK IMPLICATIONS 7.1 These are set out in the body of the report. 8. PERSONNEL IMPLICATIONS 8.1 The 2.5% increase in the Living Wage announced in November 2014 outstripped the local pay award in Hertsmere which was 1% in 2014 and a similar increase in 6

7 November 2015 would outstrip the 2% local pay award implemented from 1 April 2015 as well. The implication of this is that the gap between the Living Wage and our locally determined rates is narrowing and a decision to commit to always keeping pace with the Living Wage may have future cost implications that would impact on service costs at a time of considerable financial constraints. There may also be equal pay implications arising from such a scenario. 9. LEGAL POWERS RELIED ON AND ANY LEGAL IMPLICATIONS 9.1 The LGA have confirmed that implementation of the Living Wage is a matter for local determination. 10. EFFICIENCY GAINS AND VALUE FOR MONEY 10.1 These are set out in the body of the report. 11. RISK MANAGEMENT IMPLICATIONS 11.1 These are set out in the body of the report. 12. CORPORATE PLAN & POLICY FRAMEWORK IMPLICATIONS 12.1 These are identified in the Workforce Strategy APPENDICES ATTACHED 13.1 Transcript of the LGA Podcast on Living Wage January BACKGROUND PAPERS USED IN PREPARATION OF THIS REPORT 14.1 None. 15. AUTHOR Judith Fear Head of HR and Customer Services Ext: