CIPP Policy Update - September

4 September 2017

CIPP logo Consultation for evidence on the National Minimum Wage

In July the CIPP submitted its formal response to provide evidence of the impact that the National Minimum Wage (NMW) and National Living Wage (NLW) rates are having, and will continue to have, on businesses. We collected the views of our members and others within the payroll profession through the use of an electronic survey which ran through 13 June to 5 July and received a total of 55 responses.

Summary of key findings

  • 82.5% of respondents report that their paybill has increased since the introduction of the National Living Wage (NLW)
  • 80% of respondents state that the NLW has not affected the total number of jobs in the business
  • 22.5% report that they have reduced the overall number of hours worked in the business
  • Almost 80% say that the business is now making more use of zero hours contracts
  • 60% of respondents report that staff turnover has reduced as a result of the NLW
  • The majority of respondents (61.5%) state that the NLW has not affected premium and overtime pay in the business
  • Responses are divided as to the effect of NLW on pay differentials, with the same number (48.6%) saying pay differentials have been maintained as saying they have reduced
  • More than three-quarters of respondents (76.9%) report the NLW has had no effect on the total benefits package offered by their business
  • An overwhelming 92.5% of respondents report that the NLW has had no effect on the age profile of the workforce
  • 94.8% of respondents report that the introduction of NLW has not affected the number of workers employed below the age of 25
  • No respondents say that the increased apprentice rate has affected the number of apprentices they employ, with almost 44% saying they pay above the apprentice rate
  • 41% of respondents state that the introduction of the Apprenticeship Levy has encouraged them to employ an apprentice
  • More than 80% say they have no problems complying with the NMW or NLW
  • Many respondents raised concerns about the impact the introduction of the NLW has had on salary sacrifice arrangements
  • Though several respondents feel the introduction of the NLW has been a positive move, concerns have been raised about the reduced ability to reward staff for skills and experience
  • Several respondents suggested the NLW rates should be based on abilities rather than age.

The full consultation response and survey results, including the CIPP's conclusions and recommendations, are available in the MY CIPP/Policy Hub/consultation area of our website.

Public sector exit payments cap

The policy team wanted to establish how many relevant public sector employers have made the necessary changes 'expected' by government in relation to the public sector exit payments cap of £95,000.

We ran a quick poll on our website and at the time of writing the poll was still running but early indications showed that 45% didn't know there was a change and 37% haven't yet made any changes. 10% of respondents had already made changes, and the remaining 8% are planning to make changes.

So what are these changes that many seem to be unaware of?

Firstly let me clarify the current position. Regulations do not yet exist that create the public sector exit cap itself. The Treasury, Scottish Ministers and Welsh Ministers have had the power to bring forward regulations since 1 February 2017, but they have not yet done so. The government's expectation is that the necessary changes be made to compensation schemes and other arrangements within nine months of the publication of their consultation response.

Background

In September 2016 the government published their response to the consultation on 'Reforms to public sector exit payments'. The response outlined the government's expectations that departments should begin work to produce proposals for reform for each workforce by the end of 2016. The detail of exit arrangements are to be negotiated at workforce level, departments responsible for the workforces will take forward the detailed design and analysis of proposals for exit payment reform, within the overall framework and principles for reform set out in the response.

The government's expectation in the response was that departments would put forward proposals for reform within three months of the publication of the response, which would have been the end of 2016. Departments should then have consulted on proposals as appropriate and follow the normal process of discussions and negotiations with Trade Unions and other workforce representatives in order to seek agreement to their reform proposals.

The government expected this discussion process to be concluded, agreement reached and the necessary changes made to compensation schemes and other arrangements within nine months of the publication of the response. That takes us to the end of June 2017. The response also says that should it not be possible to achieve meaningful reform for one or more workforces, the government will consider options for primary legislation to take forward reform.

  • Author Profile
    • Sp avatar Diana Bruce

      Diana is CIPP Senior Policy Liaison Officer and Guest Author for Smart Pension.