Category Archives: Pay & Reward

HR, News, Pay & Reward

Employment Law Changes are coming in April – Here’s what you Need to Know

Significant employment law changes come into play at the start of April, and it’s important for employers to be prepared.

Alan Price, CEO at BrightHR, looks at the changes that are coming and they impact they will have on businesses.

The National Minimum Wage and National Living Wage will increase from the 1st of April. New rates will be:

  • Age 23+ from £8.91 to £9.50 (National Living Wage)
  • Age 21-22 from £8.36 to £9.18
  • Age 18 –20 from £6.56 to £6.83
  • Age 16-17 from £4.62 to £4.81
  • Apprentice rate from £4.30 to £4.81.

From 3 April, family friendly payments will increase to £156.66 per week from £151.97, including maternity, adoption, paternity, shared parental and parental bereavement pay.

Statutory Sick Pay will increase on 6 April from £96.35 to £99.35 per week as well as the Lower Earnings Limit, which is increasing for the first time in two years, from £120 to £123.

Another change is the increase to National Insurance by 1.25%. Whilst there is no legal requirement to amend pay slips until 2023, HMRC have asked employers to include a specific message on payslips issued between 6 April 2022 and 5 April 2023 to explain this.

The increase to statutory rates comes at a time when many are already struggling with soaring costs and record-high starting salaries, as well as the ending of the SSP Rebate scheme which provided a lifeline for SMEs in the midst of Covid-related absences.

However, it’s important to remember that employers must meet these statutory rates; failure to do so could lead to damaged employee relations and tribunal claims being raised. Your business is also at risk of ending up on the Government’s Name and Shame list if you fail to meet NMW payments, which can cause significant reputational damage.

The right to work checking process is changing for individuals who hold a biometric residence card, biometric residence permit or frontier worker permit; these checks can currently be completed manually but, from 6 April, will have to be done through the Home Office online checking service.

Whilst undertaking right to work checks is a legal requirement of businesses, they must ensure they do so in a fair and non-discriminatory way. Employers must not make assumptions about a person’s right to work in the UK, or their immigration status in general, based on their nationality, race, accent, surname, or length of UK residence.

Job applicants can raise claims of discrimination to the employment tribunal if they feel the recruitment process discriminated against them, or if they were overlooked for a job opportunity due to incorrect perceptions of their right to work status.

And finally, gender pay gap reporting deadlines are also fast approaching. Large businesses (250+ employees) must report on their gender pay gap by 30 March for the public sector and 4 April for those in the private sector.

 

News, Pay & Reward

What You Need To Know About Paying Someone Who Isn’t On Your Regular Payroll System

Running a business can come with many problems, especially when it comes to outsourcing work and paying employees that aren’t on your typical payroll system. Setting up payroll can be difficult enough, but paying people outside of it can be a completely different problem. In this article, we will be looking at what a payroll system is, examples of people who may not be on your payroll and how you can pay these individuals in a secure and fast way.

What Is a Payroll System?

A payroll system is the way that you pay your regular employees who are contracted to work for you or your business. Once you are fully employing someone, you will need a system in place to keep track of their working hours, how much tax they owe and other financial information. As payroll software holds employees vital information, such as their full name, date of birth, how much they get paid and bank details, it’s vital that your system is secure.

However, when you run a business, you may find that you work with people on a one-off or even a monthly basis, which are part of your workforce. As these people aren’t technically employed by you or your company, you don’t need to have them on your regular payroll. However, you will still need to find a way to pay them, in the same secure way that you pay your contracted employees.

 

Examples of People Who May Not Be On Your Payroll

So, what are some examples of people who may not be on your payroll, yet you work with them regularly? A good example that falls into this category is medical or market research organisations which need to reimburse their research participants. Organisations such as this, or in fact, any that use volunteers on a regular basis, may find themselves having to reimburse them for their travel, food or accommodation expenses. This is typically done by the volunteers providing proof of purchase, such as receipts.

Another example would be freelancers, if your business regularly outsources some of your work to self-employed individuals, then again, you will have to pay them in a secure way, once they have invoiced your company. These freelancers could be working for your business on a regular basis, but not often enough that they require being on your payroll, nor they could be working on a more ad-hoc basis. 

Guest speakers can also fall into this category. If you work for a university, a place of education or a business which regularly invites guest speakers to talk at events, then you may find that these individuals charge for their time. Whether that be in expenses alone or through an invoice.

 

How To Pay Someone Who Isn’t On Your Payroll

Paying people who aren’t on your payroll can be a tricky task and with all our new technology surrounding payroll systems, you would think there would be an innovative way to do this. However, you will find that a lot of businesses are still paying people who aren’t on their payroll in the same, old-fashioned way. Whilst regular employees are being paid in a secure and efficient manner, typically freelancers, volunteers and contractors are not. 

Typically, a business will keep the names and bank information of the person not in their payroll in a spreadsheet or in a document, which is not completely secure, leaving the person’s details at risk. Furthermore, if the details are incorrect, one of your employees will then have to spend their time getting in contact with the individual to chase down the correct information. 

Until platforms such as vHelp, there was no better method for this. Now, as a business, you can reimburse anyone who works for you on an adhoc basis and who is not on your payroll, no matter who they are and what service they are providing! Through getting them to claim using reimbursement service such as vHelp you can pay them within 24 hours  in a secure way and reduce your payment processing admin time by as much as 88%.

News, Pay & Reward

Over 200 Companies Named and Shamed After Paying Less Than National Minimum Wage

The Government has released its latest name and shame list of employers who are failing to pay staff the National Minimum Wage.

209 employers made the list including one company that underpaid eight workers by almost £30,000. Many of the companies are repeat offenders, and range from multinational businesses and large high street names to SMEs and sole traders, in a clear message that no employer is exempt from paying their workers the statutory minimum wage.

Underpaying staff isn’t always a purposeful act; sometimes it can be a genuine mistake, but that doesn’t make it okay.

Kate Palmer, HR Advice and Consultancy Director at Peninsula says: “Getting NMW calculations wrong can lead to costly pay-outs and severe reputational damage. The relaunch of the government’s naming and shaming scheme in 2020 means businesses are under more scrutiny than ever to get this right.

“Given the complexity of minimum wage regulations, it’s beneficial for organisations to pro-actively undertake regular audits, to identify any mistakes or concerns and make the necessary adjustments without involvement from HMRC.

“Paying staff correctly is fundamental in ensuring a positive company culture, and protecting motivation, productivity and retention levels across the workforce.

“The recurring reasons for falling foul of minimum wage payments is employers’ failure to take into to consideration the costs employees incur when required to purchase a work uniform. For example, many hospitality settings require their staff to wear a white top and black trousers to work.

“This request means any reasonable expenditure in connection with the employment should be reimbursed by the organisation, since an employee’s take home pay is essentially automatically spent on buying their mandatory uniform.

“Any expense incurred in connection with employment should not cause an employee’s pay to fall below the national minimum wage, regardless of whether the expense was a choice or if alternative options were available.”

HR News, News, Pay & Reward

Experts warn true COVID impact on payrolled workers won’t be evident for 6-12 months

  • Workforce planning essential to support business and employees
  • Current labour market robust – 82% of individuals supported into new roles have moved on within 90 days, just 2 weeks longer than prior to the pandemic
  • “Impossible to tell how large our economic injury is, until we rip off the Government’s furlough plaster”

Following March’s fall in payrolled employees, experts warn the true impact of COVID-19 on the UK workforce will not be evident for another six to twelve months. Renovo, a leading outplacement specialist, is calling for businesses to invest in labour force planning and preparation.

With 56,0001 people in PAYE employment losing their jobs last month, there were more than 800,000 less payrolled employees in comparison to March 20202. Combined with the September finish dates of furlough and other Government support schemes, Renovo warns that this employment fall may trigger further, long-awaited labour market challenges that could impact workers and businesses.

Rhys Moon, Director at Renovo, explained:

“These latest payrolled worker figures illustrate a slow but significant start to the changes we have been expecting in the labour market since the pandemic started.

“Currently, the market is a mixed picture. There’s a 16% increase in job vacancies3 thanks to the partial lifting of UK lockdowns, average earnings rose by 4.5% too4 after a significant fall at the start of the pandemic. In contrast, 2.7m people are now seeking benefits because they are “searching for work”, compared to 1.4m in March 20205.

Despite obvious adversities however, the current labour market is surprisingly robust, according to Renovo, with levels of restructure and redundancy lower than anticipated.

Moon explained:

“We’ve found that it is taking people we support just two weeks more than before the pandemic to transition into new roles. Eighty two percent of individuals move on successfully within 90 days. However, it is difficult to define COVID’s exact long-term labour market impact, particularly as almost five million people are still on furlough, and many are on long-term furlough. Analysis from the NEF predicts that 850,000 more could become redundant, or have hours or pay reduced when the Government support scheme ends6.”

Renovo advises that as the support scheme is not scheduled to cease until September, the UK is likely to experience a relatively stable job market for the time being.

Moon summarised:

“Employers should take this opportunity to evaluate their current labour situation in a careful manner, preparing for the latter part of 2021. Options for workforces include reskilling, redeploying, restructuring and reducing.

“While we are in the calm before a potential storm, businesses should take this time to be proactive, innovative and considered in their approach to their workforce’s future. Planning is sensible as it’s impossible to tell how large our economic injury is, until we rip off the Government’s furlough plaster.”

Renovo is the UK’s leading outplacement services specialist.

1) https://www.ons.gov.uk/employmentandlabourmarket/peoplenotinwork/redundancies

2, 3, 4, 5) https://www.bbc.co.uk/news/business-52660591

6) https://neweconomics.org/2021/04/6-4-billion-hours-spent-on-furlough-in-2020

 

News, Pay & Reward

GMB London call for Unions to have role in National Minimum Wage Enforcement as only 16 London employers named and shamed for not paying legal minimum

GMB London says figures could be much higher if unions had a role in exposing non-compliance. GMB believes the problem is too often unreported by workers affected because of the fear they have that they will be fired.

GMB called for unions to have a role in reporting offending employers who fail to pay workers the National Minimum Wage. However, despite a review of the scheme which was published in February 2020 it remains that the onus is on the worker to report underpayment.

Of 139 employers named on the list, 12% were employers in London. The total amount of wage unpaid is £97,632.8, amongst a total of wage unpaid is £97,632.8, amongst a total of 2,828 workers.  The list of Employers in London is below:

Borough Name of Business Status Unpaid Wage Amount (£) Number of Workers Affected
Barking & Dagenham Adi’s Hand Car Wash Ltd Dissolved £7,750.84 2
Barnet Ben Ong UK Limited Liquidated £1,257.12 3
Barnet Eat Tokyo Limited £530.83 2
Brent Anjana Bhog Sweets Limited Dissolved £1,020.00 1
City of London Pinnacle PSG Limited £10,166.03 10
Croydon Superdrug Stores PLC £15,228.57 2222
Enfield Trent Park Catering Limited Companies Active Proposal to Strike offActive Proposal to Strike offActive Proposal to Strike off £1,213.77 10
Haringey Gzim Workshop Limited Valeting Car wash £2,297.21 3
Haringey Natural Nails Beauty London Ltd £15,265.58 4
Lambeth Sendon Garage Services Limited £24,869.52 2
Lewisham Dessert House on the River Limited Suspended £719.10 1
Lewisham Mr Roan Bradshaw and Ms Joy Bradshaw £3,997.58 1
Redbridge KKM Enterprises Limited Liquidated £2,876.68 4
Tower Hamlets Jameson Knight Estates Limited Dissolved £885.06 2
Westminster Byron Hamburgers Limited £3,062.03 77
Westminster Renard Resources Limited £6,492.95 484

Tony Warr, GMB London Region Acting Regional Secretary said:
“GMB welcome the decision of BEIS to resume publication of this list of companies fined for not paying the National Minimum Wage.

“The current system for enforcement of the National Minimum Wage is that individual employees have to make a complaint direct to HMRC. So, unless they are potentially prepared to put their jobs on the line no complaints can be made.

“Trades unions like GMB are not allowed to make complaints on behalf of members and their family members.

“This problem is resulting in widespread under-reporting, as the example of Boohoo suppliers in Leicester clearly demonstrated. See notes to editors below for links to GMB London press release on Boohoo and national minimum wage non-payment.

“GMB is calling on Government to change the rules so that the union is able to make complaints on behalf of members and family members.  This would step up enforcement in the London and lead to a list longer than 16 employers.”

Benefits, Financial Wellbeing, News, Pay & Reward

The 9 most compelling reasons why every employer must prioritise financial wellbeing for employees now

Financial wellbeing industry data examined reveals just how much UK employees are struggling with money since the pandemic started.

By studying research from six key financial wellbeing reports, an expert in payroll and financial wellbeing has highlighted the pandemic’s impact on employee finances and their mental health. The data shows, too, how this affects organisational productivity, absence, wellbeing and profits. According to one report, individual companies with over 1000 employees, lose an average of £3.5 million each year due to poor staff financial wellbeing1.

Simon Bocca is founder and CEO of PayCaptain, the new technology that combines payroll with financial wellness and banking to support employers and employees. After examining reports from Aon, Close Brothers, EY, Nudge, Salary Finance and Willis Towers Watson, he said:

‘We know that the pandemic has adversely affected the financial situation of millions of people in the UK, employed or not. We also know that it directly impacts a person’s mental health and their ability to concentrate, feel well and be productive at work.

“What we’re finding is that huge numbers of employers want to help employees, but often don’t know the best way to do it.

“We’ve compiled the most important stats to show the depth of the issues to add weight to an employer’s financial wellbeing strategy. Employees may be facing a multitude of issues – debt, struggling between pay days, no fall-back savings or knowledge how to budget. Organisations that aim to understand the issues employees are experiencing will be able to implement the best support strategies so people can make headway.”

These are the 9 most compelling financial wellbeing stats PayCaptain recommends every employer should know:

Employee financial wellbeing is considerably worse since the start of the first lockdown

  • Prior to the pandemic, 36% of UK employees were worried about money2.
  • Now, 42% of people feel their financial wellbeing is worse than in the previous six months. Fifty-two percent also worry about finances at least once a week and nearly one in five people (18%) worry about it every day3.
  • 72% of 4000 people (US and UK) say they now struggle to meet or are anxious about the costs of day-to-day living1.

The cost of poor financial wellbeing on an employee’s mental health can detrimentally impact wellbeing

  • Those with poor financial health are 3.7x more likely to struggle with anxiety and 5.3x more likely to feel depressed4. Conversely, those with strong financial wellbeing are 23x more likely to be content with life3.
  • Of those who expressed worries about money, a quarter felt their mental health had suffered as a result3.

The impacts of poor financial health on employee productivity, retention, absence and profits is all too real

  • For those struggling with their financial wellbeing, 75% stated that it had a significant impact on their work or life situations1.
  • As a result, on average, employees annually take between 1.5-2.5 off work due to financial troubles. At the same time, employees average 3 days of unproductive work due to the same cause5.
  • Because of increasing numbers of lost talent and absent employees, not only is productivity suffering but so are organisational profits. Due to the costs of annual staff turnover, a cumulative £30 billion has been lost by companies in the UK. Yet for individual companies with over 1000 employees, an average of £3.5 million is lost each year due to poor financial wellbeing amongst staff1.

Employees are acutely aware of the need for good financial education

  • As financial stress rises, employees are increasingly aware of the need to improve their financial wellbeing. In fact, for 87% of people seeking good financial health, gaining control over their money is the top priority. As well as this, 85% said improving their skills and understanding surrounding finances is crucial for their financial success3.

Simon Bocca of PayCaptain summarised:

“It’s clear that employees would like more support from their employers. A third don’t feel well supported by their employer and nearly another third (27%) say that the support they’re given is of little help6. In a report released at the beginning of 2020, 62% of companies responding believed employee financial wellbeing was their responsibility and 48% were planning to implement initiatives7. We believe that this has increased substantially since the pandemic.

“Leaders who look to understand the general issues employees are experiencing can provide them with the most meaningful and useful support so they can positively manage their situation, rather than worrying about it and impacting their working days.”

To learn more visit www.paycaptain.com

 

1  EY – On-Demand Pay: Payroll that works for all, September 2020

2 Salary Finance – Financial Wellbeing: the 2019 Round-up

3 Nudge – Elephant in the room, September 2020

4 Salary Finance – 10 Financial Wellbeing facts for employers, October 2020

5 Willis Towers Watson Global Benefits Attitudes Survey 2017

6 Close Brothers Financial Wellbeing Index 2019

7 Aon Benefits & Trends Survey 2020

AI, Finance and Banking, Finance News, Financial Wellbeing, HR Software, HR Tech, News, Pay & Reward

First payroll system with financial wellbeing and banking capabilities launches today

A new payroll app called PayCaptain has been launched to put employees in control of their pay including tools and guidance for financial wellness.

PayCaptain, which has been piloted since the summer, also helps employers innovate with the latest technology and banking. It combines payroll, banking and wellness tools, allowing employers to support and empower their employees to take control of their finances to achieve greater financial wellbeing. It enables companies to be more strategic and creative in rewarding and paying their employees.

Yapster, the workplace messaging app, goes live this month with PayCaptain. Rob Liddiard, CEO of Yapster, said: “We’re excited by PayCaptain’s vision to turn pay from a functional, routine process into a driver of empowerment and engagement. PayCaptain will run as a “Yapplication” within our own app, so that soon all Yapster users will be able to plan income and spending, work with PayCaptain’s banking services and get financial guidance easily”.

PayCaptain supports employees in a unique way. It has a personalised education feature to build financial resilience as well as smart AI chatbots to guide employees about their payslip. Any queries that can’t be helped by AI are seamlessly transferred to a company-branded payroll team. An employees’ earnings can be split between multiple bank accounts, perhaps to cover savings, bills and day to day living. PayCaptain Personal and Savings Accounts can also be opened from the app and company-branded Visa debit cards can be issued. It has a Money Planning Tool to plan income and spending in one place, plus employees can access accrued earnings for free with a pre-planned automatic weekly advance of up to £200 a week.

For employers, PayCaptain has compliance and resilience at its core. It combines payroll, banking capabilities and wellness tools, allowing employers to support and empower their employees to take control of their finances. It embraces open banking, modern messaging and faster payments – removing the need for BACS. PayCaptain is an automated payroll process and outsourced payroll bureau service which can replace or enhance legacy payroll and payment processing systems. It allows the complete payroll process to be on brand and aligned with company values.

Simon Bocca, CEO and Founder of PayCaptain, explained:

“PayCaptain has been developed with the latest technologies to radically improve the payroll process for employers and employees. It puts employees in control of their pay which supports financial wellbeing and reduces the negative effects of financial stress in the workplace. Almost eight in ten UK employees take their money worries to work, affecting their performance, according to the Close Brothers Financial Wellbeing Index so it’s no surprise that the negative effects of financial stress can impact the employer too.

“Payroll is such an important part of peoples’ lives, yet employers and employees have been using the same payroll mechanics for years. Legacy technology isn’t good enough for today’s needs. We want to give people control over the money they earn, creating a way for payroll to be on-company brand and in line with their values, just like so many other elements of the employee experience.”

Stuart Hall, non-executive director of both PayCaptain and The Chartered Institute of Payroll Professionals, said:

“PayCaptain is breaking the payroll trend, introducing new ideas and ways forward that haven’t been seen before. It not only means employers can simply keep up with legislative changes, it will elevate the payroll process. Indeed, it means payroll people can help the financial wellbeing of employees too. Payroll professionals have been looking for new processes for years and PayCaptain is ready to challenge the market.

“PayCaptain means the experience of paying people and getting paid has dramatically improved.”

For more information, go to www.paycaptain.com or email hello@paycaptain.com.  Follow PayCaptain on Twitter @PayCaptain, or LinkedIn www.linkedin.com/company/paycaptain

FInance, News, Pay & Reward

Low Pay Rises Forecast for 2010

Wage growth is expected to remain depressed in the year ahead, according to the latest research from pay analysts XpertHR.

Pay awards have been falling, with the median basic pay award worth 2.2% over the past 12 months, down from 2.5% this time last year. Looking at the year ahead, against the background of the coronavirus pandemic, many employers in the private sector are proceeding with caution and told us that they expect to make a median 1% pay award during 2021.

XpertHR’s survey of forecast pay awards for the year running to 31 August 2021 covers the private sector only (due to the central nature of pay award decisions in large parts of the public sector). With so many employee groups expected to receive a lower pay award in the coming year – or no increase at all – it is not surprising that the forecast pay rise for the 2020/2021 bargaining year is just 1% at the median. This is less than half the 2.2% recorded in the private sector over the 2019/2020 bargaining year and – if borne out over the next 12 months – will be the lowest annual figure for more than a decade (the last time that pay awards in the private sector were worth 1% was in the year to the end of June 2010).

Key survey findings include:

  • Median forecast award worth 1%. The median forecast pay award for private-sector employee groups for the year to the end of August 2021 is 1%, down from the 2.2% median increase recorded over the past year.
  • Interquartile range falls. Half of employee groups are expected to receive a pay award worth between nil (the lower quartile) and 2% (the upper quartile). This compares with an interquartile range between 1.5% and 2.9% for basic pay awards in the private sector in the year to the end of August 2020.
  • Pay freeze most common outcome. A pay freeze is the most commonly cited outcome, accounting for 44.8% of employee groups for which a pay forecast figure was provided (see chart). Where employers are planning to award a pay increase, 2% is the most common figure (the case for 20.7% of employee groups).
  • Sector variation is stark. Manufacturing-and-production employers are predicting higher pay awards than the private sector overall, at a median 1.5%. The middle half of awards in the sector are expected to be worth between nil and 2.3%. In private-sector services the median predicted award is a pay freeze, although the interquartile range is in line with the private sector as a whole, between nil and 2%.

Pay award forecasts, 12 months to 31 August 2021

Labour market issues – including retention factors, pay levels in the same industry and pay levels in the same occupational group – dominate the factors that are expected to exert upward pressure on pay awards over the coming year; while company performance, the ability/inability to raise prices of products/services, and uncertainty due to Brexit are among the biggest downward pressures on settlement levels.

Latest pay award findings

In the three months to the end of September 2020 XpertHR has recorded a median basic pay award of nil across the economy. Based on a sample of 79 basic pay awards effective between 1 July and 30 September 2020, we find that:

  • Headline pay award at nil. The median basic pay award in the three months to the end of September 2020 is nil, the same as for the previous two rolling quarters.
  • Wide interquartile range. The middle half of pay deals is worth between nil (lower quartile) and 2% (upper quartile).
  • More than two-thirds of awards lower. In a matched sample analysis, 68.8% of pay awards made are lower than the same employee group received in the previous year. More than one in four (27.1%) are at the same level, while just two deals among our sample are higher.
  • Pay freezes common. Among the total sample of pay settlements recorded, 51.7% are pay freezes.

Over the 12 months to the end of September 2020, the median pay award in the private sector is 2.1%, compared with 2.5% in the public sector.

XpertHR pay and benefits editor Sheila Attwood said:

“The devastating impact of the coronavirus pandemic on company finances has seen the value of pay rises fall to the floor over the past few months. Many employers are not optimistic that they will be in a position to award a pay rise in 2021, with a pay freeze easily the most expected outcome of any pay review next year.”

HR News, News, Pay & Reward

Private-sector pay awards take a dive

An increase in the proportion of pay freezes has seen the XpertHR headline pay award drop to a 10-year low in the three months to the end of July 2020.

The headline pay award has fallen to 0.5% in the three months to 31 July 2020, down from the 2.2% seen in each of the three previous rolling quarters, according to provisional analysis from pay analysts XpertHR. This means that pay awards are now at the lowest level since the three months to the end of February 2010, when the median pay award stood at 0.3%.

We have now entered a quieter time of the year in the pay calendar: pay awards with effective dates in April have fallen out of the quarterly analysis, and three-quarters of pay settlements collected by XpertHR each year take effect between January and April.

XpertHR pay researchers have found that many employers are deferring decisions on their 2020 pay award, and have currently recorded around 20% fewer basic pay settlements effective between 1 January and 31 July than at the equivalent stage last year. The smaller sample in the three months to the end of July 2020 means the median is finely balanced, sitting just above a tranche of pay freezes, so the addition of a couple more pay settlements could see the median move down to zero, or above 1%.

However, looking at the year so far, the picture of pay settlements appears more stable, with the whole-economy median basic pay settlement worth 2.2%. This compares with a median of 2.5% over the year to December 2019.

Latest pay award findings

Based on a sample of 48 basic pay awards effective between 1 May and 30 June 2020, we find the following:

  • Median pay award plummets. The median basic pay award in the three months to the end of July 2020 has fallen to 0.5%, two percentage points lower than the median of 2.5% recorded in the same period a year ago and the lowest figure for more than a decade.
  • Interquartile range widens. The interquartile range spans three percentage points, with the lower quartile having dropped to zero while the upper quartile remains at 3%.
  • More than half of pay deals lower. In a matched sample of pay awards, more than half (56%) are lower than the same group of employees received a year ago. Around three in 10 (28%) are the same as last year, while just one in six (16%) is higher.
  • Pay freezes dominate. Pay freezes account for more than four in 10 (43.8%) of the total sample of pay settlements (both basic and performance-based).

Public-sector pay awards ahead. . . for now

There was a flurry of activity on public-sector pay when on 21 July 2020 the Westminster Government published a number of the independent public-sector pay review body reports and announced the pay awards that the groups within their remits would receive in 2020. Several of these groups have 1 April review dates, and the pay awards announced will be backdated to this date, meaning that they do not appear in our current headline figures. They include:

  • a 2% increase for members of the armed forces, including the senior military;
  • an increase of 2.5% on national pay bands for operational prison manager, officer and support grades in the prison service in England and Wales, and on the pay points for closed grades; and
  • a 2.8% increase on the pay scales for most NHS doctors and dentists in England.

Other groups covered by the announcement have review dates later in the year, including school teachers in England and police officers in England and Wales, whose pay review dates are in September.

However, there were warning signs that public-sector pay awards next year will not be so generous, with the chancellor Rishi Sunak stating: “In the interest of fairness we must exercise restraint in future public-sector pay awards, ensuring that across this year and the spending review period, public-sector pay levels retain parity with the private sector.”

Analysis of pay settlements over the 12 months to the end of July 2020 shows that pay awards in the public sector are worth 2.5% at the median, with the middle half of awards worth between 2% and 3%. Pay awards in the private sector in the year to the end of July 2020 have dipped to 2.2% from 2.3% in the previous rolling year, while the whole economy median has also fallen, down from 2.4% to 2.3%.

 

XpertHR pay and benefits editor Sheila Attwood said:

“The drop in the value of pay awards comes as no surprise, as the number of pay freezes made by organisations begins to creep up. We also expect many of the pay reviews currently on hold to ultimately result in a pay freeze for staff, making 2020 the worst year for pay awards since 2009.”

HR News, News, Pay & Reward, Pay and Reward

Subdued pay awards reveal impact of pandemic

In the three months to the end of May 2020 the median basic pay award is worth 2.2%, according to the latest findings from pay analysts XpertHR.

As the UK starts to emerge from the coronavirus pandemic, our headline pay award remains subdued as the impact on the economy hits organisations’ ability to reward their employees.

The research shows many employers cancelling or deferring 2020 pay awards, while others have had to introduce pay cuts and the fear of redundancies lingers. Among the pay deals recorded by XpertHR for the current three-month period, 15.2% resulted in a pay freeze.

 

Latest pay award findings

Based on a sample of 243 basic pay awards effective between 1 March and 31 May 2020, we find the following:

  • The median basic pay award is worth 2.2%, the same level as in the previous rolling quarter.
  • Almost one in four (23.9%) basic pay settlements is worth 2%, making it the most common pay award in our three-month sample, while deals worth 2.5% and 3% account for 11.9% and 9.9% of basic pay awards respectively.
  • The middle half of pay deals are worth between 2% (lower quartile) and 3% (upper quartile), unchanged from the previous rolling quarter.
  • In a matched sample analysis, 44.6% of the pay awards made are lower than the same employee group received in the previous year. More than one in four (28%) are at the same level, while a similar proportion (27.4%) are higher.
  • Among the total sample of pay settlements recorded, 15.2% are pay freezes, almost double the number recorded in the three months to the end of April 2020 (8.5%).

In the three months to the end of May 2020, pay awards in the manufacturing-and-production sector are at a median 2% and fall behind pay deals in the services sector, where the median is 2.3%.

Based on a 12-month measure, pay awards in the private sector – where the median is 2.3% – continue to be outstripped by those in the public sector, where the median is 2.5%.

XpertHR pay and benefits editor Sheila Attwood said:

“Across the private sector, alongside the many organisations delaying a decision on their annual pay review, the number reverting to a pay freeze is increasing. With the potential for redundancies looming, frozen or reduced pay is likely to be used as a way to minimise the number of job losses.”