Low pay in the UK

Low pay in the UK

woman in white crew neck t-shirt holding white and black quote board

  1. Low pay

Causes problems for workers:

 

  • Working poverty is a growing problem in the UK, and employment is no longer a way out of poverty. For example, effects on health, happiness, time with family.
  • Low-wage workers are less likely to get job benefits and training, and they are more likely to have jobs that aren’t safe.
  • Dead-end jobs: Only a small number of low-wage workers move up to jobs that pay more.

 

Causes problems for companies:

Low pay is not a good thing because it hurts business and the economy:

 

  • Fiscal: More transfer payments and less money from taxes
  • Demand: less demand and too much credit used
  • Productivity: In liberal economies, low pay and low productivity go hand in hand.

 

Exam tip:

Students should be aware that the problem of low pay in the UK is having a serious impact on both individuals and businesses. In particular, the employee strikes of recent years are serious.

 

 

Methods to regulate the low pay

 

Method 1-Statutory regulation

 

Basically, this means that the government sets a minimum wage that everyone must get.

 

Effectiveness:

  • In 21 European countries, a relatively high minimum wage is linked to a relatively small number of low-paying jobs.
  • The NMW went up for 1.3 million workers (5.1%).
  • Pay distribution was tightened, and a trend toward income inequality was stopped.

 

Limitation:

This method failed to reduce the number of low-paying jobs until the NLW appeared.

 

Method 2-Joint regulation:

 

Employers and trade unions negotiate wage agreements that raise the pay of low-wage workers.

 

Effectiveness:

  • Low pay is linked to union density, collective bargaining coverage, and centralised bargaining, all of which are bad.
  • It’s less likely that unionised workers will get the National Minimum Wage or get paid less than the Living Wage.
  • Unions narrow the pay gap by raising the pay floor.
  • Women, people of colour, the disabled, and those with low skills benefit most from joining a union.

Limitations:

As a matter of fact, unions are falling in every developed country nowadays.

Method 3-Private regulation

  • CSOs come up with a living wage standard on their own.
  • Campaigns for a living wage can help raise the standard.
  • Get employers to pay a living wage on their own.
  • Employers should be named “Living Wage Employers.”

 

Effectiveness:

  • Most employers report positive effects. Overall, the company has a good reputation and is a good employer. In addition, it help companies to bring in customers and get money.
  • Also, employee gain motivation in the business world

Limitation:

  • The level of impact is very low. Costs of labour have gone up.
  • About 10% of LW employers have stopped being certified.
    69% say that their wage bill has gone up. Besides, the bill for subcontracting went up by 32%.
  • Changes in pay structures. For examle, supervisor and other pay differences are being taken away.
  • Leaving pay decisions up to the LWF: Living Wage rates are set by the government and not by employers. Additionally, the Living Wage is going up faster than the average wage and also getting more expensive and more troublesome. Also if you give up your accreditation or don’t follow the rules, you’ll get bad press.
  • A “shadow Living Wage” comes into being.

Exam tips:

Students should consider the effectiveness and ineffectiveness of the three approaches when discussing solutions to the problem of managing low pay in the UK.  Moreover, students should pay attention to the links between the three approaches. As a result, a combination of all three approaches can help companies managing low pay problems, rather than using only one of them. 

 

Employability

Introduction:

Employment has long been a topic of great concern. With a large group of people in the UK facing unemployment and not being able to find suitable work every year, it is important to understand what employability is. Threrefore, this has been a serious topic of assessment and students need to understand the basic knowledge and citical thinking.

employment status, employment law, employer, employee, contract of service

 What is employability:

There are many different definitions of employability. Simply speaking, It is the trait or quality of being able to get a job. In detail, employability is the relative ability of an individual to achieve meaningful employment in the context of the interaction of personal circumstances and the labour market.

Academic views of employability:

Definitions of employability from the supply side and the demand side:

Demand-side:

This perspective is from the company and employer’s point of view. In short, employability is defined as a person’s “objective expectation, or more or less high probability, of getting a job.”

 Supply-side:

This perspective is from job seekers’ point of view. That is, a person needs to have the skills and qualities needed to meet the changing needs of employers and customers. This will help him or her reach his or her goals and potential at work.

Exam tips:

After learning this view, students should analyse the causes of people’s unemployment in terms of both demand and supply. This is because the causes of unemployment are not only personal but also environmental and market factors. That is, both supply and demand can be problematic.

Individualization of employability

This theory says that no matter what changes happen, workers who keep getting better at their jobs and can let a network of companies know about their skills are more likely to find work, whether it’s with their current employer, with another one, or on their own. 

The influence of individualization:

Good point:

It encourages people to take charge of their careers, skills, understanding the job market, being flexible in the face of change, finding opportunities, and getting out of precarity.

Bad point:

It makes you forget how bad things are for other people, stops people from working together, and promotes a culture of submission to power.

Exam tips:

Students should remember there are several ways to explain what it means to be employable.The supply-side definition has become the most common way to think about employability, but there are other ways to look at it. Besides, power and neoliberalism can help us figure out why supply-side definitions are on the rise. Also, the need for a critique of the effects and implications of individualising employability is especially important for academics, who are under pressure to make sure their students are employable.

Other factors influencing the employability:

Personal factors:

  • Employability, skills and attributes
  • Demographic characteristics: age, gender
  • Personal health: physical health, mental health
  • Job search: information seeking skills, CV. interview skills, perception of own strengths and weaknesses, perception of labour market
  • Adaptability and mobility

External factors:

Demand: labour market, macroeconomic factors (macroeconomic stability, business confidence), job vacancies (pay, working hours, promotion opportunities), recruitment factors: employer preferences, employer search pathways, employer discrimination

Support: employment policies, tax system incentives, public transport, childcare

Exam tips: 

General employability exam questions will be based around factors that affect employability. Students are advised to use a combination of these areas given in this article.

Read definition of employability in detail: https://journals.sagepub.com/doi/abs/10.1080/0042098042000316100?casa_token=W0SpluzLZM0AAAAA:rPiCoMapV9e6JpN_TuGmfRDv2Z1iHpVJr1EEqWhKg8eLYt4EwNh6pcNy4yOM10PDfh_tnMdAxlM

Other popular topic articles for students to know:

power in the workplace

Gender in the workplace

 

Pimlico Plumbers v Smith [2018] UKSC 29

plumber, heating technician, redundant, unfairly dismissed,

 

 

Pimlico Plumbers v Smith [2018] concerned a status of a plumber who worked for the appellant company as self-employed.

 

The case summary contains 580 words.

Keywords:

Employment law – Plumber – Independent contractor – Agreement – Self-employed worker – Perform personally – Client or customer – Supreme Court – Appeal dismissed

Facts:

In Pimlico Plumbers v Smith [2018], a plumber, Mr Smith, had carried out work for the appellant company for almost six years. He had two agreements concluded with the appellant company. Under these agreements, the company could refuse to offer him work and he could refuse to accept it. The company’s policy and manual required Mr Smith to wear a company uniform, carry a company ID card, use a company mobile phone and use a company van when carrying out the work.

Mr Smith brought an action against the appellant company He alleged that he had been unfairly dismissed, that the company unlawfully deducted his wages and he had not been paid for a period of statutory annual leave. He also argued that he had been discriminated against by virtue of his disability. The appellant company maintained that Mr Smith was not a worker but a “self-employed operative”.

Issue:

Whether Mr Smith was entitled to qualify as a “worker”?

Held:

The Employment Tribunal decided that Mr Smith was not an “employee” under a contract of employment. So, he was not entitled to complain of unfair dismissal. However, the Tribunal held that Mr Smith was a “worker” within the meaning of section 230(3) of the Employment Rights Act 1996 and regulation 2(1) of the Working Time Regulations 1998. Also, he was in “employment” within the meaning of section 83(2) of the Equality Act 2010. Thus, the Employment Tribunal’s ruling was upheld by the Employment Appeal Tribunal and the Court of Appeal.

The Supreme Court’s findings

The Supreme Court dismissed the company’s appeal and gave the following judgment. In particular, it found that the Employment Tribunal had been entitled to find that Mr Smith was a “worker” under the above-noted acts.

To qualify Mr Smith as a “worker” it was necessary for him to have undertaken to “perform personally” his work or service for the appellant company. In this respect, the Supreme Court pointed out that the agreements with the company, including the company manual, gave Mr Smith no express right to appoint a substitute to do his work. Mr Smith could swap assignments with other plumbers already working for the appellant company. Although, this was more like exchanging a shift with a fellow worker and it did not necessarily mean the substitute. So, the Supreme Court concluded that Mr Smith personally performed the work in the company.

The second point the Supreme Court considered was whether the appellant company had been Mr Smith’s client or customer. In this regard, the following features were emphasized: (a) Mr Smith was required to wear the appellant company’s branded uniform and to use its branded van; (b) Mr Smith had to carry the appellant company’s identity card and closely follow the administrative instructions of its control room. So, these features indicated that the company had tight control over Mr Smith. To sum up, the Supreme Court held that the appellant company was not Mr Smith’s client or customer.

 

Access the full text of the Supreme Court’s judgment here.

References: [2018] UKSC 29; [2018] 4 All E.R. 641; [2018] 6 WLUK 224; [2018] I.C.R. 1511; [2018] I.R.L.R. 872; [2018] C.L.Y. 850.

Followed: Bates van Winkelhof v Clyde & Co LLP [2014] UKSC 32, [2014] 1 W.L.R. 2047, [2014] 5 WLUK 735; Jivraj v Hashwani [2011] UKSC 40, [2011] 1 W.L.R. 1872, [2011] 7 WLUK 798.

Applied: James v Redcats (Brands) Ltd [2007] I.C.R. 1006, [2007] 2 WLUK 531.

Read our materials on Employment Status for more information.

 

Costain Building & Civil Engineering Ltd v Smith [1999] 11 WLUK 927

employment law, employment status, employer, employee

Costain Building & Civil Engineering Ltd v Smith [1999] 11 WLUK 927 is an Employment Law case concerning Employment Status. 

Facts:

An employment agency provided an individual, Smith (S), with a role at Constain Building & Civil Engineering Ltd (CBCE) on a temporary basis for four weeks. Moreover, S had no entitlement to sick or holiday pay. Eventually, S was dismissed by CBCE as they no longer required him. As a result, S claimed unfair dismissal. 

Issue:

However, was S entitled to claim unfair dismissal

Held:

Yes. In Costain Building & Civil Engineering Ltd v Smith, the Employment Tribunal held that S was an employee. However, CBCE appealed against this decision to the Employment Appeal Tribunal (EAT). Overall, the EAT allowed the appeal. 
 

References: [1999] 11 WLUK 927, [2000] I.C.R. 215

Read our notes on Employment Status and other cases for more information. 

Addison Lee Ltd v Lange [2018] 11 WLUK 193

taxi, self-employees, workers, employment status, employment law

Addison Lee Ltd v Lange [2018] 11 WLUK 193 is an Employment Law case concerning Employment Status. 

Facts:

The drivers of a professional private taxi firm, Addison Lee Ltd (A), contended that they were entitled to the national minimum wage and holiday pay as they were ‘workers’ within s.230(3) of the Employment Rights Act 1996. However, A denied that the drivers were workers. 

Issue: 

Were the drivers’ workers or self-employees? 
 

Held:

The Employment Tribunal held that the drivers were workers. However, A appealed against this decision to the Employment Appeal Tribunal (EAT). Nonetheless, the EAT dismissed the appeal. 
 

Applied: Autoclenz Ltd v Belcher

References: [2018] 11 WLUK 193, [2019] I.C.R. 637, [2019] C.L.Y. 938

Read our notes on Employment Status for more information.