Renewed falls in both starting salaries and temp pay Demand for staff deteriorates at fastest rate in series history
Permanent staff appointments fall at record pace
The number of people placed into permanent job roles in the South of England fell for the second month running in April. Furthermore, the rate of decline gathered pace since March and was the most severe in the survey’s more than 22-year history. Recruiters in the region frequently cited that the coronavirus disease 2019 (COVID-19) pandemic and associated restrictive measures had led clients to implement hiring freezes. Across the UK as a whole, permanent placements also declined at an unprecedented rate.
Demand for staff across the South of England deteriorated substantially at the start of the second quarter.
Permanent vacancies fell sharply and at the steepest rate since the survey began in October 1997. A record drop in demand for permanent staff was also seen at the UK level. Temporary vacancies in the South of England likewise fell at an unprecedented rate. Notably, the reduction in short-term positions was slightly faster than seen across the UK as a whole.
Availability of permanent candidates rises for first time since June 2013
After having fallen in each of the past 81 months, the supply of permanent staff in the South of England increased during April. Moreover, the rate of growth was the sharpest seen since October 2009. The increase was attributed by panel members to company layoffs and decisions to furlough staff due to the pandemic. A renewed upturn in permanent worker supply was also seen at the UK level, with the rate of expansion similar to that seen for the South of England and marked.
Startinng salaries fall for the first time since June 2012
After rising only slightly in March, latest survey data signalled an outright decline in average starting salaries for permanent workers in April. Not only was it the first time that permanent starters’ salaries had fallen since June 2012, but the rate of reduction was the quickest in 11 years. Anecdotal evidence indicated that the coronavirus pandemic led clients to cut salary offers. Starting salaries also decreased at a historically sharp rate across the UK as a whole.
As significant as April’s results are they are hardly surprising given the current circumstances. Like the rest of the UK, COVID-19 continues to wreak havoc across the South of England jobs market, with the economic uncertainty it is causing weighing heavily on the region’s firms. “All businesses in the South can do is remain resilient and adapt as necessary to survive this pandemic, as we await the Government’s forthcoming announcement on easing current restrictions so confidence in the jobs market can start to rebuild
What are the
changes for UK employment law in 2020?
In this article, Sean Dempsey and Richard Lister of UK law firm, Lewis Silkin, take a look at what’s coming up in UK employment law in 2020
Lewis Silkin is the UK member firm of Ius Laboris, an
HR and employment law firm alliance.
Looking ahead to 2020, various Good Work Plan reforms are coming into
effect in April and the Government is planning to introduce a new Employment
Bill, which will pave the way for a number of further employment law reforms.
It is clear that the Government’s main priority is ‘getting Brexit done’, but
we can expect several employment law reforms to be progressed
during the course of this year, many of which are to be included in the
proposed new Employment Bill.
Brexit impact on employment law
The prime minister has brought the Withdrawal Agreement Bill back to
Parliament, and expects MPs to ratify it prior to the UK leaving the EU on 31
January 2020. The Government has, at least for the time being, ruled out
extending the transition period beyond 31 December 2020. The Conservative
manifesto contained no detail about long-term plans for employment law, though
did include a pledge to ensure high standards of worker’s rights. For more
information about the implications of the current divorce deal, and the scope
for long-term divergence from the EU on employment rights, see our Brexit
New IR35 rules
Changes to the operation of IR35 regime are due to take effect from 6
April 2020. Private-sector businesses engaging contractors who supply their
services personally via an intermediary (e.g. a personal service company) will
become responsible for determining whether IR35 is applicable. If the business
considers IR35 applies, the person paying the intermediary will be responsible
for operating PAYE and national insurance on the fees it pays.
Companies affected should urgently prepare for these important changes
by, for example: auditing their labour supply chain to identify contractors
using intermediaries; deciding on a methodology for assessing their status; and
reviewing their onboarding process and documentation for contractors going
forward. Before the general election, the Chancellor Sajid Javid said there
would be a review of the proposed IR35 changes to ensure they were ‘right to
take forward’. It seems more likely than not the reforms will proceed in April,
so it remains sensible to continue preparations.
One of several reforms being implemented from the Government’s Good Work
Plan is a revamp of the rules requiring employers to supply staff with a
written statement of key particulars of their employment. From 6 April 2020,
statements will have to be provided to those with ‘worker’ status in addition
to employees, by day one of employment. More information will need to be set
out in the statement, including details of the full benefit and remuneration
package. Many employers are likely to be recruiting for April starters, so now
is the time to start reviewing and amending their standard documentation.
The law on agency workers is also changing in April. When the UK first
implemented the EU Agency Workers Directive, it enacted the so-called ‘Swedish
Derogation’, which provides that certain agency workers are not covered by the
principle of equal treatment. This is being abolished with effect from 6 April
2020. Businesses will need to decide what to do about any agency workers on
Swedish Derogation contracts and, where appropriate, migrate them onto standard
agency contracts or take them on as direct hires.
The reference period for calculating holiday pay is increasing from 12
weeks to 52 weeks on 6 April 2020. This change may create practical problems in
relation to people who work intermittently for just some weeks of the year.
Employers should review their current approach to calculation and identify any
changes required, and perhaps conduct a dry run to assess any cost impact.
Information and consultation
The final April 2020 Good Work change is a reduction in the threshold
for demanding information and consultation arrangements under the Information
and Consultation of Employees Regulations 2004 from 10% to just 2% of
After significant changes to the tax treatment of termination payments
were introduced in April 2018, a related requirement for employers to pay
employer NICs on any part of an ex gratia termination payment exceeding GBP
30,000 was put on hold. This change will now come in on 6 April 2020, making
termination payments more expensive.
CEO pay ratio reporting
The first reports will be due this year under the new legislative regime
requiring directors of UK-listed companies with 250 or more employees to report
annually on the difference in pay between their CEO and average workers.
Parental Bereavement (Pay and Leave) Act 2018
A new right to parental bereavement leave, giving parents two weeks’
paid leave if they lose a child under 18, is expected to come into force
sometime this year. Regulations setting out details of how the right will
operate are still awaited.
The Government has promised to implement a planned reform to provide
priority access to redeployment opportunities for pregnant women and new parents in a
redundancy situation. The new Employment Bill will include provisions to
implement these new rights.
Regulation of NDAs
The Government is expected to bring forward legislation introducing new
restrictions on confidentiality clauses in employment contracts and settlement
agreements. This follows the publication of a consultation response on the
issue last July. There is no draft legislation yet and the implementation date
Family and carers’ rights
The Government will be taking forward plans to allow parents to take
extended leave for neonatal care (following a consultation published last
July). The Employment Bill will also provide for a new right for carers to take
a week’s leave each year. The Conservative manifesto said they would look at
ways to make it easier for fathers to take paternity leave, but no further
details have been released.
Making flexible working the default
The Government intends to encourage flexible working arrangements and
consult about making them the default unless employers have a good reason
otherwise. Details are not yet clear, but the plans could go further than the
proposals currently under consultation that would require employers to say if
flexible working is available in job adverts and publish their flexible working
Employment status and protections
Despite the unresolved issue of employment status (see above), the
Conservative manifesto did promise that workers would gain the right to request
a more predictable working contract. This is something which had already been
promised in the Good Work Plan, and forms part of the requirements of the EU
Transparent and Predictable Working Conditions Directive.
The right to a more predictable working contract will form part of the
new Employment Bill. The manifesto also mentioned other ‘reasonable
protections’, which may refer to rights to reasonable notice of work schedules
and compensation for shift cancellation, which are already under consultation.
The new Employment Bill will provide for legislation requiring employers
to pass on all tips. The Government also plans to introduce a new Statutory
Code of Practice to ensure that tips are distributed fairly and transparently.
New state enforcement body
The Conservative manifesto also pledged to create a new state
enforcement body to tackle non-compliance in the labour market, following a
consultation published last year.
The plan outlined in the consultation was to bring together the existing
patchwork of enforcement under the remit of a single body, and then expand its
remit to cover holiday pay for vulnerable workers and umbrella companies
operating in the agency workers sector. The Government is likely to focus on
targeting the most exploitative employers.
Upcoming cases in 2020.
Important employment cases to be decided this year include the
The case of Morrison Supermarkets plc v Various claimants was heard by
the SC last November and the judgment is expected soon. Morrisons is appealing
against the CA’s ruling that it was liable for the wrongful disclosure of
payroll data on around 10,000 staff by an aggrieved employee.
2. Minimum wage
In February, the SC is due to hear Royal Mencap Society v
Tomlinson-Blake, a case of huge significance for the care sector. The CA
decided that care workers carrying out ‘sleep-in’ shifts were not entitled to
the national minimum wage for the whole shift, but only when they are required
to be awake and working.
3. Employment status
In Uber BV v Aslam and others, a case of major interest for the gig
economy, the CA upheld by a majority the finding that drivers engaged by Uber
are workers rather than self-employed, whenever they are signed into the
relevant app and ready to work. The SC is scheduled to hear Uber’s appeal in
4. Equal pay
Asda Stores Ltd v Brierley (see here) is likely to be decided by the SC this year. A
hearing date for Asda’s appeal is awaited.
Permanent placements decline at quickest rate since June
The seasonally adjusted Permanent Placements Index signalled a ninth successive monthly drop in permanent staff appointments across the South of England in November. There were numerous reports that employers were holding off or cancelling hiring plans due to political and economic uncertainty. Furthermore, the rate of reduction quickened to the most marked for five months and was solid overall. Permanent placements meanwhile fell only modestly at the national level.
Fastest reduction in permanent labour supply for five months
The number of people available to fill permanent job roles in the South of England fell further in November. The rate of deterioration accelerated to the steepest since June, and remained much quicker than the series average. According to anecdotal evidence, uncertainty stemming from the upcoming election and Brexit had deterred many people from seeking out new roles. The reduction in permanent candidate numbers also outpaced the UK-wide average.
Starting salaries rise at slowest rate for over three years
Recruitment consultancies in the South of England signalled a further increase in salaries awarded to permanent new joiners in November. Though still sharp overall, the rate of growth was the least marked since August 2016. Higher starting salaries were widely associated with candidate shortages and efforts to attract skilled workers. A softer rate of permanent pay growth was also seen at the UK level.
FOR THE UK IN GENERAL
Permanent candidate availability continued to deteriorate across the UK in November, with the pace of decline accelerating to the fastest for five months and remaining marked overall. The reduction was driven by falls across all of the four monitored English regions, with the South of England posting the fastest rate of contraction. The North of England reported the softest deterioration, albeit one that was sharp nonetheless.
Similar to the trend for permanent availability, the supply of temporary candidates fell at the UK level in November, with the pace of decline accelerating from October to a solid rate overall. Of the four monitored English regions, the Midlands reported the steepest rate of reduction. Meanwhile, the North of England bucked the overall downward trend, and registered a modest increase in temporary candidate supply.
Permanent starting salaries across the UK rose in November, as has been the case in every month since May 2012. The latest increase was solid, albeit the slowest for almost three years. All of the four monitored English regions reported a rise in permanent starters’ pay, with the rate of salary inflation most marked in the North of England.
Meanwhile, November data highlighted a further increase in average hourly pay for temporary workers. The rate of wage inflation eased, however, and was the slowest for three years. The South of England recorded the strongest rate of pay growth of the four monitored English regions. The weakest increase was meanwhile seen in the North of England.
The jobs market in the South appears to have caught a winter cold. A decline in hires for permanent and temporary positions points to a business community that is a little under the weather. Political and economic clarity will be the perfect tonic for employers and address the lethargy that is holding back new roles being created and stopping job seekers from considering new opportunities.
What might a no-deal Brexit mean for UK employment rights? What could employers do now to prepare? And what might the future hold in a no-deal scenario?
Prime Minister Boris Johnson is clear that he would be prepared to leave the European Union without a deal if necessary and the current legislation commits the United Kingdom to leaving the European Union at 11:00pm on 31 October 2019. Thus, it seems like a good time to revisit the employment law implications of a no-deal Brexit.
What can employers do now to prepare for a no-deal scenario?
European works councils
Employers must have pre-designated their new representative agent if their European works council is currently located in the United Kingdom. If the European works council is (or will become) located in another EU country, employers must decide what to do about their existing UK representatives after Brexit (for further details please see “European Commission confirms its views on European works councils and a no-deal Brexit“). Employers that are currently negotiating a European works council agreement or have a European works council operating under the default subsidiary requirements should consider relocating their arrangements now if they have not done so already.
There are certain legal requirements that employers should contemplate if they are considering restructuring or relocating after Brexit. The key point is that employers may need to consult on the business case for closure before any decision to close a business is taken. Employees should also be offered the opportunity to move with the business if it is relocating, subject to them meeting any relevant language, immigration or qualification requirements.
Following a no-deal Brexit – what would it mean?
In the event of a no-deal Brexit, the European Union (Withdrawal) Act 2018 will convert all EU employment law as it stands before Brexit into UK law. The Employment Rights (Amendment) (EU Exit) Regulations 2019 will make some small technical changes and introduce new provisions intended to preserve UK-located European works councils (although it has been argued that the European works council arrangements do not actually work) but, apart from the changes made by those regulations, employment law will remain the same in the immediate term (for further details please see “Will Brexit frustrate your European works council?“).
Business travel to EEA and Switzerland
The rules for British citizens travelling to Ireland will not change and they will be allowed to undertake any activity without restriction. After Brexit, British citizens travelling to the other EEA countries or Switzerland will be exempt from visa requirements for up to 90 days in a 180-day period. This is for visits only, including for attending business meetings. However, British citizens will be unable to undertake paid work, so employees must understand the scope of the proposed activities on each trip and obtain any required work permissions if these go beyond the activities allowed for visitors. It will also be important to calculate the time spent in the Schengen area on a rolling basis to ensure that the 90-day maximum stay is not exceeded. British citizens will also need to have a passport which is valid for at least six months from the time that they enter the European Union. Note that some British passports are issued for more than 10 years in total but only the first 10 years of validity can be counted towards this six-month requirement. The government has produced a calculator that people can use to check if they have enough time left on their passport to cover a visit.
Business travel to United Kingdom
If the British government proceeds with its original plan to bring in new primary legislation to end the free movement of EEA and Swiss nationals to the United Kingdom, there is likely to be a short period after a no-deal Brexit in which free movement will still apply. However, recent press reports suggest that the government may seek to end free movement using secondary legislation. It is likely this will ultimately prove to be unfeasible. However, if the government is successful in using secondary legislation, it could mean that free movement will end on exit day. After this, Irish nationals will continue to undertake business travel to the United Kingdom without restriction due to the common travel area arrangements. The arrangements for EEA or Swiss citizens arriving in the United Kingdom between the date that free movement ends and 31 December 2020 are currently unknown. The government previously announced that they would be able to enter visa-free for up to three months and would be allowed to undertake any activities without restriction; however, this plan has now been scrapped and its replacement is yet to be announced.
What would a no-deal future look like?
In the longer term, there are lots of potential employment implications for which employers should prepare.
Possible divergence from ECJ case law
Pre-Brexit decisions of the European Court of Justice (ECJ) will remain binding on most UK tribunals and courts, but need not be followed by the Supreme Court. New ECJ decisions will not be binding on any court or tribunal, although they could be considered if relevant. Overall, the UK courts are likely to continue to respect most ECJ rulings, as long as UK and EU legislation remain the same.
has already committed to implementing some aspects of the Transparent and Predictable Working Conditions Directive;
is one of the few EU countries to already have whistleblower protection; and
already provides some of the rights established under the new Work Life Balance Directive.
Thus, while differences in employment law could open relatively soon, they will be quite small.
Longer-term changes to employment law
Larger gaps will open if the UK government dismantles EU-derived employment laws after Brexit. Theresa May was always emphatic that her government would look to enhance workers’ rights after Brexit, not reduce them. However, other prime ministers may take a different stance.
Boris Johnson is reported to be keen to renounce the Working Time Directive. He gave evidence to a select committee that it has proved too expensive to implement in the United Kingdom and it would be surprising, given the strength of his previous statements, if his government made no changes to EU-derived working time laws. However, it is hard to imagine any modern UK government ending all rights to paid holiday. Instead, the United Kingdom can reasonably expect the scrapping of EU rules on working time limits and record-keeping requirements, but the retention of some rights to paid holiday (possibly paid at the rate of basic pay only). Similarly, some rights provided by the Agency Workers Directive could be abolished (eg, the right to pay parity after 12 weeks), but limited agency worker rights are likely to remain.
In the longer term, if a Conservative government remains in power, the country might also expect to see collective redundancy consultation being abolished or made less onerous and the restrictions on changing terms after a Transfer of Undertakings (Protection of Employment) (TUPE) being lifted (although TUPE is unlikely to be scrapped). Previous governments have explored whether discrimination awards could be capped (eg, at one or two years’ pay) but this was problematic under EU law. Capping discrimination awards is unlikely in the short term, not least because of the #metoo movement, but it could come back on the table later.
Ultimately, the United Kingdom faces the same challenges as any other modern economy: how to regulate the increasing volume of platform and contingent working and respond to the impact of demographic and technological change on the workplace. The United Kingdom’s withdrawal from the European Union will mean that the United Kingdom will need to find its own regulatory solutions to these challenges.
UK law prohibits workplace discrimination on grounds of nationality and national origin. In the (hopefully unlikely) event of any EU citizen experiencing abuse or harassment in the workplace, employers must be ready to respond under their anti-harassment policies. Employers may want to check that they already cover nationality as well as race.
Interestingly, UK equality legislation goes further than the EU minimum requirements in explicitly preventing nationality discrimination in the workplace. This is one of a number of instances where UK law actually provides more rights than the EU minimum and illustrates that, although the United Kingdom may dismantle some EU-derived employment rights following a no-deal Brexit, there are still likely to be areas of employment law where it goes further than the European Union.
This article was first published by the International Law Office, a premium online legal update service for major companies and law firms worldwide
Despite the uncertainty around Brexit, companies are still recruiting. It’s very much a candidates market at the moment and demand for workers is driving a sharp increase in starting salaries. It’s been getting harder and harder for firms to find good staff and with UK immigration policy likely to tighten, this trend isn’t going to get any easier.
Concerns about a no deal Brexit are putting a handbrake on the supply of candidates as the value of job security and stability shoot up people’s personal agendas. However, candidates who are prepared to take a chance and job hop can often bag a pay rise as a result.
Slower rise in staff appointments
Permanent placements increased at softer rates in November. Though strong, the upturn in permanent staff appointments was the second-weakest since October 2017.
Vacancy growth edges down to 25-month low
Though elevated by historical standards, the overall rate of vacancy growth edged down to the least marked for just over two years in November. This was driven by a slightly softer increase in permanent job openings…
Candidate availability continues to tighten…
The overall availability of staff continued to decline sharply in November. This was despite the rate of reduction easing to the weakest since March, helped by softer falls in the supply of both permanent and temporary candidates.
…leading to further upward pressure on pay
Tight labour market conditions and greater competition for workers led to further marked rises in pay for both permanent and temporary staff. Notably, temporary wages increased at the quickest rate since July 2007. Permanent starting salaries meanwhile rose at one of the sharpest rates seen in the past three-and-a-half years.
Permanent placement growth edges down to four-month low
November survey data signaled a twenty-eighth successive monthly increase in the number of people placed into permanent job roles. The pace of expansion remained sharp, despite softening to the second-weakest since October 2017 (after July 2018). Growth was generally linked by respondents to robust demand for staff. However, there were also reports that uncertainty linked to Brexit and candidate shortages had limited the overall upturn in placements.
Steep increases in permanent staff appointments were seen across three of the four monitored English regions, as the North of England registered only a modest rate of expansion.
Starting salaries rise sharply amid steep reduction in candidate supply
Permanent placements expand at slightly weaker pace
Vacancy growth softens to near two-year low, but remains strong
Companies generally are struggling to find the people they need to drive growth and opportunity.
Permanent placements growth softens…
Permanent staff recruitment continued to rise at the end of the third quarter, albeit at a softer pace. Nonetheless, growth remained sharp…
…as candidate availability drops further
We have found there is continued difficulties regarding the availability of staff for the vacancies we have. Although easing since August, the rate of deterioration in permanent staff availability remained sharp.
Starting salary inflation reaches 41-month peak…
Starting salaries for people placed into permanent jobs increased at the quickest pace since April 2015 during September.
Permanent placement growth softens to nine-month low…
Staff vacancies expand at quickest rate since last November
Decline in candidate availability eases, but remains historically sharp
The rise in interest rates for only the second time in a decade may leave some people feeling the pinch. But a new job is one way people can ease the burden on their finances. With our data showing starting salaries continuing to rise, the latest official government figures suggest that we are finally seeing the effects of a tighter labour market feed through to pay.
Softer rise in permanent staff appointments…
Permanent placements continued to rise sharply in July, though the rate of expansion was the softest recorded since last October.
…as supply of candidates continues to drop markedly
A candidate shortages weighed on permanent recruitment. The supply of permanent candidates fell sharply in July, despite rates of decline easing to the weakest in three months.
Staff vacancies rise at quicker pace…
Demand for staff strengthened further in July, with overall job vacancies expanding at the quickest rate for eight months.
…maintaining upward pressure on pay
Low candidate availability and robust demand for staff led to a further steep increase in salaries awarded to permanent starters.
Severe staff shortages leads to quickest rise in starting salaries for three years
Staff vacancies expand at the quickest pace since last November
Despite growth in demand for staff this month, there has been another drop in staff availability. There has been a rise in client recruitment indicating that employers are feeling confident in making hiring decisions but a lack of candidates remains a major challenge
Because of the lack of candidate availability we are seeing employers paying higher salaries to attract the right people. This is only part of the solution, with employers also having to think about providing a more flexible working environment and progression opportunities. With skills needs and candidate expectations continuing to evolve, employers are having to radically re-imagine their hiring procedures.
Appointments continue to rise strongly…
Permanent appointments continued to rise at a robust pace, despite growth softening to a five-month low.
…as demand for staff strengthens
Growth of demand for staff strengthened to a six-month high in May, with sharp increases in permanent roles .
Sharp fall in candidate availability…
Overall, candidate availability declined at a sharper rate midway through the second quarter. Candidate numbers fell at the fastest rate for four months, while short-term staff availability deteriorated at the quickest pace since last November.
…leads to steepest increase in starting salaries for three years
Strong demand for staff and low candidate availability underpinned further increases in starting salaries and temp pay. Notably, salaries awarded to successfully placed permanent workers rose at the steepest rate for three years
Growth of demand for staff remains high, but candidate availability drops lower;
Starting salaries increase to greatest extent for five months.
Growth in permanent placements…
Although the rate of expansion has softened from February’s three-year record high, the growth in permanent placements remains sharp. Permanent placements vacancies continue to rise at a slightly faster pace than that for temporary job roles.
The availability of permanent workers has fallen for the fifty-seventh consecutive month in March. Key permanent staff skills reported in short supply includes in particular Accountants, Engineers, HGV Drivers and Web Developers.
The rate of inflation in salaries for newly-placed permanent staff has accelerated for the second month running in March. Evidence suggested that the higher salaries are attributed to strong demand for staff alongside competition for scarce numbers of candidates with the required skills for the roles. Data published by the Office for National Statistics shows improved earnings growth in its latest report. Alongside a softer increase in living costs, this suggests that the pressure on real wages may be coming to an end.
Permanent placements are growing month on month as demand for staff remains high. More people are entering employment, but it doesn’t make up for the shortfall of candidates for many roles, from cyber security and aerospace through to sewing machinists and drivers.
As a result, employers are increasing starting pay to draw candidates away from current roles into new positions.
Candidates planning to move jobs have a strong chance of getting a pay rise. With inflation outstripping pay growth for over a year now, high pay offers will be tempting, as the pressure on starting salaries still isn’t translating into pay rises for staff who stay put. Employers need to look at other means to keep staff, such as creating a good workplace culture and offering progression opportunities.