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Holiday pay and Harpur Trust v Brazel
In July, the Supreme Court issued its final judgement in the case. This has brought some much-needed clarity on how holiday pay should be calculated in these situa ons. The decision could have some important consequences for recruitment businesses who employ staff on zerohours or annualised hour contracts of employment, or if they use umbrella companies. Ms Brazel was employed on a permanent, zero-hours contract and worked for Harpur Trust as and when she was needed. She argued that her holiday pay had been calculated incorrectly and she took the trust to an employment tribunal for unlawful deduc on of wages by underpayment of holiday pay. Although the ini al tribunal found in favour of the trust, the Employment Appeal Tribunal found in favour of Ms Brazel. That decision was then upheld by the Court of Appeal, and now also by the Supreme Court.
THE VIEW AND THE INTELLIGENCE Pushing labour up the poli cal agenda p3 BIG TALKING POINT Overcoming shortages; prac cal solu ons p4 LEGAL UPDATE Repeal of the ban on replacing strikers p6 Q&A The benefits of a four-day week p7 Issue 99 September-October2022 @RECPress www.rec.uk.com Ma
The judgement means that employers, including recruitment businesses, should no longer use a prorata method to calculate holiday en tlement for any part-year worker engaged on a permanent contract of employment. Contracts should be amended where this method of calcula on is s pulated. There is also the on law
possibility that employees whose holiday pay has been calculated using the pro-rata method could bring a claim against their employer for unlawful deduc ons from wages. Further complica ons may arise if an umbrella company is involved, and it is yet to be determined whether the decision will be extended to cover contracts forThisservices.casehas important implica ons for recruitment businesses and it is vital that you consult with a legal expert if you think you may be affected. REC members have access to our dedicated legal guides, and can find more informa on and advice on the REC website. Members can also call our legal helpline for more help if needed.
For many years, the issue of how to calculate holiday pay for employees who are on permanent contracts, but who work only part of the year or for irregular hours, has been undecided. In part, this is because of the case of Harpur Trust v Brazel – a case between a music teacher and her employer, which has been making its way through employment tribunals and the courts system since 2015.
As I write this, we s ll don’t know whether Rishi Sunak or Liz Truss will take up residence in Number 10. But for me, it’s clear what the first priority should be for the new Prime Minister – economic growth.
Recruitment Ma ers September-October 20222 Leading the industry W elcome to this edi on of Recruitment Ma ers!
Shazia Ejaz, Director of Campaigns at the REC
Controlling the rising cost of living and doing business will be the first hurdle for any new PM to jump, and is vital for the country’s economic stability. One element that has been almost completely absent in the discussion is the labour market. Shortages are rife in every sector and area of the UK, so poli cians (and businesses) need to push this issue up the agenda and think long-term about workforce planning to get the economy growing. Our Overcoming Shortages report provides some possible policy solu ons, and we are taking it right to the government’s doorstep with a launch event in Parliament. This lack of a big-picture debate on work and everything that supports it – from childcare to training providers – means that technical details are also being missed, including the unintended consequences of IR35 reform, the need to deliver umbrella company legisla on, and the poten al damage of decisions such as repealing regula on 7. That’s before you take into account legal decisions such as Harpur (see p1), which have moved things on again for agencies. As always, the latest and best advice from our lawyers is available on the REC website.
Shortage solutions and the big number we can’t ignore
It’s been a long hot summer, but the weather’s not the only thing hea ng up – while we all sweltered in the summer sun, the Conserva ve Party’s leadership elec on reached its conclusion.
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Much of the debate over the past two months has focused on economic policy, and par cularly on tax cuts. But with infla on at its highest in 40 years, people and companies across the UK are really feeling the squeeze.
Our website is also where you can book ckets to our annual awards ceremony, where we celebrate the best of recruitment. Come and join us in London on 24 November for what is always a great night!
me
Overcoming Shortages: how to create a sustainable labour market demonstrates the economic impact of not taking ac on – a fall in UK GDP of up to £39bn every year from 2024 to 2027. But this report isn’t just about the impact of inac on, it’s about finding solu ons that will create a sustainable and produc ve labour market. Tackling shortages at a me of economic uncertainty requires business and government to work together to change behaviour and priori se people planning. This is a me for recruiters to make their exper se and voices heard. The report has been well received by parliamentarians, industry bodies and the media, and was covered by the Times, FT and the BBC among others. We launched it in Parliament and we’ve met poli cians from across the UK, as well as o cials in departments including HM Treasury, and given oral evidence at two more Select Commi ees (that’s five appearences on this topic so far). So what’s next?
Over the next month, we’ll be a ending party conferences, speaking on panel events and engaging with more MPs about our findings. We’ll also drive our recommenda ons home in our Budget submission – watch our website. And we’re preparing for the next general elec on, developing a REC manifesto to influence policy development across all the main par es. We might have a new Prime Minister, but labour and skills shortages aren’t going away and it’s me to move beyond short-term, s cking-plaster solu ons. We will con nue to drive that message home. Check our report toolkit so you can help – it’s all hands to the deck to work for change to grow our labour market and support produc vity.
The new PM must put the labour market back at the heart of economic debate, warns Neil Carberry, REC Chief Execu ve the view... you want to keep up to speed with all things recruitment then follow on
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Twi er @RECNeil
he REC has talked about labour and skills shortages for years, but the pandemic pushed it up the poli cal agenda. For the past 18 months, we’ve been campaigning for government to understand the scale of this challenge and think about long-term solu ons. That’s where our latest report, launched over the summer, comes in.
3September-October 2022 Recruitment Ma ers
50% of UK employers use language in their job adver sing that is specifically designed to encourage applica ons from a diverse range of candidates.
In the second quarter of 2022, employers’ confidence in both the UK economy and their ability to make hiring and investment decisions dropped quickly. With infla on rising and the Bank of England increasing interest rates even further, this is perhaps not a surprise. Skills and labour shortages also remain a big concern, leaving many businesses grappling with uncertainty about what the future holds. As companies across different sectors experience di cul es in hiring, it can be hard to figure out what ac ons can be taken to a ract and retain talent. The REC’s recent report Overcoming shortages: How to create a more sustainable labour market highlights a number of prac cal ways they can do this. One vital part of the picture is the importance of pu ng equality, diversity and inclusion (EDI) at the core of your people plan. Many businesses understand the value of EDI in the workplace and have taken the ini a ve to implement inclusive policies into their recruitment process. The REC’s JobsOutlook survey found that 50% of UK employers use language in their job adver sing that is specifically designed to encourage applica ons from a diverse range of candidates. For more than 32% of employers, this language extends to sta ng that applica ons from diverse candidates are encouraged. However, the survey also found that a significant propor on of employers have not implemented EDI policies beyond job Put equality, diversity and inclusion at the core of your people plan
the intelligence...
18% of employers have not introduced any of the four EDI policies men oned in our survey.
By Norah Song, Research Manager at the REC adver sing, such as diverse interview panels and name-blind CV submissions. More surprisingly, 18% of employers have not introduced any of these four policies men oned in our survey. In a ght labour market, not ac ng to recruit the best talent from all demographic groups will leave your organisa on trailing behind. Businesses should start tackling skills and labour shortages by recrui ng from more diverse talent pools and providing tailored support for employees with different Recruitersbackgrounds.canactas partners, helping to execute EDI processes and reviewing clients’ internal policies. We hear stories of candidates refusing job offers from companies that don’t demonstrate their EDI creden als, and candidates are increasingly considering employers’ EDI policies when they apply for jobs. A diverse and inclusive plan will put your organisa on in a more compe ve posi on in the labour market.
Leading the industry
The REC has produced several pieces of research and guidance to help recruiters improve both their own EDI and help them to advise clients. These have been produced in partnership with organisa ons including BITC, the Centre for Ageing Be er and the Fawce Society. Labour and skills shortages are widespread across the economy, and businesses cannot afford to miss out on talented people – it’s me to put people first and recruit more inclusively to help boost your business’s prospects.
talking
Put stuff’‘peoplethefirst
4 Overcoming shortages report
As Neil Carberry, CEO at the REC, says, the point is not to complain, but to find solu ons. So the REC spoke to businesses across the UK and looked further afield to Germany and Canada.
veryone agrees we have a labour crisis – the government, employers and recruiters. Too many people are leaving the labour market. Too few are entering it. It’s easy to point the finger at the Covid pandemic or at Brexit, but these have exacerbated an underlying situa on that was already brewing. Who knew? Well, recruiters did. The problem is that no one seems to have a strategy to deal with it and that isn’t sustainable. Things need to change and soon. Rather than complaining about the ghtest labour market in living memory and figh ng to offer the scarcest jobseekers increasingly higher salaries, fuelling wage infla on, government and businesses need to work together and find long-term solu ons. This is why the REC has commissioned research to separate the facts from the anecdotes and recommend some real ac on that can, and should, be taken.
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The strongest message, however, is that this issue needs more a en on from both business and the government. At present, it is one crisis compe ng with a host of others – but le una ended it has the poten al to cost the economy serious money and to affect growth.
Recruitment Ma ers September-October 2022
“We started by trying to iden fy the true costs of the problem, which is why we partnered with CBI Economics,” explains Kate Shoesmith, Deputy Chief Execu ve of the REC. “They found that if you assume there is a 10% increase in demand for skills over the next 18 months, then from 2024, if we do nothing to resolve this, it is going to cost the economy between £30bn and £39bn a year. This is the equivalent of the en re UK defence budget or the whole contribu on of the recruitment industry to the UK Furthermore,economy.”theeconomic modelling showed that the effect of wage infla on to combat skills shortages will send prices up even further, reducing people’s disposable income and, therefore, public tax income. This will compound the losses. So what can we do about it? At government level, there is a clear need for a na onal labour strategy to look at everything from educa on and skills training to solu ons to specific labour pinch points. In Canada, for example, the big point
The REC’s new report Overcoming shortages: How to create a sustainable labour market o ers sugges ons to fix the skills crisis – and aims to push the issue up the agenda.
researchers found that the government has been joining up skills and immigra on policy to create a co-ordinated response and ac vely seeking migrants with much-needed skills. In Germany, where they already have a strong tradi on of skills training and workforce representa on, they, like the UK, have problems with labour par cipa on. In response, many German public-sector agencies have collaborated to encourage more people to enter the workforce and resolve specific skills shortages. Such collabora on seems to be a key feature of a successful response to the problem – no one group can deal with it alone. Interviewees across UK business repeatedly highlighted the importance of collabora ons between industry, government, the educa on sector and, of course, recruiters.
“We have found pockets where businesses are doing interes ng and valuable things,” Shoesmith says. “This is the prac cal side where businesses can make a difference.” For example, she points to a business in the renewable energy sector that par cipated in the Kickstart scheme with the REC and now works with school
September-October
Skilled labour shortages in the 1980s led to a 1.7% fall in produc vity growth. 77% of firms say skills shortages are a barrier to investment. 5 million workers could become acutely under-skilled in basic digital skills by 2030.
Statistics
The REC has also called for the government to reconsider the appren ceship levy. “It’s not working,” Shoesmith says. “Employers are paying into it, but they can’t use it to train temporary workers and many have limited use for appren ces. Why not make this a flexible training fund that can be used for a broader range of people andTherecourses?”aremany elements to this crisis and a variety of solu ons will work in different places. But it needs to be at the top of the agenda for government and business. Ignoring it will cost us all.
A 10% surge in demand for sta across the economy could cause a 1.2% fall in expected GDP and produc vity by 2027 – cos ng the economy £30bn to £39bn a year.
Recruitment Ma
discussed at board level, she adds. “If organisa ons are saying that ‘people are our business’, why are they not making this issue a C-suite priority?”
Recruiters also have a part to play. “We have more strategic conversa ons with clients about their workforce than anyone else. We should be asking them to look beyond pay at why their staff are jumping ship,” Shoesmith says. “We must 5www.rec.uk.com 2022 ers
At na onal level, the REC can contribute to the debate with the government and urge all the relevant par es to work in partnership to create the policies we urgently need. At regional level, recruiters can contribute by sharing best prac ce highlighted in the report with clients. Local government agencies, job centres, recruiters and educa onal ins tu ons also need to talk about the regional jobs market and collaborate to solve local shortages. “There is no one-size-fits-all solu on,” Shoesmith says. “Local recruitment companies tend to have much be er regional data than the available na onal figures, because data takes me to be reported. We need to examine what we encourage students to study. They need to know if there are few employers who require those skills locally – most people don’t travel far from where they are born to find a job.” In addi on, recruiters can talk to clients and to local employment groups about the numbers of people who are leaving the labour market and who are economically inac ve in the region.
“Why are people op ng out?” asks Shoesmith. “It’s possible that the cost of living crisis will pull some back into the jobs market, but we must remind employers that most people who are currently not working will not be found in the job centre. Recruiters are likely to have a be er idea of who these people are and may be able to find out what would tempt them back.”
10% increase in demand equates to 1.7 million jobs.
In the UK, data-driven skills shortages cost the economy £2bn a year. leavers and students over the summer holidays to teach them about the sector and to offer paid work experience. They have found that this paid them back in the insights that they got from the students, as well as ge ng young people excited about their job vacancies. But businesses need to acknowledge the problem and face it head on, with workforce planning strategies being ask them: ‘What are the assets at your disposal? Why are people not taking on your jobs? What are you offering them?’”
On 26 July, trade union law firm Thompsons Solicitors wrote a le er to the Business Secretary, Kwasi Kwarteng, on behalf of 12 unions. Thompsons intends to challenge the repeal of Regula on 7 on the grounds that it violates Ar cle 11 of the European Conven on on Human Rights and the EU-UK Trade and Coopera on Agreement. The unions also raise the failure of the Business Secretary to consult on the change as required by the Employment Agencies Act 1973.
Un l the outcome is determined, Regula on 7 remains repealed, but employment businesses should consider their obliga ons and reputa onal risks when deciding whether to supply temporary workers to stand in for striking workers.
What does this mean in prac ce?
ince 1976, employment businesses have been banned from supplying agency workers to replace staff who were taking part in strikes or industrial ac on. This was enshrined in Regula on 7 of the 2003 Conduct Regula ons that govern our industry. But on 22 July 2022, the government approved a change to the Conduct Regula ons, effec vely repealing Regula on 7 and allowing agencies to supply temporary workers to cover strikes.
Onboarding When training a new recruiter, you’ve got an opportunity to hit the ground running in engagement terms. Providing new starters with the right support not only helps them to perform be er, and quicker – it also teaches them what to expect of your company in the future. Giving your new employees plenty of one-to-one me, a range of training materials, and a lot of bonding opportuni es with their team is a great way to raise engagement from the beginning.
Mental health
The stressful nature of recrui ng is hard to get around, but pu ng preventa ve measures in place to guard your employees against mental health problems can be a massive help. In prac ce, this could mean:
• sharing mental health resources;
• running sports/medita on sessions at work. These two elements are just a star ng point, but taking steps to engage be er with your employees can help to keep your talented people happy and working to their full poten al.
By Melissa Mhondoro, REC Solicitor
• hiring a private health provider – especially one with access to counselling;
legal update
www.rec.uk.com Employment law 6 Recruitment Ma ers September-October 2022 How retenstaffincreasetoon
The restric on under Regula on 7 applied only to employment businesses supplying temporary workers. This change is therefore unlikely to affect employment agencies placing employees on a fixed-term or permanent basis during industrial ac on. However, employment businesses should think carefully about the poten al consequences of supplying temporary workers in such dispute situa ons.
The future of Regula on 7
One of the highest costs in recruitment is staff turnover. The average cost of replacing an employee earning £25,000 is £30,614, and recruitment agencies experience an average turnover rate of 43% – about triple the na onal average. These costs can be a serious drain on profits, yet too o en they are wri en off as a quirk of the industry.
By Fi SwriterMarshall,atWoer
Under the Conduct Regula ons, employment agencies and businesses must ensure that supplying a worker would not be detrimental to the interests of either party. Health and safety considera ons are relevant, as agency workers will have to cross picket lines, passing striking employees, to get to work. Picket lines are o en tense and could become violent. The fact that strikes and other industrial ac on do not normally last long also makes it more difficult for an employment business to judge the level of risk to agency workers.
It’s true that recruitment is a high-pressure career, and this contributes to the high turnover rate. But, with the proper employee engagement techniques, agencies could see significant improvements in their reten on rates.
The regula ons also place a duty on employment businesses and agencies to provide suitable workers for an assignment. In a strike, hirers are likely to require people at short no ce and for a short period. This leaves less me than usual for employment businesses to carry out the necessary checks on candidates before the assignment, and to consider and/or raise any suitability issues with the hirer.
Two key areas of engagement where employees could benefit from more support are onboarding and mental health.
Repeal of the ban on agency workers covering strikes
Produc vity and sa sfac on www.rec.uk.com 7September-October 2022 Recruitment Ma ers
Our business is 100 years old this year and the fundamentals are the same as when my grandmother bought it in 1947. The company assets then were index cards with the details of the clients.
It’s who you know Rela onships are the key to everything.
… but constantlyevolve We’re proud of our long history, but we have survived and grown by con nually moving with the mes and the market.
In 1947, a recruiter knew all the local personnel managers and, when a candidate walked in, they would contact them and say “You need to see this person”. They didn’t need CVs. It was all about the rela onship and the client trus ng the recruiter to know their business. This is s ll crucial today – and it’s why recruitment can never be fully automated. Successful recruitment depends on human interac on.
About a year before the first lockdown, I decided to work a four-day week and it was wonderful. I take Wednesdays off and it changed the pace of my life. I take the children to school and some mes have lunch out with my wife. At the same me, I’m more energised and effec ve when I’m in the office. So, once we were back on an even keel a er Covid, we offered this to all 16 of our staff We announced it last Christmas and I then found out about the interna onal four-day week pilot programme, so we joined that in order to benefit from the shared resources, feedback and support.
ts of a four-day week knowIWhat Q&A
The elsebutethosfundamentalisconstant,everythingevolves.
Why did you o er your team a four-day week?
Simon Girling is director at Girling Jones fi
Joanna Cooper is MD of Bucks and Berks Recruitment
Take the long view I’m the third genera on of my family to run the company, which we know goes back at least to 1922. We’re not the oldest recruitment company in the UK, but I think we may be the only one that has retained its name. Some of our team have been with us over 25 years. Our clients and candidates stay with us too –we have placed the grandchildren of former candidates in their first roles.
What did you hope to achieve? We did it purely to improve the lives of the team and boost loyalty. We hoped it would also help us to a ract staff How does it work?
The basics don’t change
The secrets of business longevity and the bene
The only rules are that everyone works Monday and Friday, produc vity must not go down, and client and customer service must never suffer. Each team must ensure adequate cover each day. People take the same day off each week, although there is some flexibility. What are the results? The staff love it and we’ve raised produc vity on every measure, probably because people are more energised and organised. It’s been a great business decision and has employeeboostedhappiness as well as a rac ng new staff. From a company perspec ve, it’s given us an extra chocolate boost – and great publicity.
Recruiters who are looking to fill vacancies and increase the diversity of their own workforce need to address these barriers by adop ng inclusive recruitment prac ces. Sign up to the campaign to join the likes of Axa, ASDA, Deloi e and Thames Water and make 2 million jobs more inclusive by 2025.
© 2022 Recruitment Ma ers. Although every effort is made to ensure accuracy, neither REC, Redac ve Publishing Ltd nor the authors can accept liability for errors or omissions. Views expressed in the magazine are not necessarily those of the REC or Redac ve Publishing Ltd. No responsibility can be accepted for unsolicited manuscripts or transparencies. No reproduc on in whole or part without wri en permission.Ma
The search for talent: is it time to change the way we recruit?
2. Show candidates that you’re commi ed to inclusion.
The official magazine of The Recruitment & Employment Confedera on Dorset House, 1st Floor, 27-45 Stamford Street, London SE1 9NT Tel: 020 7009 www.rec.uk.com2100
4. Focus on the essen al skills and capabili es that are needed to do the job.
Training and support
Opening doors to untapped talent
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With a new challenge reported every day, “shortage” is becoming a strong contender for 2022’s word of the year. Labour and skills shortages con nue to present a challenge for businesses, with the REC’s new Overcoming Shortages report highligh ng the impact that these have on employee engagement, consumers and, ul mately, on investment and economic growth. These labour shortages are demonstrated by the record 1.3 million job vacancies. A 2021 ONS report found that more than half of businesses are unable to meet demands. The issue of skills shortages has been steadily growing in recent years, and Brexit and Covid-19 have also contributed to this issue, as workers have le the labour market. However, the picture is less gloomy if we look through a different lens and focus on those who want to work. There are 1.3 million people who are unemployed and 1.7 million people who are economically inac ve, but would like to be working – forming an untapped talent pool of 3 million people, more than twice the number of job vacancies. So why are businesses s ll struggling to fill roles? As the Overcoming Shortages report recommends, “Equality, diversity and inclusion should be at the core of your people plan” and this needs to encompass all aspects of diversity. The UK’s untapped talent pool is made up of older people returning to the workforce, young people seeking their first posi on, refugees, disabled people and people with criminal convic ons; it is neurodiverse and ethnically diverse.
Editorial: Editor Ruth Pricke . Produc on Editor: Vanessa Townsend Produc on: Produc on Execu ve: Rachel Young rachel.young@redac ve.co.uk Tel: 020 7880 6209 Prin ng: Printed by Precision Colour Prin ng
5. Priori se accessibility and eliminate bias. Each of these principles is underpinned by specific ac ons, with Opening Doors employers commi ng to making three or more changes to their recruitment prac ces. Making these specific, targeted changes will help businesses to bridge the gap between their labour shortages and the UK’s untapped talent. Since its launch in February, the campaign has gained the support of 27 employers, whose commitments will collec vely make more than 423,000 jobs moreUnfortunately,inclusive. many standard recruitment prac ces deter or exclude some jobseekers. Asking for certain qualifica ons might exclude a neurodiverse jobseeker, who never performed well under the pressure of exams because of, for example, au sm – even if they are an excellent problem-solver and have 10 years’ experience as a manager. Placing too much emphasis on recent experience, rather than focusing on skills, could mean your jobs are not accessible to a refugee who has been wai ng for three years for the right to work, or a parent looking to return to the workforce a er a career break. Requiring candidates to declare criminal convic ons at the first stage of recruitment, regardless of whether you would later factor this into a recruitment decision, could deter someone with convic ons from applying for fear of being automa cally rejected.
3. Make sure that job descrip ons and adverts are comprehensive and use inclusive language.
Business in the Community’s Opening Doors campaign is calling on employers to make changes across five core principles of inclusive recruitment: 1. Create partnerships that connect people from disadvantaged groups to your jobs.
By Charlo e Gibb, Employment & Skills Campaign Manager at BITC
Recruitmenters Recruitment Ma ers September-October 2022