The General Election 2024 – How would a Labour Government impact Payroll? Guest Article, by Jane Vivier

It doesn’t take a crystal ball to realise that this week, for the first time in nearly a decade and a half we will have a new government. If the polls are to be believed, for many this new government clearly cannot come soon enough.

The last decade has been difficult for the average employee, most employers, and the economy as a whole – the last few years particularly have been some of the most trying in a generation.

Throughout the election campaign the world of work, businesses and employees have been bombarded with polarising views and messages on what each party might do should they find themselves in government at the end of the week. Some of it has sounded great, some of it worrying and a few bits just plain ridiculous. So, what might we expect as employers and employees when the new government gets to work in less than a week’s time?

 

Barring something seismic we will be waking up on Friday morning to a Labour government and one with a sizeable majority – so what have they promised and how might it affect you and your employees?

The Labour manifesto is full of promises and undertakings to ‘make work pay’ and improve the lives of UK employees – the first of these is a 100 day pledge to provide a new deal for working people, no doubt this will be an explanation of many of the other manifesto points, many of which also provide direction and simplification for employers. I cannot help but feel after a decade or more of confusing messages around work including the mangling of the IR35 legislation, a minimum wage regime that was so pointless that a separate independent entity was established to provide a voice of reason, tax and NI bands that changed like the wind, the destruction of the childcare voucher system, a disastrous attempt at an apprenticeship levy and a pension auto enrolment scheme that rapidly became unfit for purpose that to have employment at the top of the agenda is an encouraging sign. So, what can you do to prepare?

 

The manifesto pledges to end the age bands of the national living wage and also change its formulation so that it properly accounts for the cost of living.

 

Now is the time to start a review of your pay and grading framework. Look at the salary bands you use and see how much ‘wiggle room’ there is to allow for living wage changes – all too often when the living wage changes the bands at the bottom become compressed and those people who were previously well clear of the minimum rate find themselves being dragged back towards it. Consider your pay policy too – awarding % pay awards means that the higher paid pull further and further away from the lower paid – consider having minimum / maximum awards to help alleviate this and provide greater fairness and consistency. Have a plan in place that deals with changes in living wage rates so that you can explain to all of your employees what the future looks like, how you are going to deal with increases (especially if you operate performance related pay which can see under performing employees get the same increase as top performers as they are all on or close to living wage) and how their pay may increase not just because of living wage legislation but through skills, experience, performance and career moves.

Also consider the optics of the living wage – it is always better to pay slightly above it – that way you are paying a rate that you chose for your employees based on their value and worth rather than a rate that you were obliged to pay.

Finally, if you are using the age related / apprentice bandings – please stop! I’m baffled as to why these even exist – you don’t get groceries, travel, rent or bills that are discounted for adults under the age of 21. Even for those under 18, sending the message that their effort or input is worth less than someone just a few years older is not the way to build loyalty, advocacy and a strong consumer brand!

 

There will be a single fiscal event each year for both business and personal finances.

 

Great news! Instead of having to make changes twice a year – or even more frequently – we will see a single change for tax rates and business accounting / reporting requirements.

If your organisation has a number of financial dates in the year, consider also moving towards this single date. As well as cutting down on administration in the business it will be a huge help to employees who have to apply for in work benefits, fill in self assessment tax forms or have to draw up and stick to a budget. If you run flexible benefits, a vehicle fleet, issue total reward statements or have a bonus scheme, aligning all of your dates will provide long term benefits in terms of simplification of process and administration as well as greater engagement and understanding.

Hopefully this will also lead to greater automation and less manual processing allowing people and payroll teams to focus on tasks and activities which provide value rather than simply processing endless changes as they come along. With more meaningful work comes greater engagement so it’s a win win for business.

 

The promise of a single skills body for the UK – using the input of business, unions and training providers – alongside a review of the apprenticeship levy and guaranteed training and support for all 18-24 years olds.

 

Quite simply – Hurrah! Rather than the fanciful and ridiculous notion that what young people need is national service we will have a government who will be making a real commitment to the future of young people.

The great news for employers will be the simplification of employing and training young people – for years we have been bemoaning not only the lack of training in relevant skills such as technology, engineering, construction, and health / social care but the hoop jumping and bureaucracy that came with apprentice and training schemes.

Get ahead of the changes by looking at the succession plans in your organisation, your operating model and the stats behind your recruitment. Develop comprehensive plans that stretch years into the future outlining the roles you have now and the roles you might need in the future and match your training plans to these. Change your recruitment model to look at skills for the future rather than skills for today – encourage change from within alongside this so that there isn’t conflict as new hires join.

Its also a good opportunity to look at your role profiles and team structures – its likely that there will be an increasing number of training opportunities available – especially in ‘future skills’. Retain your talent by mapping out career plans and training portfolios to support them, when managing performance keep a strong eye on the future for the role and support the shift towards new skills and opportunities. Make full use of any and all training schemes, grants and subsidies which are available – not only will you strengthen your business, but you will be providing societal improvement as people become more skilled and have more employment opportunities open to them.

 

The creation of 3000 new nursery places, national 5G coverage, integrated transport networks.

 

Work is a thing you do, not a place you go. Its time, once and for all, to finish the debate on home vs remote vs hybrid and develop workplace plans which allow for the best work to be done in the best place.

Flexibility is the key to retaining talent and reducing turnover generally. Whilst not everyone can work from home, everyone can have some flexibility in their employment, be that start / finish times, shift patterns, working part time or term time only. Remember, ‘Fair’ doesn’t mean ‘same’. Find what works for the different parts of your workforce and work with them to overcome obstacles and issues rather than turning down requests as the solution isn’t simple or obvious. The right to request flexibility is likely to become more engrained so start with a ‘yes, how can we achieve that’ view rather than a ‘I don’t think that fits with our needs’ standpoint.

The new government will also be introducing legislation to outlaw zero hours contracts so start thinking now how you can mobilise a flexible hours workforce and forward plan your staffing needs to achieve this. Rather than a zero hours contract introduce annualised hours style arrangements for those that need a high degree of flexibility. Look at your data and if you have people working regular hours on a zero hours contract change them now to a normal employment contract with a clause allowing flexibility – its always better to act before you are compelled to do so by law, and by doing so you may just create a newly loyal, engaged and committed new member of your team.

 

Introduction of ‘Day One’ rights for parental leave, sick pay and unfair dismissal.

 

Its 2024 – having lived through a pandemic we should know by now the power of wellbeing and support. Until now sickness policies have largely punished short term sickness which is madness. The ‘no pay’ sledgehammer to crack the ‘someone might abuse the system’ nut is a notion from the playbook of the Victorian workhouse. Take a look at your sickness statistics and your sickness policy and ask yourself how that drives wellbeing in your workforce. Surely its better that someone stays away from work if they feel unable to fulfil their role that day and uses the time to get better – be that physically or mentally. Given that mental health absence is rising and one of the main drivers for mental health problems are financial worries, penalising someone a days pay just makes the problem worse.

Instead support the wellbeing of your people and show them that they are trusted and valued – if you haven’t already consider mental health first aiders and if you truly want to alleviate stress and sickness look at other interventions – be that wellbeing programmes, complimentary therapies as a benefit, gym or fitness memberships or financial wellbeing champions (shameless plug – I have recently qualified as a financial wellbeing champion and have seen first hand the usefulness of these in an organisation -contact me if you’d like to know more !)

It’s the same for parental leave – having ‘waiting times’ to access leave and pay is a relic of the past. With the modern workforce people will change jobs frequently and will not be minded to join you if they know your policies don’t fit their life plans. If you are worried about the cost, look at your past data – how many people have you had on parental leave (of any kind) that were unpaid? It won’t be many. Then look and see how many of those people left shortly after, didn’t return from leave or don’t achieve high performance scores. Still not convinced? Work out how much it would cost to have parental leave and pay from day one and compare that to your cost and time to hire statistics. Again, act before compulsion, it’s a much better look.

 

Lastly the new government have promised to reform work in the public sector, through effective, robust pay bodies (for Doctors, civil service, MPs etc) and workforce plans for health and social care.

 

Though not an obvious and direct win for employers, having effective public services where employees feel valued and are paid fairly can only be a good thing. Having health and social care services which are well staffed, well trained, engaged and motivated is a clearer win for employers with access to these services improving, people will become well sooner and return to work. We might also see less severe increases in cost for benefit provision such as private health, income protection and life assurance as people are able to access services and be healthy (and alive!) for longer. With improvements in social care, we will be able to retain our employees who are trying to juggle work and care for partners or relatives as they are able to access quality provision which supports their needs, allowing them to still work and contribute their skills to their employers.

You might think that all parties make promises before they are elected – the real proof is what they actually deliver on when in power. For me that fact that the world of work featured so prominently in the manifesto is enough of an encouraging sign that things can only get better…

 

Written by Jane Vivier – a freelance reward consultant, working on a variety of projects in pay, wellbeing and benefits across multiple sectors.

Connect with Jane Vivier on LinkedIn

 

Disclaimer: Written by Jane Vivier. All thoughts and views are her own and are not representative of JGA Recruitment Group.

 

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