From NDAs to pension worries: this week’s HR news round-up

This week’s HR news round-up covers everything from a new report on misuse of NDAs by employers to worries about pensions.

Hand close to camera in stop hand signal to illustrate domestic abuse


Report highlights impact of misuse of NDAs

A report into the potential misuse of non-disclosure agreements has found there is sufficient evidence to take forward work to determine how regulation can best address the unethical use of them by the legal profession.

A report from the Legal Services Board says that review may include looking at whether aspects of the existing regulatory framework could be reinforced or whether there are any gaps which might need to be addressed with further regulatory intervention.

It says its call for evidence highlighted examples of legal professionals’ conduct that give ’cause for concern’.  For example, there were accounts where individuals reported feeling pressured into signing agreements or considered themselves silenced by agreements that had clauses “that were unlikely to be enforceable, where an imbalance of power led to a detrimental outcome for an individual and where individuals in vulnerable circumstances felt this was exploited to the benefit of the other party”. Concerns have been raised about NDAs being used to silence victims of sexual harassment at work or other discriminatory treatment.

They will set out and categorise such unethical behaviour and work in partnership with legal services regulators to identify the codes, rules, guidance and other regulations that seek to address different types of professional ethical misconduct and ask regulators to carry out an assessment as to whether these regulations are capable of addressing the breadth of behaviours identified and, if so, how effective they have been at doing so. They will also undertake a gap analysis of the existing regulatory framework and consider regulatory levers that may be used to increase public understanding of existing laws and/or address conduct in the provision of legal services that may lead to the misuse of NDAs.

Report highlights continuation of motherhood penalty

Women continue to suffer a ‘motherhood penalty’ which is a key factor in the UK’s falling OECD ranking for gender equality, according to the annual PwC Women in Work Index.

The Index shows the UK has slipped from 13th to 17th in the OECD Index ranking – the largest annual fall in rankings experienced by any OECD country this year. The UK’s gender pay gap increased from 14.3% in 2021 to 14.5% in 2022 and is higher than the OECD average of 13.5%, and higher than more than half the other 32 countries assessed on the Index.

The report says that, even after accounting for a range of pay-determining factors, the pay disparity between women and men in the UK still persists with women earning almost a tenth less than men on average.

The gap worsens with age, with women between the ages of 46 and 65 experiencing more than twice the gender pay penalty than that of women between 16 and 30 years. While a woman entering the workforce faces a pay penalty of around 5.2% on average, this widens to nearly 13% as her career unfolds. The report highlights the ‘motherhood penalty’, with women taking on an unequal share of childcare responsibilities, as a key driver. It says this is compounded by men often having more time available to perform so-called ‘greedy jobs’, which demand unpredictable and longer hours and tend to be more highly paid. In addition, it says women between 46 and 65 are also likely to be impacted by health conditions and the the menopause, which may require them to take more time off work, potentially affecting their career progression and compensation.

The report calculates that, if women no longer faced a gender pay penalty, the total increase in women’s earnings in the UK could be up to £55bn every year. Moreover, it could also encourage more women to join or rejoin the workforce – a 5% increase in the total number of women in employment could boost UK GDP by up to £125bn every year, it states.

Meanwhile, women’s groups and unions have written to the Chancellor, urging him to ignore calls for tax cuts in the upcoming spring budget and arguing that further cuts to public services will hamper progress on gender equality. They include the Fawcett Society, the Trades Union Congress and Women’s Aid. The letter states: “If we do not invest in our public services, we risk not just stifling progress towards women’s equality but sending it into reverse.”

Workplaces ‘should do more to support health’

Improved access to occupational health and vocational rehabilitation via employers would enable more people with long-term conditions to remain in work and would improve ‘return to work’ rates for those recovering from major conditions, such as cancer, according to a new report.

The report from the Policy Exchange think tank also argues that enabling more referrals by GPs to occupational health professionals could reduce the number of ‘fit notes’ being signed-off as ‘not fit for work’.

Other recommendations include the extension of tax relief and employee benefit for a wider range of effective medical assessments and treatments, through the creation of an ‘Annual Allowance’, set at £2,500 for every employee. The report also calls for a reduction in business rates for groups of businesses who create ‘group services’ to improve access to occupational health for SMEs, or local business groups who use empty high street premises to deliver physio sessions or vaccination clinics; further reform of the ‘fit note’ so GPs can refer individuals for ‘Additional Assessment’ by an occupational health professional; making the ‘NHS Health Check’ routinely available via workplaces and extending eligibility to those over 25 with a focus on areas of the country where economic inactivity rates are highest; more training for doctors and nurses in occupational health; and boosting the role of the leisure sector in offering pain management and physiotherapy sessions to support people with musculoskeletal (MSK) problems, such as back or neck pain.

Meanwhile, a report from the think tank the Resolution Foundation earlier in the week looked at how mental ill-health shapes the education and economic prospects of young people, pointing out that two in five young women have a mental health problem [the figure is one in four for young men]. It recommended more mental health in schools and in particular in further education colleges, plus more holistic support around jobseeking and exam resits. It said employers also need to do more, in particular in the hospitality and retail sectors, given the numbers of young people who work in them, often in low-paid, insecure jobs.

In addition, Sir Robert Buckland’s report on autism was published and calls for ambiguous interview questions and application forms are keeping autistic people out of work.

Worries over gender pay gap reporting

A large number of employers have not yet carried out gender pay gap reporting, according to a new analysis.

The Chartered Institute for Personnel and Development’s [CIPD] Pay, performance and transparency 2024 report says that almost a fifth (17%) of 832 senior executives surveyed at large organisations (250+ employees) said they haven’t carried out gender pay gap reporting and 18% said they didn’t even know whether their organisation had conducted reporting. The organisations most likely to admit to not carrying out gender pay reporting in the 12 months to October 2023 are those employing between 250 and 499 people (29%), despite it being a legal requirement for all businesses with 250 or more employees in England, Scotland, and Wales to report their figures within a year of collecting the data.

As a result, the CIPD is calling on employers to help tackle discrimination and inequalities at work by reporting on their gender pay gap data and analysing that data to create a narrative and action plan to address any inequalities identified.

In addition, despite continued Government opposition to extending mandatory pay gap reporting, the report also found that, in the year to October 2023, 40% of large employers had already carried out an analysis of their ethnicity pay data, 35% had not, while a quarter didn’t know.  Over a quarter (27%) of large employers had conducted a disability pay report, 46% had not and 28% didn’t know.

Read more here.

Report catalogues rise of women on boards

The proportion of boardroom jobs in the FTSE 350 held by women increased by 2% last year to 42.1% – up from the 24.5% when the report was launched in 2017, according to  the independent, Government-backed FTSE Women Leaders Review.

It said women now hold 35% of all leadership roles in FTSE 350 companies and just over half of FTSE 350 companies (56%) have achieved or are well on their way to achieving gender balance, although others have work to do. Twenty-nine FTSE 350 Boards still fall below the 33% 2020 target for women on boards. The current target is 40% by the end of 2025.

However, the report notes that progress in the Chair and CEO role across the FTSE 350 has remained “largely flat” with marginal gains offset by losses elsewhere. But it says there are “encouraging indicators of progress to come” with the number of women on FTSE 100 Executive Committees reaching 30% and around a quarter of all FTSE 100 Finance Director and Chief Information Officer roles now being held by women. Such roles are increasingly recognised as important career routes to CEO positions.

Opposition grows to employment tribunal fees

Forty eight organisations ranging from the TUC to Maternity Action have called on government to reconsider its plans to bring back employment tribunal fees.

The Government has opened a consultation on introducing a ‘modest’ one-off fee of £55 in the employment tribunal and the employment tribunal system.

In 2017 the Supreme Court quashed a previous tribunal fees regime because it “effectively prevents access to justice, and is therefore unlawful”. The regime under which people had to pay as much as £250 for a claim and £950 for a tribunal hearing was introduced in 2013.

The joint statement by the 48 organisations says the decision will put yet another hurdle in front of those seeking justice. Other hurdles include lack of awareness of key employment rights and the process for bringing a claim, strict time limits on filing claims, an under-resourced employment tribunal system leading to significant delays in cases being heard and an under-funded labour market enforcement system.

Read more here.

Report highlights concerns over IR35

A lack of confidence in how to apply off payroll rules, together with HMRC’s approach when taxpayers make mistakes, is deterring companies from using contractors unnecessarily, according to a Public Accounts Committee report.

The report covers HMRC generally, and finds that HMRC’s customer service levels are at an all-time low “because of conscious choices made by HMRC and HM Treasury”.

It expresses concerns that HMRC’s approach to serious abuse is not deterring criminal activity sufficiently “while at the same time its approach to tackling IR35 is deterring legitimate economic activity”.

HMRC says that it is increasingly focusing its criminal prosecutions on the most serious cases, but the Committee says it is concerned that if fewer criminals are prosecuted this sends the wrong message. In the case of civil disputes over the application of IR35 rules, HMRC says that it has been using litigation through the courts to test the employment status rules and that it may need to update its guidance and tools on the basis of the courts’ judgements.

HMRC said that the reforms to IR35 shift the burden of determining employment status from workers to employers. The report says that, since the IR35 reforms, employers have moved between 150,000 and 200,000 workers from contractor status onto their own payroll.

It calls for data on the number of active litigation cases for IR35 and the amount of tax at risk and an assessment of the impact of HMRC’s approach to administering IR35 reforms on the use of contractors in different sectors.

Cost of living affecting retirement decisions

Almost half (49%) of working adults have changed their retirement plans because of the cost of living crisis, including 24% of people who are set to delay their retirement and 23% who have reduced their pension contributions, according to new research.

The research from the Pensions Management Institute finds one in 20 people have stopped their pension contributions entirely.

PMI Council Member Tim Box says: “Our research shows the concerns that many people have about how well they can prepare for retirement. With only 30% of our respondents believing that the State Pension will be more than half of their retirement income, the role of private pension provision to fill the gap is critically important. If the State Pension Age is to be raised to 71, as has recently been speculated about, then private pension savings are likely to be the only source of income between stopping work and the commencement of the State Pension for a huge swathe of those born after 1970.”

Two-thirds of those surveyed felt that they did not have the knowledge required to choose their pension provider despite nearly 60% showing some interest in being able to choose their own provider. The PMI says this is relevant to the government’s recent lifetime provider (“pot for life”) proposals and shows the importance of improving financial and pension education throughout society before implementing such a radical change.

Another report, by the charity Independent Age, found that 41 per cent of people aged 50 plus are concerned about living in hardship when they stop working. The vast majority thought the state pension wouldn’t cover their living costs [and they’re right about that] and 67% said they were not confident that their retirement income would even cover their rent.

Meanwhile, an analysis of Office for National Statistics figures by Aviva found a spike in under-65s retiring during the Covid pandemic is now reversing, with large numbers returning to the workplace.

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