Report of Cllr Jabbar, Cabinet Member for Finance and HR and
the Executive Director, Corporate and Commercial Services
Introduction of the National Living Wage for Oldham
Council Portfolio Employees – 1st April 2015
Portfolio Holder:
Cllr Jabbar, Cabinet Member for Finance and HR
Officer Contact: Dianne Frost, Director of People
Report Author: Cathy Butterworth, Assistant Director of People
Ext. 5290
25 March 2015
Reason for Decision
There is already a commitment for Oldham Council to move to pay the National Living Wage on 1st
April 2015 and, through this, to secure accreditation from the National Living Wage Foundation.
This report outlines the impacts of the National Living Wage adoption, its’ alignment with our cooperative values and recommends the method of adoption which has been fully consulted.
Recommendations:
1. That from April 1st 2015 the Oldham Living Wage is increased to pay just above the 2015
National Living Wage of £7.85 per hour; this by paying SCP 11 on the NJC pay spine and
Point 2 on the JNC Youth Workers scales as minimum pay for centrally employed
directorate staff across Oldham Council (excluding apprentices and trainees).
2. That Oldham schools be encouraged to follow suit as role model employers.
3. The Council applies for and then proudly displays its’ accreditation by the National Living
Wage Foundation.
4. That the intention to monitor the impact of the National Living Wage uplift for the council’s
Traded Services as outlined in section 3 be noted.
5. That, in the wake of further review in November 2015 and publication at that time of the
2016 National Living Wage rate, the Council considers its impact and identifies the best
means by which continued alignment with the National Living Wage level can be achieved.
Introduction of the National Living Wage for Oldham Council Portfolio
Employees – 1st April 2015
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1.1
Background and Current Position
In April 2012, Oldham Council introduced an Oldham Living Wage of £7.11 per hour, which
was equivalent to SCP 9 on the NJC Green Book pay spine. This increased further in 2013
when the Oldham Living Wage was increased to SCP 10 which was £7.24 per hour,
following a local government pay award that year.
1.2
In the wake of an earlier commitment the Council decided in June 2014 to pay the National
Living Wage as the lowest hourly rate for its centrally based Directorate staff (excluding
Modern Apprentices and Trainees) from 1st April 2015.
1.3
The SCP’s selected yield one penny per hour over the current National Living Wage rate
once the 3 days’ unpaid leave have been deducted. This means Oldham will remit £7.86
per hour against the 2015 National Living Wage rate of £7.85 per hour.
1.4
It is felt to be important that, as the initiator of the Fair Employment Charter within the
Borough, the Council is a role model in terms of pay and conditions. Many Councils have
used a supplement to pay their employees a top up, but the Council wanted to use the
existing pay spine so that it can be seen as an integral and consolidated part of our
employees’ salaries.
1.5
Oldham Council will be seeking accreditation from the Living Wage Foundation to be a
Living Wage employer. Although initial accreditation will cover workers within the
Directorates, full accreditation would be based on all procurement and commissioning
contracts where staff on our premises for two or more hours a day for eight or more
consecutive weeks of the year. Currently, suppliers and contractors to the Council are
asked to aspire to the 2013 Oldham Living Wage, and contracts are founded on current
best practice which take into account EU Procurement Regulations and EU case law which
prohibits restrictions on freedom on cross boarder service provision.
1.6
To date 39 schools have formally adopted the Fair Employment Charter. All schools will be
encouraged to also implement the National Living Wage, as part of their commitment to
work towards being part of the co-operative borough. As Schools are not subject to an
increment freeze, the picture of which schools are paying under the National Living Wage
will be different from April 1st, and reports have been commissioned to determine which
schools this would apply to, and working with the Schools Finance team, more detailed
costings can be provided to these schools in an attempt to persuade them to adopt the
National Living Wage also as a role model Fair Employer.
1.7
The Trades Unions have previously been consulted on the implementation of the National
Living Wage and have welcomed its increase to the National rate. It was also discussed the
application for accreditation to be a Living Wage Employer and the potential impact that it
may have in the future on the Council’s grading structure. It is planned to discuss this in
more detail in November once the 2016 rate for the National Living Wage has been
announced and the degree to which the Council will have to revise its position in order to
accommodate the increase for 2015/16 will then be known.
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2.1
Consultation
The recognised trade unions are aware of, and welcome, the Council’s commitment to pay
in accord with the National Living Wage. The requirement, in the future, to preserve the
integrity of Oldham’s pay line and Equal Pay rigour has been made clear in the course of
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consultation and there is a commitment to an annual review, impact assessment and
consultation on this subject.
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Financial Implications
3.1
The financial modelling is cited below:
Negotiating Body
SCP Increase
NJC Green Book
JNC Youth Pink Book
To SCP 11
To Point 2
541
1
£203,528
£50
Sum of Pension
£37,042
£9
Sum of NI
£21,167
£5
Number of Staff
Sum of Difference
Total National Living Wage Implementation Costs
£261,802
3.2
The main services affected by the living wage costs are Catering, Cleaning and School
Crossing Patrols. Whilst at this stage it is anticipated that services can increase
income/manage costs to absorb the additional costs in year, the position will be closely
monitored to ensure that any budgetary pressures are identified as early as possible
during 2015/16. This will be reported, by the Director of Finance (Interim) through the
financial monitoring process together with any action required. It is expected that should
there be any variances, these would be comparatively low value and therefore could be
comfortably managed.
(Anne Ryans, Interim Director of Finance)
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Legal implications
4.1
There are no concerns from Legal Services as to the implementation of the National
Living Wage. Whilst this is a non-statutory minimum, it is understood that this is in keeping
with the Council’s Fair Employment Charter and with the Council’s commitment to
becoming a flagship employer in the Borough. An option which sees employees from both
sets of conditions on exactly the same rate of pay would be preferred.
(Emma Deighan, (former) Employment Solicitor)
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Co-operative Agenda
5.1
The concepts of “Fair Employment” and Social Value are built on the business case that
to offer decent terms and conditions of employment, such as a Living Wage, is equally
good for business, employees and local society. The academically proven premise is that
good terms of employment attract high calibre staff, enhance productivity and customer
experience, which, in turn, all support profitability or organisational success as well as
quality of life for employees. This creates increased wealth and demand for products and
services within the local community, and thus the cycle of economic wellbeing becomes
self-sustaining. If everyone acts to support fair employment, everyone benefits from the
reciprocal and self-sustaining impact of improved economic wellbeing.
5.2
Implementing the National Living Wage is a cornerstone of how the Council intends to
model being a Fair Employer under its’ Fair Employment Charter and how it leads the way
around Social Value. Although, there is no current requirement that other employers must
adopt the National Living Wage as part of accreditation to the Charter or as part of Council
supplier assessment, employers must provide their pay rates and demonstrate, amongst
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other things, how they are tackling the impacts of low pay to improve the terms and
conditions of the lowest paid. It is thus important for the Council to model minimum pay by
example.
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Human Resources Comments
6.1
These are embedded in this report.
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Equality and Equality Impact Assessments
7.1
With respect to equality, there are significantly more women employed within Grade 1 and
the impact for this group is positive. Of those who will move up to SCP 11 if the
recommendations of this report are accepted, 87.99% are women and 12.01% are men.
Effectively reducing Grade 1 to a single SCP will mean that the average pay, based on
Full Time Equivalents, will substantively be £15,207 for both men and women, giving a
figure of 100% as the ratio of female pay as a percentage of male pay at this level.
Management information for Q 3 this year, shows that, across the organisation women
earn only 92.74% of their male counterparts and, at Grade 1, this figure is 98.23%. The
recommendations in this report will help to narrow this gap with effect from Q1 2015/16
and so have an immediate positive impact for women across the council.
7.2
A further benefit is that pay ratios between the lowest and highest paid will be bettered.
The current ratio highest to the lowest paid employees is 1:11.20. From April 1st 2015,
this ratio will improve to 1:10.52.
7.3
The impact is also positive for all groups and protected characteristics since the salary
increase will be applied to all, exclusive of trainees and apprentices, who fall below this
level. By way of context, the Trades Union Congress (TUC) reported in November 2014
that the Gender Pay Gap between male and female full time employees was 15.7%,
which, nationally, represents an average monetary gap of £5,200. Against this backdrop
the Council, from April 2015 in particular, will be in a considerably better position.
Signed:
Dated: 30 March 2015
Cllr A Jabbar,
Cabinet Member for Finance and HR
Dated: 26 March 2015
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