Move to monthly pay harming low earners, warns think tank

Experts call for better conditions and greater control over shifts for low-paid workers after the pandemic

The move to monthly pay has left millions of the UK’s lowest-paid workers waiting longer for their money, disadvantaging many of the most vulnerable workers, a think tank has warned.

In a new report, A new settlement for the low paid, the Resolution Foundation said the large-scale move to monthly payments meant the lowest-paid workers were in effect lending money to their employers – being owed on average £161 more on any given day than workers paid weekly – which is forcing some to turn to high-interest loans because of their own cash flow issues.

On top of this, it added that lower-paid workers had also been hardest hit by the coronavirus pandemic, being either the most likely to have lost their jobs because of the forced closure of businesses, or key workers putting their health at risk by working on the frontline.

Hannah Slaughter, economist at the Resolution Foundation, said: “Britain’s post-pandemic economy will look different from the one before coronavirus hit. For low earners, that should be because the government has put in place a new settlement, based on more respect, higher pay and better conditions at work.

“The appreciation now being expressed for these workers is in stark contrast to the fact that for too long we have offered them a world of work based on insecurity and exploitation, not dignity and respect.” 

The think tank called for a new “post-pandemic settlement” to be introduced by the government to help improve the pay and working conditions of low-paid workers.

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Similar to the policies outlined in the government’s Good Work Plan, it calls for workers to be  given more control over the hours they work and a right to a contract that reflects the actual hours they work. It also calls for a new right to compensation where shifts are cancelled without reasonable notice and for workers to have a right to choose how regularly they are paid.

To ensure these new rights are upheld, the Resolution Foundation called on the government to establish a single enforcement body to proactively protect workers.

In July last year, the government said it would introduce legislation to create a right for all workers to switch to a more predictable work pattern, implementing one of the recommendations set out by the Low Pay Commission to tackle fears over one-sided flexibility in contracts.

Under the proposed rules, aimed primarily at shift workers and those on zero-hours contracts, workers regularly undertaking a certain number or pattern of hours could have this written into their contract.

At the time, the government also launched a consultation into forcing employers to compensate workers for cancelling shifts at short notice; the creation of an entitlement to a reasonable period of notice when shifts are allocated; and protection for workers who may be penalised by their employers for not accepting shifts at short notice. Results of this consultation are still pending.

Ben Willmott, head of public policy at the CIPD, said the issues highlighted in the report and by the government consultation needed to be addressed. "We're waiting for the government to take thinking forward around the creation of a single enforcement body,” he said, adding that it was crucial this body had the resources to act as an “effective mechanism for cracking down on abuses of employment rights, including around pay and job security where they occur”.

Ed Griffin, director of HR consultancy and research for the Institute for Employment Studies, said there were other consequences of the treatment of low-paid workers that HR needed to consider beyond their pay and contracts, which he argued were more fundamental. 

"We came across stories of young people on zero-hours contracts, having to sit in the work cafe, not knowing if they were going to start a shift, but they had to be there just in case," Griffin said. "It was almost like people were being treated simply as resources that you switch on and off when you need them, and I think this is an inclusion issue."

There was a likelihood that low-paid workers also feel they have a less secure presence in their organisation, and potentially then less of a voice in how they are being treated or changes are being made, which could also result in low-paid workers "not being seen as people who have brilliant ideas that will make a real difference to the organisation", Griffin warned. 

In its report, the Resolution Foundation found 1.2 million workers experienced last-minute changes to their work shifts, three-quarters of whom said these changes resulted in a last-minute loss of pay.

Additionally, low-paid workers were three times as likely to have lost their job or been furloughed as their higher-paid cohorts, and more than twice as likely to do jobs exposing them to health risks.