Workplace Report April 2020


Pay: the Covid agenda

As the UK reels from the pandemic, health and safety have become our chief concerns. But, after a difficult “lost decade”, and with a new recession expected, protecting jobs and earnings has to be a high priority too.

Keeping ahead of inflation is often the main objective but since mid-March and the lockdown, new priorities have risen up the agenda:

• rewards: public support for essential workers has put the spotlight on what they are paid;

• furlough: protecting those who simply can’t work because their work has dried up;

• paid leave: time off for carers and those who are sick or self-isolating; and

• homeworkers: protecting those who now have to work at home.

Earnings data from the Office for National Statistics (ONS) and the results of over 440 settlements from LRD Payline suggest that, up until the lockdown on 23 March, many workers were seeing modest but positive gains. It was a contrast with years following the 2008-09 recession, when real earnings lost ground against inflation with the freezes and pay curbs in the public sector.

Between August 2019 and January 2020:

• RPI inflation averaged 2.37% (from 2.1% in October to 2.7% in January);

• CPI inflation averaged 1.58% (from 1.3% in December to 1.8% in January); and

• average weekly earnings (excluding bonus pay) averaged 3.27% (dropping from 3.6% to 2.8% by November-January).

Compared with those figures, settlements recorded by LRD Payline since the beginning of August 2019 were similar:

• the private sector median was 2.5% (most grades or workers) or 2.6% (on lowest basic rates); and

• the public sector median was 2.5% (most grades or workers) or 2.68% (on lowest basic rates).

But, since mid-March the outlook for jobs and pay has changed almost beyond recognition, with almost a million new claims for Universal Credit in a fortnight and an expected rise of two million unemployed (Office for Budget Responsibility), with the economy to shrink by 35%. By 6 April a quarter of businesses had temporarily closed or paused trading (ONS).

Four out of 10 adults reported having work-related concerns, mainly about the availability of work and decreased hours (36%), being asked to work from home (32%) and the potential or actual closure of their own business (16%).

These threats prompted unprecedented government action to protect jobs and incomes, including the “furlough” Coronavirus Job Retention Scheme (CJRS) and the parallel Self-employment Income Support Scheme (SEISS). Among the three-quarters of businesses still trading, on average 21% of staff are furloughed (ONS). A significant minority of firms (31%) have furloughed 75-100% of their workforce, a British Chambers of Commerce (BCC) survey found.

The effects on pay bargaining

Many groups had already settled their pay for 2019-20 when the lockdown came into force, including many groups of essential workers (see below). But for others the Covid crisis has already brought delays and disappointments.

The RMT has blasted cleaning and facilities contractor Mitie (Merseyrail) for withdrawing a £9 per hour pay offer, costing members £500 in back pay. A 2% pay offer – balloted on and accepted – at the Centre for Health and Disability Assessments (Maximus) won’t now be implemented, but may be revisited later in the year. Fortunately all non-consolidated bonuses will be paid in June.

At Scottish Power Energy Retail negotiations have also been put on hold. That is also the case at the Ministry of Defence’s (MOD’s) Defence Equipment and Support agency which has been playing a significant role in setting up the new Nightingale hospitals and ordering ventilators and PPE.

At Trelleborg Sealing Solutions a two-year pay deal (2.5% each year) was agreed on the understanding that the reviewed grading structure would be implemented. However, restrictions due to Covid-19 mean that progress has stalled. Nottingham Community Housing Association has imposed a 1.5% pay award, because some of the lowest salaries would have fallen below the new National Minimum Wage (up by around 6% this month). However, negotiations with Unite can continue after the end of lockdown.

Glasgow Prestwick Airport and the National Trust of Scotland have delayed pay negotiations and entered into 100%-of-pay furlough agreements. So has Edinburgh Airport, but it has also reduced employer pension contributions to the auto-enrolment level, and removed income protection for a year.

The National Trust (England, Wales and Northern Ireland) is one of many other employers to have applied furlough at 100% of pay (including for zero-hours staff) while agreeing with Prospect that staff continue to accrue contractual annual leave, and pension entitlements will be paid in full. Adoption of this approach meant re-negotiating the 2020 pay deal (to be reviewed later in the year). Pay increases apply only to the lowest grades (6.2%, to bring Grade 11 up to the statutory National Living Wage, and 2% for Grade 10 to protect the differential).

Wheatley Group housing association agreed a 2.2% pay rise while also topping furlough pay up to 100%. Staff will be paid their basic pay, shift allowance, pay protection and responsibility payments, but their furlough pay will not include any overtime, sleepover, non-contractual on-call payments, mileage or expenses.

Another employer paying 100% is Cormac Solutions Ltd, wholly owned by Cornwall Council. Unions insisted that the company prioritise staff with vulnerable conditions, or who live with people with such conditions. The company also has a lot of key workers and where staff have been reallocated to different roles, their salary has been uplifted to the rate a staff member routinely carrying out that role would receive.

At British Airways, where a second year 3.5% pay increase was recently implemented (underpinned by a minimum £650), there is another prominent furlough deal, negotiated by GMB, Unite and Balpa (see page 4 for details).

Paid leave

In the current conditions, parental leave and sick leave are also high on the agenda. Staff at Citizens Advice had their parental leave rights enhanced to four weeks’ paid leave, for the full calendar year. The Unite-negotiated pay deal also put 3% on salaries up to £34,500pa (almost half the workforce) while those on higher salaries got 1.5%.

M&G plc (Prudential) has also beefed up its maternity policy (26 weeks at full pay) while Argos (with a 30p per hour increase for staff aged 21 or over) is committed to aligning to the Sainsbury’s maternity and paternity policy. In a move with added significance since the lockdown, it agreed to include domestic violence guidance and support within its policies.

Temporary government changes to statutory sick pay (SSP) mean that it now provides payment from day one, but that still left room in company sick pay agreements to eliminate waiting days and secure full payment during self-isolation. Absence due to coronavirus symptoms at Nottingham Community Housing Association is being treated as absence due to national emergency on full salary.


Some think the move to mass home working and digitisation will be one of the biggest changes arising from this crisis. The vast majority of MOD staff are working from home; or are at home on special paid leave if unable to work from home. A small number are still working from sites, with the appropriate social distancing and risk-mitigation.

Civil service unions have signed Covid-19 protocols with the Scottish government, designed to ensure consistency of treatment (but with the possibility of agreed alternative arrangements in the Scottish Prison Service). These agreements follow on from the new government pay policy. Key points are:

• sickness absence (Covid-19 symptoms): remain at home, no fit note required for the first 14 days;

• homeworking: if fit but “impacted by the virus”, work from home, or special leave if not possible;

• underlying health conditions: homeworking “wherever possible, including temporary amendments to duties”; if not possible, special leave;

• hours and work patterns: if required to attend (key worker), consider changing or moving opening hours, discuss and agree with all staff/unions;

• temporary/agency/contractors: to be treated in the same way as permanent members of staff; and

• annual and flexi leave: approval conditional on the business being able to support the absence at the time (with provisions for taking pre-booked leave).

Essential workers

There has been an outpouring of support for essential workers, including those who are still going to work – not just in the emergency services but in busy sectors like communications, transport and distribution. Many have already had their pay rise for 2019-2020.

Health and social care

Under NHS Agenda for Change (England) the pre-agreed 1 April deal increased the lowest rates by 2% to £18,005, while the most populated non-medical Band 5 was set at £24,907-£30,615. In the supply chain, wholesaler Alliance Healthcare agreed a 2.4% increase last November but a further increase this month took the grade C rate outside London to 15p above the new National Living Wage, £8.87 an hour.

Education and childcare staff

From 1 September 2019, most schoolteachers in England had a 2.75% increase, taking the classroom teachers’ main pay range outside London to £24,373-35,971. Most support staff are covered by the Local Government NJC agreement, where the GMB, UNISON and Unite are pressing for a top-up on the employers’ 2.75% 2020-21 pay offer.

Government staff

Last August, most civil service pay deals were subject to a 2% paybill increase in line with government pay policy. That included MOD staff, where the majority received the equivalent of 2.4%. Salaries for industrial Skill Zones 1 to 4 now range from £16,712 to £25,726 while non-industrial salaries outside London range from £18,414 to £71,728.

Public safety

Police officers had a 2.5% increase to all pay points for all ranks from 1 September 2019 taking pay for a constable (appointed on or after 1 April 2013) to £20,880-£40,128. Police staff in England and Wales also received a 2.5% increase to all pay points and their national pay spine runs from £17,799 to £49,023.

Food and other necessary goods

Usdaw has negotiated a 20p per hour increase for retail staff at Morrisons, taking the basic rate to £9.20ph (£8.80 for new starters), and welcomed confirmation that the Colleague Bonus will be paid in May (to all permanent staff employed before 3 February). In the supply chain, poultry processor 2 Sisters in Scunthorpe matched this month’s 51p cash increase in the National Living Wage (to £8.72 per hour) with a Grade 1 rate of £8.79 and a variety of other grades paying up to £19.75.


At London Underground a new four-year RPI-plus pay award was agreed at the beginning of the month (the RMT was in the process of balloting on the offer pre-Covid). At Carlisle Support Services (Northern Trains) the GMB negotiated an uplift for all staff to the Living Wage Foundation living wage of £9.30 an hour, worth 13.3% for workers previously on the statutory National Living Wage.

Utilities and financial services

The HSBC clerical settlement effective from 1 March provided a 2.45% increase (except for “inconsistent” performance ratings). It equates to a minimum pay increase of £400. Additionally, for staff in the lowest pay grade there were awards of up to £200 depending on their position in the pay scale (most pay scales increased by 2%). EDF Energy has just agreed a new recognition agreement with Prospect, Unite and the GMB and a new three-stage, three-year agreement from 1 April 2020 with most staff receiving between 8% and 11% over the course of the deal.

Implementing furlough

The rules of the furlough scheme were widely drawn but leave plenty of scope for negotiation. There have been a number of revisions, extending it up to the end of June, and moving the qualifying date (when an employee had to be on the employer’s payroll) from 28 February to 19 March. But the broad outlines have been widely reported.

Employers can lay off or “furlough” workers (including temporary and agency workers) for three weeks at a time, and claim 80% of their wages up to a cap of £2,500 per month. The scheme is open to all businesses, charities, recruitment agencies and public authorities (although the government doesn’t expect many public sector organisations to use it). The portal for grant applications opened on 20 April.

If the employer has an existing lay-off scheme they may be able to use that, but if they’re using furlough, they must get the employee’s agreement (as it may involve a 20% cut in wages). The grant cap will be based on actual salaries as at 28 February 2020 (which can include past contractual commission and overtime but not discretionary commission, bonus or non-monetary benefits).

For variable pay/zero hours workers with at least one year’s service, it can be based on the higher of their actual earnings in the equivalent month of 2019 or average monthly earnings for the 2019-20 tax year. It is not necessarily a breach of the law to pay less than the National Minimum Wage on furlough (although still on the payroll, they’ll be doing no work for the employer). 

Objective criteria should be used to put workers on furlough, but prioritising older workers or those with a health condition is likely to be lawful and non-discriminatory. Other rules cover volunteering and other work; apprentices; furlough and sick leave, maternity/parental leave, or annual leave; and re-employing/furloughing previous employees.