Good Work Plan 2.0

In July 2017, Matthew Taylor released his “Good work: the Taylor review of modern working practices” report which examined how new ways of working, such as the ‘gig economy’ and mobile applications, were impacting worker rights. Following this, the government made a number of changes to employment law, many of which took effect in April 2020.

While Britain now has one of the highest wage floors in the world, it remains well behind other countries on wider minimum standards; for example, minimum wage workers receive only a 10th of their normal earnings if they fall sick for a week. This is one of the recent findings of the independent think tank The Resolution Foundation, which has said that raising minimum standards alongside the minimum wage should be the focus of a “good work” strategy for the decade ahead.

Low Pay Britain 2023 — the 35th report of “The Economy 2030 Inquiry”, funded by the Nuffield Foundation — examines the progress made on reducing low pay across Britain, and the lack of it on other issues that matter to low earners, from inadequate sick pay and unpredictable hours to the lack of autonomy and flexibility at work.

The 79-page report highlights that low earners’ job satisfaction has fallen (in stark contrast to higher earners), even as the minimum wage has risen. It recognises the huge success of the National Living Wage (NLW) in halving levels of low pay: the rise from £6.70 an hour in 2015 to £9.50 an hour in 2022 means that 20.7% of workers were low paid in 2015, compared to 9% in 2022. Sustained increases mean that only France, New Zealand and Korea have higher minimum wages than the UK, and that Britain is on course to eliminate hourly low pay by the middle of the decade.

However, statutory sick pay (SSP) is just £109.40 per week, lagging behind the minimum protection levels in almost all other OECD countries. Combined with the three-day waiting period, this means a full-time minimum wage worker would receive just £43.76 for a week of sickness, to compensate for lost earnings of £390.

In order to raise minimum standards as well as the minimum wage, the Foundation has made three key proposals: Firstly, a higher wage floor to continue the current pace of NLW rises in the next Parliament to see it reach 73% of typical earnings, or £13.12 on current forecasts, by the end of this decade. Secondly, to introduce an earnings replacement approach to sick pay, where statutory sick pay (SSP) is paid at 65% (matching typical OECD rates) of a worker’s usual earnings. Finally, to offer more certainty and control by introducing new rights to a contract reflecting the hours a worker usually works, at least two weeks’ advance notice of shifts and compensation for late changes.

The government hasn’t commented to say whether it will accept the proposals or take any steps to implement them, but it’s useful for employers to be aware of, and prepared for, further changes to come into effect over the next few years.