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UK Edition
12th June 2024
 
THE HOT STORY
Unemployment rate climbs to 4.4%
Office for National Statistics (ONS) data shows that the UK unemployment rate climbed to 4.4% in the three months to April, up from 4.3% the month before. This marks the steepest increase since September 2021. Across all sectors, the number of people unemployed rose by 138,000, taking the total to just over 1.5m. Regular earnings - which exclude bonuses - rose at an annual pace of 6%, the same pace as the previous month. With inflation stripped out, however, pay increased by 2.9% - the highest rate since August 2021. The ONS report shows that the number of job vacancies fell, dipping by 12,000 to 904,000 in the three months to May. It also reveals that 22.3% of working-age adults in the UK are deemed to not be actively looking for work. The ONS said: “This month’s figures continue to show signs that the labour market may be cooling, with the number of vacancies still falling and unemployment rising, though earnings growth remains relatively strong.” With the ONS figures set to be studied by the Bank of England as officials decide whether to cut interest rates, KPMG's chief economist, Yael Selfin, said the "mixed" data was "unlikely to shift the dial” at the Bank, predicting that it would keep rates unchanged this month. Jake Finney, an economist at PwC, said the latest ONS data “presents a headache” for the Bank, adding: “A broad set of indicators suggests that the labour market is cooling but pay growth has not fallen to the extent they would like to see.”
DIVERSITY, EQUITY & INCLUSION
Law firms advised to stop hosting work socials at pubs
City law firms have been advised to reconsider hosting work socials at pubs due to concerns of excluding Muslim staff, according to a report by Rare, a UK graduate recruitment company. The report highlights the unfairness of the legal profession's heavy drinking culture to those who do not consume alcohol. The report includes interviews with aspiring lawyers of Pakistani and Bangladeshi origin, who express feeling pressured to drink alcohol at networking events. Muslim women wearing hijabs were found to be at greater risk of disapproval from their families and communities if seen at bars or pubs. The report calls on law firms to review their approach to work socials and encourages open conversations about religious practices at work.
Businesswomen back Reeves as first female Chancellor
More than a dozen leading UK businesswomen have signed a joint letter welcoming the idea of Labour's Rachel Reeves becoming the first female Chancellor, saying it would help bring a new perspective to economic policymaking. The letter, signed by 13 senior businesswomen, highlights the need for more representation of women in economic decision-making and praises Ms Reeves for her openness to business and commitment to a genuine plan for economic growth. The letter emphasises the opportunity for change in this election and the chance to make real progress in achieving gender equality in economic posts.
LEGAL
BHS directors face justice in landmark ruling
The High Court has ruled that former directors of BHS are liable for wrongful trading, misfeasance trading and misfeasance and must pay £18m to creditors. The retailer collapsed into administration in April 2016, resulting in 11,000 job losses and a £571m pensions shortfall. Joint liquidators from FRP Advisory brought claims against several former directors, with Dominic Chappell, Lennart Hennington, and Dominic Chandler named as defendants. While Mr Chappell did not participate in the trial, Mr Justice Leech ordered Mr Hennington and former BHS general counsel Mr Chandler to contribute £6.5m each to the company’s assets for wrongful trading. They must also pay £5.6m between them for the charges of misfeasance. Commenting on the decision, Lynn Dunne, dispute resolution partner at Ashurst said: “The success of the wrongful trading claim and a finding that the directors acted in breach of their duty to promote the success of the company is a coup for the liquidators."
Whitbread workers threaten legal action over job cuts
More than 1,500 workers at Whitbread-owned restaurants are threatening legal action over alleged poor consultation on job cuts and closures. The Unite union claims that a 45-day consultation period has not been conducted genuinely or meaningfully. Whitbread plans to exit over 200 restaurants, but some affected workers have yet to be informed of site closures. The company is looking to sell 126 unprofitable restaurants and close 112 more, converting them into hotel rooms. The lead organiser for the hospitality sector at Unite called the treatment of workers "morally reprehensible and potentially unlawful." Whitbread denies the allegations and says it has a comprehensive consultation process in place. Unite claims that staff from the restaurants have been offered a less generous payoff compared to head office workers.
Silent lay-offs are rarely as quiet as bosses hope
The FT’s Andrew Hill observes that PwC’s advice to outgoing staff members on how to word their goodbyes to colleagues did not help keep the news of ‘voluntary severances’ under wraps.
HEALTH & WELLBEING
Channel 4 launches investigation into staff suicide
An external law firm has been brought in to examine the case of a member of staff who committed suicide after working on Channel 4's true crime series "In the Footsteps of Killers." The staff member fell ill with constant dizziness, migraines, insomnia, and pain, which led to his deteriorating mental health. The symptoms arose after he became exhausted working on the show and felt threatened by someone connected to a person he was researching. Channel 4 has launched an independent investigation into the incident and is offering support to the staff member's family.
CORPORATE
Rose takes first job since NatWest exit
Former NatWest chief executive Dame Alison Rose has taken up her first job since leaving the bank in the aftermath of the debanking scandal, having been appointed as a senior advisor at private equity firm Charterhouse. Dame Alison stood down from NatWest in July 2023 after admitting that she was the source of a BBC story about Nigel Farage’s finances with NatWest-owned Coutts.
WORKFORCE
Are some degrees losing their shine?
Data from the Department for Education indicates that five years after graduating, graduates make, on average, £38,500 – £11,500 more than non-graduates. However, not all degrees are made equal, and recent research indicates that certain previously highly esteemed degrees are becoming less valuable. The Office for National Statistics estimates that a graduate with an Oxford degree in business and management, for instance, would have made £66,600 in 2016. This makes it the most lucrative degree of its time. However, five years after graduation, that same person may expect to make £63,900 in 2022.
Labour manifesto to push for £12 minimum wage for care workers
The i reports that the Labour Party's general election manifesto, being unveiled tomorrow, will pledge that 1.5m care workers across the country should be entitled to earn at least the real living wage of £12 per hour, or £13.50 in London, under new sector-based fair pay agreements to be negotiated between trade unions and employers. While the average wage for care workers is currently around £12 per hour, the paper notes "there are significant discrepancies between privately employed staff and local authority staff," with many care workers, who are predominantly women, "among the lowest paid in the country," leaving the sector with a recruitment and retention crisis that has affected care home capacity and driven higher rates of delayed discharge from hospitals.
REMUNERATION
General counsel salaries at corporations soar
New research for The Lawyer magazine shows that average salaries for legal chiefs at City businesses have risen by more than 40%. Average salaries for general counsel at corporations have risen from between £150,000 to £160,000 before the pandemic to between £180,000 and £230,000 for those now willing to attend the office five days a week. This comes as legal departments compete with salary inflation at City law firms. It's predicted that salaries for newly qualified solicitors could soon hit £200,000.
TAX
Broadcaster Adrian Chiles faces £1.7m tax bill after losing appeal with HMRC
TV presenter Adrian Chiles is facing a £1.7m tax bill after losing an appeal with HM Revenue & Customs over his employment status at ITV and the BBC. Chiles, who has been locked in a 10-year legal battle with the tax authority, won the case in February 2022 but HMRC appealed the decision. The Upper-Tier Tribunal ruled that "errors of law" had informed the judgement, sending the case back to the First-Tier Tribunal. HMRC argues that Chiles should have been classified as an employee and paid tax accordingly. If he loses, Chiles will owe £1.2m in income taxes and almost £500,000 in National Insurance Contributions. The case is part of HMRC's crackdown on taxpayers believed to be "disguised employees" who funnel their income through personal service companies. Other presenters, such as Kaye Adams and Gary Lineker, have also been involved in similar disputes with HMRC. Susan Ball of accounting firm RSM said the employment tax rules at the centre of the case are complex and often catch people out. Dave Chaplin of tax advisory firm IR35 Shield criticised the power imbalance between taxpayers and HMRC in these cases and called for reform of the system. HMRC said it seeks to resolve disputes out of court and only litigates when necessary.
HMRC's tax rule changes puts professional service firms into limbo
HMRC is looking into professional services firms for potential backdates on tax, after rule changes by the UK tax agency to limited liability partnerships (LLP) businesses came into effect. The new guidelines target salaried members on what tax contribution they pay – a change that affected the partner compensation at most firms. Jitendra Patel, tax principal at BDO, said HMRC is “effectively saying if you contribute capital to get out of the salaried member rules then that’s tax avoidance. It’s almost like a bit of a trap, in which you’re caught even if you risk your own money to try and comply with the rules.” Mike Hodges, partner at Saffery, said the amount of potential additional liability would be “significant.” Guy Sterling, partner at Moore Kingston Smith, observed: “It is important that individuals can continue to capitalise their business as required so that these businesses do not go to the wall.”  
INTERNATIONAL
Russia's unemployment rate hits record low
Russia's unemployment rate hit a record-low of 2.6% in April, while real wages surged in March, according to data from the federal statistics service. The tight labour market in Russia is attributed to heavy spending on defence and security due to the ongoing conflict in Ukraine. However, economists warn that the country's economic growth relies heavily on state-funded arms production, hindering improvements in living standards. The labour shortage is a major concern, exacerbated by military mobilisation and emigration. Real wages, adjusted for inflation, jumped 12.9% YoY in March, with the highest growth observed in areas with a concentration of defence industry work. Despite rising wages, real disposable incomes have been declining over the past decade. Inflation remains high, with analysts predicting a possible interest rate hike by the Bank of Russia. Retail sales growth eased in April, providing some relief as the central bank aims to curb inflation.
Korea's labour reform pursues well-being of all workers, minister says
Korean Minister of Employment and Labor Lee Jung-sik emphasized the need to protect workers in vulnerable positions from unfairness and inequality at the 112th International Labour Conference (ILC) in Geneva. Lee highlighted the Korean government's efforts to ensure the well-being of all working individuals through comprehensive labour reforms. He also underscored the government's investments to ensure equal access to employment opportunities for all, expand social safety nets, and foster meaningful dialogue with workers and employers. Korea was elected as a regular member of the ILO's governing body during the conference.
 


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