It’s pay negotiation season

The agricultural economic climate is very different from a year ago, and for most farm employers this year is the first real test for the open market pay negotiations between farmers and their employees since the abolition of the Agricultural Wages Board in 2013.

Historically, wage reviews were undertaken under the direction of the AWB on 1st October each year, with a headline percentage increase used to guide the rates for both standard and individually negotiated grades of pay.

For workers who began employment on or after 1st October 2013, pay rates are dictated by the national minimum wage (NMW) which makes no separate order for overtime payments or qualifications. Workers in this category can expect flat-rate wages for all contracted and overtime hours; annual leave and sickness payments are below previous statutory AWB rates.

With effect from 1st October 2014, the Government has approved the increases in NMW hourly rates as shown in table 1 (below).

In the past, the NMW provided a base level for agricultural wages graduated according to skill levels. Using the previous criteria and the new NMW, the pay for agricultural workers employed before 1st October 2013 would have been expected to increase in line with table 2 (below).

With the prospect of significantly reduced returns due to lower product prices and a financial hangover from last year’s poor harvest, employers may be tempted to forego wage increases (particularly to overtime rates) until there is more parity with NMW rates.

Workers have recourse to claims for constructive dismissal if there are disparities in the treatment of members of the same workforce with relation to pay rates and annual reviews, or changes to other terms and conditions. Employers must be seen to be fairly treating all workers and action over wage rate changes should be consistent within the workforce.

Richard Taylor is based at Strutt & Parker’s Northallerton office and can be contacted at richard.taylor@struttandparker.com.

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