Advice on negotiating pay and terms with farm staff

Employers need to take the initiative and negotiate clear pay, terms and conditions, says employment lawyer Phil Cookson of Roythornes.

The first anniversary of the abolition of the Agricultural Wages Board (AWB) is approaching (1 October) and many farm employers have made no changes to the terms and conditions for existing staff who were on Agricultural Wages Order rates and terms.

People are aware of the abolition last autumn but they have surprised themselves at how easy it has been to do nothing. I estimate that fewer than half of employers have done anything to address negotiating terms and conditions since last autumn.

Many may use the financial pressure under which they are struggling to justify doing nothing. At the same time, there is a real need to attract and retain good people.

The risk of this drift is an increasing lack of clarity and this has the potential to lead to real complications – employees will be expecting a pay rise as the anniversary approaches.

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AWO rates were generally slightly higher in pounds an hour terms than the National Minimum Wage, which provides a default rate where nothing has been agreed for staff taken on since abolition.

However the AWO provided more generous sick pay terms, it set out standard working hours and included the entitlement to overtime rates, which NMW terms do not. There were also other standardised terms such as the rate for a dog allowance and a night work supplement.

While many larger employers, and especially those in horticulture, have put something in its place, my concern is that for those who have not.

Agriculture and horticulture are dynamic sectors which need good staff and sensible arrangements, which suit individual businesses and their teams. Employers should consider what they are willing to offer and take this opportunity to set things out clearly. For example, this may be the chance to offer a pay rise in exchange for a review of other terms and conditions. However, any changes must be negotiated rather than imposed. Any negotiation works both ways with no guaranteed pay rises since the AWO was abolished.

Under the AWO, long-term staff could be on full sick pay for six months while off sick, compared with the Statutory Sick Pay rate which is currently £87.55 a week. Part of the negotiation process could (probably should) involve a review of the sickness record of the workforce to come up with a realistic sick pay plan.

For example you could offer full pay for a month, then make it discretionary thereafter – employers need to think what is reasonable and suitable.

One very practical consideration is whether it would be beneficial to change the holiday year from the “October to end of September” year inherited from AWO. For example, in arable businesses, an October to end of September year means that if staff have not managed to take all their holiday in the period, they are left trying to squeeze it in during harvest.

Negotiating pay and conditions

• Most employers will be approaching this for the first time. In a small workforce, it can be very challenging to get it right.
• Work out carefully what you are prepared to give and what your negotiating positions might be through the process.
• Try and evaluate a proper rate for the job – talk to other employers, go to farm discussion groups to sound out other farmers, get advice, look at what else is on offer in the area.
• Being “fair” is difficult – if one employee is more valuable than the other, it may be a false economy to give them both the same increase simply to avoid a drama. This way you risk losing the better one soon after because the rate is not competitive.
• In my experience, most employers are paying an increase of 2.5 to 3% at present, but seeking to also agree with this sometimes taking in changes to other terms and conditions.
• Don’t expect to complete everything in an afternoon – it can be done, but you have to prepare the ground carefully. More likely, you will complete the process over a few weeks and over several meetings.
• Write to staff individually setting out your proposal, draft it very carefully, preferably with professional legal advice.
• Set a meeting date for a few days later to give time for consideration.
• Employees have the right to have a friend, adviser or union representative present at meetings.
• At the meeting, listen to the other side and explain your position.
• If you cannot agree, set another meeting date.
• Once agreement is reached, set out the terms and conditions and offer a written contract of employment incorporating those terms.
• Ask employees to sign the contract.

Two opposing views of AWB abolition legacy

There are two arguments about the status of AWO terms and conditions for employees who were working under those. Only a test case will determine whether where nothing is done to alter terms and conditions from those of the AWO, these persist or not.

The first argues that the AWO terms [continuey] persist and that those terms and conditions simply roll on for employees to whom they applied before abolition.

The second argument maintains that those AWO terms and conditions vanished with the abolition of the AWB and the expiry of the AWO.

No one knows which of these is right. But if the AWO terms no longer persist, that raises the question of what fills the void.

If employers do nothing to put a formal replacement contract in place of the AWO, it is likely that someone will eventually take a test case, for example to challenge whether the sick pay scheme or other terms of the AWO persist. This is likely to involve hefty legal fees and a high risk of it going to the [appeal courts] Court of Appeal, as well as setting a precedent for others in the same position. It may not be a dispute on your farm with your staff that results in problems for your business. A decision in an unrelated case might impose conditions on your employment contracts which could otherwise be avoided.