Consultation on Review of the Role of the Scottish Agricultural Wages Board: Findings from the Analysis of Consultation Responses

Option C responses

As detailed in Table 7, below, 41 of the responses received (73%) were in favour of removing all existing arrangements for agricultural workers and determining their pay conditions under general employment law - option C. Of these 41 responses, 34 were from employers and three were from organisations representing employers (the National Farmers' Union of Scotland, NFUS, and 50 Club Horticultural Employers' Association). Three responses were received from other organisations, while one response was received from an individual worker.

Table 7. Summary of responses favouring Option C, by respondent type.

Respondent Type	Number of responses
Employer	34
Worker	1
Other (individual)	0
Employer organisation	3
Workers' organisation	0
Other (organisation)	3
Total	41

Main themes emerging from the responses favouring Option C

1. Issues relating to employment law

• There is no need for the Agricultural Wages Board given general employment law and no justification for agricultural workers to be treated differently to other workers.
• Significant changes in the marketplace mean that farms are regularly checked for compliance with employment legislation.

2. Impact on effective productive sector

• Concern about costs of production being higher in Scotland than in England due to the SAWB.
• The SAWB causes confusion - abolishing it would reduce bureaucracy and help to create a business environment that encourages investment in business growth.
• Abolishing the SAWB would create flexibility.

3. Negative implications of the SAWB for workers

• Concern that the SAWB deters employers from hiring young workers.
• SAWB provisions often have adverse effects on workers.
• The Agricultural Wages Order can lead to discriminatory pay treatment.
• Abolishing the SAWB would lead to a greater awareness and appreciation of the employment rights of farm-workers.
• Abolishing the SAWB would simplify identification and enforcement of non-compliance by the Gangmasters Licensing Authority and private sector auditors.

4. Other issues/comments

1. Issues relating to employment law

• There is no need for the Agricultural Wages Board given general employment law and no justification for agricultural workers to be treated differently to other workers.

Responses favouring the abolition of the Scottish Agricultural Wages Board tended to note that since the establishment of the SAWB much has changed in terms of legislation to protect workers in farming and horticulture. Respondents pointed, for example, to the National Minimum Wage (to become the National Minimum Living Wage), the EU Working Time Directive, the Gangmaster Licensing Act (which specifically applies to agriculture), statutory requirements covering sick pay, maternity leave and workplace pensions, and Health and Safety legislation. Respondents argued that these developments make the SAWB unnecessary and that given the many mechanisms to set minimum standards for employment which now exist, "special provision for agriculture is an anachronism" and a "waste of time and money". One respondent asked if "we really need a bunch of industry reps cutting deals in smoke filled rooms in this day and age, when we have a fully functional and diverse employment marketplace".

The NFUS contended that the Wages Order has little effect on many of the individuals that it purports to protect, given that many agricultural workers are paid well above the minimum rates. The Confederation of Forest Industries (Confor) similarly noted its view that forestry workers are generally well paid and that their working conditions are carefully regulated through certified procedures and the Forest Industry Safety Accord (FISA). Confor also argued that the SAWB is no longer needed, given that the forestry workers covered by SAWB orders are now adequately covered by general employment law.

Those favouring the abolition of the SAWB argued that there was no reason for Scottish agriculture to be treated differently to other industries, and for agricultural workers to be treated different to other workers. For instance, the Association of Labour Providers (ALP) stressed that there was "no logical justification for maintaining this special arrangement for one sector". As one respondent put it: "Other sectors of industry can manage to get by without quangos - I can't really see why agriculture should be any different".

There was a view that it was "no longer necessary or justifiable to maintain a separate system of pay control for agricultural workers". It was argued that there was no reason for agriculture to be different from other labour intensive industries, and for higher/stricter rules and rates to be enforced. ALP stressed that in other sectors that are characterised by low pay and long hours, such as office cleaning, catering and hospitality, workers are entitled to only the minimum wage. Respondents suggested that it was not possible to justify a minimum wage for unskilled agricultural workers that was higher than the minimum wage for workers in other industries.

• Significant changes in the marketplace mean that farms are regularly checked for compliance with employment legislation.

NFUS noted that Farm Assurance schemes, including those operated by retailers, regularly check that farms are compliant with employment legislation, and that in most cases the requirements go beyond statutory minimums.

2. Impact on effective productive sector

• Concern about costs of production being higher in Scotland than in England due to the SAWB, putting business at a competitive disadvantage.

Concerns were expressed, particularly by those from the soft fruit sector, that the existence of the SAWB meant that Scottish businesses were operating at a competitive disadvantage, and that this was not good for Scottish agricultural sustainability, especially given the abolition of the Wages Board in England. NFUS also pointed to the "additional burdens on Scottish agricultural businesses enforced by the Wages Order", including "the direct costs associated with enhanced holiday allowance, sick leave provision, and standby duty".

It was noted that a Board with the ability to set higher and different rates in Scotland compared to other parts of the United Kingdom puts Scottish producers and employees at a considerable financial and administrative disadvantage compared to others in the UK who are supplying the same markets. NFUS noted that this was particularly keenly felt in the field vegetable and soft fruit industries, which employ substantial numbers of seasonal agricultural workers and which compete directly with farm businesses in England. As one respondent put it: "With 90% of Scottish soft fruit going to England, the soft fruit sector in Scotland is at a considerable disadvantage to its English competitors with different rates and terms and conditions". Another respondent noted that the SAWB had cost their business £100,000 more than it would have if they worked in England.

The NFUS expressed concern about the impact of proposals relating to the new National Minimum Living Wage, should the SAWB remain in place - particularly the potential for competitors in England to employ workers under the age of 25 at lower rates of pay, meaning "that Scottish businesses will be at even more of a disadvantage". Related to this, several respondents from the soft fruit sector expressed concern about the future viability of their business once the Living Wage comes into force because of how much of their costs go on wages. For instance, one respondent reported that a full fifty per cent of their costs go towards wages. Respondents also argued that since the abolition of the Agricultural Wages Board in England, the SAWB has effectively worked against the interests of workers in Scotland's soft fruit industry, reducing their incomes by making overtime working unaffordable to employers and discouraging the employment of young workers. NFUS likewise noted that as a result of the restrictions applied by the Wages Order, its members in the field vegetable and soft fruit sectors have been forced to change their employment practices to remain competitive.

It was also argued that the Scottish Government idea of being a 'Good Food Nation' "is being severely hampered and our competitors are being given a leg up by having a much simpler framework to adhere to". In relation to the soft fruit sector in particular, one respondent warned that: "If Scotland lost the fruit industry it would be a huge blow to the economy, and that is what is at stake".

• The SAWB causes confusion - abolishing it would reduce bureaucracy and help to create a business environment that encourages investment in business growth.

Many of the respondents who favoured the abolition of the SAWB argued that the Board causes confusion. For instance, ALP stressed that agricultural work is not easy to define and that it is difficult to determine who is and who is not covered by SAWB orders. Another respondent contended that the maintenance of two separate systems for the control of low pay - the minimum or living wage and the Agricultural Wages Order - "causes confusion, duplication and unnecessary additional cost for both employers and government". The 50 Club Horticultural Employers' Association similarly noted that the SAWB "adds confusion for both workers and employers, duplicating regulation and creating an unnecessary administrative burden, thus hindering business development". Another respondent suggested that it was "unclear how horticulture fits into this framework".

Additionally, NFUS noted that having to comply with both UK employment legislation and the requirements of the Wages Order adds to red tape - especially for businesses which also employ non-agricultural workers. Confor likewise noted that SAWB orders sometimes differ slightly from general employment rules and that this can give rise to confusion. Another respondent maintained that it is difficult to get independent advice on applying the order - for instance, in relation to creating employment contracts - since the agricultural wages order is specific not only to agriculture but also to Scotland.

It was argued that the double layer of legislation created by the SAWB adds complexity to the operation of agricultural businesses, making them less efficient. ALP noted that the SAWB is particularly confusing when the same workers may be subject to SAWB orders and general employment law in the same working period or when working in the same place. It was proposed that removing the SAWB would reduce bureaucracy, particularly for businesses that run two wage systems under both the SAWB and National Minimum Wage legislation, for example businesses that have diversified to include a retail element. ALP noted its view that: "It would be a welcome simplification of a complex regulatory regime to have a single set of minimum wage rules for all workers". It was also argued that removing the SAWB and determining agricultural (including horticultural) workers' pay and conditions under general employment law would help create a business environment that encourages investment in business growth.

Beyond this, ALP noted that differences in view between administrations with regard to cross border working creates confusion for labour providers working across the UK.

• Abolishing the SAWB would create flexibility.

It was argued that the SAWB has reduced flexibility of working practice. It was noted that removing all existing arrangements for agricultural workers and determining their pay and conditions under general employment law would allow more flexibility into the system, making it easier to have a rolling workforce when supplying large retailer and supermarket orders. It was also noted that abolishing the SAWB would help to create further flexibility to increase staff hours at times of increased demand. One respondent pointed to the potential for a shift from waged to salaried labour which, it was argued, would improve staff morale. Another respondent advised the Scottish Government to "leave the labour market alone, unless there are issues with food security."

It was also noted that the industry needs both skilled and unskilled labour "with maximum flexibility to encourage the unskilled to become skilled", and that the removal of the SAWB would help to create this flexibility.

3. The SAWB has negative implications for workers

• Concern that the SAWB deters employers from hiring young workers

Those who favoured the abolition of the SAWB tended to argue that the SAWB is, in the words of one respondent, "a massive deterrent to employment of young workers". Both NFUS and the 50 Club Horticultural Employers' Association argued that the omission from the Wages Order of the provisions in the National Minimum Wage concerning the age of employees acts as a disincentive to employing young workers. According to the 50 Club Horticultural Employers' Association, if the SAWB is retained "this could be further complicated by the age related basis of setting the Living Wage".

The NFUS noted that: "Young workers are less experienced, must be supervised more closely and in many cases cannot perform tasks that older workers can - yet the Wages Order requires that they should be paid the same". Other respondents similarly pointed out that there is little incentive to employ a young local person as the employer has to pay them at the full rate from the start; if the young employees are much slower than their older and more experienced colleagues, employers cannot afford to keep them on as they have to pay them the full minimum wage. Thus there was concern about 16 and 17 year olds' chances of getting and keeping a job in agriculture when employers expect them to work as productively as staff aged 25 and older. Additionally, in the horticulture sector it was noted that the SAWB wage structure discourages the recruitment of young people due to the lack of age-related pay bands.

It was argued that agriculture needs to attract more young people and that all restrictions and impediments to their easy employment, including the SAWB, "should be abolished".

• SAWB provisions often have adverse effects on workers.

It was argued that where SAWB has had special provisions, they have usually had adverse effects on workers. For instance, ALP pointed to the requirement that overtime be paid after eight hours a day and 39 hours a week with an overtime rate 50% higher than the basic rate, arguing that many agricultural businesses cannot afford to pay these overtime rates. As a result, such businesses stipulate that workers can work no more than eight hours a day and 39 hours a week, which means that agricultural workers are denied the opportunity of working longer hours and earning more money. ALP noted that "in reality this gives further encouragement to the 'informal economy', as if workers want to work 60 hours a week they will do so".

ALP also underlined that the differences between SAWB order terms and general employment law create other problems. For instance, it noted that the accommodation offset arrangements are different between the two regimes in different ways, that agricultural holiday pay arrangements require special calculations which many payroll systems cannot deal with, and that agricultural sick pay arrangements are complex.

• The Agricultural Wages Order can lead to discriminatory pay treatment.

One respondent argued that the existence of the SAWB and the Agricultural Wages Order (AWO) creates difficulties for diversified enterprises that comprise both agricultural and non-agricultural activities, and that in such situations the AWO can lead to discriminatory pay treatment within a single enterprise between workers who may have comparable skill and experience levels. It was noted that such discrimination can demotivate staff and militate against good team working. The respondent also pointed to the difficulties where workers perform both agricultural and non-agricultural duties, which in their experience is a common situation.

• Abolishing the SAWB would lead to a greater awareness and appreciation of the employment rights of farm workers.

The 50 Club Horticultural Employers' Association argued that aligning agriculture with other sectors by abolishing the SAWB would mean that farm workers and businesses would have recourse to a wide range of advisory resources from organisations such as the Advice, Conciliation and Arbitration Service (ACAS) and Citizens Advice Scotland, as well as more informal channels, such as word-of-mouth from friends and associates working in other industries. In its view, this should lead to a greater awareness and appreciation of the employment rights of farm workers.

• Abolishing the SAWB would simplify identification and enforcement of non-compliance by the Gangmasters Licensing Authority and private sector auditors.

ALP noted that the practical experience of labour providers is that enforcement of the SAWB orders "is virtually non-existent outside the sector regulated by the Gangmasters Licensing Authority". The 50 Club Horticultural Employers' Association argued that aligning agriculture with other sectors by abolishing the SAWB would simplify identification and enforcement of non-compliance by the Gangmasters Licensing Authority and private sector auditors. ALP also noted that abolishing the SAWB would mean that labour providers were no longer at a competitive disadvantage compared with non-regulated agricultural businesses "which are more able to conceal cash payments".

4. Other issues/comments

• One respondent questioned whether the agricultural wages order was being applied "fairly, consistently and correctly" by Scottish Government officials.
• One respondent pointed out that the information on the consultation document was wrong and that overtime was £9.75, not £7.14 as per the consultation document. The respondent noted that "seasonal crops and erratic supermarket orders require overtime peaks".