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National Day Nurseries Association and Pre-School Learning Alliance have disputed a new report which claims 20,000 nursery practitioners are being paid below the minimum wage.
Research based on data from the Department for Education shows 10 per cent of nursery practitioners are not receiving the minimum wage of £7.20 an hour, which should be paid to all staff over the age of 25.
The Family and Childcare Trust calculated the figures by multiplying the number of staff working in group based settings by the percentage of staff aged over 25 in the childcare workforce, and multiplying this figure by the percentage of staff aged over 25 being underpaid.
Ellen Broome, deputy chief executive of the Family and Childcare Trust (FACT), said: “Nursery workers care for and educate the next generation – this important role deserves decent pay. But instead they are being exploited and paid illegal poverty wages.
“This cannot be right. Central and local government must act immediately to make sure that every childcare worker is paid a decent wage and that tax payers’ money does not go to employers who break the law.”
Flouting the law
FACT asserts that these nurseries are flouting the law, despite receiving millions of pounds of Government funding every year through free childcare offers and subsidies that help parents meet their childcare bills.
However, Neil Leitch, chief executive of the Pre-school Learning Alliance, claims the report is “misleading”.
He said: “We’re very clear that no childcare provider should be paying their employees less than the national minimum or living wage, and it is of course right that any instances of this happening are investigated and dealt with appropriately.
“However, we completely reject the claim that such breaches are happening on anywhere near the scale that the Family and Childcare Trust are suggesting and our analysis of the same DfE data indicates that any such suggestions are both misleading and irresponsible.”
Mr Leitch criticised the use of the DfE survey for the report as this began collecting data in March 2016 – the month before the National Living Wage was actually introduced.
“As such, it’s very likely that many, if not all, of those providers who reported paying less than £7.20 per hour did so before the National Living Wage had come into effect – especially given that they all confirmed that they were paying at least £6.70 per hour, which was the legal minimum wage in March.”
He admitted low pay is a problem in the early years sector but blamed this on “chronic underfunding” from the Government rather than “greedy childcare providers”.
FACT's analysis 'flawed'
Claire Schofield, director of membership, policy and communications at National Day Nurseries Association, also called FACT’s analysis “flawed”, saying: “The National Living Wage of £7.20 came in from 1 April 2016. The Department for Education survey quoted by the Family and Childcare Trust was conducted in March to July 2016, so paying over 25s less than £7.20 before the end of March was not illegal.”
She added: “We would never condone any business paying less than the minimum wage to staff. It’s unfair and absolutely untrue to paint a picture of law-flouting nurseries raking in millions in Government funding while underpaying nursery workers. The DfE survey quoted also says that just 17 per cent of nurseries made a profit or surplus in this period with 26 per cent breaking even and 35 per cent making a loss.
“Nurseries would love to pay their dedicated, talented and hardworking staff more, and the sector supports the National Living Wage, but financial constraints caused by Government underfunding has put huge pressure on nurseries.”
Twenty-two childcare providers have recently been subject to enforcement action from HMRC for non-payment of the minimum wage.
Clearer guidance needed from HMRC
However Ms Schofield also claimed that the HMRC enforcement action is not always what it seems. She said: “It can be linked with confusing rules on deductions from staff pay, such as for their children’s nursery fees, putting workers technically under minimum wage, though they have in effect been paid properly. “This issue has been well documented in the media. As the Government is taking punitive measures, it has a greater responsibility than ever to provide clear guidance.”
Average pay in private, voluntary and independent nurseries for someone who is not in a management role is about £8 per hour, or just over £13,000 a year for full time work, according to the Childcare and early years providers survey 2016 by the Department for Education.