Employment Law governing pay, it impacts us all
Employment Law is a fascinating area and one which takes effort to keep up to date with. In addition to National Minimum Wage and National Living Wage changes, there have been recent changes in other areas of the laws governing pay….
Gender Gap Reporting
By April 2018, all organisations with 250 or more employees will have had to report on their gender pay gaps.
Using the six stated measures, you should have already pulled together some basic information (a ‘snapshot’) about your employees. This will enable you to calculate your gender pay gap and publish your first report. The report needs to be published on your own website and on a government site, by 4 April 2018. Early reporting is encouraged and you can publish your information now. From this point on you will have to report your figures annually.
Even if your organisation does not employ enough people to be covered by the regulations, it is a useful discipline for you to calculate the size of the gap and see what action you may need to take. The Government may in the future lower the minimum employment threshold at which employers must report (currently 250). So if you’ve been analysing data you’ll be ahead of the game and able to show trends over the years.
So why is this happening?
In 2016 the gender pay gap for full-time employees was 9.4%. This meant that average pay for full-time female employees was 9.4% lower than for full-time male employees. The gap was down from 17.4% in 1997. We are not the only country to experience this. Thousands of female employees across Iceland walked out of workplaces at 2.38pm on 24th October 2016 to protest against earning less than men. Iceland is the best country in the world for gender equality, yet women still earn on average 14 to 18 per cent less than their male colleagues. This means in every eight hour day women are essentially working without pay from 2.38pm. And in France women left their offices at 4.34pm on Monday 7 November. The time at which they stopped being paid for 2016 in comparison to men. The average French woman was paid 15.1 per cent less than a man in 2010. Which means women effectively work 38.2 more days each year than men for the same salary.
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The British Government considers that this rate of progress in the UK is too slow. They have committed to closing the gender pay gap through employment law changes within a generation. But closing the gender pay gap isn’t just about achieving gender equality; it’s also about boosting the economy. It’s been estimated that the under-utilisation of women’s skills costs the UK economy 1.3–2% of GDP annually, and that eradicating the full-time gender pay gap would contribute additional spending into the economy of £41 billion each year. https://www.cipd.co.uk/Images/gender-pay-gap-reporting-guide_tcm18-19647.pdf
Political pressure has also played a part in the first drop in CEO pay for some time. The average FTSE 100 CEO pay packet dropped by 17% in the past year
An annual assessment of FTSE 100 CEO pay packages was released at the beginning of August. This shows that rewards at the top have dropped by almost a fifth, but still remain extraordinarily high.
The analysis, from the CIPD and the High Pay Centre, shows that the average FTSE 100 CEO now receives an annual pay package of £4.5 million. This represents a 17% drop from £5.4 million in 2015. While this may represent a significant drop in CEO pay packages, it would still take the average UK full-time worker on a salary of £28,000 (median full-time earnings) 160 years to earn what an average FTSE 100 CEO is paid in just one year.
Key highlights from the CIPD and High Pay Centre’s analysis include:
- In 2016, the pay ratio between FTSE 100 CEOs and the average pay package of their employees was 129:1. So for every £1 the average employee is paid, their CEO receives £129. In 2015, the ratio was 148:1.
- 60 of the FTSE 100 CEOs are paid more than 100 times the typical annual pay of a UK worker which currently stands at £28,000 per year (mean earnings).
- In contrast to the generous pay packages awarded at the higher levels, just over a quarter of the FTSE 100 are accredited by the Living Wage Foundation for paying the voluntary living wage to all their UK-based staff.
- There are just six female FTSE 100 CEOs. While women make up 6% of the FTSE 100, they earn just 4% of the total pay. Male CEOs in the FTSE 100 earned on average £4.7 million last year, compared with £2.6 million on average for women.
Business Minister Margot James said:
“It remains this government’s firm commitment to build an economy that works for everyone, making Britain one of the best places in the world to work, invest and do business. We have been very clear that to achieve this ambition businesses should be run responsibly, including ensuring executive pay is properly aligned to performance as outlined in the Corporate Governance Reform employment law green paper. This report shows encouraging signs that the UK’s largest firms are already making progress in this area and our responsible business reforms, which we will publish shortly, will help to enhance the public’s trust and confidence in big business.”
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