Key employment law updates | December 2021

Executive pay: stakeholder experience, ESG and pension parity key themes of Investment Association Principles of Remuneration 2022

The Investment Association (IA), the trade body that represents UK investment managers, has written to Chairs of FTSE 350 Remuneration Committees to launch the IA's Principles of Remuneration 2022 – a document which sets out investor expectations about executive pay. The letter calls on bodies responsible for setting executive pay to "ensure the executive experience is commensurate with that of shareholders, employees and other stakeholders" – in particular showing restraint on executive pay and reward if companies have received and not paid back government pandemic financial support. The IA also calls on companies to consider management of ESG risks as performance conditions in variable executive remuneration and develop a plan to align pension contributions for executive directors to the majority of the company’s workforce by 2022.

Fawcett Society calls on employers to stop asking for salary history

The Fawcett Society, which campaigns for gender equality and women's rights, has called on employers to stop asking jobseekers for salary history.  The campaign group argue that the practice perpetuates pay inequalities. The group's survey found that the majority of people felt salaries should reflect levels of skill and responsibility rather than past salaries and felt that salary history questions resulted in a lower pay offer than they may otherwise have received.

Proposals for UK to ratify the Violence and Harassment Convention to end violence and harassment in the workplace

On 15 November 2021, the Secretary of State for Work and Pensions proposed to Parliament that the UK ratify the Violence and Harassment Convention, a Convention of the International Labour Organisation (ILO). This is the first international treaty to recognise the right of everyone to a world of work free from violence and harassment. If no objections are raised the Government will move to draw up the UK’s Instrument of Ratification. This follows the Government's announcement in July 2021 that they intend to introduce a new proactive duty requiring employers to take steps to prevent their employees from experiencing sexual harassment and introducing explicit protections for employees from harassment by third parties, for example customers or clients (although details on exactly how this will look and work are currently unclear).

Unfilled vacancies still high despite end of furlough

Office for National Statistics (ONS) figures put job vacancies at 1.17 million in October 2021. This number is almost 400,000 higher than before the COVID-19 pandemic. This suggests that the end of furlough scheme didn’t result in a deluge of available workers entering the jobs market and filling available vacancies. This is backed by CIPD research which shows that almost half of employers (46%) are finding recruitment difficult and anticipate the situation declining further over the next six months.

In response, employers are adopting tactics to recruit workers including increasing wages, offering upskilling and improving job quality. The CIPD report found a potential increase in private sector median basic pay from 2.2% to 2.5%, with 84% of employers planning a 2022 pay review and a quarter expecting to increase basic pay.

Rates of SMP, SSP and Maternity Allowance to increase in April 2022

On 11 April 2022, the rates for Statutory Maternity Pay, Statutory Paternity Pay, Statutory Adoption Pay, Statutory Shared Parental Pay, Statutory Parental Bereavement Pay and Maternity Allowance will all increase from £151.79 to £156.66 per week.

The rate of Statutory Sick Pay will also increase from £96.35 to £99.35.

Umbrella company tax and employment consultation

Following concerns about the tax and employment rights risks posed by umbrella companies, HM Treasury, HMRC and BEIS published a call for evidence on the umbrella company market. The call for evidence invites views to be given on the role that umbrella companies play in the labour market, and how they interact with tax and employment rights.

Umbrella companies currently fall outside the recruitment sector regulation so it is hoped that primary legislation will bring umbrella companies into the regulatory framework. The idea is that they will be regulated in the same way that employment agencies and employment businesses are, but that they will also be required to comply with the wider employment and tax law given that they are employers.

The regulations will set out the minimum requirements and address common issues which include non-payment of wages, payroll skimming and non-payment of holiday pay.

Responses to the call for evidence should be sent to [email protected]. The closing date for submissions is 22 February 2022.