UK General Election: Theresa May pledges boost in workers rights

The UK’s general election campaign highlighted workers rights and representation as well as executive pay.

With the main parties launching their manifestos this week the Conservative Party reiterated its commitment, that appeared in the government’s corporate governance green paper, to improve worker representation on company boards. This would not necessarily be an employee on the board but alternatively could be through employee advisory panels or the appointment of a non-executive director designated to consult with employees.

Writing in the Financial Times on Monday (15th May) the prime minister, Theresa May, said: “I will ensure that there is representation for workers on company boards and that every employee has a statutory right to receive information about key decisions affecting their company’s future.

The Liberal Democrat manifesto also said that employees should have the right to be represented on listed company boards and there should be strengthened worker participation more generally which would include staff representation on remuneration committees. Additionally, the Liberal Democrats would change company law to allow a German-style two-tier board structure to include employees.

The Liberal Democrats also said it would encourage employers to promote employee ownership by giving staff in listed companies with over 250 employees a right to request shares, to be held in trust for the benefit of employees.  Labour said it would give more people a stake in the economy by doubling the size of the co-operative sector and introducing a “right to own,” making employees the buyer of first refusal when the company they work for is up for sale. The company said it would act to ‘insource’ public and local council services as preferred providers.

The Conservative party has also confirmed its backs a stronger vote on executive pay, which is also a commitment from the Liberal Democrats. Conservatives will introduce a requirement for companies to publish pay ratios between chief executives and their employees and said it will commission a review into the use of share buybacks. This, the party said, would be to ensure they are not “used artificially to hit performance targets and inflate executive pay.”

UK General Election workers rights

Theresa May’s Conservatives pledge expansion of worker’s rights

Additionally, the Conservatives have pledged to protect employee pensions against irresponsible behaviour by company bosses. Under the plans, any company pursuing a merger or acquisition valued over a certain amount or with over a certain number of members in the pension scheme would have to notify the Pensions Regulator. The Regulator would place conditions to ensure the solvency of the scheme and would have new powers, the Conservatives said to block a takeover or to issue punitive fines for those found to have wilfully left a scheme under-resourced.

Other commitments include a requirement for companies to publish data on racial pay disparities similar to recently introduced gender pay gap regulations. Labour has committed itself to introducing equal pay audit requirements on large employers, which the party said would close the pay gap that exists between black and Asian workers and their white counterparts.

The Conservatives are also proposing the right to leave from work would be extended to bereaved parents, those seeking extra training or to care for a relative. Labour is pledging to legislate for statutory bereavement leave; to amend the takeover code to ensure every takeover proposal has a clear plan in place to protect workers and pensioners and to roll out maximum pay ratios of 20:1 in the public sector and in companies bidding for public contracts.

The Labour Party manifesto was accompanied by a document that spelt out how its spending commitments would be funded. This included an excessive pay tax which it said would yield £1.3bn. Labour said this would be a payroll tax with the principle of charging employers for paying exceptionally high rates to individuals. It would have a starting rate of total compensation charged to the employer for those paid over £0.33m.

Labour said it would amend company law so that directors owe a duty directly not only shareholders, but to employees, customers, the environment and the wider public, and we will consult on bringing forward appropriate legislation within this Parliament. The existing Section 172 of the Companies Act  requires directors of all companies to promote the success of the company, and in so doing have regard to a range of other factors, such as long-term consequences, the environment, employees, suppliers and customers and the regulator, the  Financial Reporting Council has argued it needs more powers to enforce it.  Labour added that it would implement the Parker Review recommendations to increase ethnic diversity on the boards of Britain’s largest companies.

The Liberal Democrats gave a similar commitment to Labour on directors duties and said it would additionally reform fiduciary duty so that fund managers also took considerations, such as employee welfare, environmental standards, community benefit and ethical practice into account in their investment decisions. The party also wants to increase transparency as to who owns stakes in the largest UK companies by reducing the reporting requirement for disclosure of shareholdings to 1%.

UK’s General Election: The main corporate governance and corporate responsibility policies by the parties

Parties and their proposals

Conservative

Labour

Liberal Democrats

Executive Pay Strengthened shareholder vote; Companies to publish pay ratios between chief executives and their employees and will commission a review into the use of share buybacks Roll out maximum pay ratios of 20:1 in the public sector and in companies bidding for public contracts; Introduction of an excessive pay tax Strengthened shareholder vote
Board Composition Workers to be represented (could be indirectly) Will implement the Parker Review to increase ethnic diversity Workers to be represented (could be indirectly); boards would be permitted to become German-style two-tier boards
Director Duties Would introduce a law to ensure that directors have a duty to employees, customers, the environment and the wider public, as well as shareholders Directors should be required to take wider issues into account such as employee welfare, environmental standards, community benefit and ethical practice
Protecting Employees and their pensions Any company pursuing a merger or acquisition valued over a certain amount or with over a certain number of members in the pension scheme would have to notify the Pensions Regulator. The Regulator would have powers to block a takeover or to issue punitive fines for those found to have wilfully left a scheme under-resourced. Would amend the takeover code to ensure every takeover proposal has a clear plan in place to protect workers and pensioners
Employee rights Right to leave from work would be extended to bereaved parents, those seeking extra training or to care for a relative. Would introduce statutory bereavement leave Would give  staff in listed companies with over 250 employees a right to request shares, to be held in trust for the benefit of employees
Improving company transparency Would reduce the reporting requirement for disclosure of shareholdings to 1%
Employee pay issues Companies would be required to publish data on racial pay disparities Would introduce equal pay audits

 

 

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