What does the result of the election mean for reward?
Shocking election results seem to have become the norm and the recent election was no different. A minority Conservative government with a controversial alliance with the Democratic Unionist Party, is the start of a new chapter for the UK. But what does that mean for those working in reward and the Conservative’s pre-election commitments to fairer pay for working people. We’ve looked at both manifestos, to see where they have common ground and where they differ:
Pensions: This is potentially the biggest difference between parties where pay and reward are concerned; the DUP vow to maintain the ‘triple lock’ until 2025 in which pensions are raised in line with the highest average of earnings, inflation or 2.5%. Conservatives, on the other hand, want to cease this from 2020, proposing a ‘double lock’ – cutting out the 2.5% element. However, the Office for Budget Responsibility (OBR) forecasts that the double lock would not make a significant difference to pension increases but could save money if inflation and earnings are lower than expected.
Taxes: Both the Conservative party and DUP agree that personal tax allowances should continue to increase over the next three years. By 2020, Conservatives aim to increase the personal tax allowance to £12,500 with the higher tax rate starting at £50,000. These are increases of £1,000 and £5,000 respectively to the current allowances. The DUP are aligned by being firm supporters in proposing increases to the personal tax allowance.
National Living Wage: Increases are expected to continue, rising in line with average earnings until 2022. Conservatives have pledged a target for the NLW to reach 60% of median earnings by 2020. The OBR forecasts that this will see an increase to around £8.75 (£1.25 over the current national living wage). The DUP back this in their manifesto, supporting continued increases to the NLW and issuing firm action against companies who fail to pay the minimum rates.
Worker’s Rights: Theresa May has claimed her party will deliver the biggest expansion of workers’ rights by any Conservative government. Workers will be given statutory rights to take a year’s leave from their job to care for relatives – currently, more than six million people are acting as unpaid carers, with a third of them spending more than 50 hours per week in that role. May also vows to implement measures for fairer corporate pay. These measures would mean companies will have to disclose the ratio of their executive pay to the broader workforce. This will also include companies having to explain their pay policies, particularly complex incentive & bonus schemes leading to greater fairness and more transparency.
Pay Gap: Although the legislation has only just been implemented for mandatory gender pay reporting, the Conservatives look to step this up another gear by introducing a ‘race gap’ in addition to the gender pay gap. This would outline how much they pay each ethnic group in the organisation. Research from the Trades Union Congress suggests a 17% pay gap exists for black and minority ethnic staff educated to A-level standard and 10% gap for those with degrees. The law on current gender pay reporting guidelines will also be extended, with firms having to publish their pay gap at different grades of staff and age bandings. The DUP make no mention of enhancing the current pay gap regulations in their manifesto but as Northern Ireland have the lowest gender pay gap among UK regions (PwC 2017), and the current legislation only applies to large UK companies, priorities have understandably been focused elsewhere.
If you require help with your gender pay reporting, we offer a range of tests from the mandatory gender pay regulations to a deep dive analysis investigating the current policies and practices which may be contributing to your gender gap.
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