Top bosses who work three days could earn above the average worker’s pay for the whole of the year
06 January 2020
It has been reported that top bosses, who earn approximately 117 times the annual pay of an average worker, will only need to work until 17:00 on Monday 6 January 2020 to earn the equivalent of what a standard full-time employee commands in a whole year.
In a press release from the CIPD, which details its work in conjunction with an independent think tank, the High Pay Centre, Monday 6 January 2020 has been labelled as ‘High Pay Day’. Findings demonstrated that, in 2018, the average FTSE 100 CEO earned £901.30 per hour or £3.46 million per annum. In stark contrast to this, the average full-time employee earned £14.37 per hour or £29,559 for the year.
There will be a heavy emphasis placed on the issue of high pay in 2020, as this is the first year in which publicly listed firms employing over 250 staff will need to confirm the ratio between what their CEOs are paid, alongside that of their average worker. The first figures will be disclosed in 2020, and under amended requirements stated within the Companies Act (2006), businesses must provide CEO pay ratio figures along with the rationale behind them. It is hoped that this will prompt companies to reassess how they pay their staff and to encourage the practice of fair pay amongst businesses.
There appears to be a long-standing practice of top bosses receiving excessive amounts of money whilst other workers are paid salaries that often mean that they struggle to keep up with the increasing cost of living. This creates a feeling of distrust and animosity within businesses and many are welcoming the new CEO pay ratio reporting requirements and are hoping it will lead to more transparency within the workplace.
The new regulations mean that it is mandatory for employers who fit certain criteria to disclose the ratio of their CEO’s pay to the median, lower quartile and upper quartile pay of their UK employees. They must also explain the reasons behind any year-to-year increases or decreases to the ratios, whether or not they believe the median ratio is consistent with the organisation’s wider policies surrounding pay, how they have calculated the ratio and which method was used.
The CIPP Policy team always appreciates the feedback of our members and of payroll professionals and would be interested to hear any feedback, comments or experiences on the article above and also in relation to the new CEO pay ratio reporting requirements. Please don’t hesitate to get in touch at [email protected]
The CIPP also offers a comprehensive online training course – ‘CEO pay ratios reporting’, and the next one is scheduled for 5 February 2020. You can enrol here. Topics covered will range from how to perform calculations to ensuring compliance and looking at the wider implications of the reported figures.
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