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ISSN No: 1461-6602
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Mo
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New Labour, new rights, old
worries
Top Pay Monitor has delayed its p ress date in expectation o f
the publication o f the Fairness at Work Bill. A s a piece o f
legislation it is remarkably non-committal, preferring to leave most
decisions to be made by the Secretary o f State using secondary
legislation - a hallmark o f the governm ent’s desire to keep its
options open at all times. Top Pay Monitor talks to Jessica
Learmond-Criqui o f Fladgate Fielder, who takes us through
its provisions, and John Redwood MP
|he Bill is very wide-ranging, but not unexpectedly so. It promises new
employment rights for executives - particularly as regards parental leave, a right
which already exists in many European countries.
According to the Bill, as analysed by Jessica Learmond-Criqui, employees can be
expected to enjoy the following rights.
1 The right to ask for a union to be recognised.
2 An increase for female executives on maternity leave - up from 14 to 18 weeks.
There are some clauses which give the Secretary of State power to introduce regulations
to deal with particular issues relating to maternity. There has been no real public
interest in the minutiae surrounding this subject, but that may change.
The Secretary of State may eventually produce rules concerning any attempt on the
part of a company to make a female executive redundant while she is on maternity
leave, or to change the rules about her seniority, pension rights, “similar rights” (this
is left undefined) and terms and conditions o f employment on her return. Perhaps
the regulations, when they come, will restrict the company’s right not to give her a
promotion that she might have expected had she not given birth. In other words, her
seniority, pension rights (according to Schedule 3 clause 71 sub para 7), “similar
rights” and terms and conditions must not be less favourable than those that would
have applied had she not been absent.
3 Parental leave is for men and women alike and operates in ad d ition to maternity
leave (in other words, employers will not be able to make it run concurrently with the
18 weeks of maternity leave). It runs for a total period of three months. The Bill gives
the Secretary o f State the power to introduce regulations to deal with parental leave
being taken in a single period of absence, that all or specified parts of the leave period
should be taken at or by specified times, and make provision about the postponement
by the employer of any period of leave requested by an executive.
Until these regulations come out, employing firms will still be free to postpone
parental leave for as long as they like. In fact, employers will not be obliged to permit
parental leave to take place at all until the regulations (whatever they may turn out to be)
come into force. Prudent employers should nonetheless start thinking about this now.
4 “Leave to deal with a domestic incident” is another feature o f the Bill, to be found
in Schedule 3, P a rti, Chapter II, Part II, clause 57(a)(2). The right is proposed by the
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In This Issue
News
EMI cuts new reco rd ........................2
In ignorance o f ethics.......................4
Ginn's gains underline US valu es... 8
Dividend softens salary restraint.... 8
MEPC meets payment controversy 8
French chiefs fle e ................................9
Directors' dealings............................. 9
Boardrooms bew are.......................... 9
Features
New Labour, new rights,
old w orries.........................................1-2
Creating wealth for executives..... 3-4
Recent executive pension plans ...4-5
Stopped at H eathrow ........................ 6
Straight from the horse's m outh.... 7
The Full M onti.................................. 10
Top Pay Disclosure M onitor.. 11/16
Salary Tables
H ighest paid directors by sector:
(B u ild in g & C o n stru ctio n , Food
Producers, Health Care, Leisure &
Hotels, Paper, Packaging & Printing,
T eleco m m u n icatio n s, T extiles &
Apparel, Transport, W ater)............... 12
Snapshot o f directors earning
over £50,000....................................13-14
Top Pay Top 150 Directors
(market capitalisation above
£500 m illion)........................................ 15
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Bill, but the regulations will put “meat on the bones” of this
right. The Bill lays down a few ground-rules in this area:
(i) the incident has to occur in the home o f the executive; or
(ii)it must affect a member of the executive’s family, or someone
“who relies on the employee for assistance”.
This, unfortunately, is all the Bill offers by way of description
- as a general observation, it seems that this will be a difficult
piece o f legislation for lawyers and HR professionals to deal
with in practice.
As far as the amount of time the Bill allocates to executives
to deal with these domestic incidents is concerned, the only
clue we have is the vague phrase “what is reasonable”.
The regulations (when they emerge) w ill specify instances of
“reasonable” circumstances and time limits for the amount of
time the executive will be able to take off.
5 The right to be accompanied by a trade union official or
employee of the company at any disciplinary or grievance hearing.
6 Fixed-term contracts (clause 17) are also mentioned. The
Bill proposes to take away the right o f employers to remove
unfair dismissal protection from an executive on his fixed-term
contract. Under the new rule, if the employing firm tries to
write in a clause which seeks to waive this right of the employee’s,
that clause (but not the rest of the contract) will be null and void.
7 The Bill proposes to give the Secretary of State powers to
introduce regulations to eliminate discrimination between “parttime workers” and “full-time workers” (every company employee,
according to this Bill, is referred to as a worker). This might
affect some female executives who come back to work on a
part-time basis after having taken maternity' leave.
8 The unfair dismissal limit is, according to the Bill, to be
raised from £12,000 to £50,000 as Peter Mandelson promised
before his departure from the DTI. This figure is more
appropriate for today’s marketplace than the previous one and
is in line with contemporary rates o f pay.
9 On a negative note, the Bill makes no mention of any
increase in the limit of any claims for breach of contract before
the Employment Tribunal. The current limit is £25,000.
For employers the picture is not so good. The Fairness at
Work Bill will increase their already-heavy burden as they struggle
to understand and implement a raft o f regulations related to
em ploym ent. The W orking Tim e R egulations, recently
introduced, added another dimension which was “containable”
but these provisions are far more w ide-ranging and onerous
for em ployers.
These provisions, coupled with the increase in the unfair
dismissal cap to £50,000, make it imperative for employers to
get to grips with the provisions o f the Bill as early as they can
and to review their employment practices. These practices will
be expensive, but ignorantia ju r is non excusat - (ignorance is no
excuse).
It is also possible that the Bill will have other repercussions.
Just before Top Pay M onitor went to press, John Redwood MP
told the editor: “I’m all for fairness at work, but this Bill will
dry7up opportunities for employment and will push people out
o f work - especially people at the bottom. It will make no
difference at all to directors and executives - most o f them have
enough protection already - although the strikes element might
do them damage because the union recognition side of the bill
will lead to industrial unrest and the extra cost will damage their
companies’ profitablity and affect them that way.”
EMI cuts new record
' en Berry, recently installed chief executive o f EMI’s
record labels is to receive up to £4.75m a year in total
>remuneration. Martin Bandier, chief executive of the
company’s music publishing operations is to receive up to £2.7m
a year. Both men joined the main board in April 1998. The
company is continuing the search for a new group chief executive
so that chairman Sir Colin Southgate can become a non-executive.
Executive pay is a sensitive issue for EMI since Jim Fifield
departed as head of the music division with a £12m settlement.
The new contracts have been signed against a background of
difficult trading conditions, a slide in interim profits and
rumbling bid speculation.
M r Berry has secured a two year rolling contract comprising
a base salary of $3m with a maximum performance-related
bonus of up to $2m per year. The company will also pay $300,000
to cover the rental on the home he occupies in Los Angeles with
his wife, Nancy, who also works for EMI. He will receive 181,250
shares annually rising to a potential 250,000 according to the
company’s growth and total shareholder return.
Mr Bandier will receive $2m in base salary, 87,500 shares and
a maximum performance-related bonus of $1,8m cash and 162,000
shares. Shares will not be allocated to either party until March 2002.
In the event of a takeover, the shares already allocated will be
valued at bid price. Compensation o f up to two years’ salary
would be available should they decide to leave the company.
K
Top Pay Monitor
Editor: Christopher Hamblin. Deputy Editor: Emma Rome. Publisher: Philip Harris. Marketing: Christian Richmond, Ken
Levy, Graham Root, Jonathan Davies, Colin Cunliffe. Subscription: £350 per annum for 12 issues. ISSN 1461-6602 © CTA
Financial Publishing 1999. CTA Financial Publishing, 559 Kings Road, London SW6 2EB. Tel: 0171 371 5358. Fax: 0171 371
5628. E-mail: 106550.3273@ Compuserve.com. All rights reserved. No part of this publication may be stored or transmitted
by any means without the prior permission in writing of the publishers. Printed by the Premier Printing Company.
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