Overview
Policy measures that can raise growth and reduce inequality in the immediate term, without requiring major public spending or tax commitments, will be of critical importance to the new Government. Demos' ‘Charter for Fair Pay’ sets out a series of policies that could meet these criteria.
The Charter focuses on ways to empower workers, facilitate dialogue and enhance transparency in a way that would enable fairer, more equal pay outcomes negotiated between employers and employees, rather than by trying to dictate business practice through heavier handed restrictions and regulations.
The recommendations relate to key policies already outlined in the new Government’s 2024 Employment Rights Bill and how they might be most effectively implemented. They also include measures that could apply as part of the forthcoming Audit Reform and Corporate Governance Bill and wider reforms relating to corporate governance, reporting and investment stewardship that the Government might also consider.
The Charter focuses on ways to empower workers, facilitate dialogue and enhance transparency in a way that would enable fairer, more equal pay outcomes negotiated between employers and employees, rather than by trying to dictate business practice through heavier handed restrictions and regulations.
The recommendations relate to key policies already outlined in the new Government’s 2024 Employment Rights Bill and how they might be most effectively implemented. They also include measures that could apply as part of the forthcoming Audit Reform and Corporate Governance Bill and wider reforms relating to corporate governance, reporting and investment stewardship that the Government might also consider.
A Charter for Fair Pay
A. Employment Rights: Effectively implement the 2024 Employment Rights Bill and clarify workers’ rights to consultation and voice
1. Provide workers with information on key employment rights and prohibit ‘union-busting’ employment practices
2. Define and clarify meaningful consultation rights for trade unions and works councils, enabling real worker voice in business decision-making
B. Corporate Governance: Create seats for elected worker directors on company boards and align business governance with the public interest
3. Revise company directors’ legal duties and strengthen enforcement mechanisms
4. Create seats for ‘worker directors’ on company boards
5. Cap ‘CEO to worker’ pay gaps for public service providers, such as water or social care
6. Establish a framework for tax and procurement incentives for responsible businesses with fair and democratic pay-setting processes
C. Investment and Stewardship: Establish a task force to promote worker ownership, and enhance investor accountability to beneficiaries
7. Require investors to state how they account for the values and non-financial interests of their beneficiaries when making investments
8. Establish a task force for the expansion of worker ownership and profit sharing, with voluntary targets for large companies
D. Transparency: Provide better corporate reporting on the pay of top earners and the distribution of spending on pay
9. Expand pay ratio reporting to ensure consistent disclosure of what all employers spend on their top earners
10. Introduce a right for workers to know how their pay compares to pay throughout their organisation
1. Provide workers with information on key employment rights and prohibit ‘union-busting’ employment practices
2. Define and clarify meaningful consultation rights for trade unions and works councils, enabling real worker voice in business decision-making
B. Corporate Governance: Create seats for elected worker directors on company boards and align business governance with the public interest
3. Revise company directors’ legal duties and strengthen enforcement mechanisms
4. Create seats for ‘worker directors’ on company boards
5. Cap ‘CEO to worker’ pay gaps for public service providers, such as water or social care
6. Establish a framework for tax and procurement incentives for responsible businesses with fair and democratic pay-setting processes
C. Investment and Stewardship: Establish a task force to promote worker ownership, and enhance investor accountability to beneficiaries
7. Require investors to state how they account for the values and non-financial interests of their beneficiaries when making investments
8. Establish a task force for the expansion of worker ownership and profit sharing, with voluntary targets for large companies
D. Transparency: Provide better corporate reporting on the pay of top earners and the distribution of spending on pay
9. Expand pay ratio reporting to ensure consistent disclosure of what all employers spend on their top earners
10. Introduce a right for workers to know how their pay compares to pay throughout their organisation
Recommendations
1. Provide all new workers with information on key employment rights and prohibit ‘union-busting’ employment practices
2. Define and clarify meaningful consultation rights for trade unions and works councils, enabling real worker voice in business decision-making
3. Revise company directors’ legal duties and strengthen enforcement mechanisms
4. Create seats for ‘worker directors’ on company boards
5. Cap ‘CEO-to-worker’ pay gaps for public service providers, such as water or social care
6. Establish a framework for tax and procurement incentives for responsible businesses with fair and democratic pay-setting processes
7. Require investors to state how they account for the values and non-financial interests of their beneficiaries when making investments
8. Establish a task force for the expansion of worker ownership and profit sharing, with voluntary targets for large companies
9. Expand pay ratio reporting to ensure consistent disclosure of what all employers spend on their top earners
10. Introduce a right for workers to know how their pay compares to pay across their organisation
2. Define and clarify meaningful consultation rights for trade unions and works councils, enabling real worker voice in business decision-making
3. Revise company directors’ legal duties and strengthen enforcement mechanisms
4. Create seats for ‘worker directors’ on company boards
5. Cap ‘CEO-to-worker’ pay gaps for public service providers, such as water or social care
6. Establish a framework for tax and procurement incentives for responsible businesses with fair and democratic pay-setting processes
7. Require investors to state how they account for the values and non-financial interests of their beneficiaries when making investments
8. Establish a task force for the expansion of worker ownership and profit sharing, with voluntary targets for large companies
9. Expand pay ratio reporting to ensure consistent disclosure of what all employers spend on their top earners
10. Introduce a right for workers to know how their pay compares to pay across their organisation