Well, it’s good to know the bosses can have the rest of the year off!

In an article published by the BBC it is claimed that by “Fat Cat Friday” (4th January 2019) top bosses will have earned more than the typical worker will earn all year.

This throws up a few questions for HR and wider business in general. The question of the executive pay gap is an interesting one.  On the one hand, as you climb up that corporate ladder there’s an expectation that you will be rewarded appropriately for your work and contribution to the business. On the other is the ever more public outcry on the disparity between the highest and lowest earners. Where do you fall on the spectrum, and do you have the right to know what your boss earns? There isn’t currently any legal framework to govern pay and reward within the UK, save for the equal pay act, which address any disparity between the genders and only between the genders where each are doing comparable jobs, and the wider equality framework which could address clear disparity for groups with protected characteristics.

What’s the solution though?  Capping executive pay, China style, could push top talent and their skills and tax contributions out of the UK. Whereas narrowing the ever-widening gap between executives and the national minimum wage would potentially increase the quality of life and societal contributions of the majority and lowest paid members of our community.  The latter however would have a greater cost impact for business in the UK and have the knock-on impact of more SMEs, which make up the largest proportion of business in the country, out of business and therefore increasing unemployment and those reliance on benefits.

At AHR we have seen a client continue to pay executive bonuses and dividends despite being in a near bankrupt position because to not comply with their obligations would be a breach of contract.  However, instead of consulting with those high-level employees on measures to potentially save the business and therefore safeguard the jobs of most of the employees, they called in the administrators and liquidated the business.

What are your thoughts?

For advice on this, and all other HR and employment law matters contact AHR Consultants on 0345 07962288, we can help you help your business.