HR Update – March 2012

Proposals on executive remuneration

Following the publication of the discussion Paper on Executive Remuneration Vince Cable has announced various measures to address ‘excessive pay’ for company senior executives. This has been a hot topic in the media recently.

The measures proposed fall into four key areas:

Transparency – companies will be required to publish more detailed remuneration reports, their policy on executive pay and how they have applied it.

More shareholder power – proposals to change how shareholders vote on executive pay; making such votes binding and requiring a 75% approval (up from 50^). Consideration is also being given to requiring all companies listed on the stock market to introduce ‘claw back’ clauses for payments to recouped in the case of poor performance.

More diversity – proposal to reduce the number of executive directors who serve on numerous company boards giving rise to possible conflicts of interest. This is endeavouring to widen the range of people represented on company boards

Employee engagement – companies will be required to explain how the views of employees have been reflected in their remuneration policies.

Its important to note that it is listed companies who are most likely to be affected by these proposals in the first instance but it would be wise other companies to give a watchful eye as to how they be affected following the proposals being finalised.


Pensions auto enrolment update

The Department of Work and Pensions has published a revised timetable setting out when employers must start enrolling their “eligible jobholders” into a workplace pension arrangement.

The timetable is driven by the size of organisation. The largest organisations with in excess of 250 employees will go first. The revised timetable is set out below:


Employer size Automatic Enrolment duty date
From To
250 or more members 1 October 2012 1 February 2014
50 to 249 members 1 April 2014 1 April 2015
Test tranche for less than 30 members 1 June 2015 30 June 2015
30 to 49 members 1 August 2015 1 October 2015
Less than 30 members 1 January 2016 1 April 2017
Employers without PAYE schemes 1 April 2017


Compensation Limits

The annual Employment Rights (Increase of Limits) Order 2011 has been published. These changes with take for any termination of employment, which falls on or after 1st February 2011.

–       Maximum compensatory award for unfair dismissal increases from £68,400 to £72,300

–       Statutory cap for a week’s pay, which is used for calculating a basic award for unfair dismissal and statutory redundancy payment, increases from £400 to £430

–       Minimum basic award for unfair dismissal, relating to trade union membership or activities, health and safety duties, occupational pension scheme trustee duties or acting as employee representative increases from £5,000 to £5,300.

The proposed benefit rates for maternity, paternity, adoption and sick pay have also been published. These would take effect from 9th April 2012.

–       Statutory maternity pay increases from £128.73 to £135.45

–       Statutory paternity pay increases from £128.73 to £135.45

–       Statutory adoption pay increases from £128.73 to £135.45

–       Statutory sick pay increases from £81.60 to £85.875


Unfair Dismissal – Qualifying Period

Following consultation the Government has stated that, from 6th April 2012, the qualifying period of service for an employee to claim unfair dismissal will increase from one to two years. Transitional provisions that will need to be in place for those employees who have more than one years but less than two years service are still being discussed.


Early ACAS Conciliation

The proposal is that all claims should be submitted to ACAS prior to being filed at the employment tribunal. ACAS is preparing for this to be implemented form April 2014. Time limits would be frozen during conciliation and if unsuccessful, claimants will have a further month to file their claims after submitting them to ACAS. This will delay claims to the employment tribunal, but the jury is out on whether it will result in any better dispute resolution.



Whistleblowing legislation was intended to protect employees when raising genuine concerns of public interest. However it also allowed employees to use the legislation to bring breaches of contract claims, the revised legislation by the Government intends to close this loophole, no date has been announced for its deployment.


Still to come in 2012


–       Independent Sickness Absence Review

–       Equal pay reform

–       Safeguarding, Vetting and Barring (Protection of Freedoms Bill)

–       Review of Part-Time and Fixed-Term Workers Directive

–       Amendments to UK Corporate Governance Code (Gender diversity on boards)

–       Possible strike law reforms

–       Modernising maternity and parental leave rights

–       Simplify compromise agreement

–       Slimming down the dismissal process

–       Introduce system for “Protected conversations”