Directors’ remuneration and national minimum wage: what do they have in common?
These are not topics that you would normally see in same sentence. However, changes to employment law which came into force on 1st October affect both Directors and those on the national minimum wage.
The national minimum wage (NMW) rates have now increased as from 1 October 2013 and the NMW will also now apply to agricultural workers. For the rate increases see our table of rates and limits.
Also from 1 October 2013, the Enterprise and Regulatory Reform Act 2013 (ERRA 2013) introduces a new voting and disclosure regime for the remuneration of directors of quoted companies. Although not relevant for all companies, the changes include:
- the annual directors’ remuneration report will need to contain a statement by the chair of the remuneration committee, the company’s policy on directors’ remuneration and information on how the remuneration policy was implemented in the previous financial year
- the remuneration policy must set out how the company proposes to reward directors, and how this supports the company’s long-term strategy and performance
- shareholders will have a binding vote on the remuneration policy, which must be approved by ordinary resolution at least every three years
- when a director leaves, the company must publish a statement on its website setting out what payments the director has received or may receive. Companies will not be allowed to make any payment to a Director (past, present or future) unless it is in line with the remuneration policy.
The above is brief overview only and if you require further advice, please do contact Linda Wilson