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General Election 2017: what’s in store for employment law?

In the lead up to the forthcoming national vote on 8 June, employment law has assumed centre stage with the main parties vying to win the hearts and…

In the lead up to the forthcoming national vote on 8 June, employment law has assumed centre stage with the main parties vying to win the hearts and minds of UK workers. The party manifestos published this month is packed with employment law pledges. Theresa May has promised “the greatest extension of rights and protections for employees by any Conservative government” while a cornerstone of the Labour manifesto is a “20 point plan” to “fix the rigged economy” in the workplace. We dig into the detail of what’s promised and how key proposals might pan out as post-election policy.

Employment status

The issue of employment status in the gig economy has made the leap from the headlines to the manifestos of all the main parties.

Both the Conservatives and Liberal Democrats have proposed to wait for and act on the recommendations of the ongoing Taylor Review to ‘modernise’ employment rights and bring them up to speed with newer business models.

Immediate action is proposed on much-maligned zero-hours contracts. Labour and the SNP have pledged an outright ban on contracts with no guaranteed minimum hours of work. Notably, unpaid internships would also be banned by a future Labour government.

The Liberal Democrats have stopped short of a ban but have promised to “stamp out abuse” of zero-hours contracts by introducing a formal right for employees to request a fixed-hours contract and consulting on introducing new rules to make regular patterns of work contractual after a period of time.

Whilst it appears that the driving force behind these proposals is to prevent unscrupulous employers from consigning workers to insecure employment, an outright ban may have unintended consequences. For example, many employers rely on zero-hours contracts to smoothly operate ‘banks’ of reserve or occasional employees or to engage seasonal workers. Many consultancy agreements operate on a zero-hours basis. In addition, zero-hours contracts remain a first-preference for many employees seeking to flexibly balance work with childcare, training or education.

A prominent pledge in the Labour manifesto is the party’s commitment to “give all workers equal rights from day one, whether part time, full time, temporary or permanent”. Behind this simple statement lies potentially huge upheaval and change to multiple pieces of employment legislation. Like most manifesto pledges this statement is light on specifics and encourages speculation. Does this signal an intention to scrap the qualifying period for unfair dismissal (a significant change to the status quo) or a more subtle realignment of the rights afforded to workers under different types of contract? This of course remains to be seen.

Pay and pay reporting

In the public sector, both Labour and the Liberal Democrats have also pledged to end the 1% cap on annual pay increases.

Both Labour and the Conservatives have promised an increase in the National Living Wage. The Conservatives have pledged that the statutory minimum rate will rise to 60% of median earnings (approximately £8.25) by 2020, while Labour has promised that it will climb to at least £10 in the same time period. The Liberal Democrats have pledged to set up an independent review to establish a genuine living wage to be paid by all government departments and encouraged across the public sector. The SNP pledges to support moves over the next Parliament to increase NMW/NLW rates and, additionally, advocates a new single rate applying to all adults over the age of 18. Smaller businesses, in particular, may struggle to meet such steep and rapid increases to statutory minimum pay.

Only the Labour party manifesto touches on the issue of maximum pay, floating the idea of a maximum pay ratio in public sector organisations of 20:1. This means if the lowest salary was £18,200 (based on a 35hr week at a new minimum of £10 per hour) the highest possible salary would be £364,000. This rule would also apply to private sector companies bidding for public sector contracts.

The introduction of gender pay gap reporting last month seems to have set a political ball rolling, with all major parties (and some others) proposing further and more detailed reporting of staff pay. For example, the Conservative manifesto states that larger employers will be required to publish “more data” on the pay gap between men and women (although it is unclear what this will involve in practice). Labour has promised a new civil enforcement regime to strengthen compliance with gender pay gap reporting.

The Women’s Equality Party is a strong emerging voice on this issue, pledging to extend the gender pay gap reporting requirement to smaller employers with 50 employees or more, and to require gender pay gap data to be further broken down by numerous other factors and monitored following return from parental leave.

The SNP has stated that it will press the UK Government to follow the example of Scotland, where public authorities with 20 or more employees are already required to produce gender pay gap reports every two years.

Under the Liberal Democrat plans, larger employers would be required to report the number of people paid less than the living wage (we’re not sure what this means but it might mean the rates suggested by the Living Wage Foundation) and the ratio between top and median pay in an organisation. Media reports suggested that the party would also introduce a formal ‘ethnicity pay gap’ reporting regime to redress the issue of comparatively low pay amongst black and other minority ethnic workers. This proposal has also been picked up in campaigning by both Labour and the Conservatives. However Labour is the only party to specifically mention the ‘ethnicity pay gap’ in its manifesto.

Whether you view this as welcome transparency or unwanted red tape may depend on your resources and ability to pull together yet another set of detailed numbers. However, the proposal undoubtedly raises confidentiality and data protection issues. Many employees prefer not to share with their employer information regarding race or ethnic origin.

Better Boardroom balance?

All of the main parties have come up with suggestions to re-shape Britain’s boardrooms.

Conservative plans include mandating public listed companies to ensure that employee interests are represented at Board level, either by the nomination of a Director from the workforce, the creation of an employee advisory council, or assigning responsibility for employee representation to a Non-Executive Director. Other similar measures are intimated to strengthen corporate governance in privately owned businesses.

The Liberal Democrats also support the idea of employee representation at Board level, promising to change the law to create a two-tier Board structure to include employees.

It appears that Labour’s focus will be on improving ethnic diversity on Boards, as the party’s manifesto promises to implement the recommendations of the recent Parker Review on the issue.

Boardroom balance is also a hot topic for the SNP which has promised to legislate to ensure 50:50 gender balance in public sector Boardrooms in Scotland by 2020.

Time off and holidays

One of the biggest headline hitting promises, was the Conservative commitment to allow workers to take up to a year’s leave from work to care for a sick relative.

Whilst employees are likely to welcome any measure that makes it easier to balance work commitments and family responsibilities, this proposal in reality may have limited impact. It appears that this will be a ‘right to request’ and not a ‘right to receive’ time off (analogous to the current right to request flexible working regime) and, importantly, time off will be unpaid. Although, presumably, employers will be able to make more generous arrangements if they wish, it is unlikely that many employees will be able to afford to step out of work without pay for such a long period.

The Conservatives also proposes a new statutory right to leave for parents who have lost a child. Although this probably reflects existing workplace practice, introducing a legal minimum entitlement might introduce welcome certainty for both employers and employees.

Labour has pledged to introduce four new bank holidays (falling on the national days of the four countries of the UK) to promote national unity and boost the economy. While the thought of fewer Mondays in the office may be very welcome, this would obviously introduce additional cost for business and an unwelcome administrative burden (it may also mean there is a need to review the wording of your holiday clauses to confirm contractually what this would mean for you).

The Green Party has boldly committed to investigating a ‘three day weekend’ citing benefits for employee morale, well-being and productivity. However, while this may well be a vote-winner, it appears that the policy is still at formulation stage.

The SNP has stated that it will continue to push for “full devolution of employment and employability policy” to Scotland and, in the event that this occurs in future, has promised a full review of workplace leave entitlements.

Discrimination

Keen to establish itself as the ‘party of equality’ Labour has promised to enhance the powers of the Equality and Human Rights Commission (EHRC) to “ensure that it can support ordinary working people to effectively challenge any discrimination”.

Somewhat confusingly, the party has promised to “reinstate the public sector equality duties” and to seek to extend them to the private sector. Whilst it is not clear exactly what this will mean in practice for the public sector, which is already subject to extensive equality requirements, we can perhaps expect to see a new rule obliging private employers to have regard to and to transparently promote equality, as well as to avoid discrimination.

Labour has also pledged to update the law on transgender equality by implementing the proposals of the 2016 Women and Equalities Committee report on the issue. This would involve some small but crucial tweaks to the language used in the Equality Act, for example changing ‘gender assignment’ to ‘gender identity’ and updating some terms such as ‘transsexual’ which have largely fallen out of use.

Labour has also pledged to end discrimination against gypsy, Romany and traveller communities. It is not clear whether the party would introduce a new protected characteristic under the Equality Act or expand the existing definition of race discrimination to include these groups. Arguably there is no need for any change to the law on this, as it is likely that race discrimination law as it currently stands is sufficient to provide protection.

Both Labour and the Conservatives have pledged to extend disability discrimination law, with Labour promising to legislate to make terminal illness a protected characteristic under the Equality Act 2010. The Conservatives havefocused on mental health, promising to extend protection against discrimination to individuals suffering mental health conditions that are “episodic and fluctuating”. However, arguably, both these initiatives are already covered by existing disability discrimination law (albeit if the latter proposal led to the removal of the requirement for some disabilities to be long term, that might significantly expand the number of employees who have a disability).

Pregnancy and Maternity

Labour has promised to extend the time period for submitting an Employment Tribunal claim of pregnancy discrimination from three to six months, arguably a welcome boost to discrimination protection for women at a time when they are particularly vulnerable and may find it to difficult to access resources and advice.

The party has also pledged to work with the Health and Safety Executive to make it mandatory for employers to conduct a workplace risk assessment for pregnant women. It appears that this would be an extension of the existing obligation to consider workplace risks to pregnant women as part of a broader risk assessment, where the work presents a special risk.

The SNP expressly backs the Women and Equalities Committee proposal to strengthen the law to protect the pregnant women and new mothers from discriminatory redundancies and practices. The party also proposes to introduce a “proper legal right” to breastfeed at work.

The shared parental leave regime has also come under the spotlight during the election campaign. Both the Liberal Democrats and Labour have pledged to double the length of paid paternity leave from two to four weeks to encourage sharing of parental responsibilities. It is not clear at this stage whether the level of statutory pay for paternity leave would also increase.

Shared parental leave is also a cornerstone of the Women’s Equality Party manifesto, with the party proposing a “fully equal system” of nine months leave at 90% of pay. Other far-reaching changes to the system, for example allowing a mother to share leave with another nominated care-giver, are also proposed.

Employment Tribunals

Both Labour and the Liberal Democrats have pledged to scrap Employment Tribunal fees if they win power post-election. Fees are perceived as a barrier to access to justice, and both parties have stressed that the ability to enforce employment rights is as high a priority as adding new employment law to the statute book. This move is supported by the SNP which points out that the Scottish Government has already pledged to abolish the fee regime when responsibility for Employment Tribunals is formally devolved.

The Conservatives have made no mention of the fee regime in their campaign literature and, given that the current Government has only recently undertaken a post-implementation review of fees which resulted in only minor tweaks to the fee remission system, it seems unlikely that further changes will be made by a future Conservative administration.

Trade Unions and industrial relations

The manifestos of the main parties are quiet on industrial relations, with the notable exception of Labour which proposes a number of bold changes to trade union law.

The party’s 20 point plan promises to repeal the Trade Union Act, which came into force earlier this year and increased the voting thresholds required to call a lawful strike. The SNP is also in favour of repeal. Also proposed by Labour is the roll-out of sectoral collective bargaining, allowing trade unions guaranteed access to workplaces, enforcing all workers’ rights to trade union representation at work and, perhaps most controversially, only awarding public contracts to companies that recognise trade unions. While some employers will be comfortable and familiar with collective negotiation and union involvement in workplace life, for others this would be a huge shake-up of how day to day business is conducted.

Immigration

A sensitive and difficult issue against the backdrop of Brexit, the issue of immigration is threaded through the manifestos of all major parties. However, the stand-out proposed change to business immigration law comes from the Conservative party, which pledges to double the immigration skills charge on companies employing migrant workers to £2,000 a year by the end of the post-election Parliament, with the extra revenue to be spent on high level training for UK employees. This means that employers may have to pay up to £6,000 per migrant worker they sponsor to come to the UK on a five year Tier 2 (General) visa on top of standard visa charges. This will stretch budgets or even prove prohibitive in some cases. This issue features prominently in the SNP manifesto. The party expresses strong opposition to the immigration skills charge, arguing that it will “lead to skills shortages, harm our economy and remove funding from frontline public services”, and promises to apply pressure for the charge to be scrapped altogether.

Comment

The parties manifestos set out a rich and varied mixed bag of employment law promises and there is arguably more for employment lawyers and HR professionals to debate and deliberate this June that at any other general election in recent memory.

One surprising feature of this campaign, across the political spectrum, has been an apparent lack of understanding of how UK discrimination law works and what it can already do. The parties clearly hope that ‘new’ law will win votes, but the post-election government should remember that it already has nuanced and flexible discrimination law at its disposal.

While the nature and scale of change will depend on the composition of the new government, some reshaping of employment law post-election seems inevitable. As always, the devil will be in the detail, most of which is still to be mapped out.

Ben Daniel (ben.daniel@weightmans.com) is Head of Employment, Pensions and Immigration at Weightmans LLP and is based in Leeds. If you have any questions please do not hesitate to contact Ben or speak to your usual Weightmans advisor.