As the dust has settled on a surprising election result and ideas and policies are beginning to be formed, Michael Sissons and David Buckle, employment solicitors at Cubism Law, take a look at what proposed law changes could mean for UK businesses in the future.
Manifesto pledges are curious things. In 1945, the successful manifesto contained a grand total of 18 pledges. The years have seen the manifesto pledges of all parties balloon to the point that, by 2010, the Conservative 2015 manifesto contained 550 of the things. Their 2015 manifesto contains a number of employment related pledges, which vary from the specific to the vague or even aspirational. Given the vagaries of some pledges, predicting the legal changes landscape is, perhaps, is more an art than a science. Nevertheless, we can distil the following from the Conservative manifesto.
A British Bill of Rights
A central pledge is removal of the Human Rights Act, which would be replaced with a British Bill of Rights. The aim is to break the link with the European Court of Human Rights, making the Supreme Court the arbiter of human rights in the UK. Whilst this will not have an immediate impact on business in the UK, the effect on the development of employment law could be profound.
Zero hours contracts
The Coalition had already put in place most of the steps to ban exclusivity in zero hour contracts before the Election, although it is unclear when the ban will come in. Zero hour contracts will remain, although businesses using them will no longer be able to guarantee the availability of employees meaning employers may be forced to broaden the bank of on-call staff to cope with availability.
Trade unions and industrial action
The most contentious pledge is the limiting of strike and trade union activity. For a strike to be legitimate in the health, transport, fire and education sectors, there will be a requirement of a minimum turnout of 40% of all those entitled to take part in ballots, in addition to a majority vote by those balloted. The ballot must also occur within 3 months of the strike. There is also to be a review into the minimum service levels in certain sectors to avoid core public services being affected. Probably more important is the removal of restrictions on employers using agency workers to cover striking employees. This will mitigate the effect of strikes.
The Manifesto promises to “halve the disability employment gap”. There is no detail as to how this might be implemented, beyond an intention to get the disabled into work by “transforming policy, practice and public attitudes”.
The Manifesto also proposes a requirement for businesses with over 250 employees to publish the difference between the average pay of male and female employees. The law is likely to come in within the next 12 months, after which affected employers will have 12 months to publish the information. The new Regulations will be able to specify a fine for non-compliance, proposed as up to £5,000, although the adverse publicity may be incentive enough.
A pledge is made to take further steps to address illegal working and the exploitation of migrant workers through regulation of the labour market. The Manifesto speaks of harnessing data such as Exit Checks to identify businesses that employ illegal workers. This will not impact on employers who already ensure immigration status in recruitment.
Time off for voluntary work
Employees in the public sector worker and working in a company over 250 employees will have the right to take 3 days’ paid leave to undertake voluntary work. It is however not clear if employees will need to prove how they used their time off or if abuse of the scheme may be a disciplinary matter.
Fitness for Work
‘Significant new support’ for those out of work due to mental health is pledged. Help back into work is also promised for people with ‘long-term yet treatable conditions’. If a recommended treatment is refused, a person’s benefits will be reviewed and may be reduced.
The National Minimum Wage will increase to £6.70 a hour by autumn 2015, increasing to £8 by the end of 2020. This will increase wage bills for many employers. For employees, the tax-free allowance will also increase to £12,500 to match so that people on the minimum wage will pay no income tax.
Work and families
The proposed increase in the entitlement to free childcare from 15 to 30 hours for children aged three and four will have an impact on employers and employees. 15 hours frees working parents for about 2 more days a week, 3 to 5 days in total, which could allow greater scope in their choice of jobs. This should ease the burden on working families currently paying for childcare and create a more flexible workforce. Employers may find they need to consider fewer job share arrangements, which may in turn lead to a reduction in administration costs. It appears however this will not occur before 2017.
An extra three million apprenticeships are promised over the next five years. Deals with leading employers have already been announced but the impact on and take up by SMEs will be dependant on the funding arrangements. The position on this remains unclear.
And finally – public sector termination payments
In the public sector, there will be a limit on redundancy payments to £95,000 for employees on salaries on or above £27,000 a year. In the private sector, the maximum statutory redundancy payment is £14,250.
Regulations are also proposed for repayment of redundancy payments if an individual is re-engaged in the public sector within one year. The recovery may however be tapered and there will be a discretion to waive repayment.
The changes will require employers to adapt, which always brings a cost. Whether the benefit balances this out is to be seen. The devil is in the detail.