After the election - what now for employment law?

12 May 2015


The pollsters were wrong. No hung Parliament, instead the Conservatives win an outright majority. The looming EU referendum brings a cloud of uncertainty for the long term future of UK employment law. However, in the short-term, a Conservative majority Government adds an element of clarity as to what the remainder of 2015 and 2016 is likely to hold in employment law terms.

Zero hours contracts

Exclusivity clauses ban

Zero hours contracts (ZHC) have attracted much bad press in recent times. Are ZHCs a social blight on the employment landscape that needs to be expunged? If so, what should be done?

In the run up to the General Election, the Conservative positon was made clear. ZHCs in and of themselves are not inherently bad. In some scenarios they can work very well for both employer and worker, with Iain Duncan Smith calling for ZHCs to be rebranded as "flexible-hours contracts". At the same time, the potential misuse of such contracts has been recognised as a social blight - in particular the use of exclusivity clauses.

As the Coalition Government drew to a close, the Small Business Enterprise and Employment Act 2015 was passed, enabling the new Government to render exclusivity clauses in zero-hours contracts unenforceable. To avoid some employers attempting to circumvent the proposed ban by simply introducing one-hour contracts on minimal pay, the ban on exclusivity clauses will also be extended to workers on 'prescribed contracts' - contracts that do not guarantee the worker a specified minimum income.

How quickly the new ban will be in force is yet to be announced. Given the media attention the issue attracts, October seems a good bet.

Industrial relations

Tougher balloting and picketing requirements

The Conservatives have outlined a series of strong measures aimed at curbing strikes. They would amend the hurdles for lawful industrial action with a new turnout threshold. This will require at least half of the union's members in the affected workforce to vote. Even tougher will be a new threshold for lawful industrial action in 'essential public services'.

The plans announced back in July 2014 also include a new three-month time limit after a ballot for the strike action to take place. There would be an increase in the notice period before taking industrial action from seven to 14 days, illegal picketing would be made a criminal offence and the current code of practice on picketing would become legally binding.

With an outright majority, it is now likely that the new Conservative Government will press on with these reforms sooner rather than later.

Lift ban on use of agency workers

As part of the measures to curb the effect of strikes, the Conservative Government also intends to repeal the existing restrictions banning employers from hiring agency staff to provide essential cover during strikes.

Further details on this and the balloting reforms are expected in the Queen's Speech on 27 May.

Working Time

'Volunteering' paid leave

The Conservatives have pledged to introduce a new requirement for public sector employers and companies with more than 250 employees to give staff up to three paid days off a year to do voluntary work in addition to the current annual leave entitlement of 28 days.

We await details and no doubt a public consultation will be needed so this is unlikely to be introduced any time in 2015.

The change, if and when made, will be by way of amendment to the Working Time Regulations (WTR). Will the Government take the opportunity to also make other long awaited and much needed amendments to the WTR? In particular, amendments to the carry over provisions in relation to those on sickness absence or family-related statutory leave highlighted in the 2011 Modern Workplaces consultation.

Holiday pay back-claims

The hot topic of what constitutes 'normal remuneration' for calculating holiday pay continues to feature, with new novel arguments over what constitutes 'normal pay' for these purposes continuing, albeit increasingly unlikely to succeed.

While holiday pay claims rumble on, going forward the potential for back pay claims over several years is being limited. The Deduction from Wages (Limitation) Regulations 2014, already passed, impose a two-year backstop period on most unlawful deduction of wages claims presented on or after 1 July 2015, including claims for holiday pay.

A point to bear in mind is that the new regulations affect deduction of wages claims generally, not only holiday pay cases, with the exception of statutory sick pay, statutory maternity pay (and other similar family leave payments), guarantee payments or protective awards.

Employment tribunals

Penalties for failing to pay award

Last year, the tribunals were given the power to impose a financial penalty on employers where it is found that they have breached a worker's rights and that breach has "one or more aggravating features". Penalties are payable to the Exchequer and largely viewed as a way to get employers who breach employment laws to contribute to the financial cost of running the tribunal service. However, to date no such penalties have been ordered.

Under powers contained in the Small Business, Enterprise and Employment Act 2015, the Government can bring in regulations to impose a penalty on employers who fail to pay employment tribunal awards or sums due under a settlement agreed following ACAS conciliation.

When in force, an enforcement officer will be able to impose a financial penalty of 50% of the unpaid award subject to a minimum of £100 and maximum of £5,000. Penalties will be payable to the Exchequer.

The new non-payment penalties are expected to possibly be brought into force as early as October. It is anticipated that enforcement officers will be much more willing to exercise their new power than the employment judges appear to have been.

Tribunal fees

On the controversial question of tribunal fees, the new Government will no doubt simply sit tight as it awaits the outcome of the latest pending judicial challenge. The Court of Appeal is scheduled to hear the appeal in Unison's challenge in mid-June.

Equalities

Equal pay audits

In a Liberal Democrat parting shot, the Secretary of State is required by law to bring into force private sector equal pay reporting regulations "as soon as possible, and no later than 12 months after the passing of the Small Business, Enterprise and Employment Act 2015", making the deadline 26 March 2016. So soon, employers employing 250 or more people will be required to publish information about differences in the pay of male and female employees. A consultation is now expected on the details of such regulations.

Discrimination recommendations

As the Coalition Government drew to a close, the Deregulation Act 2015 was passed, which enables the Secretary of State to repeal the power to make recommendations for the wider workforce in discrimination cases introduced by the Equality Act 2010.

While removing the wider recommendations provision, the more long-standing power to make recommendations for the benefit of the individual claimant will remain, therefore returning to the position before October 2010.

As Conservative MPs in the last Parliament argued that the power should be repealed as unnecessary and putting employers in fear of inappropriate or excessive recommendations, October seems a good bet for the change coming into force.

National Minimum Wage (NMW)

Enforcement

Since 7 March 2014, the maximum financial penalty for employers who flout the NMW has been 100% of the total underpayment, subject to a maximum of £20,000. This maximum penalty applies per notice, irrespective of the number of underpaid workers. Penalties are be payable to the Exchequer.

Following the passing of the Small Business, Enterprise and Employment Act, the Secretary of State can increase the maximum financial penalty to £20,000 per worker. So whereas currently, where a notice relates to ten workers who are each owed £20,000, the maximum penalty that can be levied is £20,000. When brought into force, the maximum penalty would instead be £200,000.

Given the cross-party support for stronger enforcement of the minimum wage, implementing regulations are likely soon.

Rate increase

The Conservative Government has pledged to support an above-inflation rise in the NMW (if approved by the Low Pay Commission).

Whistleblowing

'Prescribed persons' annual reporting

Under the Small Business, Enterprise an Employment Act 2015, the Secretary of State has the power to require 'prescribed persons', to whom whistleblowing disclosures can be made, to report annually on the disclosures they receive. A consultation is expected later this year on the nature and extent of the reporting to be required.

Additional protection for NHS staff

In addition, the Secretary of State has a specific power to make regulations prohibiting an NHS employer from discriminating against an applicant because it appears to the NHS employer that the applicant has made a protected disclosure.

How quickly the changes will be brought into force is yet to be announced. Given the need for consultation, while October is possible, April 2016 seems more likely.

Europe

European Union referendum

A Conservative pledge to hold an in-out referendum by the end 2017 will be a dominating pledge for the new Government. For employment lawyers, the outcome of the referendum will have a significant impact in light of the number of employment rights derived from or impacted by EU law - working time, transfer of undertakings and collective redundancies to name but three.

Immediately after the election result, news reports abound that David Cameron has already begun negotiations with his European counterparts over Britain's membership of the EU. Speculation that an EU in-out referendum could take place as early as next year is now gaining pace.

European Convention on Human Rights

The Conservatives have pledged to 'scrap' the Human Rights Act to be replaced with a British Bill of Rights, leaving the European Court of Human Rights an advisory body only under UK law. Headed a 'fighting crime' pledge, this pledge also has important ramifications for employment law.

The content of a British Bill of Rights will no doubt attract much consultation and debate.


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