The Queen's Speech: What now for employment law?

10 minute read
28 May 2015


Our employment and equalities experts look in to what is to be in the new government's legislative programme, what was mentioned in the campaign but has not made it this far and what was done in the Small Business, Enterprise and Employment Act 2015, passed in March, some of which is now in operation.

Reforming trade unions

The big headline issue is the proposed new legislation which will "reform trade unions and protect public services against strikes". So, what does this really mean?

In the private sector it is suggested that there will need to be a minimum turnout of 50% of the electorate. In all sectors, ballots would only be allowed to sanction action for a limited period post ballot. The period of validity is not yet clear.

The change in voting requirements in industrial action ballots is much more important, and will impact on the public sector employers and the unions concerned. At the moment, provided the union allows those to be called upon to vote, they need only a simple majority in favour to validate the action. This can and has allowed action to be called on a very low turnout with, say, only 10% of the actual membership voting in favour, but binding everyone.

The suggestion is for a two part test in "health, transport, education and the fire service" (for which might be substituted "where the big public sector unions are involved, especially the RMT") which will require that:

  • The turnout is over 50% of those who can vote; and
  • There must be 40% of those who can (as opposed to who do) vote in support of the action.

This is a major change. It is not how things are in ballots at the moment and, as mentioned many times in the election campaign, it is not how we elect MPs. The outcome is going to be that the unions will need far more people to vote, and vote in favour, than they do at the moment.

There is the possibility of unintended consequences - might this higher hurdle galvanise the unions into greater action, ensuring greater membership engagement with the process on the back of what can be presented as the unions ( and the public sector workings they represent) being used as a political soft target? Equally, will the union movement use this to challenge the current European Court of Human Rights (ECHR) decisions?

So far the ECHR has accepted that the current ballot regime is not an impediment on the right to assemble and strike. Will the proposed tighter requirements tip the balance? Will the Government beat the unions to the punch on that if (see below) the Human Rights Act (HRA) is to be repealed or amended?

Other news from the Queen's Speech

Aside from this headline grabbing change there is not that much more to report at this stage. The Queen's Speech made references to all of the following but it is unclear what they will mean in practice:

  • Further legislation to reduce the legislative impact on small businesses. There is no detail of what this will mean in practice so we will need to wait and see. Pre-election there was much discussion about possible changes for micro-businesses, and calls for them to be made exempt from some employment (and other) legislation. Some had assumed this might mean the implementation of the Beecroft Report from 2011, but Sajid Javid said on 24 May that "I won't be looking at that again".
  • Controls on immigration. The detail so far is that employment agencies will not be allowed to advertise exclusively outside the UK when running a recruitment campaign and that there will be an additional levy where employers use employees who need visas. This forms part of the political agenda around immigration and each of these provisions will have some impact. But the devil will be in the detail of what is required to show you advertised in the UK and EU citizens are not going to be impacted by the visa levy anyway.
  • No income tax for those on national minimum wage (NMW) working under 30 hours and no pay as you earn (PAYE) or national insurance contribution (NIC) increases for five years. The latter sounds very attractive, but we believe that we need to see the detail before we can decide how binding or how important this really is - does the Government really mean no increases in employer NIC? For those on NMW, how much tax might be paid anyway and what will be the offset if benefits are reduced?
  • Cap on public sector exit payments. Press reports abound about highly paid public sector employees receiving large redundancy payments followed by a quick re-engagement as a 'consultant' - the Deputy Children's Commissioner making recent headlines. The Government already has power to introduce regulations requiring public sector employees and office-holders to repay 'exit payments', such as redundancy payments, if they are re-employed in the public sector under the Small Business, Enterprise and Employment Act 2015, Presumably, the Government does believe this power goes far enough and is now also looking to impose a cap on exit payments to cover non-re-engagement cases of large pay-outs.

Other topics mentioned in the run up to the election...

Thinking back to pre-7 May, there other issues being discussed as part of the new legislative agenda. Where are they now?

  • Repeal of the Human Rights Act (HRA) - a lot of rhetoric about it. The Speech mentions only that there will be a proposal brought forward to reform the current legislation. That could reflect a step back on the issue as a whole in light of back bench opposition at this early stage of the Parliament or an acceptance that the situation is not quite as it is presented. Employers will need to keep an eye on how this develops given the importance of HRA issues in and around discrimination.
  • Employment Tribunal fee regime to be reviewed - the campaign promised no more than that and there is nothing to say how or when (even if) it might happen. As the coalition Government introduced the fees to discourage what it said were the material numbers of unmeritorious claims (and claims have declined markedly) then why would the Government change things in any way even when faced with strong evidence that there are issues over access to justice and changes in employer behaviour? It appears that the Government is sitting tight as it awaits the outcome of Unison's judicial challenge due to be considered by the Court of Appeal mid-June.
  • EU Membership - there will be a referendum at some point. The impact of an exit from the EU on employment law as we know it would be enormous. So great, in fact, that we have to leave it for another briefing.
  • Volunteering and paid leave - this sounded like a great idea, a sort of "Big Society Lite", to be funded by employers who would give staff three days paid holiday to do voluntary work . Whether this was ever more than pie in the sky, or a thought off the cuff, is hard to tell but there is no sign of it.

So, while we wait for all this to come to pass what do we need to think about?

Late in March, with the election looming, the new Small Business, Enterprise and Employment Act 2015 (SBEE), was passed. Unexpectedly, the first commencement order under SBEE was published on 26 May, ahead of the Queen's Speech, bringing into force immediately the ban on exclusivity clauses in zero hours contracts and increased national minimum wage fines

Zero hours contracts - exclusivity clauses are unlawful. You can use the zero hours approach for the moment but you are not entitled to require that the individual does not work for anyone else. Regulations of this issue came in to force on 26 May 2014 and are very detailed. If employers want to restrict individuals they need to consider exactly how that is to be done without it being to the employee's disadvantage.

Not yet in force are the anti-avoidance measures proposed back in March. These will extend the ban to so-called 'prescribed contracts', being contracts that do not guarantee the worker a specified minimum income. Further consultation on what the minimum level will be is expected

NMW penalties - Prior to 26 May, 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 applied per notice, irrespective of the number of underpaid workers. Now the maximum financial penalty has been substantially increased to £20,000 per worker. So whereas previously, where a notice related to ten workers each owed £20,000, the maximum penalty that could be levied was £20,000, now the maximum penalty will instead be £200,000. Penalties remain payable to the Exchequer

Other provisions under SBEE not yet in force include:

  • Tribunal penalties - for employers who do not pay monies awarded in Tribunal cases (which happens in as many as 50% of cases). The revised regime is serious and the payment goes to the Exchequer, not the individual.
  • Protected disclosures - new obligations in the health service regarding the fair treatment of those who make protected disclosures. In this case greater clarity about health sector employers' duty not to discriminate against whistle-blowers. There are also provisions for 'Prescribed persons' annual reporting on the disclosures they receive
  • 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 no later than 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.

NOT LEGAL ADVICE. Information made available on this website in any form is for information purposes only. It is not, and should not be taken as, legal advice. You should not rely on, or take or fail to take any action based upon this information. Never disregard professional legal advice or delay in seeking legal advice because of something you have read on this website. Gowling WLG professionals will be pleased to discuss resolutions to specific legal concerns you may have.

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