On both sides of the Atlantic it has become customary to review the performance of a new administration after 100 days in office so as the first majority Conservative Government for nearly 20 years reaches this mark, what’s the outlook for employers? Andrew Masters, Partner and Head of Employment at Kent law firm Furley Page, reviews some of the emerging employment themes….
In his July budget, the Chancellor announced the introduction of a National Living Wage (NLW), which is a premium above the National Minimum Wage (NMW) for workers aged 25 and over. The NMW is to remain in place and the adult rate will increase to £6.70 per hour on 1 October 2015. The first NLW premium will be 50p per hour and will be introduced in April 2016, thus increasing the total NLW to £7.20 per hour from that date. The NLW is projected to increase to £9 per hour by 2020. This is linked to changes to working tax credits and a pledge to increase the income tax-free personal allowance to £12,500 by 2020.
Support for working parents has become a key political issue in recent years. Under the Labour Governments from 1997 we saw the development of so-called family friendly policies in the workplace. This was expanded in the last parliament with the Coalition introducing shared parental leave and extending the right to request flexible working.
The new Government has pledged to increase free childcare from 15 to 30 hours a week (for 38 weeks of the year) for working families where the parents are working for all three- and four-year-olds. It plans to remove the current system of childcare vouchers and introduce a tax-free childcare scheme under which working families will be able to claim 20% of qualifying childcare costs for children under five (and children with disabilities under 17) with claims capped at £2,000 per child per year. The new scheme will replace the current employer-supported childcare system and will not depend upon participation by employers.
The Government is seeking to identify the barriers facing female employees in the workplace in terms of pay and to address the issues, while acknowledging that voluntary gender pay reporting has failed. It has confirmed that it will require firms with 250 or more staff (including the private and voluntary sectors) to publish gender pay gap data showing whether there are differences in gender pay. This is likely to be from 2016. It’s consulting on the level of detail of gender pay information that will be required. This could be the overall difference between the average earnings of men and women as a percentage of men’s earnings, or whether it should be broken down by full-time and part-time employees, or by grade or job type.
The Government is also consulting on whether employers should be required to provide additional, contextual information, explaining any pay gaps and setting out what remedial action they plan to take; and how often employers should be required to publish such data. It’s noteworthy that since October 2014 an Employment Tribunal has had the power to order equal pay audits when an employer is found to be in breach of equal pay law.
The Government wants to impose new restrictions on industrial action ballots. It will introduce a 50% turnout requirement for a valid ballot on industrial action and limit the period during which a ballot is valid to authorise industrial action to four months.
In addition to the 50% threshold, industrial action in the public sector, to include health, education, fire, transport, border security and energy sectors, will only be authorised if 40% support is achieved. The Government wants to repeal the current ban on employment agencies providing agency workers to replace those taking industrial action. It also seeks to introduce a requirement that union members wishing to contribute to a union’s political fund ‘opt-in’ instead of the current ‘opt-out’ procedure.
An ‘in-out’ referendum on whether the UK should stay in the EU is promised by the end of 2017. Prior to the referendum the Government will attempt to renegotiate the terms of our membership. This is likely to see the Government seeking refinement or the opting out by the UK of the Working Time Directive and of the Temporary Agency Work Directive.
A referendum vote to leave the EU – the so-called BREXIT – would mean the UK Government regaining parliamentary sovereignty and so would no longer be bound to have national legislation reflecting many EU laws in the workplace. It would be free to abolish or amend EU-sourced laws, from working time and discrimination to health and safety, immigration and some aspects of remuneration, for example, CRD IV (limits on bankers’ bonuses). In the future this could potentially result in important changes to the legislative framework determining employment law and HR practice.
Apprenticeships, in conjunction with a training provider, are popular and successful with employers and apprentices alike. Some 78% of employers believe that school / college intake will overtake graduate intake in the next five years as employers seek a more balanced intake, while over 70% of apprentices stay with the same employer on completing their apprenticeship. The Government has pledged to create an extra three million apprentices over the next five years and plans to introduce a levy on large UK employers to fund these apprenticeships. The levy will support post-16 apprenticeships in England and will provide funding that each firm can use to meet their individual needs.
The issue of zero-hours contracts was contentious during the election, with parties pledging to address some of the perceived unfairness of these types of contracts. The Conservatives supported a lighter regulatory touch seeing them as a way of enhancing business flexibility. So the widespread use of zero-hours contracts is likely to remain under Cameron. However, under s.53 Small Business, Enterprise and Employment Act 2015, an exclusivity term in a zero-hours contract that prohibits a worker from working for a different employer under another arrangement, or requiring the employer’s consent, will be unenforceable.
The Government will consult on devolving powers on Sunday trading to city mayors and local councils. The consultation will look at allowing mayors or councils to extend Sunday trading for retailers and create a more flexible Sunday trading environment. The commitment is supported by London Mayor Boris Johnson and some of the UK’s biggest retailers.
A review of the effectiveness of the Employment Tribunal fee system has been launched. Introduced in July 2013 by the Coalition, the fee system aimed to save money, encourage the use of alternative dispute resolution and to increase efficiency within the system. Since the introduction of fees there has been a reduced number of claims. While welcomed by employers, there remains a debate as to whether fees represent a barrier to justice for employees. Whatever the outcome of the review, and subject to the legal challenge brought by the trade union UNISON, it seems very unlikely that Tribunal fees will be scrapped.
Andrew Masters is a Partner and Head of Employment at Kent-based law firm Furley Page. He’s providing a number of talks and seminars on the issues contained in this article. For further information contact Andrew Masters on 01227 763939.
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