The 8 June 2017 snap election predicted by all to be a Tory landslide has backfired on Theresa May in the most spectacular fashion and has resulted in another hung Parliament. Yet in spite of this, she has announced that the she will push ahead and form a minority government with the informal assistance and backing of the Democratic Unionist Party. This will inevitably impact the Conservative’s ability to deliver on aspects of its manifesto however on areas such as employment law and workers’ rights there may be little change. Given that the Conservatives’ proposals in this area are universally employee-friendly it is hard to imagine Labour voting against them.
So, with that in mind, what does the Conservative manifesto say about employment law and how might we expect things to change?
National Living Wage
The Conservatives have pledged to continue to increase the National Living Wage to 60 per cent of median earnings by 2020 and then by the rate of median earnings. To recap, on 1 April 2016 the government introduced the National Living Wage for over 25s. This is currently £7.50 an hour, as compared to £7.05 for the National Minimum Wage (for 21 – 24 year olds). According to the Institute for Fiscal Studies the promised increases to the National Living Wage would take the rate to £8.75 per hour by 2020, which is 5% higher than if it were increased in line with average earnings.
The Conservatives have promised to legislate to make executive pay packages subject to strict annual votes by shareholders. The current practice in large companies is that a Remuneration Committee with delegated authority will set executive pay, so this proposal does go quite a step further. Listed companies will also have to publish the ratio of executive pay to broader UK workforce pay. Further, there is a pledge to commission an examination into the use of share buybacks with a view to ensuring these cannot be used artificially to hit performance targets and inflate executive pay.
Since Theresa May’s leadership bid last year she has promised to put workers on boards in a bid to make companies more accountable to their workforce and to increase employee engagement. The actual manifesto promise in this regard is far more watered down than expected as it only applies to publically listed companies. What has been promised is that the law will be changed to ensure that listed companies will be required to either:
- nominate a director from the workforce;
- create a formal employee advisory council; or
- assign specific responsibility for employee representation to a designated non-executive director.
In addition, subject to “sensible safeguards” the Conservatives say they will introduce, for employees, a right to request information relating to the future direction of their company.
The manifesto contains a promise that a Conservative government will “act to ensure that the interests of employees on traditional contracts, the self-employed and those people working in the ‘gig’ economy are all properly protected.” This refers to the Taylor Review commissioned by the government in October last year. Matthew Taylor (Chief Executive of the Royal Society of Arts) is compiling a report called “Employment Practices in the Modern Economy”. The catalyst for the review has been the widely reported concerns around the employment rights (or lack thereof) of those working in the “gig economy” where notionally self-employed individuals work “gigs” or specific “jobs” for organisations and in return have the flexibility to work when they want and for whom. The report is due later this month and we are told to expect some radical proposals, though there has been some criticism that the scope of the report does not extend to looking at tax and national insurance which are both crucial drivers for companies within the gig economy. It should be borne in mind that Theresa May has only promised to “consider” the proposals set out in that report and “act to ensure” that the interests of all these types of worker are “properly protected” which does not guarantee any change. Watch this space.
Workers’ rights after Brexit
The Conservative manifesto contains a promise that workers’ rights conferred on British citizens from membership of the EU will remain. This is not as heroic a promise as it appears. Bearing in mind the UK will leave the EU in March 2019, only three years will remain of the government’s term in which they could have potentially started legislating to strip back workers’ right if they wanted to. What with possible transitional arrangements and other far more important matters to address, such as striking a trade deal with the EU and other countries, it is unlikely the newly formed government could feasibly make any changes even if it had the willpower to do so.
The Conservatives have promised to roll out some new family friendly rights and benefits:
- 30 hours of free childcare for three and four year olds of working parents who find it difficult to manage the cost of childcare;
- a new statutory right to unpaid time off for caring;
- a new right to child bereavement leave.
It will be interesting to see how the time off for caring will work in practice and whether it will function in the same way as maternity leave whereby employees who take this leave for the full year will not have an absolute right to return to the same job.
Equality law and disability
The manifesto provides rather vaguely that a Conservative government will “strengthen the enforcement of equalities law” so that private landlords and businesses who deny people a service on the basis of ethnicity, religion or gender are properly investigated and prosecuted”. This is an interesting and somewhat puzzling proposal for a number of reasons.
- Section 29 of the Equality Act 2010 already prohibits discrimination in the provision or services.
- The word “prosecuted” implies the introduction of possible criminal sanctions for discrimination; and
- There are some notable absences in that list of protected characteristics, namely, sexual orientation, disability, gender reassignment.
There is a particularly interesting promise in the manifesto that the Equality Act 2010 would be extended to cover discrimination against those suffering from mental health conditions that are “episodic and fluctuating”. Conditions of this nature are most likely to be episodic bouts of depression and anxiety which do not necessarily satisfy the current test for a disability.
Gender pay gap
The Conservatives have promised to make companies with more than 250 employees which are caught by the new Gender Pay Regulations publish more data on the pay gap between men and women. At the moment it is widely agreed that the information companies are currently required to publish is very limited and provides an overly basic illustration of the actual difference between pay which entirely lacks context. Further information would be welcome.
There is also mention in the manifesto that the Conservatives will “push for an increase in the number of women sitting on boards of companies”. What exactly “push” means in this context is not at all clear but short of quotas the options might be that companies may have to publish the gender ratio of their boards. This would certainly be in line with the current softly-softy approach of encouraging companies to diversify themselves to avoid negative PR.
Race / ethnicity gap
Following hot on the heels of gender pay reporting the Conservatives have also pledged that large employers will also be asked to publish information on the pay gap between people from different ethnic backgrounds.
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