Outlook video: New Government

XpertHR's head of content Jo Stubbs and group editor David Shepherd discuss prospects for employment law and the workplace under the new coalition Government. 

 

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The questions in full:

We now have the coalition Government's "Programme for government" - what plans does it set out for employment?
There are several proposals that will be of interest to employers, including the promise to cut red tape by introducing a "one-in, one-out" rule whereby no new regulation is brought in without another regulation being cut by a greater amount. 

The Government also says it is going to apply "sunset clauses" to legislation to ensure that the need for each piece of legislation is regularly reviewed. 

In addition, it says that it will review employment laws to ensure that they maximise flexibility for both parties, while protecting fairness and providing a competitive environment for enterprise to thrive. 

What does "maximising flexibility" mean?
This point about reviewing employment laws to ensure that they maximise flexibility for both parties and provide a competitive environment has been welcomed by some business groups, which have read it to mean that employment law is currently skewed in favour of employees and that the Government intends to reverse this trend. Reading between the lines, this might mean changes to the law on unfair dismissal - perhaps an increase in the qualifying period (it was reduced from two years to one, by the Labour Government in 1999), or the exclusion of employees in small businesses from the right to claim unfair dismissal, both of which could be done without the need for primary legislation. 

Another area that may be affected is redundancy. Prior to the election, the Conservatives had talked about possible incentives for employers to find alternative work for potentially redundant employees and a greater onus being placed on employees to seek alternative employment in the organisation. There was a suggestion that employees in some sectors such as financial services opt for a redundancy payment when suitable alternative employment exists. 

And what about the "one-in, one-out" rule?
It will be interesting to see how this works in practice. The Government is, for example, proposing to extend the right to request flexible working to all employees – so presumably this will require another piece of legislation to be cut by a greater amount. The question is, which one? One of the problems for the Government in getting rid of existing employment legislation will be that much of it is the result of EU Directives. 

So what does the Government have to say about Europe?
It is going to put an end to the "gold-plating" of EU Directives - this is the practice of going beyond what is strictly necessary to implement EU legislation, perhaps by adding procedural requirements, or applying more rigorous penalties. One area where the UK has gone beyond the requirements of the relevant Directive is the inclusion in the Transfer of Undertakings (Protection of Employment) Regulations 2006 (SI 2006/246) of service provision changes in the definition of a TUPE transfer. Another is the introduction of an additional 1.6 weeks’ leave on top of the four weeks required by the Working Time Directive (2003/88/EC), but removal of this additional minimum annual leave entitlement would be unlikely to be popular among the UK workforce, even if it might be welcomed by some elements of business. 

The Government has also said that it will ensure that no further sovereignty or powers are transferred to the EU. In addition, it has promised to examine the balance of the EU’s existing competences and, in particular, to work to limit the application of the Working Time Directive in the UK. This is likely to mean a fight to maintain the opt-out from the 48-hour maximum working week that it currently takes advantage of. It will also be interesting to see how the new Government approaches the amendments to the Working Time Regulations 1998 (SI 1998/1833) that the previous Government conceded were necessary following the European Court of Justice rulings in Stringer and others v HM Revenue and Customs sub nom Commissioners of Inland Revenue v Ainsworth and others; Schultz-Hoff v Deutsche Rentenversicherung Bund [2009] IRLR 214 ECJ and Pereda v Madrid Movilidad SA [2009] IRLR 959 ECJ concerning the relationship between annual leave and sickness. Gordon Brown’s Government had promised a consultation on this issue this summer. 

Of course, in practice, the Government is limited in what it can do to amend or avoid legislation emanating from Europe. The last Conservative Government’s opt-out of the social chapter of the Maastricht Treaty was brought to an end after the Labour Government came into power in the late 1990s. 

It is, however, worth noting that there is some speculation that changes that Germany is demanding to the euro regime could require renegotiation of the Lisbon Treaty, and it is hard to imagine this occurring and David Cameron not seeking to repatriate various social and employment powers. 

What does the agreement say about the national minimum wage, one of the key elements of the last Labour Government’s reforms?
The coalition says that it "supports" the minimum wage because of the protection that it gives to low-income workers and the incentive for people to work that it provides. However, it is relatively non-committal, and has not, for example, made a commitment to continue to set the rate on the basis of the Low Pay Commission’s recommendations. 

What does the new coalition mean for the default retirement age?
This is to be phased out, rather than abolished immediately. As yet, we have no timescale for this. 

 

The coalition's "Programme for government"

The main points of interest for employers in the Programme for government (PDF format, 475K) (on the Cabinet Office website): 

General

  • We will cut red tape by introducing a "one-in, one-out" rule whereby no new regulation is brought in without other regulation being cut by a greater amount. 
  • We will impose "sunset clauses" on regulations and regulators to ensure that the need for each regulation is regularly reviewed. 
  • We will review employment and workplace laws, for employers and employees, to ensure they maximise flexibility for both parties while protecting fairness and providing the competitive environment required for enterprise to thrive. 

Public sector

  • We will have a full review of the terms and conditions for police officer employment. 
  • We will undertake a fair pay review in the public sector to implement our proposed "20 times" pay multiple. 
  • We will require public bodies to publish online the job titles of every member of staff and the salaries and expenses of senior officials paid more than the lowest salary permissible in Pay Band 1 of the Senior Civil Service pay scale, and organograms that include all positions in those bodies. 
  • We will require anyone paid more than the Prime Minister in the centrally funded public sector to have their salary signed off by the Treasury. 
  • We will introduce new protections for whistleblowers in the public sector. 

Specific sectors

  • We will bring forward detailed proposals for robust action to tackle unacceptable bonuses in the financial services sector; in developing these proposals, we will ensure they are effective in reducing risk. 
  • We will seek to ensure an injection of private capital into Royal Mail, including opportunities for employee ownership. We will retain Post Office Ltd in public ownership. 

Equal opportunities

  • We will look to promote gender equality on the boards of listed companies. 
  • We will extend the right to request flexible working to all employees, consulting with business on how best to do so. 

Pay and tax

  • We support the National Minimum Wage because of the protection it gives low-income workers and the incentives to work it provides. 
  • We will increase the personal allowance for income tax to help lower and middle income earners. We will announce in the first Budget a substantial increase in the personal allowance from April 2011, with the benefits focused on those with lower and middle incomes. This will be funded with the money that would have been used to pay for the increase in employee National Insurance thresholds proposed by the Conservative Party, as well as revenues from increases in Capital Gains Tax rates for non-business assets as described below. The increase in employer National Insurance thresholds proposed by the Conservatives will go ahead in order to stop the planned jobs tax. 
  • We will further increase the personal allowance to £10,000, making real terms steps each year towards meeting this as a longer term policy objective. We will prioritise this over other tax cuts, including cuts to Inheritance Tax. 

Pensions and retirement

  • We will phase out the default retirement age and hold a review to set the date at which the state pension age starts to rise to 66, although it will not be sooner than 2016 for men and 2020 for women. We will end the rules requiring compulsory annuitisation at 75. 
  • We will simplify the rules and regulations relating to pensions to help reinvigorate occupational pensions, encouraging companies to offer high-quality pensions to all employees, and we will work with business and the industry to support auto enrolment. 
  • We will commit to establishing an independent commission to review the long-term affordability of public sector pensions, while protecting accrued rights. 
  • We will restore the earnings link for the basic state pension from April 2011, with a "triple guarantee" that pensions are raised by the higher of earnings, prices or 2.5%. 

Immigration

  • We will introduce an annual limit on the number of non-EU economic migrants admitted into the UK to live and work. We will consider jointly the mechanism for implementing the limit. 

Criminal records

  • We will review the criminal records and vetting and barring regime and scale it back to common sense levels. 

Unemployment

  • We will end all existing welfare to work programmes and create a single welfare to work programme to help all unemployed people get back into work. 
  • We will seek ways to support the creation of apprenticeships, internships, work pairings, and college and workplace training places as part of our wider programme to get Britain working. 

 

HR implications of new Government

With a Conservative-Lib Dem coalition focusing on economic stability, reforms affecting the workplace could be put on the back burner for some time. Personnel Today assesses the implications for HR.