Rachel Ashwood, Senior Associate, writes:
Five years ago, I was asked to write an article for a leading employment law publication on what the Labour Government did for employment law. I recall at the time (having worked my way through the raft of measures introduced over the ten years that Labour were in office) thinking that whichever party (or as it turns out parties) that was in power next, it would be a safe bet to assume that it would not match the sheer volume of changes introduced by Labour. However, as I now look back at what the Coalition has achieved in its shorter stint leading the country, it becomes very clear that I was wrong on that front.
Where did it begin?
From the earliest days of the Coalition, it pledged to “review employment and workplace laws” to ensure they “maximise flexibility for both parties while protecting fairness and providing the competitive environment required for enterprises to thrive.” Whilst specific policies at that stage were unwritten, the Coalition’s commitment to employment law reform had been hailed.
Next came the Government’s Red Tape challenge, the objective of which (as its name suggests) was to reduce the burden of regulations in all spheres and cut red-tape. In October 2011, it was employment law’s turn for the spotlight, with businesses being asked for their comments on employment related matters which were (at the time) contained in more than 160 different employment regulations. As part of the same challenge, the Department of Business, Innovation and Skills asked Adrian Beecroft,a venture capitalist, to prepare a report on employment law. This widely criticised report (particularly so when it was reputed that the author himself said that he didn’t have time to conduct detailed research into the relevant matters), set the Coalition’s reform ball rolling on some matters but it was certainly not followed (to the relief of most employment lawyers) in full by the Government.
So what have been the most significant changes introduced by the Coalition?
- Unfair dismissal: In April 2012, the qualifying service requirement for ordinary unfair dismissal claims was raised from one to two years. This important change has given employers greater flexibility to dismiss employees during the early stage of the employment relationship, whilst retaining (in very largely the same form) a very valuable employee protection. Connected to this, in April 2013, a cap of one year’s salary was placed on the compensatory award that an Employment Tribunal could award to an employee that it found had been unfairly dismissed. At the time, many thought that the combined effect of these two measures would be a marked increase in claims based on discriminatory treatment (possibly with little merit),which don’t require a period of qualifying service and which are not subject to a cap on compensation. Tribunal fees, however, have quite successfully knocked that concern out of touch (see below).
- Tribunal Reform: From July 2013, any individual looking to bring a claim in the Employment Tribunal has had to pay a fee (subject only to a limited and hideously complex fee remission system). For that claim to proceed to a full hearing, the claimant must pay a further fee, meaning that a relatively straightforward unfair dismissal claim currently costs the claimant £1,250. At the point where the claimant may contemplate challenging the dismissal, it is highly likely that he is operating without an income, and it is therefore not financially viable for him to bring a claim. Or is that an assumption too far? Well the statistics say no. At the end of 2014, Tribunal claims had fallen off the proverbial cliff. Claims were down 77% on the same period in the prior year. Enough said.
- TUPE reform: Certain changes were introduced to TUPE in January 2014. These changes were not as far reaching as had first been imagined, however, they still comprised some useful measures for employers grappling with the complexities of TUPE. Notably, the changes gave employers a degree more flexibility when introducing changes to terms and conditions post-transfer and enabled transferees to begin collective consultation with the transferor’s employees pre-transfer, subject to the agreement of the transferor.
- Flexible working: It would not be a balanced review of the significant changes if I didn’t mention some of the Coalitions’ employee-friendly measures. Leading the way here is the extension of the right to request to work flexibly, to all employees with six months’ qualifying service. No longer is the right limited to those that have caring responsibilities and so now, those that wish to take time off to study or perhaps those that just don’t like Monday very much, can ask their employer to consider varying their work schedule to accommodate these schedules.
- Shared Parental Leave: The right to shared parental leave has been one of the most hotly discussed topics (amongst employment lawyers and HR professionals at least) in recent months. In a nutshell, it allows the mother (or adopter) to serve notice to terminate their maternity leave and gives both parents (or adopters) the right to share the remaining leave and statutory pay. Despite the level of interest raised by this measure, I am somewhat sceptical about how popular the uptake for SPL will be and only time will see what effect it has.
And the least significant (in my opinion…..)?
- Employee shareholder status: Who remembers the introduction of employee shareholder status back in 2013? Yes, that’s right, the important new category of employee who, in exchange for receipt of at least £2,000 worth of shares in their employer’s company, would agree to severely curtail their employment rights, including the right to bring an unfair dismissal claim and their right to a redundancy payment? Whilst the Government has stated that eventually up to 50,000 to 80,000 employees may benefit from the tax incentives offered by this status, take-up for this status has not been significant.
- So what lies on the employment law horizon for the next five years?
Given the current media frenzy for all news stories connected to zero hours contracts, you may be forgiven for thinking that this is the only HR related topic contained in the various (weighty) manifestos. Whilst this is not quite accurate, it is certainly one of the few HR policy areas that all of the main parties have a view on. The truth is of course, that in the absence of either an election result (or a crystal ball), we can only speculate at this stage as to what changes may be on the employment law horizon. However, it is still worth taking a brief look at a handful of policy areas, to see what we can glean from the various manifestos, if for no other reason than to highlight how divergent the policies are across the parties.
- Employment Tribunal Reform: The parties are somewhat divided here, particularly with regards to Tribunal fees. Whilst the Conservatives are understandably happy with the fee regime as it is (and why wouldn’t they be as they are largely responsible for how it operates today), the Green Party has pledged to reduce fees, the Liberal Democrats has pledged to review fees and Labour has pledged to abolish them! Interestingly, for those parties seeking to reduce or abolish fees, it is unclear how they plan to make up the revenue shortfall that would result from this measure.
- Discrimination and Equality: Much of the focus in this area has been on enhancing the rights of female employees. The SNP is pushing for equal representation on public and private boards for men and women. This seems to suggest that if elected, quotas for women on boards may become a reality. The Green party proposes to “make equal pay for men and women a reality”, whilst Labour is committed to requiring the largest companies to publish their gender pay gap.
- Zero hours contracts: The most radical proposal in connection with zero hours contracts has been made by Labour, which has pledged to “ban” these contracts and give workers who work regular hours for at least 12 weeks, the right to a regular contract. The Conservatives in turn have pledged to ban exclusivity clauses (a measure that in fact already received Royal Assent as part of the Business and Enterprise Regulatory Reform Act, shortly before Parliament was dissolved at the end of March). Very importantly, the Liberal Democrats have bravely openly recognised the value that zero hours contracts can potentially have to the economy, in the way they can be positively used to plug holes in the labour market.
- Low Pay: All parties (rather unsurprisingly) pledge to tackle low pay, so finally some consensus across the political divide. Ways of achieving this, however, vary considerably. Labour has pledged to introduce tougher fines for employers that breach minimum wage rules, whereas other parties support a more direct approach by simply raising the minimum wage. Both the manifestos of the SNP and the Conservatives propose measures in connection with the Living Wage, with the SNP pledging to support measures to extend the Living Wage across the UK with the Conservatives adopting a sector based review of this wage.
The above is only intended to be a snapshot of the various HR pledges set out in the manifestos and should, if for no other reason, highlight the divergence between the parties. And this is without even starting to talk about UKIP’s proposal to introduce a two year qualifying period for discrimination claims (which would effectively make it lawful to discriminate in the way a company carries out its recruitment activities)!
It’s clearly been a busy five years in terms of employment law reform. What lies ahead is uncertain, however, as soon as the election result is knows and as soon as the winning party or parties have announced their policy commitments, we shall be publishing a second article to focus on these pledges with a view to demystifying the future employment law landscape.
Join Rachel Ashwod, Roger James and members at Taylor Vinters on 19 May for a breakfast seminar looking at the post-election HR landscape:
www.cambridgenetwork.co.uk/events/employment-law-seminar-may-2015
Places are now limited so book now to secure a place to look at HR policies; focussing specifically on how they are likely to affect recruitment and employment issues in the coming term. The presenters will also consider what preparatory steps you should start thinking about taking, to best prepare yourself and your business for the next five years.