The post below was first published on our Employment blog.
Employment rights have been a key political battleground during both the Brexit process and the current general election campaign and, unsurprisingly, the approaches of the two main political parties are very different. On Brexit, the Conservatives seek to reserve the right to deviate from EU employment laws while also committing to maintain high standards of workers’ rights; on domestic policy their approach is largely business as usual, building on, rather than reforming, existing employment law. In contrast, Labour is committed to dynamic alignment with EU laws on workers’ rights and, domestically, to shift the balance of power back towards workers. It is proposing “the biggest extension of workers’ rights in history”. The outcome of the 2019 election therefore has the potential to fundamentally reshape the landscape of industrial relations and employment rights, and to significantly restrict employer flexibility.
There are a number of areas where employers are likely to see change in the fullness of time, whatever the outcome. All the major parties focus on the themes covered by the Theresa May-commissioned Taylor Review on modern working practices, including atypical workers and employment status, flexible work, family leave, and better enforcement of employment rights, although there are variations in approach. All the manifestos also make proposals in the areas of pay gap reporting and discrimination, along with changes to the apprenticeship regime.
The key differences lie in Labour’s proposals to empower unions, through mandatory sectoral collective bargaining and the repeal of legislative restrictions on industrial action, and in its proposals on working hours and employee involvement in company ownership and governance. Heading this sea-change would be a new Ministry for Employment Rights, to ‘give working people a voice at the Cabinet table’. Given the scale of the proposed changes, it would be a tall order to implement these within even a five year parliament. And of course a minority Labour administration would likely struggle to implement some of the more radical proposals, although it would receive support from Liberal Democrats and the SNP in a number of areas as noted below.
Labour pledges include:
- the roll-out of sectoral collective bargaining, enabling trade unions to negotiate minimum standards on ‘a wide range of issues’ including wages and working hours for whole sectors; this would be a radical change affecting an estimated 20 million employees.
- to strengthen and enforce unions’ right of entry to workplaces to organise, meet, represent and recruit members (the Liberal Democrat manifesto also mentions strengthening unions’ right to entry)
- rolling back the restrictions imposed on unions by the Trade Union Act 2016 (this increased the thresholds for ballots for industrial action and imposed tighter information and timing requirements) and permitting electronic balloting for industrial action
- simplifying the process for unions to require employers to formally recognise them for collective bargaining purposes
- enhancing legal protections for union representatives
- a legal right to worker consultation on the introduction of new technology in the workplace, although it is unclear whether this would encompass a right to veto. This taps into rising public concerns about the use of AI and automation in the workplace, which was identified as the key trigger for increasing employee activism in our recent Future of Work report (click here).
All the parties also focus on the need to retrain British workers in light of increasing automation, with various differing proposals for training funds and for reforms of the current apprenticeship scheme. For example, Labour propose allowing the Apprenticeship Levy to be used for a wider range of training and requiring 25% to be used for training Climate Apprentices.
A key focus of the Taylor Review concerned the current classification of individuals as employee, worker, or self-employed, and the rights that go with each status, particularly in the context of new forms of working in the gig economy. Notably, the Conservative manifesto is silent on their plans in this respect, perhaps still being finalised, but all of the other parties’ manifestos support reform. The most radical proposal is from Labour, which suggests removing the distinction between workers and employees and giving everyone except the genuinely self-employed ‘full rights from day one’ along with a ban on probation periods. This would presumably mean that everyone apart from the genuinely self-employed would be able to bring an unfair dismissal claim from day one of the job, rather than needing two years’ service as currently. Although this would take away an incentive for those without sufficient service to look for a whistleblowing or discrimination angle to dismissal claims (as those are day one rights), such a radical change would make recruitment decisions even more critical for all employers. It would also present a significant challenge to the business models for gig economy employers.
The Liberal Democrats’ proposal is less radical, suggesting a new ‘dependent contractor’ status to replace that of workers, but it is unclear to what extent this would be more than a change of label. They also propose moving the onus onto the employer to prove status at tribunal.
The Liberal Democrat and SNP manifestos both commit to a review of the May government’s proposals to extend the IR35 reforms to the private sector from next April. (These reforms basically shift responsibility for ensuring correct tax treatment for contractors providing their services through personal service companies from the PSC to the end-user, where the end-user is a medium or large private sector company. There has been a growing campaign by contractors to try and stop those changes, particularly as a number of large companies have already responded by announcing they will no longer use these workers.)
Neither Labour nor Tory manifesto mention this issue, but both parties have now publicly announced a commitment to review the proposed changes. However, given that the changes are due for April 2020, companies need to carry on their preparations for the time being.
Zero hours, atypical workers
The Taylor Review also made various recommendations about atypical and zero hours workers, and again this topic features in a number of the manifestos.
Theresa May’s government consulted on measures on this over the summer and the Conservative Manifesto confirms an intention to go ahead with new rights in this area. Although no detail is set out, that presumably means the May proposals for workers to be given reasonable notice of their working hours and compensation for shifts being curtailed or cancelled, along with a right to request a contract that reflects actual normal working hours, with limited grounds for refusal by the employer. The Tories have not yet said at what point they propose that this right to request would apply; Labour have suggested a similar right applying after 12 weeks’ work and the Liberal Democrats after 12 months.
Labour is also proposing an outright ban on unpaid internships and on zero-hours contracts (which is supported by the SNP) while the Liberal Democrats suggest a higher minimum wage for zero-hours workers at times of normal demand (this was one of the ideas proposed by Matthew Taylor but rejected by the Low Pay Commission).
Equality and discrimination
Although equality and discrimination features in all the manifestos, the Conservatives are the least specific. They acknowledge the need to tackle discrimination and address the complex reasons why some groups earn less at work, and to improve the quality of evidence and data within government about the types of barriers groups face. However, although not mentioned in the manifesto, it is probably safe to assume they would also continue with the reforms to non-disclosure agreements and third party harassment proposed and consulted on earlier this year.
In contrast, Labour has announced a number of bold initiatives both in the main manifesto and in supplementary manifestos on race and disability published in recent days. These are in part aimed at achieving their intention to close the gender pay gap by 2030. It proposes a new Department for Women and Equalities with a full-time Secretary of State, an independent National Women’s Commission and a Treasury Race Equality unit to drive progress. It has committed to extending reporting obligations to cover:
- the gender pay gap for employers with 50+ employees by the end of 2020, with a new obligation on in scope employers to obtain government certification on gender equality or face further auditing and fines
- the race pay gap (employer size not specified)
- the disability pay gap for employers with 250+ employees
- the number and proportion of disabled people employed (and, although not entirely clear, probably also similar breakdowns by gender, race and all other protected characteristics)
- devising and implementing plans to eradicate the above pay gaps with fines for non-compliance.
There are also (unspecific) commitments on workplace harassment including third party harassment, to give statutory rights to equalities representatives, and to make the state responsible for enforcing equal pay legislation.
Labour has other more novel initiatives in this area too – the manifesto mentions introducing a new ground of prohibited discrimination on the basis of socio-economic disadvantage, as well as separating disability leave from sick leave, improved rights for the terminally ill, and a new more prescriptive code on reasonable adjustments for disability which would include clearer guidance on what amounts to ‘reasonable’ and timescales for implementation of adjustments. They would introduce a government-backed Reasonable Adjustments Passport scheme to assist workers to move between jobs more easily and would also launch an inquiry into name-based discrimination within the first 100 days of a Labour government and, if necessary, consider rolling out name-blind recruitment practices.
There is considerable overlap with Liberal Democrat policy in this area, which proposes an obligation on larger employers to report gender, BAME and LGBT+ employment levels and pay gaps and encouraging the use of name-blind recruitment. The SNP manifesto supports tougher action on the gender pay gap including fines.
Flexible work and parental rights
Currently only employees with 26 weeks’ service can make a request for flexible work which the employer can refuse on certain grounds. The Conservatives propose consulting on making flexible working the default “unless employers have good reasons not to”; both Labour and the Liberal Democrats propose making it a right from day one of employment and possibly also tightening the grounds for an employer to refuse a request.
Changes on parental leave rights are likely whatever the outcome of the election. Earlier this year the May government published consultations on a number of proposals, including neonatal care leave and extending priority over vacancies to those made redundant during the six months after maternity leave. The Conservative manifesto confirms an intention to proceed with these, to introduce one week’s carers’ leave (trailed in the Government Equality Office’s roadmap for gender equality published in the summer), and to look at ways to make it easier for fathers to take paternity leave. Although not mentioned, the Parental Bereavement (Leave and Pay) Act is also expected to come into force in 2020 (once detailed regulations have been implemented) and will provide for two weeks’ leave (paid if eligible) for parents who lose a child under the age of 18 or who suffer a stillbirth after 24 weeks of pregnancy.
The Conservatives are yet to formulate their response to two other consultations: first, on requiring larger employers to publish their policies on flexible work and family-related leave and pay and requiring all employers to set out their approach to flexible working in job adverts (proposals which are included in the Liberal Democrat manifesto); second, on a potentially radical re-design of family leave and pay (the consultation on this only ended on 29 November 2019). An evaluation of shared parental leave is also due, and the GEO roadmap mentioned the possibility of requiring employers to publish retention rates for employees returning from parental leave.
Labour commits to review family-friendly rights, and specifically pledges doubling paternity leave from two to four weeks (the Liberal Democrats favour six weeks), increasing the period of statutory maternity pay from nine to twelve months (also supported by the SNP), and increasing statutory paternity pay. Pregnancy protection is to be extended, including a ban on dismissing pregnant women without prior approval from a state inspectorate, and Labour also supports statutory bereavement leave, ten days’ paid leave for domestic abuse victims, and better rights for menopausal women (including requiring larger employers to have a menopause policy).
The Liberal Democrats want to ensure parental leave is a day one right while the SNP focuses on changes to encourage fathers to take leave.
Working time and pay
Labour proposes to achieve its headline-grabbing pledge for a 32 hour average maximum working week with no loss of pay within a decade, by productivity increases, ending the ability to opt-out of the maximum 48 hour week, mandating bargaining councils to negotiate reductions in working time, and setting up an independent Working Time Commission to advise. It also pledges four new bank holidays, pay for breaks during shifts, and the rapid introduction of a £10 an hour Real Living Wage for all workers aged 16 and above. These proposals would obviously represent considerable additional cost for employers.
The Conservative manifesto repeats its intention to increase the National Living Wage to £10.05 per hour by 2024 for workers aged 21+, and to introduce the legislation presented to Parliament pre-dissolution to require employers to pass on tips to workers.
One area where all the main parties agree is in the need for a body with stronger powers to enforce key employment rights. The Conservative manifesto refers to the creation of a single enforcement body covering sick pay and tips; it is possible that its remit would also extend to holiday pay for vulnerable workers, umbrella companies, the national minimum wage, employment agencies, and gangmasters and labour exploitation (these were the suggestions when the proposal was consulted on over the summer).
Labour and the Liberal Democrats also propose a new, powerful enforcement body. The Liberal Democrats’ Worker Protection Enforcement Authority would protect those ‘in precarious work’, whereas Labour perhaps envisage a broader remit for their Workers’ Protection Agency to cover enforcement of many more workplace rights. The Labour manifesto mentions the real living wage and equal pay legislation, and also says that the body would be able to inspect workplaces and bring prosecutions and civil proceedings on workers’ behalf. There is a reference to keeping employment tribunals free to use and extending their powers as well as setting up new Labour Courts, but with no further detail provided.
Inclusive ownership funds and corporate governance
One of Labour’s radical proposals is the idea of requiring large companies to set up an Inclusive Ownership Fund, so that up to 10% of a company would be owned collectively by employees and 10% of any dividends would be distributed to employees each year up to a £500 per employee cap. Labour also plan to require one third of seats on boards to be reserved for elected worker-directors and to give them more control over executive pay.
The Liberal Democrats also pledge more moderate reforms: giving staff in listed companies with 250+ employees a right to request shares to be held in trust for the benefit of employees, and strengthening worker participation in decision-making, including staff representation on remuneration committees. They would require all UK-listed companies and large private companies to have at least one employee director on their boards and that executive pay policies be subject to a binding and public shareholder vote. The SNP also supports increased worker representation on company boards.
Of course, manifesto pledges are not binding, and a degree of pragmatism and flexibility in implementing the proposals outlined above is likely to necessary whatever the outcome. But the above, lengthy list of possible changes at the very least promises ‘interesting’ times ahead for HR practitioners