News and Updates

What to expect from the Tories

With the Conservative Party winning an overall majority (if only by 12 seats), and no longer partially restrained by the Liberal Democrats, the question arises as to what affect this have on employment law. The Queens speech on 27 May 2015 highlighted several express Tory ambitions.  We set out below a summary of those changes affecting employment that we know the new government intends to implement.

Trade Unions Bill

The Queen’s speech referred to legislation being brought forward to “reform trade unions and protect essential public services against strikes”.  A Bill has already been developed and it is expected that reforms will include the following:

  • Minimum threshold of 50% of voters to turn out to vote on union ballots (with the requirement for a simple majority of votes in favour).
  • For industrial action in the health, education, fire and transport services, the requirement that 40% of those entitled to vote, vote in favour of striking (in addition to the minimum 50% voting turnout threshold).
  • Prevention of intimidation of non-striking workers during a strike.

In their manifesto, the Conservatives stated they would repeal the “nonsensical” prohibition that is currently in place which prohibits employers using agency workers to cover striking employees. However this is not yet mentioned as part of the Bill.

The Full Employment and Welfare Benefits Bill

The Queen made reference to and the government has stated it wishes to create 3 million new apprenticeships whilst simultaneously curtailing benefits for under-21s.  The aim is to encourage youth education and employment.  However, the apprenticeship system has been criticised on a number of grounds. First, in relation to pay for apprentices.  Currently the hourly national minimum wage (“NMW”) rate is set as follows:

For workers who are 21 and over: £6.50; 18 to 20: £5.13; under 18: £3.79

However if an apprentice is aged between 16 and 18, or is of any age and in his first year as an apprentice, he is only entitled to £2.73 per hour.   This is due to rise in October 2015 to £3.30 per hour.  The Employer is also subsidised by government grants and funding for providing apprentice training. Apprentices are a source of cheap labour.

Secondly, government figures on the age of apprentices joining schemes which were published in March 2015 suggested that currently over 20% of new apprentices are aged 35 or over.  This suggests that the apprenticeship scheme may not be meeting its aims of youth employment as fully as it intends.

The Immigration Bill and the Visa Levy

The government wants to reduce demand for skilled migrant workers and crack down on the exploitation of low-skilled workers. A Bill has been produced which will achieve these aims through the following provisions:

  • Illegal working will be made a criminal offence, allowing wages paid to illegal migrants to be seized as proceeds of crime.
  • Creation of a new enforcement agency with powers to take action against employers who exploit migrant workers.
  • It will be illegal for employment agencies to only recruit from abroad without advertising those jobs in Britain.

In addition the government plans to launch a consultation process to include a “visa levy” in the Bill. Under the plans, companies employing migrants from outside the European Union would be forced to pay the levy. The money would then be used to fund apprenticeships for British and EU citizens.

The Small Business, Enterprise and Employment Act 2015 (“SBBEA”)

The Queen’s speech referred to various measures that the government had already enacted in the SBEEA on 26 March 2015, although most of the operative provisions of that Act have not yet been brought into force.  The changes that the SBBEA will make include the following:

  • Measures to assist employees who are successful in Tribunal claims, to recover their Tribunal awards and agreed payments under COT3 settlement agreements.
  • The imposition of restrictions on public sector exit payments and repayment thereof in the event that employees earning £100,000 return to the public sector within 12 months.
  • Measure to address abuse of zero hours contracts including provision to make exclusivity clauses unenforceable.
  • A limitation on postponements of Tribunal hearings to encourage claims to be resolved more quickly.
  • A requirement for private and voluntary sector employers with at least 250 employees to publish information about their gender pay gap within 12 months of the SBBEA coming into force, namely by Spring 2016.
  • To curtail avoidance of the NMW, the SBBEA will amend the National Minimum Wage Act 1998 so that if an employer fails to pay the NMW it can be exposed to a fine of up to £20,000 in respect of each underpaid worker.

Finance Bill/National Insurance Contributions Bill

This Bill is aimed at ensuring that future increases to the personal income tax allowance are linked to changes to NMW. This means that people working 30 hours a week on the NMW will not pay income tax.  The personal tax allowance is set annually through the Finance Bill.  The Queen’s speech specifically stated that legislation will be brought forward to ensure that there are no rises in income tax rates, VAT rates and National Insurance contributions for individuals, employees and employers for the next five years.

The EU Referendum Bill – The main event

Finally it seems inevitable that a referendum will take place in either 2016 or 2017, amid fears that the vote could damage investment in the UK. The Bill is due to receive its second reading in the House of Commons in early June. The Question will be: “Should the United Kingdom remain a member of the European Union?” Potentially a vote to retreat from the EU could have far reaching consequences with issues such as free movement of persons (and labour), the application of TUPE and the Working Time Regulations/Directive. Currently the implications of an “out” vote are not yet fully understood.

For further information on the issues raised in this article, please contact Helen Wyatt on 020 7925 8083 or by email at helen@spencer-wyatt.com.

 

+44 (0)20 7925 8080 info@spencer-wyatt.com