On the HR horizon following the change in government – what employers need to know

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The Queen’s Speech, delivered on 27 May 2015, set out the government’s proposals relating to employment law for the next five years.

European Union Referendum Bill
There is to be an in-out referendum on membership of the EU before the end of 2017. Much of the UK’s employment law is derived from European Directives – TUPE, working time, agency worker protection, collective redundancy consultation and equality to name but a few. These UK laws would not automatically fall away or be repealed in the event of an EU exit, but it would be open to the government to take active steps to repeal or amend it. Some laws that originally derived from Europe have become enshrined, over time, in contracts of employment and organisational core values (e.g. equal treatment and the right to paid holiday). Our view is that it is unlikely that an EU exit would have an earth-shattering impact on employment law as we know it, and certainly not in the short to medium term.

Replace the Human Rights Act 1998 with a British Bill of Rights
If this proposal comes to pass it is unlikely to have any significant impact on the majority of employers on a day to day HR level. Nevertheless, the fate of the Human Rights Act is of interest to HR practitioners as it has been the centre-piece of many high profile employment cases over the years, for example, those dealing with the right to manifest religious beliefs at work or not to be dismissed for being a member of a right wing political organisation.

Industrial Action
The government proposes a Trade Unions Bill to reform trade union law by introducing the following:

  • A minimum threshold of 50% of eligible voters to turn out to vote on union ballots.
  • In the health, transport, education and fire services (and in addition to the above 50% requirement) a requirement that 40% of those entitled to vote, do vote. Thereafter, a further requirement that at least 50% of those employees vote in favour of strike action.
  • Time limits on mandates following a ballot on industrial action.
  • Transparent opt-in process for the political fund element of TU subscriptions.

Finance Bill/National Insurance Contributions Bill
Future increases to the personal income tax allowance will be linked to changes in the national minimum wage to ensure that people working 30 hours a week on the NMW will not pay income tax. Legislation will be introduced to ensure no rises to income tax, VAT rates and NI contributions for individuals, employers and employees for the next five years.
The government has indicated that it would wish to see the NMW rise to £8 by the end of 2020 and, in the meantime, business that can afford to pay the Living Wage (£7.85 per hour/£9.15 per hour in London) will be encouraged to do so.

Childcare Bill
Free term-time childcare will be increased to 30 hours per week for eligible working parents of children aged 3-4 years.

Immigration and illegal working
David Cameron has made it clear that this government will be taking a strong stance on illegal working. A new Immigration Bill will be introduced to make illegal working a criminal offence and allow wages paid to illegal migrants to be seized as proceeds of crime. No businesses and recruitment agency will be permitted to recruit abroad without advertising in the UK. Employers who employ individuals that do not have the appropriate permission to work and who fail to carry out measures to prevent illegal working are subject to criminal liability. As ever, the reputational risks to a business in falling foul of immigration rules are a significant consideration.

Legislation will be introduced to encourage progress towards meeting a target of 3 million new apprenticeships over the next five years.

Zero hours contracts
Exclusivity clauses in zero hours contracts were made unenforceable from 26 May 2015. There is, however, no actual sanction against employers who continue to include such clauses or who simply refuse to give work to zero hours workers known to be working for other employers.

Public sector termination payments
The government intends to introduce a cap on enhanced redundancy payments in the public sector which will “end six-figure payoffs for the best paid public sector workers”.
Sections 154 to 156 of the Small Business, Enterprise and Employment Act 2015 will be brought into force to require the repayment of public sector termination payments if the individual is re-employed in the public sector within a certain period.

Gender pay reporting
Employers with at least 250 employees will be required to publish the difference between the average pay of their male and female employees. This has already been brought into law as part of the Small Business, Enterprise and Employment Act 2015 and will be implemented within the next 12 months. We recommend that affected employers begin preparing for this now. An organisational pay audit may well be advisable in order to identify and address any significant gender pay anomalies prior to compulsory reporting. Do ensure that any such audit is carried out in such a way as to attract privilege or it will be fully disclosable in any litigation.