Theresa May surprised us all when she called this month’s election, but she in turn was surprised by the result, which has left the UK with no party with a majority of seats in the House of Commons. Mrs May intends to form a minority government with assistance from the Democratic Unionist Party (DUP).
Earlier this year, the last government was forced to drop proposals announced in the Budget to increase National Insurance Contributions for the self-employed, because the Conservatives’ winning manifesto had promised not to raise National Insurance.
In the circumstances, the government is focussing on a smaller number of legislative initiatives than were contained in the Conservative manifesto. The Queen’s Speech this week set out new laws planned for the next two years. What does this mean for HR and employment lawyers?
What’s in the Queen’s Speech…
This will be crucial. The Queen’s Speech promises 27 Bills in a legislative programme intended to deliver a Brexit deal that works for all parts of the United Kingdom, and builds a “stronger, fairer country by strengthening our economy, tackling injustice and promoting opportunity and aspiration”.
The Conservative manifesto promised that EU-derived workers’ rights will remain, and the DUP said that it would not only maintain the framework of existing rights, but that the UK would “lead the way in improving this framework as it has throughout its history”.
This manifesto promise would bind the government only so long as this government lasts – until 2022 at the latest.
The Repeal Bill will, with the exception of immigration (see below), convert existing EU law into UK law. The UK is committed to implementing the General Data Protection Regulation (which comes into force on 25 May 2018) while it remains an EU member state. A new Data Protection Bill will fulfil the Conservative manifesto commitment to ensure that the UK has a data protection regime fit for the 21st century.
A new Immigration Bill will allow for the repeal of EU law on immigration, including free movement. The migration of EEA nationals and their family members will be subject to the relevant UK law once the UK has left the EU. The Queen’s Speech does not, however, provide any further details of what this law might be.
The national living wage
The Queen’s Speech promised, as set out in the Conservatives’ manifesto, to increase the National Living Wage (the minimum hourly wage paid to workers aged 25 or over) so that people who are on the lowest pay benefit from the same improvements in earnings as higher paid workers. The DUP’s manifesto also promised to increase the National Living Wage, although did not give details. The National Living Wage is currently £7.20 per hour.
When the NLW was introduced, it was promised that it would reach £9 by 2020. The Institute of Fiscal Studies has calculated that the Conservatives’ manifesto promises are acted upon, this will mean the NLW would be £8.75 per hour in 2020 (5% higher than if it were increased in line with average earnings).
Enforcement of the national minimum wage is also crucial. The DUP promised to take firm action against companies who fail to pay their staff properly. There is no detail of changes to enforcement rules at present.
Modern work, employment status and the gig economy
Modern ways of working, including issues surrounding the gig economy and the employment status of individuals, have been a hot topic for some time. In October 2016, the Prime Minister asked Matthew Taylor to carry out a review into modern working practices. His report was expected after the election, but has not yet been published.
The Conservative manifesto promised to listen to the findings of that report, and the Queen’s Speech says that, “Ministers will seek to enhance rights and protections in the modern workplace.” The government believes that employers must take their employment law responsibilities seriously, which will include proper pay and the rights to which workers and employees are legally entitled. However, no further detail is given of how these rights and protections will be enhanced at present.
Gender pay gap and discrimination
Earlier this year, mandatory gender pay gap reporting was introduced for employers with 250 or more employees. The gender pay gap for all employees is currently 18.1%, and a McKinsey report estimates that increasing gender equality in work could add £150 billion to the UK economy by 2025.
The Queen’s Speech promised that the government will make further progress to tackle the gender pay gap and discrimination against people on the basis of their race, faith, gender, disability or sexual orientation (age was not mentioned).
National Insurance contributions
A new National Insurance Contributions Bill will include changes to National Insurance contributions previously announced in the 2016 Budget, and the Autumn Statement 2016.
The previous government’s plans to change the taxation of termination payments was dropped in order to pass the most recent Finance Act. However, it was previously announced that national insurance contributions and tax on termination payments above £30,000 would be aligned, so this may be included in the new Bill. Although not mentioned in the Queen’s Speech, it is possible that the tax changes to termination payments will also be resuscitated.
…and what’s not
Corporate governance and executives
At the moment, large companies have remuneration committees, who set executive pay levels. The Conservative manifesto promised new legislation that would require executive pay packages to be approved annually by shareholders.
Transparency – demonstrated by the modern slavery and gender pay gap information reporting regulations – has been a trend of the last Parliament. This is expected to continue, with the Conservatives stating that large companies would be required to publish the ratio between executive and average pay. There was also a pledge to examine the use of share buybacks, which it is believed may be used to hit performance targets artificially, therefore inflating executive pay.
When Theresa May became Prime Minister last year, she said that she would make companies more accountable to their workforce by putting worker representatives on boards. However, the actual manifesto contained only a requirement that listed companies would have to:
- Nominate a director from the workforce, or
- Create a formal employee advisory council, or
- Assign specific responsibility for employee representation to a designated non-executive director.
Employees will also be given a right to request information relating to the future direction of the company for which they work (subject, says the manifesto, to “sensible safeguards”).
Time off to care for sick relatives
During the election campaign, Theresa May announced that the Conservatives would introduce a legal right to up to a year off to care for sick relatives. This was not referenced directly in the Queen’s Speech.
Labour and the Liberal Democrats both promised to review tribunal fees. Neither the Conservatives nor the DUP touched on this issue in their manifesto.
The Supreme Court’s decision in the Unison judicial review case is awaited.