What might the election result mean for employment law?

Clearly, this outcome gives rise to major uncertainty and it remains to be seen what the political fallout will be. Theresa May’s position as prime minister is now under pressure, but she has so far refused to resign and promised a “period of stability”. While it is very difficult to predict what might transpire over the next few days and weeks, it seems most likely that the Conservatives - as the party with most MPs - will form the next government, possibly relying on the support of the Democratic Unionist Party.

If this does happen, a Conservative government would not have a particularly strong mandate to implement the policies in the party’s manifesto, regardless of whether Theresa May remains at the helm. Nonetheless, in this article, we look back over the main pledges and outline the changes we might expect to see in relation to employment law.

Employment issues were quite prominent during the election campaign, reflecting the Conservatives’ aspiration to supplant Labour as the “workers’ party”. Theresa May made the rather bold assertion that she was promising “the greatest expansion in workers’ rights by any Conservative government in history”. It now remains to be seen whether that claim will translate into any concrete reforms over time.

Brexit

The election result creates a cloud of uncertainty over the forthcoming Brexit negotiations with the EU. Some commentators are already suggesting that these could be derailed and may need to be postponed, while others are claiming that the prospects of a so-called “Hard Brexit” are now diminished.

In relation to Brexit, the Conservative manifesto restated the party’s commitment to enact a “Great Repeal Bill” to convert EU law into UK law at the point of departure, including all EU-derived rights and protections for workers. Parliament would subsequently “be able to pass legislation to amend, repeal or improve any piece of EU law it chooses”, but the manifesto offered no hints about specific employment law reforms that might ensue.

The Conservative manifesto said that the Human Rights Act 1998 would not be repealed or replaced while Brexit is underway, but the UK legal framework would be considered once the process of leaving the EU has concluded. This leaves open the possibility that a new Conservative government might resurrect previous plans under David Cameron’s government to replace the Human Rights Act with a “British Bill of Rights”. Such an outcome appears increasingly likely in the aftermath of the recent terrorist attacks, with Mrs May having said that she would “rip up” human rights laws.

Gig economy

As might be expected, the Conservative manifesto alluded to the topical issue of the “gig” economy, pointing to the review of employment practices that has been commissioned from Matthew Taylor. While not pre-empting his report with any specific commitments, the manifesto said that a new Conservative government “will act to ensure that the interests of employees on traditional contracts, the self-employed and those people working in the ‘gig’ economy are all properly protected”.

We understood from sources close to the Matthew Taylor report that there were plans to publish it within days of the election. That timetable might now slip due to the inevitable political uncertainty following the result, but we can expect to see further developments in the relatively near future.

On a related topic, we would not expect to see any more changes to zero-hours contracts under a Conservative government. Both Labour and the Liberal Democrats proposed new rights for those working under such arrangements, but the Conservative manifesto was silent on the issue.

Employment Tribunal fees

The Conservative manifesto made no mention at all of Employment Tribunal fees, despite recent criticisms from the Justice Committee and the Women and Equalities Committee, among others, that fees have eroded access to justice. This issue seems to be settled for the time being if the Conservatives are in power.

Disability discrimination

The Conservatives have promised to “transform how mental health is regarded in the workplace”, one aspect of which would involve extending protection under the Equality Act 2010 to mental conditions that are episodic and fluctuating. This would probably be implemented via an amendment to the definition of “disability”.

Gender pay gap reporting

The Conservatives appeared to indicate in their manifesto that they would extend the gender pay gap reporting regime by requiring companies with more than 250 employees to “publish more data on the pay gap between men and women”. This pledge is unhelpfully vague and we would hope that any changes made would not impact upon any work that has already been done in complying with the new regulations. In our experience, they are already proving challenging for employers to get to grips with.

There were rumours that the Tory manifesto would include mandatory race pay gap reporting, but in the event it merely stated that they would “ask large employers to publish information on the pay gap for people from different ethnic backgrounds”. This suggests a voluntary system rather than a legal duty (at least initially). In the medium term (5+ years), mandatory race reporting may become more of a possibility, so forward-thinking employers might wish to start giving it some consideration.

Family rights

Although it did not go into detail, the Conservative manifesto included two significant commitments on workplace family rights:

• A new statutory entitlement to leave for carers. This is likely to be a right to take up to a year’s unpaid leave for workers whose family members require full-time care. As it is unpaid, we would expect take up of this new right to be relatively low.
• A new right to child bereavement leave (possibly up to two weeks).

The Conservatives also plan to take steps to improve the take-up of shared parental leave and introduce measures to assist parents and carers in returning to the workplace after taking time out to look after children or support elderly relatives. A further commitment in the manifesto was the extension of the right to request unpaid time off for training to all employees (which currently applies only to employers with 250 or more staff).

Employee representation

One of the early announcements of Theresa May’s premiership was a pledge that employees should be represented on company boards. This did not emerge in the Conservative manifesto as a full-blown legal requirement to appoint worker directors, but it did state that the law would be changed to require listed companies to implement one of the following measures:

• Nominate a director from the workforce.
• Create a formal employee advisory council.
• Assign specific responsibility for employee representation to a designated non-executive director.

 Corporate governance

The Conservatives are committed to consulting on how to strengthen corporate governance for privately owned businesses and introduce a right for employees to request information on the future direction of their company (“subject to sensible safeguards”).

In addition, a new Conservative government would be expected to: 

• Legislate to make executive pay packages subject to strict annual votes by shareholders.
• Require listed companies to publish the ratio of executive pay to broader UK workforce pay.
• Investigate share buybacks, with a view to ensuring businesses cannot use them to inflate executive pay artificially.

Low pay

With regard to the national minimum wage (NMW) and the national living wage (NLW) (which is essentially a premium on top of the NMW for those aged 25 or over), the Conservative manifesto focused on the latter. It confirmed that the NLW would be increased to 60% of median income by 2020 and then subsequently raised in line with median earnings. (Notably, the manifesto made no mention of equivalent increases for the other rates of the NMW).

Trade unions

Finally, one significant omission from the Conservative election platform was any mention of further reforms in relation to trade unions and industrial action, a decision having apparently been reached that the recent changes in the Trade Union Act 2016 are sufficient for the time being. This may well have disappointed the 50 or so Tory MPs who earlier this year called for tougher anti-strike laws in response to the Southern Rail dispute.