Given the polling indications prior to the election, there was a general view that the main parties would not be able to stick to all their manifesto pledges. Instead there would be compromises necessary and deals done with coalition partners. However, of course, that proved not to be the case and we can now be a little more certain as to what the next five years holds for employers.
Industrial Action
Sajid Javid, the newly appointed Secretary of State for Business, Innovation and Skills, has already made public comments about his commitment to reforms in this area. The government will reduce the ability of the unions to undertake strike action in what it sees as essential services (such as health, transport and education). Many commentators are speculating as to whether such legislation will be rolled out to other sectors in due course. The government will also legislate to reduce the ability of the unions to undertake strike action based on historic ballot results, and reverse current restrictions that ban employers from using agency workers to cover strikes. The latter would have a particularly significant effect on the impact of any strike action.
The new legislation will go through a consultation process that will be hard fought, but these are reforms that the government is determined to push through, particularly at a time when it believes it has popular support in this area.
Zero-Hours Contracts
This issue became a central theme to all the parties’ manifestos, perhaps a little unexpectedly. The use of zero-hours contracts has become far more widespread over recent years. Historically, they were a relatively uncontroversial tool used by employers who required flexibility in their workforce. It was arguable that such contracts often suited the workers – from students to the semi-retired or those simply making a lifestyle choice. However over recent years, and in certain industries and sectors, the increased and habitual use of zero-hours contracts has caused some concern.
The government will make exclusivity clauses in zero-hours contracts unlawful, thereby ensuring that the zero-hour workers will be free to undertake work for other employers. In fact, this change was already afoot under the last government. It is unlikely that this ban will greatly affect those employers who have a large enough pool of zero-hours workers, but may affect those who rely on the availability of individual zero-hours workers (which of course is the point of the new legislation).
The outcome of the election means it is now far less likely that any more radical reform in the law of zero-hours contracts will take place; for example the Labour manifesto referred to the possibility of zero-hours workers who work regular hours for more than 12 weeks being entitled to a permanent contract, and compensation payments to employees who have shifts cancelled at short notice. Therefore, it is questionable whether the current trends regarding zero-hours contracts will actually change greatly over the next five years.
National Minimum Wage
Unsurprisingly, the Conservatives accepted the recommendations of the Low Pay Commission and therefore the national minimum wage is set to rise to £6.70 by autumn of this year, increasing to at least £8 per hour by the end of this Parliament. Smaller businesses will be concerned that this will add to their costs and arguably it may mean more employers considering the use of zero-hours workers instead of hiring permanent full-timers.
The Big Society
Somewhat controversially, in the run up to the election David Cameron announced that employees in the public sector and larger private sector companies (with at least 250 employees) would be entitled to undertake volunteering duties for three days a year. It will be interesting to see how this reform is implemented in practice. It may be that this sort of initiative is best promoted on a voluntary basis (no pun intended!) than as a mandatory legal entitlement.
Companies with more than 250 employees will also have to publish the difference between the average pay of their male and female staff. There will now be a consultation period to determine exactly what and how the information should be disclosed and there will, no doubt, be many companies undertaking their own internal audits to see how this information will look.
On the whole, the business community has welcomed the return of the first Conservative government in 18 years as it is seen as a business-friendly government that will continue to cut red tape, reduce State intervention and allow employers to grow. However, it is inevitable that in the course of this Parliament all the above issues will be entirely overshadowed by the EU referendum – and on that issue, both in respect of whether we should be in or out and whether the referendum will cause unnecessary economic instability, the business community is somewhat more divided.
Partner in the employment team, IBB Solicitors
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