Last month, the Queen delivered her first Queen’s Speech prepared by a Conservative-majority government since 1996. Unsurprisingly, in the 19 years which have elapsed since John Major’s last year in Number 10, the governmental agenda has radically changed. Yet the Conservatives’ perennial inability to unite on the question of Europe is one factor which remains. From an employment law perspective, the consequences of the Conservatives’ internal rift in this respect may be significant. While a the proposed abolition of the Human Rights Act was removed from the Queen’s Speech at the last minute, a number of prominent agenda points which did still feature will undoubtedly have employment law implications.
EU Referendum
The majority of employment laws nowadays come from the European Union, often by way of EU Directives (such as the Working Time Directive). In the main, most British businesses and their interest groups are keen to make the case of the UK’s continued EU membership, although there are some notable exceptions (e.g. Dyson and JCB). The reasons for most large employers wishing to remain within the EU are obvious: access to a single market comprising over 503 million potential consumers and service users. But aside from the business argument, what impact would a “Brexit” have on UK workers and job seekers?
The short answer is: it depends. Employment law provisions, such as the Working Time Regulations 1998 and the Transfer of Undertaking (Protection of Employment) Regulations 2006, were incorporated into UK law by way of implementing regulations introduced by the UK government. The power for ministers to incorporate EU law in this way was expressly granted by Parliament in the European Communities Act 1972. Such subordinate legislation would likely be nullified following a Brexit. However, where any provisions of EU law were implemented by Act of Parliament (known as “primary legislation”) those statutes (e.g. Equality Act 2010) would most likely survive EU withdrawal.
A decision would then need to be taken by the government as to which of these surviving statutes they would seek to repeal, whether in full or partially. Taking the Equality Act as an example, it is not entirely clear what the current government would seek to do to that particular piece of primary legislation. Wholesale repeal would be unlikely, but dilution of specific provisions may be sought.
Irrespective of where employers or workers stand on the EU membership question, if the UK votes to leave, the medium to long term status of our employment laws will be uncertain. As the new government progresses into its five year term, the potential treatment of these surviving laws would hopefully become clearer. The use of temporary transitional provisions to plug the gaps in employment law if the country voted to leave the EU would be unavoidable and has the potential to be extremely messy.
Scottish Devolution
Given the Scottish National Party’s (SNP) successes in the 2015 general election, it was inevitable that a significant element of the Queen’s Speech would concern further devolution to the Scottish parliament at Holyrood and this was indeed the case. Devolution of employment law has now become a major policy objective for the SNP. While the Smith Commission does propose some limited administrative devolution of employment law north of the border, the SNP now seeks devolution of substantive employment law matters to the Scottish parliament’s control (e.g. extending the statutory collective consultation period for redundancies and increasing the minimum wage). The creation of a two tier system of employment law within Great Britain (Northern Ireland already has a slightly different employment law statutory scheme) would impose additional administrative burdens and costs on employers who also operate in Scotland, England and/ or Wales and the risk of job cuts in Scotland as a consequence should not be underestimated.
Coupled with plans for further devolution to Wales, are we looking at a situation where substantive employment law is devolved across all of the Home Nations in the not too distant future?
Trade Union Reform
It has been a Conservative policy for a long time to vary current strike and industrial action laws. In coalition, the Liberal Democrats largely tempered these ambitions but these re-emerged in the Queen’s Speech. The government is looking to increase the current thresholds authorising industrial action: requiring a minimum 50% of eligible employees to have voted in favour of action and not simply a majority of those who did elect to cast their ballot. In certain essential public sector services, these new qualifications will be even more stringent.
Regulation of trade union powers has long been a sensitive issue in British politics. While the implications of trade union restrictions is certainly not as pronounced as it would have been in previous decades given the substantial decrease in membership, it is hoped employers will not equate diminution of industrial action powers with weakened employee protections. As such, employers would remain wise to continue to build constructive and open relationships with unions and minimise the need for recourse to industrial action in the first instance.
Incentivising increased employment
The Queen’s Speech also contained a number of policies and initiatives which would appear to tie in with the often heard mantra that being in employment is essential to escaping poverty. Following plans to increase the personal income tax allowance, those working on minimum wage will be more likely to find their earnings will be wholly excluded from tax. The government will also seek to encourage small employers to take on more staff and apprentices through the upcoming Enterprise Bill and Full Employment and Welfare Benefits Bill respectively.
However it is likely these changes will fall short of satisfying both employers and workers. The plans to encourage additional job creation schemes come alongside plans to impose upper limits on redundancy payments in the public sector. Likewise the linking of minimum wage to a higher personal allowance will not affect all low pay workers. While many minimum wage workers will see an increase in their take home pay, those working for slightly over the minimum wage or who work very long hours for minimum wage will still likely find themselves subject to some income tax liability. Ironically, it may be that UKIP’s policy of exempting all minimum wage workers from income tax would have proven more equitable in this respect.
Employment of foreign workers
Linked closely again with the question of Europe, immigration reform also featured in the Queen’s Speech. The target points in this respect are twofold: reducing foreign skilled workers coming to the UK but also tackling the exploitation of often unskilled and undocumented workers. Both these issues threaten the British job market albeit in different ways.
Foreign skilled workers are often prepared to work for less pay than their British counterparts. A prohibition on recruitment agencies advertising work in Britain exclusively overseas will come into effect. It will be unlawful for agencies to advertise abroad without first having advertised the work in the UK beforehand. Similarly those working illegally in the UK often find their employment rights trampled on and paid less than the minimum wage.
While the economic imperatives for these initiatives are often touted, such restrictions on advertising for work overseas may present significant issues for some recruitment agencies. Some UK employers have expressed a preference for hiring other EU citizens; often on the (dangerous) assumption they are allegedly more hard working and productive. On the other end of scale, the government’s plans to curb illegal employment by making it a criminal offence and subjecting undocumented workers’ wages to seizure does little to stop those who employ illegal workers in the first place. Such individuals are largely unconcerned with what happens to their workers’ meagre wages. These new laws are unlikely to significantly limit the number of illegal entrants who remain in the UK to find work.
Conclusion
The Queen’s Speech contains both positive and negative elements from an employment law viewpoint. Plans to encourage employment generally by way of tax cuts and supporting apprenticeships should be lauded and will hopefully lower levels of unemployment. However, these reforms are overshadowed by the constitutional upheaval gripping the UK at present. Ultimately the outcome of the EU Referendum will be crucial in identifying the direction of employment laws in the future. The impact and lasting success of the government’s agenda will almost certainly hinge on how these constitutional issues are handled and resolved in the coming months and years.
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