With the General Election taking place, Lisa Mayhew, employment partner at law firm Jones Day, examines the implications of each of the main parties’ policies on employment law.
Having already introduced significant changes to employment law since 1997, the Labour Party has unsurprisingly put forward the fewest proposals. Recognising the pace of recent legislative change, the other parties have stated that they would introduce a "one-in, one-out" rule for new regulations.
All three of the major parties have identified the following as core areas for reform.
The Conservatives have pledged to "make Britain the most family-friendly country in Europe". They propose a new system of flexible parental leave which lets parents share maternity leave between them, having previously suggested that maternity leave be 52 weeks and shared between the parents or used by both in parallel (although the first 14 weeks after birth must be taken by the mother). In addition, they will extend the right to request flexible working to every parent with a child under the age of 18 (an increase from the current limit of 16), first in the public sector and then, following further consultation, in the private sector.
The Liberal Democrats will also extend parental leave and flexible working schemes. They propose allowing parents to share the allocation of maternity and paternity leave between them in whatever way suits them best and to extend the period of leave up to 18 months "where resources and circumstances allow". They also say that the right to request flexible working should be extended to all employees and not just parents (eg. grandparents). Labour have also proposed introducing the right to request flexible working for "older workers" and will consult on the age at which this right should apply as well as extending paid paternity leave from two to four weeks to create "Fathers’ Month".
The parties’ approaches to this issue are more diverse. The Liberal Democrats propose introducing equal pay audits for all employers with over 100 employees. The Conservatives say they will "force equal pay audits on any company found to be discriminating on the basis of gender". It is unclear whether this relates just to equal pay complaints or any findings of sex discrimination, but such an audit presents an additional sanction on employers and is likely to further discourage many from fighting discrimination litigation in the Employment Tribunals. Labour has already introduced transparency provisions in the Equality Act, including outlawing pay secrecy clauses in contracts and allowing for regulations to be drawn up requiring employers of 250 or more to publish salary information. In their manifesto, Labour have pledged to "encourage" employers to make greater use of pay reviews and equality checks but have not detailed how this would be implemented.
Default retirement age
Each party has identified that the default retirement age of 65 should be abolished, and Labour propose that there be a review to establish the right way in which to support more people to work longer should they choose to do so. This follows the High Court’s decision in Heydey that whilst forced retirement at 65 is not unlawful under the Equal Treatment Framework Directive, this is unlikely to remain the case forever.
Given the widely held belief that the City bonus system was partly responsible for the financial crisis, the regulation of bankers’ bonuses has become a key issue. The Liberal Democrats say they will ensure "that the bonus system can never again encourage banks to behave in a way that puts the financial system at risk or offers rewards for failure". They have proposed limiting cash bonuses to £2,500 per year with any additional payments being made in shares which may not be sold for five years, banning directors of financial institutions from receiving any bonuses, extending the Financial Services Act 2010 so that loss-making banks are not allowed to pay bonuses, publishing the names of all banking employees earning more than the Prime Minister and fining directors of banks if the bank breaches the industry’s code of practice.
The other two parties have provided less clarity with regard to their intentions. The Conservatives promise to "empower the Bank of England to crack down on risky bonus arrangements", but have not explained exactly how this will be achieved. Labour will require banks to put their remuneration policies to shareholders for approval, they will give the FSA additional powers if necessary to constrain and quash executive remuneration where it is a source of risk and instability and agreed lending targets will be set with the banks in which taxpayers have a stake with consequences for executive remuneration if these are not met.
Labour and the Liberal Democrats also propose making changes to the national minimum wage. Labour have pledged to increase the national minimum wage at least in line with average earnings every year until 2015, whereas the Liberal Democrats wish to ensure that the same minimum wage rate is paid to everyone in work, regardless of their age.
Both the Conservatives and Liberal Democrats propose making changes to the criminal records "vetting and barring" regime that was recently introduced by Labour. The Conservatives say they will "scale it back to common sense levels" and the Liberal Democrats have pledged to support the voluntary sector by requiring volunteers to have only one record that is portable, rather than multiple checks for each activity.
Other proposals made by the Conservatives include reviewing the Agency Worker Regulations 2010, due to come into force on 1 October 2011. They have targeted the proposed 12 week qualifying period after which temporary workers will have the same rights as permanent staff, including pay. Whilst supporting the Equality Act in principle, the Conservatives have criticised some aspects of it, including what they call the "mistaken" provisions on equal pay, and propose to review it. They also say that they will replace the Human Rights Act 1998 with a UK Bill of Rights so that Britain’s laws can no longer be decided on by "unaccountable" European judges.
The Conservative manifesto also states that "we are proud of the last Conservative government’s industrial relations reforms, which helped bring about our economic revival in the 1980s, and we will always be prepared to build on them if necessary". These reforms were largely designed to inhibit the activities of trade unions. Therefore, this statement may signal an attempt to further curb the unions’ power and influence.
The Liberal Democrats say that they will end "gold-plating" of European directives (the process by which governments go beyond what is required when implementing EU legislation, eg. by applying more rigorous penalty regimes) and have made a number of new proposals including introducing "name-blind" job application forms and introducing a training allowance of £55 per week for anyone undertaking an internship.
What is most notable about the parties’ respective manifestos is that, by and large, they each identify the same areas as key for reform and adopt broadly similar approaches in similar areas, except the politically significant issue of regulating the financial sector, with the Liberal Democrats having identified the most extensive proposals for reform here. Whilst these may appeal to many members of the public, they are unlikely to gain much support in the City and the Liberal Democrats’ proposed cap on bankers’ bonuses of £2,500 is likely to raise the blood pressure of many in the Square Mile.