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New Government; New World

New Government; New World

What a difference a month makes. Since our last newsletter, the UK has voted to leave the EU and has a new Prime Minister.  Lots of opinions have been expressed about what Brexit means for employment law, but what do the next 2 years pre-Brexit have in store for us?

Brexit is likely to dominate the political agenda but Theresa May will be keen to announce policy in coming months. Based on May’s comments to date we speculate on what the next 2 years might look like:

More Tribunal Claims

"You have a job, but you don't always have job security. You have your own home but you worry about paying the mortgage” - Theresa May

One of the few truly radical potential changes that could theoretically be made post Brexit would be to abolish the unfair dismissal protection that has been with us since the 1970s. This was mooted by elements of the Conservative party back in 2012 although those proposals were never made Government policy. Nobody seriously thought that things would change post Brexit and they are unlikely to under May in light of her comments in her acceptance speech.

Actually things could go the other way. The introduction of fees in the employment tribunal in 2013 has resulted in a 70% drop in the number of claims and has been widely criticised. This one change has had a very significant impact on the risk profile for HR advice and is probably the single most significant change to employment law since the 1990s.

When the fees were introduced the Government committed to review their effect on access to justice. That report, which was supposed to have been published in 2015, is still being sat on by the Ministry of Justice. This has been overtaken by the Parliamentary Justice Committee report which found that fees had “a significant adverse impact on access to justice for meritorious claims” and recommended substantially reducing fee levels. Perhaps May will have a sympathetic ear.

More detailed Gender Pay reporting?

"If you're black you are treated more harshly by the criminal justice system than if you're white… if you're a woman you will earn less than a man” - Theresa May

One of the areas of law thought to be vulnerable to reform post Brexit were some of the protections offered under equality law. In particular, it was thought that the UK may seek to re-impose a cap on damages for discrimination claims of the type that are enthusiastically reported in the press. However, following May’s comments, it seems unthinkable that this could still be on the agenda.

May was a powerful advocate in Government in favour of introducing mandatory gender pay reporting. Because such reports are carried out at a company level they offer limited insight. May could be sympathetic to reform of these regulations over the next couple of years.  This might see a requirement to report data at a far more granular data.

Worker Representation on Boards?

So if I'm Prime Minister, we're going to change that system - and we're going to have not just consumers represented on company boards, but workers as well" - Theresa May

May’s stance on this is nothing short of extraordinary: this is something that the Labour party would not have dared call for. Although nothing new, she has opened up a debate that has not been aired in the UK since the 1970s.

Of course this would likely be limited to the biggest public companies (likely quoted companies to whom existing “say on pay” rules apply) but would involve very substantial changes to English company law and corporate governance structures.

The supervisory boards of German companies have, for many years, included workers’ representatives.  There is an astonishing irony in the UK voting to leave the EU – in part to leave measures like collective consultation and works councils – only to replace them with, err, German style worker representation.

Whilst the Anglo-American legal and business tradition is naturally suspicious of collective representation – it must be recognised that there can be benefits. Bloomberg report that markets in which worker representation is compulsory beat those without. We also see from our own experience that consultation can sometimes be extremely positive if appropriately managed.

Ban on Non-Competes?

We are encouraging the establishment of small businesses through excellent initiatives such as the new enterprise allowance, which will provide mentors and financial support to help the unemployed to become self-employed”- Theresa May

One of the lesser known areas being considered by the Government is the introduction of a ban on non-competes. A call for evidence was issued back in May but did not receive much attention in the midst of the referendum campaign.

It will not have escaped the notice of the Government that Silicon Valley does not instinctively believe in non-competes (they are unenforceable in California). Perhaps they feel that the Silicon Roundabout could benefit from the same?  As legislative work on this one is already advanced this could be an eye catching measure to be introduced in coming months.

No Time off for Grandparents?

There is a real difference between how small businesses can cope with regulation and that burden and how a large business with a big human resources department can cope… I continue to believe that flexible working and flexible parental leave will be of benefit overall and will benefit many small businesses, a number of which already operate flexibly [but it would be better to avoid] “constantly requiring businesses to effect innovations”.

One of David Cameron’s pet projects was the idea that shared parental leave could be extended to Grandparents. We suspect that that one will be very gently placed on the back burner.

Of course, many of these statements were made in the expectation of a three month leadership campaign and were primarily aimed at the Conservative party. But these statements will, at least, set the tone for what comes.