Our newsletter last month outlined employment law related proposals in the General Election manifestos of each of the three main political parties. Now of course these have no direct relevance. Instead the new Coalition Government Agreement states that there will be a review of “employment and workplace laws, for employers and employees, to ensure they maximise flexibility for both parties while protecting fairness and providing the competitive environment required for enterprise to thrive“.

What that means in practice is far from clear. However some key points are emerging:-

  • The Identity Cards scheme is to be scrapped by end August 2010. An “Identity Documents Bill” had its first reading in the House of Commons on 26 May. This will repeal the Identity Cards Act 2006 and end the ID cards scheme. It will remove ID cards’ status as travel documents or proof of ID and provide for scrapping the underlying databases as well as for cancellation of contracts with suppliers (notably Thales). Around 15,000 ID cards (at £30 each) have already been issued to select groups, including workers at Manchester and City of London airports, pending the previously intended nationwide roll-out in 2012. They will presumably become worthless save as museum pieces.
  • In line with a general policy of ending the gold-plating of EU Directives it is possible that parts of the 2006 TUPE Regulations (notably the “service provision change” part) and of the 2010 Agency Workers Regulations may be watered down.
  • A Pensions and Savings Bill is to provide for phasing out of the age 65 “default retiring age” (at which, subject to conditions, employees can currently be required to retire without unfair dismissal rights). The Bill is likely to include further provisions about increasing state pension age and for State Pensions to increase in line with earnings rather than inflation as from 2012 (it may not be over-cynical to note that the link to inflation was made when earnings were rising faster than inflation while now that position appears to have been reversed. Thus the Reed Job index recently reported a dip in salaries while inflation indicators are showing a sharp rise in both CPI and RPI ).
  • The right to request flexible working is to be extended to all employees.
  • Replacement of the Human Rights Act with a British Bill of Rights, proposed in the Tory manifesto, is not incuded in the coalition agreement (Justice Secretary Kenneth Clarke is reported as saying that repealing the Human Rights Act is not a high priority).
  • The Labour government’s proposed 1% rise in National Insurance contributions payable by employers from April 2011 is to be scrapped. However the 1% rise in employee NICs will go ahead, albeit offset for the lower paid by an increase in personal tax allowances.
  • There appears to be some uncertainty about the future of the Equality Act 2010 after the October 2010 implementation date was recently removed from the Government Equalities Office website.
  • The much derided Vetting and Barring Scheme has been stalled following a Government announcement on 15 June. Voluntary registration was due to start on 26 July with compulsory registration to be implemented by November 2010. The changes will affect 66,000 organisations including employers, voluntary groups and education authorities. New Home Secretary Theresa May commented:

    “The safety of children and vulnerable adults is of paramount importance to the new government.

    “However it is also vital that we take a measured approach in these matters. We’ve listened to the criticisms and will respond with a scheme that has been fundamentally remodelled.

    “Vulnerable groups must be properly protected in a way that is proportionate and sensible. This redrawing of the vetting and barring scheme will ensure this happens.”
    Theresa May is known to have opposed the scheme, describing it as “draconian”. She told the BBC: “You were assumed to be guilty until you were proven innocent, and told you were able to work with children”.

Other Coalition proposals include a clampdown on “unacceptable” bonuses within the banking sector; extension of proposals for social security benefits to be conditional on willingness to work; a cap on immigration from outside the European Union; some form of tax break for married couples and civil partners (Lib Dems able to abstain) and a review of the IR35 tax arrangements (which neuters tax advantages of individuals, notably IT consultants, who provide their services through wholly owned limited companies).

1 Comment

  1. The “emergency” budget has clarified a few issues concerning employment and employment-related matters in the current Parliament.

    Interestingly, the Chancellor referred to consultation about “whether” rather than when to abolish the default retirement age.

    From next year, statutory benefits including maternity and sick pay will be aligned with the Consumer Price Index rather than RPI. The result? Lower payments expected to create savings of £6 billion per year by the end of the Parliament.

    You can read the full budget speech here:


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