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A new Prime Minister: employment law changes ahead?

  • United Kingdom
  • Employment law

05-09-2022

The election of Liz Truss as Prime Minister paves the way for new policy announcements in the coming weeks, reflecting a full in-tray. Will those changes include changes to employment law? In our briefing below, we review recent commitments made by the new Prime Minister in relation to the workplace.

Diversity and inclusion

In December 2020, as Minister for Women and Equalities, Liz Truss delivered a speech which outlined a “new approach to equality” in the UK. The change involved a move away from focusing on “people with a single protected characteristic” (sex, race, sexual orientation etc), to prioritising fair treatment for all, based on transparency and data, including a new evidence-based approach to address geographical inequality and barriers to social mobility. It remains to be seen whether this approach is taken forward in her new role. If it is, employers should expect a broader focus to government diversity policy (while not excluding protected characteristics) which is tied to evidence-based outcomes.

IR35: off-payroll working

Liz Truss has said that she would review how the off-payroll working rules (or IR35) are working. These rules are designed to ensure that individuals who work in a similar way to employees, such as some contractors, consultants and freelancers, pay broadly the same income tax and national insurance contributions as employees. A reformed set of rules were extended to the private sector from 6 April 2021. However, the new Prime Minister has criticised them for taxing the self-employed in the same way as employees, despite the lack of entitlement to the same benefits such as paid holidays, and has stated that the tax system should “reflect that more”.

Bill of Rights and deregulating EU law

During campaigning, the new Prime Minister expressed support for a Bill of Rights to reform the effect of the ECHR in the UK and committed to accelerating plans to “get EU law off our statute books” by the end of 2023, suggesting future EU/UK divergence. Until further details are announced, it is unclear how both proposals will affect domestic employment law. However, given the breadth of EU employment law which continues to apply (to preserve continuity and legal certainty in the immediate period after Brexit), and the range of employment rights enshrined in the ECHR, both may have repercussions in the workplace.  

Industrial action legislation

In response to current industrial action, or the threat of action, across a range of sectors, Liz Truss has promised to introduce significant changes to legislation within the first month of her leadership. These include:

  • raising the strike ballot voting threshold. It is unclear whether this applies to all sectors or more narrowly. It may be aimed at ballots where the majority of workers involved are normally engaged in the provision of important public services (or “IPS” - these are already defined by regulation and include some fire, border security, transport, health and education services). Currently with such ballots, at least 40% of those entitled to vote must vote in favour of the action and it is reported that the new Prime Minister wishes to raise this to 50%
  • introducing minimum service levels during strikes affecting “critical national infrastructure”. Services falling within this description have not been clarified but might include the existing category of IPS. This promise is broader than the 2019 Conservative manifesto which committed to minimum service levels during transport strikes
  • increasing the minimum notice period for strikes to four weeks. Currently, a trade union must ensure that the employer receives not less than fourteen days’ written notice of the commencement of the industrial action
  • limiting the number of times a union is able to strike in the six months after a ballot. Under existing law, the ballot mandate expires after six months (or up to nine months if both parties agree), and there are no such restrictions applying

Some union leaders have promised large-scale resistance in response, if such changes were taken forward. In addition, it is anticipated that unions would seek to challenge them in the courts, potentially arguing that they restrict the right to strike under the European Convention on Human Rights (“ECHR”).

Practical implications for employers

The proposals to reform industrial action legislation are significant, as are commitments to review the continued application of EU law given the extent of EU-derived employment rights in the UK. However, the political context will inevitably influence whether they are taken forward in the immediate future, particularly given current energy and economic priorities.

Finally, it is unclear whether Liz Truss remains committed to employment reforms contained in the 2019 Conservative Party manifesto. These include creating a single body to enforce employment rights, extending redundancy protection for employees returning from maternity leave and introducing neonatal and unpaid carers’ leave.