In his penultimate budget prior to the General Election, the Chancellor will undoubtedly be looking to implement measures to further accelerate the economic recovery, and job creation; already both ahead of target.
In terms of taxation, this may lead to further NIC concessions, on top of the significant removal of employers’ NIC for under 21 year olds earning less than £42K pa, due to come in from April 2015. Further NIC concessions could perhaps include reduced rates for SMEs, to help offset the Low Pay Commission’s recommended three per cent increase in the national minimum wage (NMW). There is also talk of merging income tax & NICs, which employers would generally welcome, and perhaps raising the current band for higher rate tax, to please Middle England tax payers who have increasingly fallen into the higher rate slot.
In terms of employment measures, one of the areas of interest is likely to be steps to encourage continued use of the wide range of flexible working options, which expanded during the last recession, and which give us a competitive edge against most other EU member states. Hence the unlikelihood of anything other than very ‘light touch’ legislation to curb the worst abuses of zero hours contracts, enjoyed by an estimated 1/4m workers, particularly as the Government view this as a helpful route to employment, taking people off the unemployment register and into work, however sporadic!
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Doubtless the same reasoning has encouraged early publication of draft regulations, to implement shared maternity leave and pay next April. Such measures are designed to help parents to flex work between them, and keep both parents in the job market.
At the same time the Government are likely to be keen to publicise the marked decrease in the number of employment tribunal (ET) claims since the introduction, last July, of the ET fee regime. Having, rightly or wrongly, perceived that fear of ET claims was a brake on recruitment, the Government are almost certainly relieved that the judicial review challenge by UNISON has, to date, been unsuccessful, so it seems likely that ET fees will remain. That fact, together with a greater role for ACAS, when ‘early conciliation’ is introduced next month, coupled with other changes (such as the cap of a year’s salary on unfair dismissal compensation) are all ways of deterring ET claims, which the Government will be keen to continue.
Plainly employment law remains a key political battle ground, as the parties try to distinguish themselves in the run up to the General Election. Hence, for example, Labour’s Early Day Motion seeking to annul the January TUPE changes, doubtless with an eye to catching the union vote. Changes (under the inelegantly planned CRATUPEAR regulations), have given business greater flexibility to move more quickly to deal with collective redundancies post TUPE transfers, by allowing joint consultation in advance. They have also tweaked the existing service provision changes, to provide a degree of flexibility around post transfer changes and dismissals. Today’s announcement of plans to fund 26 week’s work, at NMW, funded in part by a tax on bankers’ bonuses, may well have been purposefully timed by Labour to influence the Chancellor’s proposals next week.
The other key political fighting ground is obviously immigration, but we should expect further rhetoric rather than substantive changes, particularly whilst the Government’s options to protect UK jobs remain fettered by EU worker rights.
These are just early examples of a range of, probably increasingly random, employment tit bits, which all the main parties are likely to be throwing out to the electorate over the next 14 months, with the Liberal Democrats increasingly trying to walk a tightrope of solidarity with the Government and finding their own voice.
There is much to play for, in a tight race, and employment changes will doubtless loom large in the developing manifestos of all parties.
Nikki Duncan, Senior Partner, Michelmores
