April 24, 2017

What impact will Theresa May’s decision to call a snap election have on employers?

During the 6 weeks of ‘purdah’ prior to the election, essential government business is carried on but it is unlikely that any new action will be initiated as decisions on policy matters are generally postponed until after the election.

In our article in December 2016, we gave our forecast for the HR agenda for 2017.  The decision to call a snap election may delay or even prevent some developments going ahead:

  • Gender pay: A critical element of the Gender Pay Regulations is that employers are required to publish their gender pay gap on their own website and also on a specially designated Government Equalities Office website, which had been due to launch shortly.  Whilst many employers will have been planning to leave reporting until closer to the time limit in 2018, it was thought that any employers keen to get their data out there soon would have to wait until after the election.  However, the Government has now prepared a 'beta' version of the reporting website, so getting data ready for publication should remain a priority for employers over the next few months.
  • Employment status: As we reported in December, employment status is a key issue for many HR teams in 2017, with Matthew Taylor tasked by the Prime Minister to conduct an independent review into employment and working practices.  He had been due to publish his policy recommendations in mid-June, but according to Matthew's twitter feed, it is now unclear whether this will go ahead and is likely to be delayed.  Of course, a change of government would throw the publication of his report into doubt.  Despite this, gig economy cases continue to be dealt with by the courts: an appeal by Uber against a decision that its drivers are workers has been approved to be heard in September 2017.
  • Flexibility and Leave: The consultation on grandparents leave, which had been delayed due to the Brexit vote in June 2016, seems unlikely to be a priority issue in the foreseeable future, whatever the outcome of the election.

As well as the issues above we forecast in December, we anticipate the taxation of termination payments being another casualty of the snap election.  It is unclear whether the government will now have time to deal with it, although it is being fast-tracked through parliament.  The Finance Bill was due to be passed shortly and come into force in April 2018.  The Bill sets out the proposed termination-related tax changes including: ensuring that termination payments over £30,000 are subject to employer’s National Insurance; and treating all pay in lieu of notice payments as taxable earnings.  However, if the Bill is not passed by the time parliament is dissolved on 3 May 2017; it will have to be presented to parliament for approval again after the election, which could result in further amendments and delay.

Given the current opinion polls strongly indicate re-election for the Conservative government, the focus is currently on the delay to progress caused by this election and we will continue to track these delays and keep you updated.  However, in these unsettled political times, it would be foolhardy to rule out a change of government, which would of course have a radical impact on the legislative landscape for employers.  We will keep you updated on the proposals being put forward by the main political parties – and the implications of those proposals for employers - as they are revealed in the coming weeks.