Coalition government and workplace reform

Whatever the party manifestos promised, the general election result ensured that delivering their commitments will be harder than ever. The need to establish a government capable of guiding the country towards sustained economic recovery means downplaying ideological differences in the interests of cross-party unity.

For business, the overriding priority is stable government. John Philpott, chief economic adviser at the Chartered Institute of Personnel and Development (CIPD), says: “If it is a weak coalition, people will not be sure about what will happen in the short and medium term.” He suspects it would also mean another general election in the near future.

Victoria Woodison, UK and Ireland HR director at in-flight catering company Gate Gourmet, warns that without clear direction from the government, business will be reticent about recruitment and investment. She says: “Any sign of recovery that we have seen could disappear as parties just concentrate on one-upmanship.”


Politicians are all too aware of this danger. In the immediate aftermath of the election, Conservative leader and new prime minister David Cameron warned the UK’s problems were too serious for “party political bickering, grandstanding and point scoring”.

Lorely Burt, a Liberal Democrat shadow business minister in the last parliament, says ensuring economic recovery has to be the priority for the new government. “Business needs certainty in order to have confidence to go ahead and invest. What [politicians] have to do is provide a practicable and stable economic framework for businesses to work in so they know what is coming and then can plan for it,” she says.

Although her party is committed to greater fairness in the workplace, she concedes that is not a priority right now. A similar view is voiced by the Recruitment and Employment Confederation’s chief executive Kevin Green, who argues the political “twilight zone” created by the election is likely to delay some of its priorities. He says the immediate priority is to “deliver the right economic climate for business to create the prosperity and jobs our country needs”.

For David Yeandle, head of employment policy at manufacturers’ lobby group the EEF, the prospect of a break in the flow of new regulations has clear attractions. He admits: “If nothing happened in terms of new employment legislation or changing existing employment legislation, it would not necessarily be a bad thing.”

Woodison agrees, saying: “If you start to implement new policies and procedures, it’s more for business to get its head around.” But she says that should not mean ignoring HR issues altogether, particularly in relation to employment tribunals. “There’s way too much time wasted on frivolous and vexatious claims. We definitely need some tighter control and clearer guidance, which would benefit both employer and employee.”

As well as reform of tribunals, Geoff Hall, head of HR at travel retailer World Duty Free, which employs 3,000 people in the UK, wants to see the right to request flexible working extended in medium-sized and large businesses. “If you show some short-term flexibility, you get long-term stability, commitment and loyalty,” he says. “We do it and I think other businesses would benefit.”

CIPD jobs warning

The CIPD has urged the new government to give clarity on policies affecting the jobs market.

Chief economic adviser John Philpott says: “Everyone acknowledges the severity of the UK’s fiscal crisis, but the jobs market challenge is equally serious. For jobs’ sake, the government must get to work without delay.

“Employers are looking for a lasting political settlement and, in particular, clarity on the shape of economic and employment policy that will help inform decisions about staffing levels. Without this, hopes for any marked improvement in job prospects later this year will be dashed.”

A statement on the timing of deficit reduction measures, plans for any change to employers’ national insurance contributions, and the scope of welfare-to-work policy is vitally important, he adds.


He also supports the planned abolition of the default retirement age, saying: “It just retains experience and, in the current economic climate, it is difficult to put a price on that.”

But Hall is doubtful these reforms will be implemented. “I anticipate months of uncertainty before any decisions about employment legislation are made. Once the government is fully formed, whatever the focus is going to be, there is going to be compromise and stuff is going to be watered down.”

Elaine Aarons, employment law partner at Withers law firm, argues some reforms affecting the workplace do have a good chance of being implemented, pointing out that there is common ground between the three main parties on the need to tackle equal pay, diversity and flexible working. She says: “There’s not a philosophical difference between them, just a question of what they’re going to do and the extent to which they’ll do it. It does not look as though the differences between them would be difficult to bridge.”

Aarons also believes the whole issue of bonuses in the City will have to be addressed sooner rather than later, simply due to public pressure. She says: “I can’t imagine [the next government] will leave the issue of bonuses alone for very long,” adding that payments made at the end of this year are bound to reignite the issue.


One concern for the new government, according to Yeandle, is forthcoming discussions about a review of the Working Time Directive, as well as a debate about the Pregnant Workers’ Directive in the European Parliament. He warns: “There is always a danger [the UK] could lose the individual opt-out and find our labour market flexibility undermined, and that would be a serious problem.”

Critics have also questioned how much the new government can deliver on manifesto commitments to help business through deregulation given other, more pressing concerns. Woodison agrees, pointing out that de-regulation will be difficult because so much legislation originates in Europe.

With both parties committed to reducing the deficit – be it starting this year or next – the impact of the election result on public sector HR could be far-reaching. Philpott says: “One would assume there might be more potential for union opposition and unrest to a Conservative-led government.”

Jayne Billam, HR director at the University of Lincoln, believes that, in terms of affordability, it is almost inevitable that the issue of expensive final salary pension schemes in education and local government will be tackled. Given the life expectancy of a coalition government could be more limited, she questions whether there will be sufficient appetite for tackling such long-term challenges.

“We have heard a lot about doing what is right for the country, but this sort of politics is not just for the next three to four years. I think there’s an opportunity for parties to demonstrate that, but I am not sure they will.”

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