The Conservative Party, Labour Party and Liberal Democrat Party have published their manifestos for the General Election on 8 June 2017. They contain several policy statements of interest to in-house lawyers.
Curbing executive pay
The Conservatives would extend the remit of the directors’ remuneration regime by making executive pay packages subject to annual votes by shareholders. They would also commission an investigation into the use of share buybacks, with a view to ensuring that these cannot be used artificially to hit performance targets and inflate executive pay.
Increasing boardroom diversity
The Liberal Democrats would continue the drive for boardroom diversity, pushing for at least 40% female boards in FTSE 350 companies and implementing the Parker review recommendations into ethnic minority boardroom representation.
Improving employee representation at board level
Under the Conservatives, listed companies would be required to implement one of the following measures to improve employee representation at board level:
- Nominate a board director from the workforce.
- Create a formal employee advisory council.
- Assign specific responsibility for employee representation to a designated non-executive director.
Listed companies will not be required to appoint a worker directly to their board of directors. Although these requirements will not apply to private companies, the Conservatives would consult on how to strengthen corporate governance for privately-owned businesses.
Takeover rules and merger control
The Conservatives propose to update the rules that govern mergers and takeovers. They will require that:
- Bidders are clear about their intentions from the outset of the bid process.
- All promises and undertakings made in the course of takeover bids can be legally enforced afterwards.
- Government can require a bid to be paused to allow greater scrutiny.
A Conservative government would also ensure that foreign ownership of companies controlling important infrastructure does not undermine British security or essential services.
Modern slavery
The Conservatives would remain committed to tackling modern slavery through the Modern Slavery Act 2015, but would also review the application of exploitation in the Act, to strengthen their ability to stop modern slavery.
The Labour manifesto states that the party would work with businesses to ensure the provisions of the Modern Slavery Act 2015 are respected, including reporting for due diligence in supply chains.
The Liberal Democrats would focus on good practice in tackling modern slavery and extend the requirements on companies to strengthen responsibility for supply chains.
Taxes affecting businesses and corporations
The Conservative manifesto includes:
- A renewed commitment to reduce corporation tax to 17% by 2020, in line with the government’s current plans.
- A pledge not to increase VAT rates.
The Labour Party would:
- Increase corporation tax for businesses from 19% to 26% by 2021 for larger firms, and to 21% for smaller firms with profits below £300,000 a year.
- Extend stamp duty reserve tax on shares of 0.5% to derivatives and other securities, and removal of the intermediaries exemption, with the intention of raising an additional £5.6 billion.
- Introduce an “excessive pay levy” of 2.5% on employers paying staff more than £330,000, and, according to the Centre for Labour and Social Studies (CLASS) on whose proposals the levy is based, 5% on salaries above £500,000.
The Liberal Democrats would:
- Reverse the cut in corporation tax from 20% to 17% currently scheduled for 2020.
- Reform corporation tax to develop a system that benefits the smallest companies and ensures that big multinational companies cannot avoid paying sums comparable to nationally based competitors.
- Consult on shifting the basis for the corporation tax charge away from a profits-based tax to one assessed in relation to a wider range of economic activity, including sales and turnover.
Tax avoidance and evasion
The Conservatives would introduce:
- A tougher stance on tax avoidance and evasion, including stricter regulation of tax advisory firms.
- A “more proactive approach” to the misuse of trusts and tax transparency.
- A commitment to improve HMRC’s capabilities to investigate smuggling and further measures to reduce online VAT fraud.
Labour’s Tax Transparency and Enforcement Programme sets out various detailed business tax measures including:
- Disincentivisation of self-incorporation for tax avoidance purposes.
- Closure of the so-called “Mayfair Tax” loophole by preventing the treatment of carried interest as a capital gain rather than income.
- Abolition of the eurobond withholding tax exemption for securities listed on the Channel Islands Stock Exchange.
- A clamp down on “umbrella agencies” as sources of tax avoidance.
- An investigation into advanced thin capitalisation agreements and their role in tax avoidance.
The Liberal Democrats would:
- Take tough action against corporate tax evasion and avoidance by introducing a general anti-avoidance rule (details are not provided, nor is it clear how this will differ from the existing general anti-abuse rule).
- Set a target for HMRC to reduce the tax gap.
- Invest in HMRC staff to meet revised anti-avoidance targets.
- Hold multinational companies accountable for the taxes they pay in the developing countries they operate in, including tightening anti-tax haven rules and requiring large companies to publish their tax payments and profits for each country in which they operate.
Late payments
The Conservatives would ensure that big contractors comply with the Prompt Payment Code, both on government contracts and in their work with others. Where contractors fail to comply, they will lose the right to bid for government contracts.
Labour would use government procurement to ensure that public sector suppliers pay their own supply chain within 30 days. They would also develop a UK version of the Australian system of binding arbitration and fines for persistent late-payers for both the public and private sectors.
Consumer regulation
Among other things, the Conservatives would:
- Strengthen consumer enforcement body powers to order fines against companies breaking consumer law and deliver redress for wronged consumers.
- Explore how to give consumers a greater voice in the regulation of business.
Digital economy
The Conservatives aim to make doing business online easier for companies and consumers by, among other things:
- Giving businesses the right to insist on a digital signature and the right to digital cancellation of contracts.
- Obliging digital companies to provide digital receipts and clearer terms and conditions when selling goods and services online.
- Supporting new digital proofs of identification.
Data protection and data privacy
Among other things, the Conservatives would introduce:
- Protections for people’s data online, backed by a new data protection law.
- New rights to require social media companies to delete information about young people as they turn 18.
- A £1.9 billion investment in cybersecurity.
The Labour Party promises to ensure that young people are able to easily remove content they shared on the internet before they turned 18.
Business crime
The Conservatives plan to incorporate the Serious Fraud Office into the National Crime Agency, improve intelligence sharing and bolster the investigation of serious fraud, money laundering and financial crime.
Pay transparency and equality
The Conservatives would extend the remit of mandatory gender pay gap reporting by requiring large employers to publish more data on the pay gap between men and women. The manifesto states that a new mandatory reporting requirement would be introduced for large employers on the “race gap”, that is pay disparities between people from different ethnic backgrounds.
Labour plans to increase pay transparency and equality by introducing an independent body to ensure compliance with the gender pay gap reporting obligations. It would aim to close the ethnicity pay gap by introducing equal pay audit requirements on large employers.
The Liberal Democrat Party manifesto highlights the party’s commitment to build on the gender pay gap reporting scheme in the private sector to include a requirement to monitor and publish data on gender, BAME, and LGBT+ employment levels and pay gaps.
National living wage
The Conservative Party manifesto confirms that the national living wage would continue to be increased in line with the current target, which is for the rate to reach 60% of median earnings by 2020. It will then continue to increase in line with median earnings.
Labour proposes to tackle low pay by raising the national minimum wage for all workers aged 18 or over to the level of the national living wage. The national living wage is expected to be £10 an hour by 2020 for all workers aged 18 or over.
Zero and short hours contracts
The Labour Party would ban zero hours contracts to ensure that every worker receives a guaranteed number of hours a week. Labour also plans to broaden the pool of workers entitled to employment rights by giving all “workers” equal rights irrespective of their employment status.
In their manifesto, the Liberal Democrats promise to stamp out abuse of zero hours contracts and create a right for workers to request a fixed term contract. It would also modernise employment rights to make them “fit for the age of the gig economy”, building on the forthcoming Taylor report.
Employment status and the gig economy
The Conservatives state that, once the Independent Review of Employment Practices in the Modern Economy has concluded, they will act to ensure that the interest of employees on traditional contracts, the self-employed and those working in the gig economy are all properly protected.
Labour has pledged to give all workers equal rights from day one, and to extend the employment rights of employees to all workers. Labour intends to tackle the issue of bogus self-employment by, among other things, creating a statutory definition for “self-employed”, “worker” and “employee”.
Employment tribunal fees
Labour would abolish employment tribunal fees and would extend the time period for claimants lodging a maternity discrimination claim from three to six months.
The Liberal Democrats would abolish employment tribunal fees. They would also bring together relevant enforcement agencies to strengthen enforcement of existing employment rights.
Working families
The Labour Party will support working families by increasing the scope of the current 30 hours of free childcare to include all two-year-olds. They will also issue subsidies in addition to free-hour entitlements to ensure that all can access free childcare “no matter their working pattern” and will consult on extending childcare provisions to include one-year olds. The manifesto also pledges to increase the rate of paternity pay and double paid paternity leave to four weeks, extend the period of maternity pay to 12 months, and introduce legislation on statutory bereavement.
The Liberal Democrats would, among other things, make flexible working, paternity leave and shared parental leave (SPL) “day one” rights. They would also introduce an additional one month “use it or lose it” period of SPL for fathers, to encourage greater take up among men.
Increasing the Immigration Skills Charge
The Conservatives would increase the Immigration Skills Charge, which is levied on companies employing migrant workers, from £1,000 to £2,000 a year. The revenue would be used to invest in higher level skills training for domestic workers.
Trade unions
Labour will repeal the Trade Union Act 2016 and introduce “sectoral collective bargaining”. They will also give all workers the right to receive union representation and guarantee all unions access to the workplace to speak to current and recruit new members.
Apprenticeships
Labour plans to support young people at work include creating a new target that will see the number of completed apprenticeships at NVQ level 3 double by 2022. They will also maintain the existing apprenticeship levy, but will work with devolved administrations to provide employers with more flexibility on how they use the levy.
Additional employment rights
The Conservatives would introduce new rights to:
- Request unpaid time off for training for all employees.
- Unpaid time off for workers whose family members require full-time care.
- Child bereavement leave.
