The Tory election manifesto promised “the greatest expansion in workers’ rights by any Conservative government in history”. The Queens Speech, however, was notable for the absence of a number of key pledges. In the context of the political reality of a minority government and the priority of legislating for Brexit, a more modest reform agenda was not unexpected but it still represents a missed opportunity to greatly improve the strength of the employee voice and its representation at the highest level of organisations.

Despite the pledge that employees should be represented on company boards, it would seem that employee representation is no longer a key legislative priority. The Conservative manifesto had indicated that the law would be changed to require listed companies to nominate a director from the workforce, create a formal employee advisory council or assign responsibility for employee representation to a designated non-executive director.

There are some who would not have supported this innovation but the potential for worker strategic participation was clear.  Workers can bring with them in-depth knowledge of how their company operates and are also well-placed to contribute to a range of strategic and operational discussions that are central to board decision-making. As well as bringing the voice of workers to influence company decision-making, their experience of working for the company was likely to give them understanding of the need to foster positive relationships with other stakeholders. Employee representatives would have been more likely than shareholder representatives to take broader stakeholder interests into account, not just the interests of workers but also environmental impacts and community interests.

In particular, two potentially significant benefits have moved to the back burner. The first would have seen representatives asking the right questions of the executive team. By doing this, workers can lend an independent and objective perspective to the board’s decision making. Sometimes the key strategic, most obvious questions or most pertinent questions are missed when Executives are absorbed in the day to day high-level running of the business.

The second would have seen representatives acting as the Board’s “critical friend”. This form of challenge can be a positive force, aiding the performance of the executive directors and the board as a whole. With a clear strategy and the right training worker voices on the board can help to protect and enhance the governance and performance of the organisation.

There was also nothing in the Queen’s Speech to indicate that the Government will press ahead with reforms of boardroom remuneration – including, for example, promised legislation to make executive pay packages subject to strict annual votes by shareholders and requiring listed companies to publish the ratio of executive pay to the broader workforce pay.

The Speech did, however, indicate that the Government “will seek to enhance rights and protections in the modern workplace”. This refers to the review of employment practices by Mathew Taylor (Chief Executive of the Royal Society of the Arts) that has been commissioned and is expected to report shortly. The Conservative manifesto promised to “act to ensure that the interests of employees on traditional contracts, the self-employed and those people working in the ‘gig’ economy are all properly protected”.

The commitment to increase the National Living Wage, essentially a premium on top of the national minimum wage for workers aged 25 or over, was confirmed. This will be increased to 60% of median income by 2020 and then subsequently raised in line with median earnings. There was, however, no mention of equivalent increases for the other rates of the national minimum wage.

In the end it was, understandably, all about Brexit.  The Speech confirmed plans to enact a “Repeal Bill” to convert EU law into UK law at the point of departure. This will include all EU-derived rights and protections for workers, but any of these could subsequently be amended or repealed. There have not yet been any indications as to what employment reforms of this nature might be pursued post-Brexit and any repeal of, for example, the Information & Consultation Regulations does not seem to figure in the government’s current thinking. 

While it was reasonable in the circumstances to prune back legislative commitments made in the manifesto to make time for the eight major Bills needed to pave the way for Brexit, the prevailing uncertainty may continue to affect longer term strategic business planning around vital measures to increase involvement and engagement. The cost of employee disengagement still stands at around £26 billion in terms of loss per Gross Domestic Product to the UK economy – if organisations de-prioritise addressing whatever portion of that figure they lose, it may not be long before that overall figure starts moving back towards the 2008 figure of £60 billion.    

If you are interested in learning more about the IPA training programme, “How to deal with the effects of Brexit”, please contact Derek Luckhurst, IPA Training & Development Director – ([email protected] or 07780 697024)