Keep up to date with the latest employment law developments and proposed future changes
UK employment law originates in three places: in Parliament through the legislative process, in the courts through judicial decisions and in European Union institutions.
This factsheet for CIPD members looks at the process of making UK legislation.
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Acts of Parliament are sources of primary legislation in which the key principles of the law are set out. Important acts relating to employment law include the Employment Rights Act 1996, the Employment Act 2002, the Equality Act 2010, the Enterprise and Regulatory Reform Act 2013 and more recently the Trade Union Act 2016.
While the Acts are in their draft form and being considered by Members of Parliament, they are called Bills.
Consultation before a Bill is presented to Parliament
Most legislation is proposed and brought to Parliament by government ministers in the form of a Bill. This is then debated and voted on in Parliament. Amendments are often made during this process. Once a Bill has been approved by both the House of Commons and the House of Lords and has received Royal Assent it becomes law.
Before a Bill is presented to Parliament, ministers usually present their proposals for consultation. In the employment field it is common for the Department for Business, Innovation and Skills (BIS) to set out a variety of policy options on its website. Contributions are then invited from any interested party. Sometimes ministers will commission a small team of business people or experts to investigate an area of employment policy and produce a report which makes recommendations. The subsequent consultation process determines whether or not the recommendations will become law. A recent example was the Report on employment law by the venture capitalist Adrian Beecroft which was commissioned by BIS in 2011 and published in 2012. The report recommended a number of far reaching reforms, most of which were not pursued by the government. However, some of the proposed reforms were consulted on and have since become law. An example is the reduction of the collective consultation period employers must give when making large scale redundancies to 45 days.
Governments also present these proposals formally to Parliament. 'White Papers' contain broad statements of government policy and their rationale. 'Green Papers' set out specific proposals and different policy options about which ministers intend to consult. Historically these were printed on green or white sheets of paper. They are now published in the form of glossy brochures.
An example of a White Paper concerning employment law was Fairness at work. This was issued in 1998 and most of its proposals on individual and collective employment rights and family-friendly policies were implemented in the Employment Relations Act 1999.
An example of a Green Paper relating to employment was Discrimination law: a framework for fairness which was published in 2007 and set out the Government's proposed strategy for consolidating all discrimination and equality laws into a single Equality Act. Many of the proposals subsequently found their way into the Equality Act 2010.
After consulting on policy options, ministers go on to present their draft Bill. These are drafted by specialised legal draftsmen based in the House of Commons. Sometimes, but not always, further consultation takes place at this stage before a final version of the Bill is prepared for presentation to Parliament.
Each year the government sets out its legislative programme for the year ahead in the ‘Queen's Speech’. The Queen reads this out from the throne in the House of Lords at the State Opening of Parliament, but the words are those of government ministers not those of the Queen. The Queen's Speech essentially consists of a list of the Bills that the government intends to bring forward in the following year. Brief summaries of around thirty Bills are typically included in the Queen's Speech, of which two or three may contain employment-related measures. The State Opening used to take place in November, but since 2011 it has been held in May or June. In years when a general election is held it follows shortly after the new Parliament has assembled.
Passage of a Bill through Parliament
When the consultation phase is complete and a final draft of the Bill has been agreed by ministers it is then presented to Parliament by the relevant Secretary of State or one of his or her junior ministers. Most new employment legislation is presented by ministers based at the Department for Business, Innovation and Skills, but other ministers can sometimes sponsor employment legislation. The Department for Work and Pensions is often involved, as are ministers with responsibility for equality who are typically based in the Home Office.
The Bill starts with its short and long titles and what is known as 'the enacting formula' which is a form of words first formulated in the fifteenth century:
‘Be it enacted by the Queen's most Excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament assembled, and by the authority of the same, as follows:’
A series of numbered clauses then follow setting out the contents of the legislation and details of the date it will take come into force. After the clauses come a series of schedules which contain the detailed measures that the government is planning to introduce.
The Trade Union Act 2016, which is most recent major employment-related Bill to be enacted, contains 26 sections. Each section contains several clauses or sub-clauses. These are followed by four schedules which set out exactly what existing measures had to be repealed or amended as a result of the new legislation and how terms are to be interpreted.
There are a number of stages that a Bill has to pass through in Parliament before it becomes an Act. Government Bills sometimes start their journey through the legislative process in the House of Commons and sometimes in the House of Lords. In any event the Bill can only become an Act after it has been approved following votes in both chambers. This process normally takes several months to complete.
This just takes a few minutes. The Bill is briefly presented to either of the Houses and then sent to be printed. A date is also set for the second reading. No debate occurs and no vote is taken.
This is the first time that the Bill is debated and voted on in Parliament. The focus at this stage is on its major principles rather than the detailed measures it contains. The Secretary of State or one of the junior ministers in the sponsoring government department will open the debate, setting out its purpose and how the measures it includes will serve to meet that purpose. The principal opposition spokesman then answers, stating in what respects their party plans to support or oppose the different parts of the Bill. Other MPs or Lords then take it in turns to contribute to the debate. Speeches are often limited to eight minutes or so and members often interrupt one another to dispute particular points and ask each other questions.
Amendments can be proposed at this stage, but are rarely debated in any detail and are almost always voted down by the government party or parties.
Assuming that the Bill has passed the second reading, it then has to be scrutinised in detail, clause by clause. This occurs at the Committee Stage. For most government bills a Standing Committee is appointed, consisting of between fifteen and forty-five members chosen to reflect the balance of party membership across the house. This means that MPs from the governing party or parties have a majority of the seats on the committee. In the House of Lords, owing to the presence of many cross-benchers who do not have a party affiliation, it is rare for the government to be able to rely on majority support for its bills. At the Committee Stage amendments are proposed as well as new clauses. These are debated in groups and voted on.
The Bill, now often amended, returns to be debated again and voted on by the whole House. More amendments can be proposed and debated at this point, while an opportunity is provided for those who oppose the Bill to make their views known. Bills are often amended following a vote at the Report Stage, particularly when ministers accept amendments proposed by members.
Third Reading debates tend to be short. This is when the Bill in its final form is presented and voted upon by the whole House. No further amendments can be made at this stage in the House of Commons, although it is possible to do so in the House of Lords.
Once the Bill has been passed by one of the two Houses of Parliament it then passes on to the other. The same process is then repeated.
From time to time a Bill is passed by one House, but not by the other. More often there are disagreements about particular clauses, or a refusal by one House to accept amendments that have been passed by the other House.
In the case of government sponsored Bills, this is only problematic when the House of Lords rejects a Bill that has the support of the majority of members of the House of Commons or when the House of Lords proposes amendments which the House of Commons (that is the government) will not accept.
There is a long-standing convention that the House of Lords will not, as a matter of principle, vote down measures which formed a part of the manifesto issued by the governing party at a general election. The House of Lords will propose amendments and will often ask the House of Commons effectively to reconsider parts of a Bill, but ultimately the view prevails that the elected House must be allowed to get its business through.
Where a measure has not formed part of the governing party's manifesto, the House of Lords do from time to time vote down government Bills. In such cases ministers can, if they wish to, make use of the Parliament Acts of 1911 and 1949. These Acts provide that a Bill may become law if it is passed by the House of Commons twice in two successive sessions, provided a full year has elapsed between its second reading in the House of Commons and its final passing. This means that an elected government ultimately gets its way, even if its measures are rejected by the House of Lords. The power of the House of Lords is therefore limited to delaying legislation for a year or two.
In practice the Parliament Acts are rarely used. The two Houses generally reach agreement about new bills without there being a need for the House of Commons to use its power to overrule a vote in the House of Lords. Since 1990 there have been only four occasions on which a government has needed to have recourse to the Parliament Acts, none of which has involved any employment-related legislation.
What is much more common is the development of what is known as a ‘ping-pong’ situation between the two Houses. This happens when they disagree about some aspects of a bill and have voted different ways on it. The Bill cannot become law until both Houses pass it in its final form. In order to achieve a settlement, the Bill bounces back and forth between the two houses, amendments being made in the process. This happened in April 2016 when the government found itself in disagreement with the majority of peers in the House of Lords over some of their amendments to its proposals during the passage of the Trade Union Bill. After 'Ping-Pong' ministers made a series of concessions, including the removal of a clause that would have outlawed online balloting by trade unions of their members when seeking approval for industrial action.
Before the Bill can become an Act and be enacted, it has to receive Royal assent. In other words, the Queen must give it her formal approval. In practice this is now a formality. No sovereign has refused to give assent to a bill that has been passed by both Houses of Parliament since 1708.
How an Act comes into force
Clauses in an Act set out at which date it is due to come into force and becomes law which must be followed and can be enforced.
Employment legislation mostly comes into force on one of two set dates each year in early April and early October. Commentators often refer to these as 'red tape days'. The aim is to give employers time to prepare after an Act has been passed. For example, although the Equality Act 2010 was passed in April 2010, it has become operational in stages. The core provisions came into force on 1 October 2010, while more provisions came into force on 6 April 2011. In 2016 the National Living Wage (NLW) increased in April and the National Minimum Wage (NMW) will increase in October, but the new rates are always announced several months earlier so that employers have plenty of time to prepare.
Statutory instruments are a form of delegated legislation or secondary legislation. These are issued by ministers using powers delegated to them under Acts of Parliament. They take the form of sets of regulations and orders. These typically contain a lot more detailed legislation than is found in the relevant parts of their 'Parent Acts'.
A great deal of European Union law is implemented in the UK through delegated legislation of this kind. This is possible because the European Communities Act 1972 permits ministers to give effect to European directives through the use of delegated legislation without the need for a vote in Parliament.
In most cases ministers simply issue sets of regulations and wait for forty days. If no MP demands a debate in this time, the regulations simply pass into law. Examples of statutory instruments from the field of employment law include the Working Time Regulations 1998, the Transfer of Undertakings (Protection of Employment) Regulations 2006 and the Parental Leave (EU Directive) Regulations 2013.
Regional Parliaments and Assemblies
The Scottish Parliament and the Welsh and Northern Ireland Assemblies have the power to legislate in defined areas. In the case of the Scottish Parliament, devolved legislative powers extend across all areas that are not specifically reserved to the Westminster Parliament. In the case of the Welsh and Northern Irish Assemblies a list of the areas in which legislation can be made on a devolved basis is set out in law.
The right to make new employment laws is not currently devolved either in Scotland or in Wales, although some other areas of employment policy are. This has enabled the Scottish Government to announce its intention to abolish the employment tribunal fees that claimants still have to pay in England and Wales. It is only in Northern Ireland that ministers have the power to propose employment legislation which is voted on by the Assembly members and can become law. As a result, in recent years, some significant differences have developed between employment law in Northern Ireland and in the rest of the UK. For example the qualifying period for unfair dismissal in Northern Ireland is one year whereas in Great Britain the period has been set at two years since April 2012.
For more information on the key differences in employment law between Northern Ireland and Great Britain see our members only factsheet.
In many countries Parliament is the only source of law, but in the UK and some other countries which follow a similar legal tradition, the judiciary are not simply involved in interpreting the law – they also make it in some circumstances. There is a great deal of judge-made law in the field of employment, and over time it is becoming more significant.
In addition to statutes enacted by Parliament, the UK has long-established 'common laws' dating back centuries, none of which have ever been considered by an MP or proposed by a government. Common law is entirely judge-made.
Unlike a statute which is enacted on a particular day, common law evolves over time as cases come before the courts and are appealed up through a hierarchy of courts. The presence of this hierarchy is highly significant in the UK's judicial system because courts that are lower down in the hierarchy are obliged to apply any precedents that have been established by higher courts. As a result, in practice, this means that the judges in the higher courts make the law. Whenever a similar type of case comes before a lower court in the future, the principles that have been set out by the higher court must be applied.
The same principle of precedent and law-making also applies when the courts are asked to interpret the precise, practical meaning of clauses in statutes that have been passed by Parliament. How legislation should be interpreted is for judges to decide and once a judge or a panel of judges in a higher court rules on a point of principle, all the lower courts must apply that principle when any similar case comes before them.
This happens all the time in employment law. It is particularly significant in the area of the law of contract which forms apart of common law and is entirely judge-made.
According to common law judges are able, when they see fit, to establish what are called 'implied terms' or sometimes 'common law duties' into every contract of employment in the UK. These sometimes place a duty on employers and sometimes on employees. So, for example, under the law of contract every employer in the UK owes their employees a general duty of care. If an employee is injured at work because the employer has breached this duty, they can sue for damages. By contrast common law states that all employees owe their employers a general duty of fidelity. This means, for example, that an employee who passes legitimate trade secrets on to a competitor of their employer can be summarily dismissed and in some circumstances also sued for damages.
In recent years by far the most significant development in this field has been the evolution of a new common law duty 'to maintain a relationship of mutual trust and confidence' which applies to both employers and employees.
Mutual trust and confidence originated in the early 1990s and since then, its use as the basis for legal argument in tribunal cases and in judgments has grown steadily but also exponentially. From the turn of the century it has been firmly established that employers and employees owe each other a general duty 'to maintain a relationship of mutual trust and confidence'. If one side breaches this duty they are said to be 'repudiating' the contract through their actions. An important development came in 2007 when the Employment Appeal Tribunal widened the scope of 'mutual trust and confidence' very significantly by simply changing one word in the established formulation.
The effect on employment law has been profound, yet this duty and its subsequent further development and application have never been given any consideration by Parliament. The duty is entirely a creation of the courts.
2014 saw the creation of a new common law duty following the Supreme Court decision West London Mental Health NHS Trust v Chhabra (unreported,  EWCA Civ 11 25 January 2013, SC) where it was effectively decided that henceforth all employment contracts have implied into them a right for employees to be treated fairly when being formally disciplined by their employers. Importantly, this right applies equally in the case of contractual and non-contractual disciplinary procedures.
Parliament and common law
Unusually, the UK does not have a written constitution, although the powers of the Scottish Parliament and the Northern Ireland and Welsh assemblies are clearly set out in writing. The absence of a written constitution does not mean, however, that there are not very well-established constitutional principles.
The most important of these is that Parliament is sovereign. This means that if Parliament saw fit to do so, it could at any time by passing a statute override anything it disapproved of in common law. Judges make law in the way described above, but they cannot ever over-rule or make decisions that in any way contradict the will of Parliament as set out in statutes. It is rare for Parliament to exercise this right, but it does happen from time to time. The most recent example of relevance to employment was the abolition in 2013 of the right for employees and former employees to base personal injury claims on 'breach of statutory duty'.
Useful contacts and further reading
DARBYSHIRE, P. (2016) Nutshells English legal system. 10th ed. London: Sweet and Maxwell.
DICKSON, B. (2013) Law in Northern Ireland. 2nd ed. Oxford: Hart Publishing.
ELLIOT, C. and QUINN, F. (2016) English legal system 2016/17. Harlow, Pearson Education Ltd.
GILLESPIE, A. (2015) The English legal system. 5th ed. Oxford: OUP.
MARTIN, J. (2013) The English legal system. 7th ed. London, Hodder Education.
PARTINGTON, M. (2016) Introduction to the English legal system 2016-2017. Oxford, OUP.
ROGERS, R. and WALTERS, R. (2015) How Parliament works. 7th ed. Abingdon: Routledge.
SHIELS, R. (2015) Law basics: Scottish legal system. Edinburgh: W Green.
SLAPPER, Gary and KELLY, David. (2015) The English legal system 2015-2016. 16th ed. Abingdon, Routledge-Cavendish.
This factsheet was written and updated by Stephen Taylor.
Stephen Taylor: Senior Lecturer in Human Resource Management (HRM), University of Exeter Business School and Chief Examiner for the CIPD
Stephen Taylor is the author/co-author of several HRM books, including the bestselling texts 'Human Resource Management' (with Derek Torrington, Laura Hall and Carol Atkinson) and ‘Armstrong’s Handbook of Human Resource Management Practice (with Michael Armstrong).
He is a frequent speaker at HR conferences and Acas events for employers, and has regularly represented parties in employment tribunals. He also undertakes HR consultancy, tutoring and training work, and previously worked in a variety of HR management roles in the hotel industry and in the NHS.
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