Labour’s landslide victory last week is likely to mean significant employment law reform impacting workers and businesses alike.
Here are some of the key changes the party has proposed, drawn from its election manifesto, party conference, and the ‘Make Work Pay’ publication from May 2024.
Right now, many of these proposals are pretty broad, so we’ll have to wait and see which ones are actioned, and what the specifics will be.
The timing is also still unclear. But Labour has said it’s committed to introducing new legislation within 100 days of entering government. That means the clock’s already ticking and we may see a draft bill by the autumn with some changes likely as early as the start of next year.
DAY ONE RIGHTS- UNFAIR DISMISSAL, FLEXIBLE WORKING AND PARENTAL LEAVE
Changes to unfair dismissal is one of the most significant proposals and, interestingly, has (in my view) been under-reported.
At the moment, employees usually need two years’ service to claim unfair dismissal. Labour has indicated it intends to allow claims from day one of employment.
It’s hinted dismissals would still be fair if they were carried out during an employee’s probationary period, with fair and transparent rules and processes. However, it is not clear whether —
- There would be limits on the length of probationary periods
- Dismissals during probation would be limited to the usual fair grounds for dismissal (e.g. conduct, capability etc)
- Whether you would need to meet the usual procedural requirements for a fair dismissal during probation
It’ll be interesting to see more detail on this proposal. In the meantime, employers need to be aware they might face more unfair dismissal claims down the line.
If an employee wins such a claim, the compensation includes a basic award and a compensatory award. The basic award is calculated in the same way as a redundancy payment, taking into account age and length of service. The maximum compensatory award for unfair dismissal is either £115,115 or 52 weeks’ pay, whichever is lower. So, it's definitely something to keep an eye on.
Other proposed day one right changes include —
- Flexible working for all workers, except where it isn’t reasonably feasible. It is not clear how this will differ from the current position, whereby employees can request flexible working from 'day one' and you can only refuse if you have a genuine business reason for this
- Parental leave — currently there’s a one-year qualifying period. It is not clear whether the proposals are limited to the current right to unpaid parental leave or a wider review of all family leave
WORKING TOWARDS A SIGNLE STATUS OF WORKER
There are currently three categories of employment status: employees, workers (which includes employees) and self-employed.
As part of a move towards a single status of “worker”, Labour plans to consult on moving to a two-tier system: workers and self-employed. It appears that this would involve 'levelling-up' the employment rights of workers, to match those of employees.
Labour has also discussed giving more rights and protections to 'self-employed workers'. But, it is not clear who would be caught by such changes, particularly if there was a move to a two-tier employment status system.
PAY-MINIMUM WAGE, STATUTORY SICK PAY AND TIPS
Labour has announced plans to reform minimum wage by removing the age 18-20 minimum wage rate (currently £8.60 per hour, compared with £11.44 for the national living wage) and enforcing new rules on pay for travel time for those with multiple working sites.
Regarding sick pay, Labour has proposed the removal of the lower earnings limit. It plans to introduce a new system that provides ‘fair earnings replacement’ for those earning below the current rate of statutory sick pay. Also, Labour aims to abolish the three-day waiting period for claiming this type of pay.
And when it comes to tips, new legislation brought in by the previous government is due to come into force on 1 October 2024. Labour has said that it will “strengthen the law to ensure hospitality workers receive their tips in full and workers decide how tips are allocated.” It is not entirely clear whether this means that Labour will continue with the planned legislation, or change it.
RIGHT TO SWITCH OFF
Following the lead of some European countries, including Ireland and Belgium, Labour has indicated workers will have the right to switch off, adding this will give “workers and employers the opportunity to have constructive conversations and work together on bespoke workplace policies or contractual terms that benefit both parties.”
This clarification is important. There’s long been a lack of clarity in terms of how a “switch off” would work in workplaces that are increasingly flexible and where many employees have more choice than before about their working arrangements.
FIRE AND REHIRE
Fire and rehire is a means of effecting changes to employees’ contracts by dismissing them and offering re-engagement on new terms.
The previous government introduced a code of practice which was due to take effect on 18 July 2024. Labour's pre-election commitments were to —
- End 'fire and rehire' unless there is no alternative and the business must restructure to remain viable, but in those cases employers would need to follow a 'process' – it is not clear what this would involve
- Replace the previous government's planned code of practice with a “strengthened” version
New legislation and an amended code would take time. In the meantime, it is not clear whether the new government will allow the previously planned code to take effect on 18 July 2024 and, if so, whether it will bring into force the previous government's planned legislation allowing tribunals to uplift / reduce compensation due to a failure to comply with that code.
REDUNDANCY
Labour’s proposals include strengthening rights and protection.
Currently, if you propose to dismiss as redundant 20+ employees at one establishment within 90 days, you must carry out 'collective consultation' i.e. consult with appropriate representatives of affected employees. Labour intends to trigger collective consultation if the 20+ threshold is met across the business as a whole, rather than each establishment.
Also, women currently have priority for suitable alternative employment in redundancy situations during pregnancy, maternity leave and for a period thereafter. Labour proposes to make it unlawful to dismiss a woman during pregnancy and for six months after she returns from maternity leave – however, there will be exceptions in 'specific circumstances' — no more detail is available for now on what these are.
WORKPLACE EQUALITY
Proposals here include —
- Introducing the requirement for ethnicity and disability pay gap reporting for employers with more than 250 employees
- Businesses of this size would also have to produce Menopause Action Plans — setting out how they’d support employees through the menopause
- Revising gender pay gap reporting rules to include outsourced workers. Labour also plans to make it mandatory for businesses with a duty to report to develop, publish and implement action plans to reduce gaps – this is currently voluntary
- Strengthening harassment laws. The previous government introduced a new duty to take reasonable steps to prevent sexual harassment in the workplace – this is due to take effect in October 2024. Labour intends to extend the duty to cover harassment by third parties, such as customers, and may make other changes including introducing protection for interns and volunteers. However, it is not clear whether Labour will allow the previous government's changes to take effect in October 2024 and make changes thereafter, or look to implement their own plan within the same, or a different, timescale
FAMILY FRIENDLY RIGHTS
Labour has outlined a number of family-friendly rights on top of parental leave being a day one right, as I’ve mentioned above.
Proposals include —
- Introducing bereavement leave for all workers
- Reviewing the implementation of the right to one week's unpaid carer's leave (which took effect in April 2024) and 'examine the benefits' of introducing paid carer's leave
PREDICTABLE WORKING/ZERO-HOURS
The previous government introduced the right to request a predictable working pattern, which was scheduled to come into effect in September 2024. It is not clear whether Labour will continue with this as planned.
Labour has indicated it would —
- Introduce a new right to a contract that reflects normal working hours, based on a 12-week average
- Only allow workers to agree to zero-hours contracts if the contract meets minimum standards
- Ensure workers get reasonable notice of a change in shifts, and compensation for shifts that are cancelled or curtailed (depending on the notice given)
Further details are awaited to see how these proposals will be implemented.
TIME LIMITS, TUPE AND TRADE UNIONS
Labour has indicated a raft of other proposals, including —
- Extending employment tribunal claim time period from three to six months
- Strengthening protections for workers who transfer under TUPE
- Strengthening trade union rights, such as a new right to access workplaces to allow officials to meet, represent, recruit and organise members, as long as they give appropriate notice and comply with reasonable requests of the employer
Indeed, Jonathan Reynolds, the new business secretary, is already under pressure from unions to intervene to alleviate almost 3,000 job losses at Tata’s UK steel operations in Port Talbot, South Wales.
At the moment, without a great deal of detail it’s hard to be definitive about how — and when — we’ll see these proposals become reality. Make no mistake though, even if Labour’s proposals are partially enacted, we could be in for a comprehensive change to workers’ rights.
And, while there’s a strong commitment to consultation in specific areas, I expect we’ll start to find out more of that all-important detail pretty quickly.
After all, while the new prime minister — in his first speech outside Number 10 Downing Street on Friday — was keen to point out changing a country isn’t like “flicking a switch” he did conclude with “our work is urgent. And we begin it today.”
If you have any questions about what these proposals might mean for your business, please do get in touch.