What does the new Labour government mean for the Employment landscape?

Labour committed to a ‘New deal for Working people’ in their manifesto. Their proposals represent a significant shift in UK employment law and are set to enhance workers’ protection while providing the biggest change in workers’ rights for a generation.

In this article, we summarise the proposed changes and highlight key priorities for businesses.

Employment Rights and Status

1. Day One Rights:

• Currently employees are protected from unfair dismissal after two years.  This will change making protection from unfair dismissal a Day One right.

Many employers rely on the ‘two-year’ rule to let employees go without the risk of claims for unfair dismissal.

2. Employment status – all workers to get the same basic rights and protections.

• Simplification of employment status, making a clear distinction between those who are employed and self employed.  It will remove the three-tier status – ‘Employee’, ‘Worker’ and Self-Employed’.
• Right to a written contract for self-employed individuals
• Equal basic rights and protections for all workers, eliminating the distinction between employees and workers. This means, for example, entitlement to sick pay and holiday pay for all.

In Employment Law terms, there are currently 3 categories of employment status – Employees, Workers and the Self-employed. Differentiating between them can be contentious. Generally speaking, ‘employees’ have more rights and obligations than the other categories because there are stronger mutual obligations.  A ‘worker’ may perhaps be on a zero hours contract where, for example, they can choose when they work.

3. Zero-Hour Contracts:

• Eliminate one-sided flexibility (i.e. in favour of he employer); giving employees the right to a regular contract after 12 weeks of regular hours and reasonable notice for shift changes and compensation for cancelled shifts.

4. Strengthened Rights:

• Enhanced protections during pregnancy, redundancy and whistleblowing.
• Encouragement for employers to adopt the “Dying to Work” charter for terminally ill workers.

(Some enhanced protection for pregnant employees and adoptive parents came into effect under the last Government in April 2024).

What you need to do:

• To minimise the risk of people challenging dismissals due to capability or disciplinary issues, ensure that you hire the right people in the first instance.
• Engage in a robust recruitment process.  Ensure job descriptions, adverts and interviews help you to screen prospective candidates properly.
• Set expectations from the start, in terms of Onboarding and probation periods.
• Provide training to managers on how to manage new joiners and develop staff.
• Strengthen HR and legal compliance.  Review employment contracts and policies especially Capability, Disciplinary, Grievance policies. 
• If your business uses zero-hour contracts, prepare to transition to fixed hours contracts based on a 12-week reference period.

Pay

1. Salaries

• Abolish age bandings on the National Minimum wage so that all workers earn at least £10 per hour.
• Reform the Low Pay Commission to consider the cost of living.
• Ensure travel time and “sleep over” hours are compensated.
• Implement Fair Pay Agreements in adult social care.
• Ban unpaid internships unless part of education/training.

2. Sick Pay:

• Strengthen Statutory Sick Pay (SSP) and remove the waiting period, ensuring it reflects fair earnings replacement.

3. Close Pay Gaps:

• Mandatory publication of ethnicity and disability pay gaps for firms with over 250 employees.

What you need to do:

• Budget for increased labour costs due to higher wages and extended sick pay.
• Invest in an effective payroll system to ensure staff are paid correctly with reference to sick pay and new national minimum wage requirements to avoid HMRC penalties.
• Put in place measures to manage sickness absence such as clear policies and procedures, and training for managers on handling sickness.

Workplace Conditions

1. Tackle Harassment:

• Obligations on employers to maintain a harassment-free workplace, including third-party harassment.

2. Flexible Working:

• Make flexible working a Day one right, there may be allowances for exceptions, where this is not feasible due to business need.

3. Family-Friendly Policies:

• Immediate parental leave rights and bereavement leave.
• Protection for pregnant employees from dismissal for six months after maternity leave, except in specific circumstances.

4. Caring Responsibilities:

• Review and consider the benefits of implementing paid carer’s leave.

5. Fire and Re-Hire:

• Improve consultation processes and adapt laws to prevent situations where employers dismiss employees who reject less favourable terms and conditions.

6. Wellbeing:

• Support physical and mental health, including protections for those with Long Covid.

7. Menopause:

• Require employers with more than 250 staff to create Menopause Action Plans.

8. Work-Life Balance

• The Right to Switch Off – Introduce the right to disconnect and protect against remote surveillance.

Note that although this was included in the Labour manifesto, changes to Flexible working requests and the introduction of unpaid Carers’ leave came into effect in April 2024 under the last government.

What you need to do:

• Review all relevant policies within the scope of the new changes such as Parental leave and Flexible working policies.
• Inform staff when rolling out the policies and provide training to managers.

Technological Impact

1. Artificial Intelligence (AI):

• Collaborate with stakeholders to understand AI’s impact on work, jobs, and skills.

Trade Union and Legal Rights

1. Update Trade Union Laws:

• Strengthen union rights, simplify recognition processes, enhance protections for union representatives, and inform workers of their right to join a union.

2. Enforcement Rights:

• Extend the time limit for employment tribunal claims to six months.
• Simplify equal pay enforcement.
• Establish a single enforcement body for worker rights.

Comment

Whilst many of these changes may increase costs and complexity, if implemented correctly, they may also help with employee morale, motivation and retention which are drivers of  enhanced productivity, reduced turnover and improved business performance.

As with all proposals, these will be subject to the usual consultation and legislative process before becoming Law.  We are unable to provide details of any timelines which of course are subject to the new government’s agenda. 

We will be following this closely and will keep our clients updated. Please ensure you are signed up to our updates and we encourage you to join our Employer Community if you have not already done so.

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