Labour's Proposed Changes to Employment Law

July 4, 2024, is when the UK will hold its general election. In this article, we discuss the possible effects on British employment law of a Labour government. 

The Labour Party stated at the beginning of 2024 that, should it win the general election, it would secure a "New Deal for Working People."  

Let's explore some of Labour’s key proposals.

(Our video on Labour's proposed changes to Employment Law is found here)

Key Proposals

1 – Simplifying employment status

In terms of employment law in Great Britain, there are three main categories of workers: employees, self-employed individuals and workers. The removal of the distinction in employment law between employees and the intermediate category of workers, and the creation of a single status of "worker" for all but the "genuinely self-employed," are, it would appear central to Labour's New Deal proposals. 

2 – ‘Day one’ rights

One of the main points of Labour's proposals that raised eyebrows across the employment law profession was the proposal to provide protections for all workers from the moment they started working - day 1. This might include, among other things, the right to receive sick pay, parental leave and compensation, and the prohibition against unfair dismissal. Unfair dismissal itself (subject to exceptions) is currently available to employees after two years of continuous employment for the majority of dismissals.

Labour has further stated that it would:

• Remove the cap on compensation and will guarantee that workers will "receive full compensation, without statutory limits, if they suffer loss because of employers' breaches of the law." They argue that the caps "are unfair and discourage companies from following the law.".

• Increase the amount of time that workers have to file claims with employment tribunals. 

Remember that these day-one rights under Labour's initial proposals might not only apply to employees as is the case now, but also to the broader category of “workers” as mentioned.

Employers will absolutely have to think about how they handle terminations in a whole new way they haven't had to before. One prediction is that employers will very much be forced to have to follow a thorough and equitable procedure for each individual dismissal if they have employees who prove unfit for the position during the first few months of employment. Failing to do so could result in claims of unfair dismissal with uncapped compensation.

3 – Proposals to improve disability, gender and ethnicity pay gaps

The proposed New Deal package also calls for mandatory ethnicity pay gap reporting for companies with more than 250 employees, as well as requiring employers to develop and implement plans to eliminate the gender pay gap (which is currently voluntary).

Recently, Labour announced that it would expand the grounds for which claims for equal pay may be made, beyond sex, to include claims based on disability or ethnicity. To add to this, Labour's current proposals include mandatory requirements and enforcement rather than merely requiring employers to publish data.

4 – Flexible working rights from day 1

Making flexible working a default right from day one is also on Labour’s agenda. Currently, it is the case that an employee has the right to request flexible working for day one (not the right to work flexibly from day one). Labour seeks to flip the script and allow employees to be able to work flexibly by default from day 1, with employers required to accommodate this as far as is reasonable.

5 – Stronger collective bargaining rights and reforming trade union laws

Labour has declared its intention to “empower working people to collectively secure fair pay, terms and conditions” given its long history of ties to trade unions. 

One reform that Labour has announced is the implementation of Fair Pay Agreements, which would establish minimum standards for entire sectors and allow for sectoral collective bargaining. Although it was unclear from Labour's initial proposals how broad sectoral collective bargaining would be, new reports indicate that Labour is likely to concentrate on the social care industry.

6 – Ending the practice of fire and rehire

Putting an end to the "fire and rehire" practice - which is where companies fire workers and then quickly rehire them under less favourable terms. 

7 – The right to “switch off”

Labour claims that with "some of the longest working hours in Europe," the UK has a culture of long hours. The rise in the number of workers working from home and the development of technology, which means that work is no longer left at the office at the end of the day, may be contributing factors to this. In an effort to better balance work and personal life, Labour first suggested employers giving employees the option to disconnect and not be contacted after hours.

This type of law is not dissimilar to rights which have been introduced throughout Europe; for example France - who set the precedent in 2017, and Ireland, Germany, Italy, Denmark, and Belgium who have since followed. On the other hand, any firm proposal would have to overcome some difficult obstacles.

It seems that Labour is considering the best way to implement this in practice, and there are currently rumours that this right could be introduced through an Acas Code of Practice and that an exemption for small companies might be included, rather than through new legislation. 

Some genuine considerations to think about this type of change are: How does this work with flexible working? How do you make this work across different types of industries or even working across international borders and time zones?

Round Up

It is worth bearing in mind that the Labour party have promised to implement these changes within 100 days of assuming office. We are unsure about how that would actually work in practice, including whether or not consultation periods on draft bills would take place during the allotted 100 days or if their goal would be to pass final legislation by the end of the 100 days.

How can employers prepare for a Labour Government

It could be that there are too many unknowns for employers to begin acting immediately to get ready for these changes, given that the election's outcome is uncertain, and any proposals will need to go through a legislative and consultation process. Nonetheless, employers would be well-advised to take the below into account:

• If you don't have an annual Employment law retainer with a law firm, get one. Magara Law offers this service - and you can find the link for this in the description of this video - Essentially what this is is unlimited employment law advice (subject to a few exceptions) in exchange for a set annual fee. The value is priceless. It's having an Employment Solicitor on your side without being the stereotypical hourly rate charges most do.

• Employers will secondly need to proactively seek to ascertain any current issues or difficulties within their own personnel and assess if any actions could be done at this time to resolve them, such as through harassment, intimidation, or broader issues related to diversity and inclusion. hiring, firing, or recruiting procedures, etc. as well as cultural concerns about extended work hours.

There are plenty other things employers ought to be doing, and these are just a few.

Conclusion 

This article provides general information and shouldn't be considered legal advice.

Please consult with a professional for specific situations. For employment law advice, you are welcome to call Magara Law on 01869 325 883 or email roy@magaralaw.co.uk.