A new Labour government - July 2024
What does this mean for UK Employment law?
Labour’s manifesto included a pledge to implement “Labour’s Plan to Make Work Pay: Delivering a New Deal for Working People” in full. This will arguably represent the biggest change in Employment law in a generation and the impact on businesses will be huge.
Labour have promised to introduce an Employment bill within the first 100 days of office, so we should have further details on their plans very soon.
Below are the key changes that are relevant to most employers in the UK. As soon as further details are known, we will update you.
1. New Day 1 rights – including unfair dismissal
A key manifesto pledge was the introduction of several new “Day 1” rights, including the right to sick pay, parental leave and (crucially) the right not to be unfairly dismissed. Currently, an employee needs a minimum of 2 years’ continuous employment to bring an ordinary unfair dismissal claim. Very soon, this right will apply from Day 1 of employment.
Labour also plans to remove the cap on compensation for unfair dismissal (currently £115,115) such that compensation in successful claims is unlimited, like in discrimination and whistleblowing claims.
2. Reforming employment status
Labour intend to consult on moving to a single status of worker. The law currently distinguishes between three types of employment status (employee, worker and self-employed) with different rights given to each.
Labour proposes to introduce a single status of “worker” which will include those that are currently workers and employees. All of these individuals will be entitled to the same basic rights and protections. This would mean, for example, that workers could bring a claim for unfair dismissal. A separate category covering those who are genuinely self-employed will remain.
As Labour have stated that they will consult on the detail of how this simpler framework would work, it seems unlikely that this proposal would form part of the bill that Labour will introduce in the first 100 days.
Labour has also stated that there will be a single enforcement body to enforce workers’ rights.
3. Flexible working – a default right
Labour have stated that they will make flexible working a default right unless employers have a good reason to refuse it. Currently, there is a right to request flexible working from Day 1 of employment, but this would shift to a right to flexible working.
4. Deadlines for Employment Tribunal claims
Labour have stated that the time limits for bringing all claims in an Employment Tribunal will increase from 3 months to 6 months.
5. Ban on zero hours contracts
Labour also pledged to ban exploitative zero hours contracts and contracts without a minimum number of guaranteed hours. We await further details of what is meant by “exploitative”, as this may not be a blanket ban.
In addition, Labour have stated that they will introduce a new right to have a contract that reflects the number of hours the employee regularly works, based on a 12-week reference period.
6. Ending “fire and re-hire”
“Fire and rehire” tactics means the practice of facilitating a change of employment terms by dismissing employees and then immediately re-engaging them on the new terms. A new Code of Practice was published in February 2024, but Labour does not believe it goes far enough and have committed to end the practice.
7. A right to switch off
The Labour manifesto also referred to the introduction of a new right to switch off, i.e. for employees to disconnect from work and not be contacted by their employer outside of working hours. This follows a trend emerging across other European countries (e.g. France) and beyond. How this would work in practice is at the moment unclear.
8. Changes to collective consultation rights
Collective redundancy consultation is required where an employer proposes to dismiss 20 or more employees at one “establishment”. Under Labour, this will change so that the number of redundancies across the whole business is determinative, rather than the number at each “establishment”.
9. Bereavement leave
Labour intend to introduce a right to unpaid bereavement leave. At the moment, this is only available following the death of a child.
10. And for larger employers
Labour have stated that they will introduce a new requirement for employers with more than 250 employees to have a menopause action plan, and there will be new duties to produce ethnicity and disability pay gap reports.
What employers should be doing now:
Review the probationary period clauses in your employment contracts for new starters and ensure they are as robust as possible.
Review performance management processes to make sure you can deal quickly, effectively and fairly with unsuitable recruits. You may wish to have different procedures for employees with less than 2 years’ service.
Review your recruitment practices - make sure you are hiring only the best candidates and don’t hire in haste.
Larger companies should start monitoring and taking action on their ethnicity and disability pay gap now. This would include gathering preliminary data and considering whether you need to change your remuneration structures before you have to publish figures.
Check the company’s directors’ and officers’ insurance policy to ensure it covers liability for unpaid Tribunal awards, given that these may soon be uncapped.
Don’t put off any plans you have to change terms and conditions via a “fire and re-hire” process.