A New Labour Government – all change in employment law

What’s going to change?

If all of Labour’s proposals go ahead, a lot!

As a reminder, a summary of Labour’s numerous employment law pledges can be found in our recent article, here.  We won’t list these out again, but have instead picked out our ‘top 10’ which we think are of most significance to employers.

1. Unfair dismissal to be a ‘Day 1’ right

Employers currently have two years before an employee obtains unfair dismissal rights.  Our new government believes that being able to change jobs easily is a good thing for the economy, and making employees wait two years for the right not to be unfairly dismissed stifles the job market.  It therefore intends to change this so that employees have the right not to be unfairly dismissed from the first day of their employment.

Importantly, the government has said that any change will not prevent employers from dismissing fairly, including during a probationary period provided a fair and transparent process has been followed.  This will allow employers to assess new hires.  We may therefore also be looking at an amendment to the Employment Rights Act 1996 to make termination during probationary periods a potentially fair reason for dismissal.

We’ll have to wait and see what the detail will be on this, but if it goes ahead, employers will need to review their probationary processes and policies to ensure they are as tight as possible, and think about retraining managers to ensure any potential issues with employees are picked up and dealt with without delay.

2. Increase Tribunal time limits from 3 to 6 months

This is another change designed to strengthen employment rights and make it easier for employees to bring an employment claim.  Labour says that increasing the time limit from three to six months will allow more time for issues to be dealt with internally, potentially decreasing the number of claims, and will provide more support to employees seeking to make claims for pregnancy discrimination.

Whilst this would have no practical impact on how employers operate on a day-to-day basis, it could present a headache when it comes to defending claims, given that it will only increase the time between when relevant events take place and when the parties have to recall it all for the Tribunal process.

3. Simplify worker -vs- employment status

Working people currently fall into one of three categories: employee, worker or self-employed.  Your status dictates the rights and protections you are entitled to.  For example, only employees are protected by the right not to be unfairly dismissed.

It can often be difficult to assess a person’s employment status.  Case law gives us guidance on how to do this, but it is far from straightforward and there have been a number of high-profile cases which demonstrate just how fundamental this issue is to the increasing number of workers in the gig economy sector.

The proposal is to move towards a system which differentiates only between workers and the genuinely self-employed.  Depending on the detail, this could have the effect of opening up a whole host of rights for workers, including the right not to be unfairly dismissed and the right to a redundancy payment.

Recognising just how fundamental this change could be to UK employment law, the government has said that it will consult in detail on how a simpler framework might work.  We should therefore expect to see more detail on this once the consultation opens.

4. Ban ‘exploitative’ zero-hour contracts

The government has said that it will ban ‘exploitative’ zero-hour contracts.  There is a question mark over what this means, as they haven’t gone so far as saying that it is banning zero hours contracts entirely.  Rather, the focus seems to be on making sure employees have a right to a contract which reflects the number of hours they regularly work (based over a 12-week reference period) and reasonable notice of, and compensation for, any change in shifts or working time.  The requirement to give compensation for such changes is likely to be cumbersome to businesses which operate flexibly.

5. End the current “fire and re-hire” culture

This refers to the process of dismissing employees, usually following a consultation process, and immediately offering them new terms and conditions which effect changes the employer wants to make.  It is a process that tends to be (cautiously) followed by employers when there is a real business need for the proposed changes, but where the changes may be contested by employees.

The practice has been making headlines for a while now, especially following the P&O debacle in 2022.  The concern is that unscrupulous employers use the practice to impose changes that exploit employees.  The previous Conservative government attempted to tackle the issue by introducing a new Statutory Code (see our previous update – here).  Labour has said that this Code is inadequate and will be replaced.  It also says that it will reform the law to provide effective remedies against abuse, whilst acknowledging that it is important that businesses are allowed to restructure to remain viable, where there is genuinely no alternative.

Despite the headlines, it does not appear that the “fire and re-hire” practice will be banned outright.  Instead, we might expect to see measures introduced to tighten up employee protection around when the practice can be used, and impose tougher remedies for when it is abused by employers.

6. Changes to when collective redundancy consultation applies

Readers will know that collective consultation requires employers to consult with trade union or elected employee representatives for a minimum period of time (either 30 or 45 days) where it proposes to dismiss as redundant 20 or more employees in any 90 day period.  Whether or not it applies depends on the number of employees the employer proposes as redundant.  Currently, employers need only consider the number of employees proposed as redundant at a single establishment – broadly speaking, a single place of work.  Our new government wants to change this so that employers must consider the number of employees affected across the entire business.

Businesses operating in multiple locations across the UK (e.g. the retail sector) will be most affected by this change; it will require them to keep a centralised and up-to-date record of all redundancies across the UK.

7. Equal pay laws and pay gap reporting to cover race, ethnicity and disability

The government intends to strengthen rights and enshrine in law the right to equal pay for workers who are disabled and black, Asian and other ethnic minority workers.  The government has also said that it will implement a regulatory and enforcement unit for equal pay, with involvement from trade unions.  As anyone involved in an equal pay dispute will know, these claims can be complex and lengthy, but employers should be prepared to deal with more of them in the future.

Pay gap reporting in respect of disability and ethnicity is also planned for employers of more than 250 employees.  Whilst this will add to the administrative burden facing employers, those who have instigated streamlined processes to deal with the gathering of data will now reap the rewards if/when the duty is widened to cover more groups of employees.  However, we anticipate there will be difficulties in gathering accurate data on these issues – not least because it will in most cases rely on a voluntary disclosure from employees.  Detailed guidance from the government on this would be welcome.

8. The right to ‘switch off’

The government has said that it will bring in the right to switch off and follow similar models to those in place in Ireland and Belgium, giving workers and employers the opportunity to have constructive conversations and work together on workplace policies or terms that benefit both parties.

In Ireland, there is a Code of Practice which requires employers to engage with employees (and any trade union) to tailor a policy that takes account of the needs of the business and the workforce.  A breach of the Code can be used as evidence in proceedings relating to an individual’s working hours (rather than a breach of the Code being an offence itself).  If we end up with a similar situation in the UK, employers may need to carefully assess its needs in respect of working time, implement a policy dealing with the right to switch off and take steps to train its workforce (particularly those with management responsibilities) on it.

9. Unlawful to dismiss a pregnant woman for 6 months following a return to work

Another proposal employers should take note of is the government’s plan to make it unlawful to dismiss a pregnant woman for six months following her return to work, except in limited circumstances.  Labour says that this will give pregnant employees certainty that the law is “on their side”.  We’ll have to wait for the proposals before seeing how much this adds to the current protections against pregnancy and maternity discrimination.

10. Reform Trade Union Law

As you’d expect, Labour has committed to updating trade union law and removing ‘unnecessary’ restrictions on trade union activity.  It says it will:

• repeal past Conservative legislation limiting trade union activity
• modernise balloting by allowing modern secure electronic balloting
• simplify the process of union recognition and reduce the statutory recognition thresholds
• introduce rights for trade unions to access workplaces, for recruitment and organising purposes
• introduce a duty on employers to inform all new employees in writing of their right to join a trade union, and to periodically remind employees of this

Perhaps the change that might concern employers the most is the proposed right of access – we will have to wait to see the detail as to how much (or little) control employers will have over this.

What’s the timetable for change?

It’s been widely publicised that Labour intends to hit the ground running and introduce legislation in Parliament within 100 days of entering government. As Labour have been asked to form a government today (5 July), D Day (no, not that one, Rishi) will be 13 October 2024.

In its Plan to Make Work Pay: Delivering A New Deal for Working People published on 24 May, Labour commits to consulting fully with “businesses, workers and civil society” on how to put its plans into practice before legislation is passed.  We also know that it will follow a full Parliamentary process for its proposals, whilst treating its employment law reforms as a top legislative priority.  However, it acknowledges that there are areas of its New Deal that will take time to review and implement, for example, its plans to move towards a single status of worker.

It will be interesting to see which of its numerous proposals Labour tackles first.  However, even if only a fraction of the various pledges are pushed forward immediately, that’s still an awful lot to do in 100 days.

The countdown is on, and we’ll keep you abreast of developments as and when they happen.