Following their historic, landslide victory, there now appears little holding back Keir Starmer’s government from implementing widescale reforms to “Britain’s outdated employment laws”. They have committed to introduce legislation within 100 days of taking power, which will likely take the form of an Employment Bill.
We expect to learn further details of what this Bill may comprise in the King’s Speech at the State Opening of Parliament on 17 July. For now, we can make predictions of what the Bill may entail based on Labour’s previous statements of intention (set out in their “Plan to Make Work Pay: Delivering a New Deal for Working People” and in their manifesto):
Removal of intermediary worker status
Individuals will be classified as either workers or self-employed, with all workers being entitled to the same rights as currently enjoyed by employees. This will substantially increase the pool of individuals entitled to valuable rights, such as the right not to be unfairly dismissed, to take parental leave, to request flexible working, and to a redundancy payment. Labour also plans to extend the time limits for bringing tribunal claims. The combined effect, together with removing the service requirement for unfair dismissal (see below), will undoubtedly increase the number of tribunal claims submitted. It is unclear how the new government intends to resource the already over-stretched tribunal system.
Day 1 right to claim unfair dismissal
All workers will be entitled to claim unfair dismissal from their first day of work, removing the current requirement for a minimum of two years’ service. Labour has, however, intimated that employers may be able to dismiss fairly during a probationary period, provided it is conducted with fair and transparent rules and processes. It is unknown whether Labour will simply remove the current qualifying period and amend existing legislation to provide for dismissal during a probationary period to be a fair reason for dismissal. It is also unknown whether there will be a statutory limit on the maximum length of any such probationary period. In any event, the ACAS code of practice on disciplinary and grievance procedures will need to be amended, because it does not currently refer to probationary periods, and any unreasonable failure to comply with the code may result in a 25% uplift in unfair dismissal compensation.
Enhanced rights and protections for the self-employed
The genuinely self-employed will have a right to a written contract and greater recourse to tackle late payment of fees. As well extending greater health and safety and anti-blacklisting protections to the self-employed, Labour suggests that its plans to strengthen trade union rights will also benefit this category of individual.
Strengthened Code of Practice on Dismissal and Reengagement
A new statutory code comes into force on 18 July, a legacy of the outgoing government, which imposes various obligations where an employer is proposing to dismiss and reengage (aka “fire and re-hire”), including collective consultation with a recognised trade union regardless of the number of individuals affected. A tribunal may order a 25% uplift where an employer has unreasonably failed to follow the code. Labour has described this new code as “inadequate” and has committed to implementing “a strengthened code of practice” when in power, so the new code may be short-lived.
Greater flexibility for those in work
A recent change to the current regime saw the right to request flexible working made available from the first day of employment. However, this does not go far enough for the new government, which intends for flexible working to be the default position for all jobs “except where it is not reasonably feasible”. There is no indication of how this will be implemented in practice, and we expect that employers will still need some form of request and consultation procedure to identify and resolve pragmatic issues around working arrangements.
Limited use of zero hours contracts
The new government considers zero hours contracts to be exploitative and initially suggested that these would be banned by their government. They have retreated from this absolute position, but are now proposing that all workers will be entitled to a contract reflecting the average number of hours they work based on a 12-week reference period, and that workers be entitled to reasonable notice of any change in shifts or working time. These proposals go far beyond the right to request a more predictable work pattern, which was expected to come into force this Autumn; the government may choose to bypass this and proceed with these more radical reforms.
Expansion of collective rights
Labour has a raft of proposals to strengthen trade union and collective rights, removing what they consider to be unnecessary restrictions on trade union activity and enabling workers to collectively raise grievances to ACAS. The new government will increase the likelihood of meeting the threshold for collective consultation in a redundancy situation, by determining the number of those affected by the redundancy proposals across the business, rather than at the relevant establishment. Where collective consultation is triggered, it entails a moratorium of up to 45 days before the first dismissal, and employers are at risk of protective awards equal to a quarter of their annual wage bill.
Strengthened protection for whistleblowers
Protection for those who make protected disclosures will be enhanced, possibly by mirroring the provisions of the EU Whistleblowing Directive which does not apply in the UK. This may include the requirement for organisations to establish internal reporting channels and to adhere to a specified timeline.
Expansion of parental rights
Although 2024 has already seen a number of enhancements to family-friendly rights, Labour has committed to undertaking a review of parental rights currently available in the UK, with the implication that such rights will be expanded and available from the first day of work. For example, at present, although there is no minimum service requirement before women are entitled to take maternity leave, parents wishing to take paternity leave or shared parental leave must have worked for their employer for a minimum of 26 weeks before the relevant qualifying week. Those wishing to take parental leave, must have at least one year’s service.
Greater proactive duty to prevent sexual harassment
The new positive duty to prevent sexual harassment comes into force on 26 October, requiring employers to take reasonable steps to prevent sexual harassment of their employees. Tribunals will have the power to uplift compensation by up to 25% where an employer is found to have breached this new duty. Labour seeks to strengthen this duty by requiring employers to take all reasonable steps to prevent sexual harassment. We await an updated EHRC code of practice and technical guidance for clarity on what constitutes reasonable steps for these purposes.
Labour also intends to increase protection for women who report sexual harassment, although there is no indication of how they will do this. Although Labour has referred expressly to women, we note that sexual harassment is not confined to female victims.
Employers to publish more equality data
The new government will require employers to develop, publish and implement action plans to close their gender pay gaps. It will also be mandatory for employers with 250 or more employees to report on ethnicity and disability pay gaps within their organisation. Such employers will also need to publish Menopause Action Plans, setting out how they will support their employees through the menopause.
SSP paid from first day of absence
The current three-day waiting period will be removed before a worker is entitled to receive statutory sick pay (SSP). The lower earnings limit before a worker qualifies for SSP, currently an average of £123 a week, will also be removed. Unlike in relation to statutory maternity pay, an employer is not entitled to recover any SSP paid to staff, so this additional cost will fall entirely on employers.
New Single Enforcement Body
Labour may finally establish the long-awaited single labour market enforcement body, bringing together HMRC’s National Minimum Wage Enforcement, the Employment Agency Standards Inspectorate, and the Gangmasters and Labour Abuse Authority. Such a body was first proposed by the outgoing conservative government in 2018, under the logic that a coordinated approach would better protect the rights of vulnerable workers. It is unclear what model of enforcement body Labour is proposing, although we do know that they envisage it to include trade union representation. Again, there is no indication of how such a body will be funded and whether the government will provide greater resources to the tribunal system tasked with adjudicating the anticipated increase in proceedings against employers brought by this new body.
Unsurprisingly, from a Labour government, we can expect their reforms to enhance worker rights and increase the regulatory burden and cost for employers, to strengthen the rights of trade unions, and to increase the volume of litigation through our tribunal system. The next few months will certainly be busy for employers, as they grapple with changes to existing regimes, update their policies and procedures, and ensure that new rights are extended accordingly. Subscribe here for updates straight to your inbox.
Sarah Taylor