New Labour Government's Planned Employment Law Changes
Guest editor: Louise Millard at Edan Blue Limited.
Louise brings 20 years’ high-level industry experience to help small businesses, start-ups, and individuals with HR advice and specialist resourcing. Contact Louise if you are looking for straight talking advice.
With the Labour Party elected as the UK's new government, it is likely that they will now be planning to quickly initiate significant legislative changes as outlined in their Manifesto and Labour’s Plan to Make Work Pay: Delivering A New Deal for Working People. Despite their goal to act within 100 days (by October 12, 2024), employers can expect some delays as Labour has committed to consulting with businesses before finalising legislation.
Key Points for Employers
Employment Status – Single “Worker” Status
Labour aims to simplify the current three-tier system (employee, worker, and self-employed) into a two-tier system: "workers" and "self-employed." Those classified as "workers" will receive full employment rights, such as maternity, paternity, and unfair dismissal protections. Employers should evaluate their workforce and anticipate the costs associated with extending these rights.
Employment Protections – Unfair Dismissal
Labour proposes to make unfair dismissal protections available from the first day of employment, eliminating the current two-year qualifying period. This change will impact recruitment practices, probation periods, and manager training, as employers will need to justify dismissals and follow fair processes from day one. The potential for an increase in grievances and Tribunal claims means employers will need to be cautious with new hires.
Day One Rights
Labour proposes granting basic individual rights from the first day of employment for all workers. These rights would include parental leave (maternity, paternity, adoption, and shared parental leave), and sick pay. This would eliminate the current qualifying periods for employees and extend these rights to the broader category of ‘workers,’ which would be a significant change.
Employment Tribunals – Extended Time Limits
Labour plans to extend the time limit for bringing employment claims from three to six months. This change aims to allow more time for internal procedures and settlement discussions, potentially reducing the number of Tribunal claims. However, it also means a longer period before employers know if a claim has been filed.
Zero Hours Contracts
Labour intends to ban exploitative zero hours contracts, ensure reasonable notice for shift changes, and provide workers the right to a contract reflecting their average hours over a 12-week period. Employers may need to audit their workforce and explore alternative flexible working arrangements.
Pay
Labour will align the National Minimum Wage (NMW) with the cost of living, abolish NMW age bands, remove lower earnings thresholds for Statutory Sick Pay (SSP), and eliminate SSP waiting days. These changes are expected to start as early as April 2025.
Fire and Rehire
The practice of fire and rehire will be restricted, only allowed when no other options exist for business viability and after fair consultation. This is a dilution of the original proposal to fully ban the practice.
Collective Consultation
Labour proposes changing collective redundancy consultation requirements to apply across all of an employer’s sites rather than each site individually. This change could result in more frequent collective consultations.
Right to Disconnect
Labour will introduce a right not to be contacted outside of normal working hours to promote work-life balance, following models in Ireland and Belgium. Employers will need to create bespoke policies to accommodate this right.
Preparing for Change
While the exact timeline and details of these changes are uncertain, employers should start preparing by:
Auditing Current Practices: Identify areas needing adjustment and seek advice if necessary.
Updating Policies and Procedures: Be ready to revise and communicate changes to employees, ensuring information is easily accessible.
Training and Resources: Plan training for managers, and prepare FAQ documents to facilitate a smooth transition when changes are implemented.
By taking these steps, employers can ensure they are ready for the reformed employment landscape that Labour's new legislation will bring.
