The King’s Speech on 17 July set out Labour’s legislative agenda for their first months in government. It made only a passing reference to ‘legislation to ban exploitative practices and enhance employment rights’. Here, we look at what that will mean in more detail.
‘New Deal for Working People’
This was Labour’s employment law policy announced when they were in opposition. They say it is their plan to make work pay by ‘boosting wages, making work more secure and supporting working people to thrive’ – delivering, they say, ‘a genuine living wage, banning exploitative zero hours contracts, and ending fire and rehire’.
The Prime Minister’s briefing notes on the King’s Speech give some detail on implementing this policy.
So what will Labour actually do?
The government plans to introduce an Employment Rights Bill. This is likely to include:
- Making protection from unfair dismissal available from day one of employment.
This would be a massive change because currently employees need two years’ service to bring a claim. Even under the last Labour government it was one year. Labour justifies their policy by saying that the prospect of job insecurity stops people changing jobs and seeks to reassure firms that the protection will depend on special (but unspecified) rules for probationary periods. Expect considerable lobbying from employers to either retain a long specific qualifying period or to ensure that the probationary rules are flexible enough to allow the possibility of simpler dismissals for an adequate period of time.
- Banning zero-hour contracts
It might not be an outright ban. Labour say they want to make sure that workers have a right to a contract that reflects the hours they regularly work. Their aspiration is to ban ‘one-sided’ flexibility where the employer sets hours of work and the employee has no say.
- Ending ‘fire and rehire’ and ‘fire and replace’
Labour wants to stop employers unilaterally changing contracts by terminating them and offering a new contract on different terms. Currently that is a dismissal and employees with over two years’ service can claim unfair dismissal but the caselaw shows that this is often fair if there is a good business reason and the employer has consulted. Expect the rules to be much tighter. Expect also that there will be heavy penalties for employers who dismiss their workforce to replace them by cheaper staff. This has its origins in the widespread criticism of P&O Ferries who in 2022 dismissed 800 staff without notice to replace them with agency workers. In both these areas there is to be both law reform and a new statutory code.
- Removing the lower earnings limit and waiting period for statutory sick pay (SSP)
At the moment employees have to wait until the fourth day of sickness to receive SSP and must earn at least £123 per week. Both of these qualifications were seen as unfair. There has been no announced intention to significantly raise the rate, which is currently £116.75.
- Making flexible working the default for all workers from day one and requiring employers to accommodate this as far as is reasonable
The right to request flexible working was already made a ‘day one’ right by the last government so it remains to be seen what the change will be on that. Also, it is not clear what making it the default position means. But a positive obligation to accommodate requests signals a shift in emphasis that will make it more difficult for firms to decline them.
- Making it unlawful to dismiss a woman who has had a baby for six months after she comes back to work
This will further strengthen the protections around maternity, with the policy aim of increasing female participation in the workforce. But new mothers won’t be totally fire-proof: the key to this will lie in the exceptions to the rule.
- Making the right to take parental leave a ‘day one’ right.
What about trade unions?
The Labour party was born out of the trade union movement so may be expected to treat unions more favourably than the Conservatives. They will remove some, but probably not all, of the laws introduced by the last government restricting strikes. As a minimum, the law on minimum service levels in relation to industrial action will be repealed. Acquiring statutory recognition for trade unions will be simplified. A new right for workers and union members to access a union within workplaces will be introduced.
Any other changes?
Yes, there will be a Fair Work Agency to enforce workplace rights.
And Labour say they will boost the National Living Wage by an unspecified amount to make it a ‘genuine living wage’ while also making the minimum wage employers can pay those under 23 the same as for those aged 23 and over.
And, separately, there will be draft Equality (Race and Disability) Bill to ‘enshrine the full right to equal pay law’ for disabled people and ethnic minorities and introduce mandatory ethnicity and disability pay gap reporting. Both of these last proposals contain huge practical difficulties, and it will be interesting to see how the government will deal with these.
When will the Bill be introduced?
Labour has promised to introduce a bill within 100 days. That means we can expect it before November. It will then take time to go through Parliament and there will be a further period before the changes actually take effect, possibly in April 2025.
As always, we are available to advise on what these reforms will mean for your business. And we will bring out another Newsletter when the full detail in these proposals are known, including when they will become law.
How 3CS can help
We offer a range of employment law services to give you the best, most up-to-date advice and protect your business. For further information on employment law matter, please get in touch with your usual 3CS contact.
