News & Insights

Changes afoot for Employment Law

The newly-elected Labour government are proposing a raft of employment law changes under their “new deal for working people”.

Well, there we have it. Labour has officially won the 2024 general election with Kier Starmer stating in his victory speech that “change begins now”. Labour have secured an overwhelming majority, giving them the mandate they need to act on their election promises. However, many of you will be asking “what does that mean for employment law”.

We have followed Labour’s employment law proposals closely in recent months, you may recall our earlier article regarding Labour’s “cast iron commitment” to introducing a new Employment Rights Bill and our most recent article which set out a number of Labour’s key manifesto proposals.

Labour’s plans for employment law formed a key part of their manifesto for the election with them publishing their plans in what they call the “new deal for working people” – further details of which can be found here.

Labour’s plans are said to include:

  • Day one employment rights. This is likely to be considered the most extreme proposal made by Labour as employees would no longer require two-years’ service to acquire unfair dismissal rights, parental leave and sick pay. Whilst the proposals in relation to parental leave and sick pay will be a welcome change for many, the earlier access to unfair dismissal rights will inevitably increase the number of unfair dismissal claims brought to tribunal.
  • Replacing the upcoming code on “fire and rehire”. The new code of practice on fire and rehire, due to come into force on 18th July 2024 (see here for our article on this) would be replaced with a “stronger” version. Labour have not announced what we can expect this code to look like.
  • Changing the thresholds for redundancy consultation. Labour proposes to change the current trigger for collective consultation requirements. Employers would be required to consider the number of redundancies that are being made business wide rather than just at each site/workplace. Employers would also need to keep a close eye on the number of redundancies made to ensure compliance with collective consultation requirements.
  • Ban on “exploitative” zero-hour contracts. Labour proposes to ban “exploitative” zero-hour contracts and introduce anti-avoidance measures. This will be a particular concern for businesses who rely heavily on this type of arrangement. It is not clear what Labour deem “exploitative” and employers will need guidance on this.
  • Flexible Working. Labour plan to build on the recent changes to flexible working. This would include ensuring workers can benefit from flexible working and allowing opportunities for “flexi-time” contracts that would better accommodate term-time workers.
  • Right to “switch off”. This would include a ban on employers contacting workers by phone or email outside of normal working hours – following similar models that have already been adopted in Ireland and Belgium.
  • Employment rights for self-employed individuals. Those who are self-employed would enjoy rights to a form of employment contract, health and safety and blacklisting rights.
  • Overhaul of the current three-tier employment status system. Labour proposes to introduce a single “worker” employment status and a transition to a simplified two-tier framework. They accept that this will not take place without first conducting a consultation process, given the unavoidable impact on employment rights and the current tax regime. Labour hopes that a simplified framework will ensure flexibility and remove ambiguity for workers on what protections they are owed.
  • Technology and Surveillance. Labour plan to work with workers, trade unions and employers to understand what AI and new technology will mean for work, jobs and skills and how to safeguard against the invasion of privacy.
  • Strengthened Whistleblowing rights. Labour proposes to strengthen protections for whistleblowers, particularly for women who report sexual harassment at work.
  • Increased employer reporting requirements. More stringent reporting requirements for Gender, Disability and Ethnicity pay gap reporting are proposed.
  • Extension of rights to bring equal pay claims. Labour plan to extend the right to make equal pay claims to black, Asian and minority ethnic workers as well as disabled workers stating that the current equal pay scheme is flawed. This will involve a new “Race Equality Act”.
  • Plans to strengthen trade union rights. Labour say they will introduce new rights for trade unions to access the workplace in order to recruit and organise which is a big jump from the current rights of entry. In addition, Labour plan to introduce a simplified process of union recognition, with a lower threshold for voting. Labour pledge to abolish the Strikes (Minimum Service Levels) Act 2023 and regulations which allow agencies to provide cover for striking workers.
  • Further family friendly rights. Labour want to introduce a statutory right to bereavement leave, which is currently unpaid, and at the employer’s discretion to grant. It also plans to set out an outright ban on the dismissal of those returning from maternity leave within six months after returning from maternity leave, except in certain circumstances. Labour have also suggested making the recently introduced carer’s leave, a paid entitlement, rather than unpaid. Labour have also promised as part of their “new deal” that they will conduct a review of parental leave within the first year of government”.
  • Statutory sick pay reforms. Statutory Sick Pay (“SSP”) would be payable from day one of sickness. They have not confirmed any increase to the level of SSP payable, but there is speculation that this could be brought in line with other European countries.
  • Extension of the time limit to bring employment claims. Currently, employees have three months less 1 day to bring certain claims. Labour propose to extend this period to six months.
  • Genuine living wage and fair tips. One of Labour’s key priorities is the proposal of removing discriminatory age bands for the minimum wage and to ensure that it considers the rising cost of living. Labour also proposes that frontline workers in the hospitality industry will benefit from strengthened laws to ensure they receive their tips in full and allow workers to decide how tips are allocated.

Labour has expressed their intention to “hit the ground running”, part of which has been said to involve them looking to introduce legislation within the first 100 days of entering government. They have said that they will work in partnership with trade unions and businesses to engage in full and comprehensive consultation on the implementation of their “new deal”. This would mean we could expect to see some form of legislative process to have commenced before 12 October 2024.

Labour acknowledges that a lot of the detail in the legislation will need to be flexible to react to changing economic circumstances and we are likely to see plenty of secondary legislation as a result. Similarly, Labour have acknowledged that many of their proposals will take longer to review and implement, in particular their plans in respect of moving towards a single worker status.

Whilst questions remain about when and how Labour will implement their “new deal” there will no doubt be further updates released in due course. The Labour Party Conference is due to take place on 22 September 2024 where we hope Labour will announce their plans in more detail, or at least give some indication of when we can expect consultation to open on their various proposals.

What we do know, is that the next year will likely be a lively time for employment law and our team are busy looking at what we can do to best prepare our clients for the upcoming changes to ensure they are well placed to deal with any challenges.

We will be keeping a close eye on Labour’s employment law proposals, particularly within the first 100 days of government, and will keep you updated if any further details emerge.