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A New Era of Employment Reforms? – Exploring the Labour Party’s Plans

Posted on 13th May 2024 in Employment

Posted by

Mai Mbye

Solicitor
A New Era of Employment Reforms? – Exploring the Labour Party’s Plans

The Labour party have long advocated reforming UK employment law and more detail is now emerging about what is proposed. 

With increased speculation on whether there may be a change in government, the Labour Party have published a Green Paper, ‘A New Deal for Working People’ which sets out various employment law proposals. 

Although much of the detail is yet to be revealed, below are some of the key proposals put forward by the Labour Party which could change the future landscape of employment law.

Key proposals from Labour 

  • Increasing the National Minimum Wage to at least £10 per hour for all workers (currently workers aged 16-17 receive only £6.04). Labour’s stated aim is to ensure it is in line with the cost of living. 
  • Ending qualifying periods for employment rights such as unfair dismissal and parental leave. In essence, these would become day one rights. Whilst this would be a particularly big change for unfair dismissal law, the suggestion is that unfair dismissal protection would apply from the end of a probation period. Further detail is awaited on how this would work in practice. 
  • There are also proposals to remove the statutory compensation limits for unfair dismissal claims. To put this into perspective, the current cap for unfair dismissal compensatory awards is £115,115 or 12 months’ pay (whichever is lower). Removing the cap could see a very significant increase in Tribunal awards, especially in cases where the employee is a high earner, is unlikely to obtain alternative employment quickly or where there are other sizeable losses e.g. relating to a pension. 
  • Moving towards a single status of worker, allowing for a transition towards a simpler two-part framework for employment status. Currently the different statuses (employee, worker, self-employed) have different rights attached to each but by having a single status of ‘worker’ (which would include both workers and employees) this would extend the same basic employment protections currently enjoyed by employees to workers. A separate self-employed category is expected to remain. 
  • Allowing all workers (and those self-employed) the right to receive statutory sick pay from the first day of sickness (as opposed to the present waiting period of 3 qualifying days). 
  • Strengthening existing rights and protections for pregnant workers, whistleblowers, redundant workers, and those who are self-employed. The proposal includes making it unlawful, except in specific circumstances, for employers to dismiss pregnant workers for 6 months after their return. Labour’s aim is to help self-employed workers thrive in good quality self-employment. Those who are self-employed may see extended health and safety protections as well as more action being taken to tackle late payments.
  • Banning zero-hour contracts and ensuring anyone working regular hours for 12 weeks or more gains the right to a regular contract. The hope is this will help limit unpredictable working patterns, however, it could result in employers having less flexibility when it comes to arranging shifts. 
  • Introducing the ‘right to switch off’ which allows workers the right to disconnect from work outside of working hours and not be contacted (subject to the type of role). This is a concept that has been trending across Europe with many countries (such as Italy, Belgium, and France) adopting similar practices. 
  • Reviewing the parental leave system and introducing a right to bereavement leave. Currently, there is no legal right to paid time off for bereavement unless the employee is eligible for parental bereavement following the death of a child. 
  • Strengthening the law to enforce workplace rights which will include establishing a single enforcement body which will be given powers to undertake unannounced inspections of workplaces and bring prosecutions and civil proceedings on workers’ behalf relating to health and safety, minimum wage, worker exploitation and discriminatory practices. 
  • Extending the limitation period for issuing claims from 3 to 6 months. 
  • Imposing tougher penalties for those who break the law or fail to comply with tribunal orders. This will also allow directors of companies to also be held personally liable for the actions of their companies. 
  • Ending the controversial practice of dismissing and reengaging employees on new terms where an agreement to change contractual terms cannot be reached, also known as ‘fire and rehire’.

What steps should employers be taking?

Whilst it is still early days, below are some steps employers might want to consider ahead of any changes:

  • Staying informed and keeping up to date with proposed or impending reforms. 
  • Reviewing existing contracts, policies and procedures in good time. 
  • Organising additional training for those involved with HR matters (including directors, who may be at risk of liability). It is important that HR and managers are kept up to date with any changes.  
  • Reviewing any financial impacts of any proposed reforms and ensuring recruitment processes are also carefully reviewed. Given the heavy scrutiny on practices of ‘fire and rehire’ this will be especially important as there will no doubt be changes to this area.  
  • Review employee communications and how consultations are dealt with generally. With changes expected for 2025, employers will need to clearly communicate changes to employees and explore ways to support them during transition periods. 
  • Review any performance or conduct concerns ahead of any changes so that these are easier to deal with. 

With a general election expected to be called later this year, and Labour announcing plans to introduce an Employment Rights Bill within the first 100 days of office, it is important for employers to keep up to date. We will of course keep you updated on further developments as we go through the year but for any other help or support, please contact our dedicated Employment Law team. 

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