What Employment Law Changes Can We Expect from the New Labour Government

The recent victory of the Labour Party in the UK general election has paved the way for significant reforms in employment law, as outlined in their New Deal for Working People. This article will explore the key proposed changes, focusing on Labour’s efforts to modernize workplace rights and enhance protections for employees. Many of these reforms were announced in the King’s Speech on July 17, 2024, with two bills introduced: the Employment Rights Bill and the Equality (Race and Disability) Bill.

Here’s a look at the proposed changes and what they could mean for businesses and workers:

1. Ending “One-Sided Flexibility”

Labour has committed to ending the exploitation of zero-hours contracts by offering workers a guaranteed number of hours based on a 12-week reference period. They plan to go beyond previous proposals, such as the Predictable Terms Act, which aimed to offer workers a more stable working pattern. This change is expected to take effect by late 2025.

What employers can do: Review the proportion of zero-hours contracts and assess how to manage scheduling requests and new contractual requirements.

2. Fire and Rehire

The new rules will restrict the use of fire-and-rehire practices to only when a business’s viability is at risk, and even then, only with proper consultation. While the Statutory Code of Practice on Dismissal and Re-engagement is already in place, Labour plans to strengthen it further.

What employers can do: Comply with the current Code and prepare for stricter future regulations.

3. Basic Day One Rights

Labour’s Employment Rights Bill will grant employees the right not to be unfairly dismissed from their first day of employment. This could significantly increase tribunal claims and affect recruitment practices.

What employers can do: Ensure recruitment and probation processes are more rigorous and fair.

4. Single Employment Status

Labour proposes to simplify the current three-tier employment status system by classifying people as either workers or self-employed. This move aims to offer workers uniform rights but could have tax implications.

What employers can do: Conduct an audit of current employment statuses and assess potential financial impacts.

5. Whistleblower Protections

Labour is committed to strengthening whistleblower protections, including for those reporting workplace harassment. Whistleblowers may also receive financial rewards for exposing misconduct.

What employers can do: Review whistleblowing policies, particularly with respect to harassment complaints.

6. Redundancy Rights and TUPE

Redundancy rights will be strengthened, ensuring that consultation obligations are determined by the total number of redundancies across the entire business, not just at specific locations. Labour also intends to strengthen TUPE (Transfer of Undertakings) protections.

7. Family-Friendly Rights

• Carers’ Leave: Labour is considering making carers’ leave a paid entitlement, moving beyond the current unpaid leave.
• Parental Leave: Parental leave will become a day-one right, potentially leading to significant changes in how businesses manage parental absences.
• Bereavement Leave: Labour intends to introduce statutory bereavement leave for all workers, expanding on current provisions for parental bereavement.
• Maternity Discrimination: The law will be strengthened to protect women returning from maternity leave from dismissal for up to six months.

8. Flexible Working and the Right to Disconnect

Labour plans to make flexible working the default from day one of employment, except where it’s not feasible. They are also proposing a right to disconnect, similar to legislation in Belgium and Ireland, allowing workers to establish boundaries between work and personal time.

What employers can do: Review current flexible working policies and ensure technology is in place to support remote and flexible work.

9. Fair Pay and Wage Reforms

• Living Wage: Labour aims to adjust the National Minimum Wage to reflect the actual cost of living and plans to eliminate the age-based pay gap.
• Sick Pay: The proposed removal of the waiting period for statutory sick pay will allow workers to receive payment from day one of illness.
• Fair Tips: Labour will enforce the Employment (Allocation of Tips) Act 2024, ensuring workers receive 100% of their tips.
• Ban on Unpaid Internships: Unpaid internships, unless part of a training or education program, will be banned.

10. Trade Union and Worker Representation

Labour intends to modernise trade union legislation, including the introduction of electronic balloting and lowering the threshold for statutory union recognition. They will also strengthen the rights of union representatives, granting greater protection against unfair dismissal and harassment.

11. Equality and Workplace Rights

• Equal Pay and Pay Gap Reporting: Labour will extend equal pay laws to include workers from minority ethnic and disabled backgrounds, and mandate ethnicity pay gap reporting for large firms.
• Menopause Action Plans: Employers with over 250 employees will be required to create action plans to support menopausal workers.

Conclusion

Labour’s proposed changes to employment law will have a substantial impact on businesses and workers across the UK. While some reforms may take time to implement, businesses should start preparing by auditing their current practices and ensuring that their policies are updated to meet future requirements.

For advice on how these changes may impact your business, get in touch with our employment law experts at Gilson Gray.

For more detailed information on these employment law changes, please download our full guide by filling out your details below.