How could employment law change under a new Labour government?
With the general election now less than a month away, we are taking a look at the employment law changes Labour hopes to make if elected.
On 24 May 2024, Labour published its new proposal ‘Plan to make work pay – Delivering a new deal for working people’. The key proposals are as follows:
- To simplify employment status,
- To enhance existing employment protections,
- Prevent the abuse of zero-hour contracts,
- To put an end to ‘firing and rehiring’ practices,
- Enhance redundancy protections,
- To strengthen trade union rights,
- Expand equality reporting in the workplace.
Labour has somewhat boldly stated that, if elected, they will introduce an Employment Rights Bill which will seek to introduce the aforementioned reforms within the first 100 days. Let us now take a closer look at some of those key proposals in more detail.
Employment Status
Under the current system there are three identifiable employment statuses, ‘employee’, ‘worker’ and ‘self-employed’. Notably, the rights you are afforded will depend on which category you fall into, for instance, workers are awarded certain protections under the Equality Act 2010 but will not benefit (for example) from statutory redundancy pay or unfair dismissal protection.
Under a new Labour government however, we would see this reduced to a two-tier approach with there being only those who are ‘workers’ and those who are ‘self-employed’ – giving workers the previously enhanced protections only awarded to those with employee status.
This is a significant change within employment law and will likely require lengthy consultations, most notably on the subject of tax and how this is managed by employers going forward.
Employment Rights
The new two-tier system will see an increased number of people awarded enhanced employment protections. Not only does Labour propose this change in relation to whom can benefit from these protections, but they are also proposing changes to the protections themselves.
Current legislation dictates that you must have two years continuous employment in order to bring a claim for unfair dismissal, Labour hopes to scrap this making the right not to be unfairly dismissed a day one right. However, the revised proposal indicates that there may still be exceptions to this, such as where a probationary period applies.
Note to employers – in light of this proposal, it may be worth reviewing your employment contracts to ensure any probationary clauses are clearly drafted and for the correct amount of time for your business.
Please get in touch with our Employment Team if this is something you would like assistance with.
Labour is also seeking to update the family-friendly rights, including making parental leave a day one right and introducing paid family and carer’s leave.
Banning ‘fire & rehire’ practices The ‘fire and rehire’ practice sees employees being dismissed to then be rehired but on much less favourable terms than their original contract. This has been considered a cost-effective loophole for employers in the past but Labour is seeking to ban the practice altogether. The key areas that Labour hopes to change within this practice are:
- To ensure that employers are properly consulting with employees regarding any proposed changes to their contracts and attempting to reach an agreement,
- Updating unfair dismissal and redundancy legislation to afford greater protection to workers who had been dismissed for refusing to agree to less favourable contract terms,
- Ensuring trade union activity does not inhibit defensive action ensuring workers are protected from fire and rehire practices.
Redundancy
At present, when a redundancy situation arises the precedent set out in the Woolworths case indicates that the right to redundancy consultation is determined by the number of workers in the establishment where the duties are carried out. Labour wishes to change this to be the number of workers impacted across the whole business rather than one specific workplace.
Equal Pay Reporting
Going forward with a new Labour government, employers with over 250 employees will be subject to undertake ethnicity and disability pay reporting such as the system that is currently in place to try and address the gender pay gap. Speaking of the gender pay gap, this will also see further amendments requiring employers to also report on the inclusion of outsourced employees.
Conclusion
As we are still being drip-fed information relating to Labour’s proposals, it is difficult to predict how these proposed changes will impact the wider employment sector. Only time will tell whether or not Labour can deliver on its promising proposals. If you have any questions on how the Labour Party’s employment law reforms might impact your business, please do not hesitate to contact our Employment Team who will be happy to assist.