POTENTIAL FUTURE DEVELOPMENT

The impact of Labour’s proposals on employment law

With the next general election in the UK edging closer, the Labour party has recently published its Employment Rights Green Paper, “A New Deal for Working People”, announcing its commitment, if elected, to various reforms of employment law. The core message behind the party’s proposals is a prioritisation of focus on worker’s rights in relation to “pay, security, inequality, and discrimination”, primarily via an Employment Rights Bill that it would seek to introduce within 100 days of election. Key proposed changes are summarised below.

Practical takeaways

While we are still some months away from a general election, based on current forecasts, there is a real likelihood of a change of government. With that in mind, Labour’s proposed employment reforms should be kept at the forefront of employers’ minds in respect of almost all areas of their employment practices and processes.

Should any or all of the below proposals eventually come into force, employment contracts and internal policies will need to be updated accordingly. New and extended employee rights, and how exactly they are to be effectively accommodated in practice, will need to be given thorough consideration.

New single status of “worker”

One of the more radical proposals, this new employment status will seek to remove the existing differentiation between “worker” and “employee”, putting all workers into one category of employment status, except for those who will continue to be “genuinely self-employed”.

The idea behind this proposed change is to remove ambiguity (and associated employment disputes) as to which category individuals fall into, and ensure all workers have the same basic rights and protections including in respect of sick pay, holiday pay, leave, and protection against unfair dismissal.

Unfair dismissal protection

A further change with the potential for significant impact on the employment landscape relates to unfair dismissal protection. This proposed reform will largely act in favour of employees by:

  • Removing the two-year qualifying period for employees to bring a claim for unfair dismissal and instead making it an immediate right from the outset of employment;
  • Removing statutory caps on the compensation individuals can receive from a successful claim; and
  • Extending the limitation periods for claims to be made in the Employment Tribunal beyond three months.

This may cause an influx of unfair dismissal claims, and a greater burden on employers to both prevent and deal with litigation.

Right to ‘switch off’

Workers will have a new right to “switch off”, aiming to allow individuals to disconnect from work and only be contacted within agreed hours.

Wage increases

Reforms are proposed such that the National Minimum Wage will take account of the real cost of living and be raised to at least £10 per hour for all workers e.g., apprentices and younger staff.

Increases in Statutory Sick Pay are also proposed.

Our guide here summarises the key rates currently in force (from April 2024).

Ban zero hours contracts

Ban zero hours contracts and ensure that anyone working regular hours for at least 12 weeks has the right to a regular contract. Unpaid internships will also be banned.

Parental leave and family support

Statutory parental leave for both maternity and paternity arrangements will be extended, the express right to bereavement leave will be introduced, and it will become unlawful to dismiss a woman who is pregnant for six months after her return from maternity leave except in specific circumstances.

Extended union rights and arrangements

Individuals will be encouraged to act collectively, with new “Fair Pay Agreements” covering the core terms of employment to be negotiated through sectoral collective bargaining. Trade unions will also see their ability to effectively represent their members bolstered, through strengthened rights and protections, simplified laws around industrial action and union recognition, and reformed trade union ballots.

Mental health

It is proposed that the provision for mental health and wellbeing would be aligned with that for physical health. Recognition would be given to the existence, and impacts in the workplace, of neurodiversity conditions, stress, mental health, lifestyle changes, and new technology, and renewed provisions put forward.

Inequality and discrimination

A widened review of inequality and discrimination is promised, with stronger actions to be provided: (i) against sexual harassment (employers will be required to ensure workplaces are free from harassment, and women who report incidents at work will be granted the same protection as other whistleblowers); (ii) for those with caring responsibilities (including new paid family and carers’ leave); and (iii) to help close gender, ethnicity and disability pay gaps (including a new Race Equality Act). A Secretary of State for Women and Equalities will also be debuted.

Regulatory body

A single enforcement body will be established to enforce the above rights, and given extensive powers to inspect workplaces, investigate compliance, and bring prosecutions.