A New Labour Government: A Changing Landscape for Employment Law

As most of us expected, and we all now know, the Labour party won the General Election which took place on 4 July 2024. This change in government is going to mean a significant change to employment rights – probably sooner rather than later if Labour’s manifesto pledges are to be believed – and employers would be wise to start to prepare.

Workers’ Pay and Rights

Labour have committed to implementing ‘Labour’s Plan to Make Work Pay: Delivering a New Deal for Working People’ in full, introducing legislation within 100 days – i.e. by mid-October this year.

Key proposals include:

• Moving to a simpler two category framework for employment status whereby people are classified as either ‘workers’ or ‘genuinely self-employed’ for the purpose of workplace rights and protections. The current position is that people are classified as employees, workers, or self-employed and each group has different rights and protections. This will be a significant change and the tax implications are unclear.
• Affording all workers the same basic rights and protections, including sick pay, holiday pay, parental leave, and protection against unfair dismissal. For individuals who have previously been workers, but not self-employed, this will be a significant change. Employers are going to have to not only ensure those protections are in place but will need to be very mindful of fair dismissal procedures if they are to avoid unfair dismissal claims from individuals who were not previously afforded that protection.
• Scrapping the current two-year qualifying period to protection against unfair dismissal. Whether scrapping means scrapping entirely, or modifying in some way, we will need to wait and see, but either way, it will be a dramatic shift. Employers will need to ensure appropriate performance management from day one, robust probationary review procedures, and that dismissal procedures are properly applied to all workers.  Arguably sensible employers are already doing this in order to minimise the risk of discrimination claims but going forward it is going to be a must for everyone. No more “it should be fine as they don’t have two year’s service”!
• Removing the three day ‘waiting period’ before statutory sick pay is payable – although many employers tend to ignore this anyway and continue to pay full pay for those days. That said, for those working for employers that don’t already do this, the ability to receive pay (even at SSP level) when unwell will be a significant change.
• Implementing rules to prevent zero hours contracts from being “abused” or exploitative. This will essentially extend the current requirement that zero hours cannot be exclusive, which was introduced in 2015 in an effort to ensure fairer treatment of workers engaged on zero hours and this extension will be welcomed by many.  Like so many of Labour’s proposals, employers that treat employees less well will need to up their game.
• Ending ‘fire and rehire’. This is likely to be interesting. The introduction of the ACAS code formalised the fair requirements that employers should have been following in any event when looking to change employment terms by using fire and re-hire. With little detail on the current proposals, it is difficult to know what the impact will be but one can’t help wondering – if it’s removed completely how will employers ever force a change of terms through against an unreasonable workforce?
• Ensuring the right to collective redundancy consultation is determined by the number of people impacted across the business rather than in one workplace, another significant change to the current law.
• Create a Single Enforcement Body to ensure rights are upheld, strengthening the collective voice of workers and unions.
• Remove the age bands for minimum wage so that all adults are entitled to the same minimum wage – and ensure that it is a “genuine living wage.”

Family Leave Rights

• Make parental leave a day one right (rather than the current one year qualifying period).
• Extend statutory maternity and paternity leave, and urgently review the shared parental leave framework. In addition, introduce paid family and carer’s leave.
• Make it unlawful to dismiss a woman during pregnancy or within six months of her return to work, except in specified circumstances.

Equality and Diversity

• Strengthen rights to equal pay and protections from maternity and menopause discrimination and sexual harassment.
• Introduce a Race Equality Act, to enshrine in law the full right to equal pay for Black, Asian, and other ethnic minority people, strengthen protections against dual discrimination and root out other racial inequalities.
• Introduce the full right to equal pay for disabled people and introduce disability and ethnicity pay gap reporting for large employers.

As can be seen from the above, the next few years may be challenging whilst businesses navigate the changing employment landscape – we should all be prepared for a busy period ahead.

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