Labour’s Employment Law Changes – 2024

Posted Friday 30th August 2024

Under the new Government, we expect significant employment law reforms. They are likely to be seismic, changing the whole employment law landscape for employers.

The Labour Party gave an early warning of that, by making its New Deal for Working People a core part of its election manifesto (Labour’s Plan to Make Work Pay: Delivering A New Deal for Working People – The Labour Party)

Post-election, two employment law bills were announced in the King’s Speech: an Employment Rights Bill and a draft Equality (Race and Disability) Bill. The detail (and implications) of each will only be clear when the Bills are published. However, the Kings Speech indicated particular proposals that would be covered. The Government have promised to introduce the Employment Bill within the first 100 days (i.e. by 12th October 2024).

Part A below summarises employment law changes referred to in the Kings Speech and so are most likely in the short term (effective within the next 12-18 months);
Part B below lists other changes that may also be on the horizon (some of which may sneak into the expected new laws).

Announced changes (Kings Speech)

DISMISSALS

1. Day one right not to be unfairly dismissed.

Change – The Employment Rights Bill will give employees the right not to be unfairly dismissed from their first day of employment. Employers could still dismiss an employee for failing probation but only after following a fair and transparent process.
Effect – Details are unclear. However this would probably:
- increase processes around probation and dismissal of new hires.
- lead more cautious employers to use alternative resourcing models such as agency workers [more difficult for larger employers].
- significantly increase the number of Employment Tribunal claims.

2. Restrictions on ‘fire and rehire’

Change
- A clamp down on the practice of fire and rehire by providing ‘effective remedies’ in the Employment Rights Bill. Dismissing and offering to re-engage workers on new terms (or replacing them with new workers on new terms), will only be allowed as part of a restructuring for a business to remain viable and preserve its workforce when there is genuinely no alternative.
- Labour will also strengthen the new code of practice on ‘fire and rehire’ (which comes into force on 18 July 2024).
Effect – Details of ‘effective remedies’ is unclear. However, the proposals will require employers to have more than a ‘substantial reason’ for changing terms, than is currently required.

ZERO HOURS CONTRACTS AND STABLE / FLEXIBLE WORKING

3. Ban on ‘exploitative’ zero-hours contracts, and right to an average-hours contract.

Change – To give employees more predictability in their income, Labour plans to:
- outlaw ‘exploitative’ zero-hours contracts. The King’s Speech did not give any further detail on what would be considered ‘exploitative’;
- introduce anti-avoidance measures; and
- bring in a new right to a contract that reflects hours that are regularly worked (as judged against a 12-week reference period) – i.e. an average hours contract.
Effect – There is no detail on the minimum number of hours that must be guaranteed or any grounds on which employers may resist an average-hours contract. However, migrating employees to average-hours contracts could:
- reduce flexibility (for both employers and employees),
- increase employer costs,
- create resourcing challenges; and
- potentially encourage greater use of self-employment.

4. Right to reasonable notice of work schedules and wages for shifts cancelled at short notice.

Change – Labour plans to introduce new laws about shift scheduling, to ensure that workers get reasonable notice of the times they are required to work, with compensation proportionate to the notice given for any cancelled shift.
Effect – This would add pressure on managers who create rosters. It is unclear what exceptions might be introduced to address unexpected work shortage/increase situations.

FAMILY RIGHTS

5. Flexible working by default.

Change – The Employment Rights Bill will strengthen the right to request flexible working to ensure flexibility is genuinely the default from day one, except where it is not reasonably feasible.
Effect – Details are unclear. However, I imagine it could involve:
- limiting employer’s discretion for refusing flexible working requests; and/or
- increasing Tribunal powers to review employer decisions (to reject such request).

6. Parental rights review

Change – The Employment Rights Bill will make ‘parental leave’ a day one right.
Effect – It is not clear if this means parental leave specifically or any kind of family leave right. For example, paternity leave currently requires six month’s employment – It is not clear if the Government plans to scrap that qualifying period. The devil will be in the detail of the legislation.

7. Enhanced maternity/pregnancy protection – redundancies

Change – Since 6 April 2024, women selected for redundancy have had the right to suitable alternative employment if they are pregnant (and have told their employer this) or if their expected date of childbirth was less than 18 months ago. The Employment Rights Bill will also prevent the dismissal of those returning from maternity leave for six months after their return, except in specific circumstances (to be defined).
Effect – This could be challenging and counter-intuitive, where it results in higher performing employees being prioritised for redundancy. It is not clear if the new right would apply during maternity leave as well as afterwards, but it is likely.

SICKNESS

8. Statutory Sick pay reforms

Change – The Employment Rights Bill will remove the current waiting period, so that statutory sick pay must be paid from day one of sickness (rather than day four); and remove the lower earnings limit so that very low earners qualify for sick pay.
Effect – It’s not clear if Labour will also increase the rate of SSP, which remains low
compared to other countries. The changes will increase costs for employers.

TRADE UNIONS

9. Right for trade unions to access workplaces to recruit and organise.

Change – The Employment Rights Bill will introduce rights for trade unions to access workplaces in a regulated and responsible manner, on appropriate notice.
Effect – This will be a big change to the current limited rights of entry ahead of a statutory recognition ballot. It could also include a new digital right of access enabling unions to get in touch with remote workers. In the medium to long term, this could result in an increase in union membership (depending on how effectively unions are able to market their services).

10. Simplify statutory union recognition processes and lower the threshold for a union to secure it.

Change – Labour plans to grant recognition to unions if supported by a simple majority of votes in a statutory ballot. The current requirement that recognition must also be supported by 40% of those entitled to vote will be scrapped, as will the requirement to show that at least 50% of workers are likely to support recognition before the process can begin
Effect – These changes (combined with greater access to employees (see 9 above) will make it easier for unions to secure statutory recognition.

DIVERSITY & EQUAL PAY

11. Ethnicity / disability pay gap reporting (for employers with 250+ employees).

Change – The draft Equality (Race and Disability) Bill will, for employers with over 250 employees, introduce compulsory:
- ethnicity pay gap reporting.
- disability pay gap reporting
Effect – An increased administrative burden for employers, who will need to ramp up efforts to gather ethnicity data from existing/new employees. Gathering data on disabilities will provide its own challenges, particularly around how to ask about/define disability and given the broad spectrum of disabilities. Detailed consultation on the law will be needed to ensure the changes are workable in practice.

12. Equal pay rights for black, Asian and minority ethnic and disabled workers

Change – Labour is planning a draft bill to extend the right to make equal pay claims to black, Asian and minority ethnic and disabled workers (rather than it just being based on sex).
Effect – Equal pay claims are already hugely complex. Extending their remit to cover additional protected characteristics will increase their complexity, in circumstances where arguably rights are sufficiently covered by current anti-discrimination legislation. Offering greater rights to bring claims, will result in more claims (and a higher number of employee group actions).

ENFORCEMENT

13. New state enforcement body – “Fair Work Agency”

Change – The Employment Rights Bill will establish a new state enforcement agency called the Fair Work Agency. That new body is likely to have powers to enforce working time, holidays, pay, sick pay, agency rules and ‘discriminatory practices against migrant workers’. Its remit may also include parental rights, but that is unclear.
Effect –
- It is not clear whether more state enforcement of employment rights will be any more effective than the Employment Tribunal system. The nature and powers of the new body is unclear.
- Maintaining a high level/quality of HR documentation and record-keeping will become more important.

Other Proposals

The following are other employment law proposals that Labour published, but which were not mentioned in the Kings Speech, so whether they are introduced remains less certain. Many proposals are vague and lack detail. Proposal 1 is the most significant.

1. Extension of time limits for bringing tribunal claims from 3 to 6 months

This would increase the number of Tribunal claims and lengthen the Tribunal claim process.

2. Thresholds for redundancy consultation

Changing the law so that collective consultation requirements will be triggered if redundancies reach a defined threshold across the business as a whole – rather than just numbers within each site/workplace. There is no indication as to whether there will be a change to the number of redundancies that would trigger collective consultation requirements (currently 20 within a period of 90 days).

3. Outsourcing/TUPE

Labour says it will strengthen the rights and protections for workers transferred under TUPE. No further details as to how.

4. Right to disconnect

Introducing the ‘right to switch off’. Details are unclear.

5. New single status of worker

Labour wants to abolish the UK’s current three-tier system for employment status. It wants a simple framework where people are either workers or self-employed, abolishing the current distinction between ‘employees’ and ‘workers’. This change would be complex and require a complete overhaul of employment rights. If implemented, more individuals (‘workers’) will have full employment rights.

6. Rights for the self-employed

Labour has said it will give self-employed people the right to a written contract, take action to tackle late payments and have greater protections re: health and safety and blacklisting.

7. Obligation to notify workers of their right to join a trade union

The written statement of employment particulars (which must be given to all workers when they start a new job) will need to say that workers have the right to join a trade union, and all staff must be informed of this on a “regular” basis. This will require the updating of standard contract templates.

8. Collective grievance process

Labour says it will enable employees to collectively raise grievances about conduct in their place of work to Acas. A strange proposal, because grievances are ordinarily first raised with employers (not Acas). Will require the introduction of completely new processes for grievance resolution.

9. New protections for trade union reps and members

No details. Labour wishes to give unions reps stronger protection from dismissal and create new rights for members in relation to intimidation, harassment, threats and blacklisting.

10. Bereavement leave to be introduced for all workers

Labour plans to make this a statutory entitlement for all workers.

11. Menopause action plans to be published (for employers with 250+ employees)

Many employers already have policies which could be converted into action plans.

12. Terminal illness best practice

Labour plans to encourage employers and trade unions to sign up to the Dying to Work charter. This sets out best practice around employing workers with terminal illness.

This article is for reference purposes only. It does not constitute legal advice and should not be relied upon as such. Specific legal advice about your specific circumstances should always be sought separately before taking or deciding not to take any action.