Now that the dust is beginning to settle on Labour’s General Election victory, politicians’ priorities are changing from campaigning to policy implementation. A key area of Labour’s election manifesto was its “New Deal for Working People” which has since evolved into the planned introduction of an Employment Rights Bill. Described by the Government as “the biggest upgrade to workers’ rights in a generation”, the Bill proposes a variety of reforms to the Employment Law landscape with the aim of providing workers with fairer employment practices.
What is being proposed?
During the King’s Speech, Labour promised to introduce the Bill within the first 100 days of the new parliament. Given its stated commitment to “consult fully with businesses, workers and civil society on how to put their plans into practice before legislation is passed”, it remains to be seen when exactly the legislation will appear on the statute books.
Some key elements of the Labour Government’s Employment Rights Bill include:
Day 1 rights
Arguably the most significant change proposed by Labour’s New Deal is that the right not to be unfairly dismissed is to become a Day 1 right. Generally speaking, employees only receive the benefit of unfair dismissal protection after 2 years’ continuous service – albeit there are some limited exceptions to this rule that are already in force. Labour’s proposals make it clear that there will be a role for probation periods in assessing new hires, but it has not yet been stated how these will be limited. For example, will a limit on the length of probation periods be included in a bid to stop employers attempting to circumvent these new protections?
Zero hours contracts
Labour intends to ban “exploitative” zero hours contracts. Whilst they are not proposing an outright ban on all zero-hour contracts, it is not yet certain what is meant by the term “exploitative”. A number of businesses – particularly in seasonal sectors – argue that they could not operate without the flexibility that zero-hour contracts provide. This flexibility is also appreciated by some of the workforce, who can use such contracts to plan work around their other commitments. Exclusivity clauses were banned in zero-hour contracts some time ago and it remains to be seen how much further Labour will go when it comes to regulation in this area.
Fire and rehire
Whilst fire and rehire can in some circumstances be a lawful means of bringing about changes to terms and conditions, it often carries negative publicity and the risk of reputational damage. In many ways, it is already a “nuclear” or “last resort” option in business change exercises that should typically only be used when other consultative options fail to achieve the desired outcome. Labour recognises the need for businesses to restructure to remain viable and preserve their workforces, but is intending to reform current laws to “provide effective remedies against abuse” and replace the statutory code prepared by the previous Government that was introduced earlier this month. There is, however, the risk of unintended consequences in Labour’s plans. For example; if fire and rehire becomes more heavily regulated; businesses in times of crisis may simply “fire” without any offer of “rehire” in an outcome that would be more detrimental to the employees involved.
Proposing further work protections
Labour’s proposed Bill contains a variety of other proposals – including the creation of a single enforcement body to implement workers’ rights, factoring the cost of living into setting the minimum wage rate, and removing (i) the lower earnings limit and (ii) waiting days from Statutory Sick Pay. Labour has also committed to make it unlawful to dismiss a woman who has had a baby for 6 months after she returns to work (subject to limited exceptions). A Fair Pay Agreement is to be established in the adult social care sector and flexible working is to be a default right unless an employer has good grounds to refuse it. There are also a variety of proposals to strengthen the position of Trade Unions and reverse some of the changes recently enacted by the previous Government.
Worker status
The UK currently has 3 different employment statuses – employees, workers and self-employed – each carrying a different set of employment rights. Although not specifically mentioned in the King’s Speech, Labour’s New Deal proposed to create a single status of worker and pledged to consult in detail on a simpler framework to distinguish between workers and the genuinely self-employed.
This is not the first time that reform in this area has been proposed, with employment status issues being highlighted by the Taylor Review under the previous Government back in 2017. Simplifying employment status is still on the government’s agenda, however, employment status reforms are notoriously complex and success in this area is far from guaranteed.
What is next?
As noted above, Labour has committed to introducing legislation within 100 days and to consulting fully with a variety of stakeholders. A number of the proposals represent potentially significant departures from the current position, so the consultation exercise will be key to bringing future clarity.
Altogether the proposals are significant and ambitious. As ever, the devil will be in the finer details of the proposals that we will continue to monitor as they emerge over the coming weeks and months.
