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Labour party employment law reforms

The Labour party intends to make some sweeping changes to employment law if it wins the next general election.   The reforms are set out in its paper entitled “A New Deal for Working People”, and includes the following key proposals:

Labour intends to get rid of, what is refers to as, “exploitative” zero hours contracts – contracts where workers are not guaranteed any hours and have little job security.  The party intends to legislate to ensure that all workers have the right to regular hours contract where they have worked those hours for 12 weeks or more.    Workers on these regular hours contracts will be entitled to reasonable notice of any changes to their hours of work and compensation proportionate to the notice given for any shifts that are cancelled or reduced.

Currently there are three types of employment “status” in employment law: those who are self-employed, those who are employed and those who are workers.  Depending on which “status” you have, you will have different rights and protections.  For example, if you are an employee, you have the right to claim unfair dismissal providing you have been employed for 2 years or more.  If you are worker, you do not have this right. 

According to Labour, this three tier system is confusing and has contributed to unscrupulous employers increasingly using “bogus” self-employment contracts to avoid any legal obligations.  

Labour’s proposal is to have a “single status” of worker, in place of having separate statuses of “employment” and “worker”, and for all workers to be entitled to the same basic employment rights. 

The party intends to consult on how to put into place a simpler framework to differentiate between those who are genuinely “self-employed” and those who are “workers” and try to protect against rogue employers using novel contractual arrangements to avoid their legal obligations.  

Perhaps one of the most eye-catching changes proposed is to introduce the right to all workers to claim unfair dismissal from day one of their employment.    At present, this right is only available to employees who have a qualifying period of 2 years’ service so this would be a huge change. 

Many years ago – under a Labour government – the qualifying service for unfair dismissal was reduced to 1 year, however this was changed back to 2 years in 2012 under the Conservative/Liberal Democrats coalition.  

To reduce this qualifying service down to a day one right is quite a remarkable proposal, to say the least, and will no doubt prove very controversial if Labour comes into power and delivers on this promise.   According to Labour they will “ensure employers can operate probationary periods to assess new hires” but the proposed change “will help to ensure that newly hired workers are not fired without reason or cause and will help drive up standards in workplaces.”  

In addition to ending the qualifying period of service for unfair dismissal rights, Labour intends to remove the cap on compensation for unfair dismissal claims and extend the time limits for bringing claims (currently 3 months).  This combination is, without doubt, going to lead to increased tribunal claims and is also likely to have financial implications for employers.

July 2024 will see come into force a new Code of Practice on dismissal and re-engagement, aimed at tackling the practice of “fire and re-hire” – the practice of dismissing employees who refuse to agree to contractual changes and offering re-employment on the new terms.   The Code is aimed at ensuring that employers consult with employees and treat them fairly when considering making wholescale changes to employment terms.

Although the Code does not have legislative force, employers who do not comply with the Code of Practice will risk financial penalties if affected employees subsequently bring tribunal claims.  

This, however, does not go far enough according to the Labour party which intends to ban fire and re-hire practices.  Details of exactly how such a practice will be “banned” are unclear but it is likely that the reforms will involve stricter rules on informing and consulting with employees and enhanced protections for employees under unfair dismissal laws.

Following the lead of countries such as Ireland and Belgium, the party intends to bring in rules which will prevent employers from contacting employees outside of their contracted working hours – allowing them to “switch off”.   This proposal relates to the increased number of people who are now working remotely since the pandemic – a change which has allowed opportunities for people to fit work around family life but at the same time has blurred the boundaries between home life and work for many.  The idea is to introduce the right to “switch off” so that workers do not end up being available 24/7 and have a better and healthier work/life balance.    Again, the details of how this will work are thin on the ground at present.

Currently the right to receive statutory sick pay (SSP) is only available to those who are employed and who earn the lower earnings limit of at least £123 a week.  There is also a “waiting period” of 3 days before you can receive SSP.  

Labour proposes to remove the waiting period and make SSP payable from the 1st day of sickness as opposed to the 4th.  It also wants to remove the lower earnings limit to make SSP available to all workers.

Currently, any employer with 250 or more employees must report their gender pay gap data.  Labour wants to do more to reduce the gender pay gap by requiring large businesses to implement action plans for closing their gender pay gaps. In addition, Labour wants employers that have more than 250 staff to mirror gender pay gap reporting by reporting on their ethnicity and disability pay gaps as well. 

Should the Labour government win the next election, businesses will need to be aware of the proposals for reform and be ready.  Many of the changes will, of course, take time to come to fruition – as consultations are held, legislation is drafted and the bills are passed through the houses – so there is no need to act in haste.   We will keep you abreast of any employment law updates as and when they are announced and are here to provide support as and when legislative changes are implemented. 

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The information contained in this blog post is provided for guidance and is a snapshot of the law at the time it is written. It is provided for your information only and should not be used as a substitute for obtaining legal advice that it specific to your particular circumstances.

The guidance should not be relied upon in any decision making process. It is strongly recommended that you seek advice before taking action.


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