Employment law changes proposed by the new Labour government: An employer’s quick guide

Following the Labour Party’s victory on 4 July 2024, we now turn to the employment law agenda proposed by the party which promised sweeping plans and caused a stir before the elections took place. Let Paula Squire, Partner and Head of the Employment Team in Taunton guide you through what you need to know.

The Labour Party pledged that the proposed changes would be implemented within the first 100 days of their administration, promising a fast pace on change albeit the devil will be in the detail to fine tune the proposals set out. The party has confirmed it’s commitment to a significant overhaul of employment law with a key focus on creating their landscape for a ‘fairer balance’ between employees and employers committing to ‘make work pay’ through ‘delivering a New Deal for Working People.’

The party also promised to fully consult with businesses, workers and society on how to put its plans into practice before this new employment legislation is passed. So, we have yet to see how long this would take to implement. Standard implementation periods for new employment legislation would typically mean it would likely be 6-12 months at least before we see any of these changes implemented, so let’s watch this space.

Below is a summary of Labour’s biggest proposed changes:

General Changes including Tribunal and Legislative

• Day one unfair dismissal claims: Unfair dismissal rights for all employees from day one of employment, not after two years as is the current position in most cases. The current fair reasons to dismiss will remain.
• Probationary periods: There will be new rules about the use of ‘fair and transparent’ probationary periods and processes.
• Extended claim period: The time limit to bring claims will be six months for all statutory employment claims – currently it is three months.
• Right to switch off: A policy to support work-life balance by allowing employees to disconnect from work communications outside of working hours. Their aim is to stop working from home resulting in homes turning into 24/7 offices. Similar models were introduced in Ireland and Belgium, where workers and employers will be encouraged to have constructive conversations and work together on bespoke workplace policies or contractual terms that benefit both parties.
• Reform of minimum wage: The national minimum wage will increase to a real living wage, removing current age bands so all adults are entitled to the same. No figures have been presented yet.
• End to fire and rehire practices: New processes will be required for restructuring, limiting the use of fire and rehire tactics (which is the practice of an employer making an employee redundant and then re-engaging them on reduced terms and conditions). Labour’s plans appear to be aimed at both collective and individual ‘fire and rehire’ scenarios.
• Enforcement body for workers’ rights: A body that will enforce workers’ rights with powers to inspect workplaces and take action against exploitation.
• Worker surveillance: Requirement to consult with workforce representatives before introducing surveillance technology. To include considering safeguards against ‘discriminatory algorithmic decision making’.
• Unpaid internships: These will be banned, except where they are part of an educational or training course.

Employment Status

• Ban on exploitative zero-hour contracts: There will be a ban on zero-hour contracts deemed ‘exploitative’. There is a promise to end ‘one sided’ flexibility to ensure all jobs provide a basic level of security and predictability. This would include compensation to be paid by an employer when shifts or working times are cancelled or curtailed without reasonable notice.
• Right to request fixed hours: New right to have a contract that reflects the number of hours regularly worked, based on a twelve-week reference period.
• Consultation on single status of worker: Currently there is a three-tier system for employment status, with individuals classified as employees, workers or self-employed. Labour intend to create a simpler two-part framework to differentiate between a ‘worker’ (to encompass current employees and worker statuses) and those who are self-employed.

Family Friendly Rights

• Day one parental pay and leave rights: Parental pay and leave will be granted from the first day of employment, removing any service requirement. Labour also promises to conduct a review of parental leave within the next year.
• Pregnancy and maternity protections: Dismissals of pregnant women will be unlawful for six months after their return to work, potentially extending recent protections already laid down.
• Flexible working: Labour want to ensure that flexible working is a genuine default. Labour promised to build on recent changes and make flexible working the default from day one for all workers, except where it is not reasonably feasible.

Diversity, Equality and Inclusion

• Harassment-free workplace: Duty to take ‘all’ reasonable steps to prevent sexual harassment and an extension of the duty to harassment by third parties. They will also increase protections for whistleblowers including protection for women who report sexual harassment at work.
• Day one sick pay: Employees will be entitled to sick pay from the first day of employment. This would include those earning below the lower earnings limit and the current three-day waiting period would be removed.
• Menopause action plans: Employers with over 250 employees will need to implement action plans for menopause support.
• Ethnicity and disability pay gap reporting: Large employers will be required to report on pay gaps related to ethnicity and disability.

Trade Unions

• Notification of right to join a trade union: A new obligation to inform employees of their right to join a trade union in contracts of employment in addition to a requirement to remind staff of this right at regular intervals.
• Reversal of trade union reforms: This includes reducing required turnout for ballots, method of ballots and shortening notice periods for industrial action.
• Easier union recognition: Simplified processes for unions to gain recognition.
• Union access to workplaces: Unions will have rights to access workplaces for recruitment and organisation.

Do ensure you have signed up to our regular free employment update webinars as we keep you up to date on how the new legislation progresses. Do get in touch should you wish to review your employment issues further. Paula Squire and her team offer a free employment contract and handbook to ensure these documents are up to date, so do get in touch.