Preparing for Labour’s Proposed Changes to Employment Law: A Guide for UK Employers

Preparing for Labour’s Proposed Changes to Employment Law: A Guide for UK Employers

The Labour Party's bold statement prior to their victory was; "Britain’s outdated employment laws are not fit for the modern economy," sets the scene for a series of proposed changes under their "New Deal for Working People." While the manifesto provides only broad commitments, it reaffirms Labour's intention to implement what they describe as the "biggest upgrade to rights at work for a generation." Employers must stay informed and prepared for these potential changes. This article outlines the key proposals, anticipated timelines, and some missing elements from the manifesto.

Key Proposals in the Labour Manifesto

  1. Zero Hour Contracts: Labour plans to ban "exploitative" zero-hour contracts. This proposal marks a shift from their previous stance advocating for an outright ban.
  2. Fire and Re-hire: The manifesto aims to end the practice of fire and re-hire (where employers look to vary their employee’s terms and conditions), allowing it only when absolutely necessary for business viability and following a proper, dialogic process.
  3. Day One Rights: Labour proposes extending basic rights such as parental leave, sick pay, and unfair dismissal protections from the first day of employment, albeit with permissible probationary periods under fair and transparent conditions.
  4. Trade Unions: Enhancing union rights, including access to workplaces and obligating employers to inform employees about their right to join a union, is a priority for Labour.
  5. Enforcement of Rights: Labour suggests establishing a Single Enforcement Body to ensure workplace rights are upheld, though specifics remain undefined.
  6. Minimum Wage: The minimum wage would be adjusted to a genuine living wage, removing the current age-related bands.
  7. Equal Pay: Strengthening equal pay rights for women and introducing equal pay measures for disabled and ethnic minority employees, alongside mandatory pay gap reporting for large employers.
  8. Discrimination and Harassment: Proposals include better protections against maternity, menopause discrimination, and sexual harassment, alongside a Race Equality Act to enshrine equal pay for ethnic minorities and protections against dual discrimination.
  9. Rights of Disabled People: Labour aims to improve employment support and access to reasonable adjustments for disabled people.
  10. LGBT+ Protections: Ensuring respect and dignity for LGBT+ individuals in the workplace is another key Labour commitment.

Additional Changes from the New Deal

The "New Deal for Working People" green paper also proposed several changes, including:

  • Extending the employment tribunal claim period from three to six months.
  • Amending collective redundancy consultation thresholds.
  • Mandating information about trade union membership in employment contracts.
  • Making flexible working the default from day one.
  • Introducing a right to contracts reflecting regular working hours based on a 12-week reference period.
  • Providing bereavement leave for all workers and potentially paid carers’ leave.
  • Allowing collective grievances to be raised with employers, potentially through Acas.
  • Protecting pregnant workers from dismissal for six months post-return, except in defined circumstances.
  • Strengthening TUPE protections.
  • Banning unpaid internships unless part of educational or training courses.

Implementation Timeline

Labour has reiterated its intention to introduce legislation within 100 days of taking office, consulting with employers, trade unions, and other stakeholders before passing secondary legislation. While some changes will take longer to implement, transitional arrangements are expected to allow employers time to adapt. Employers are not going to have much time once the detail is released so now is the time to start planning.

Missing Elements from the Manifesto

Not all proposals from the green paper appear in the manifesto, notably:

  • Removing the cap on compensatory awards for unfair dismissal.
  • Introducing personal liability for directors failing to comply with tribunal orders.

Additionally, the manifesto does not address raising the £30,000 tax-free termination payment limit, unchanged since the 1980s.

Preparing for Change

While the specifics of many proposals remain unclear, it is prudent for employers to stay informed and begin considering how these changes might impact their operations. Employers should:

  • Review current employment contracts and policies.
  • Engage in dialogue with HR and legal advisors.
  • Plan for potential adjustments to HR practices and payroll systems.
  • Stay updated on legislative developments post-election.

In conclusion, employers should anticipate significant changes to employment law, requiring diligent preparation and adaptation to ensure compliance and maintain workforce stability. The single biggest change will be the abolition of the requirement for employees to be employed for two years before they have the right to claim unfair dismissal. Two years is a long time, and currently employers often short cut dismissal procedures and adopt a relaxed approach to dismissing employees with less than two years’ service. Labour have suggested that employees will have the right to claim unfair dismissal following the completion of a probation period, and one assumes from the first day of employment if no probation period is included in the contract of employment. This will have huge implications for employers in the UK and see a huge increase in the number of claims issued. It is vitally important for employers to review their contracts (now) and have established probation periods that are effectively reviewed and managed.

For more in depth advice, join us for an in-person Employment Law Update event hosted on Thursday 18th July for more insights and guidance.

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