Key UK Employment Law changes under the new Labour Government 

Implementation of Labour’s Plan to Make Work Pay: Delivering A New Deal for Working People

Labour’s ambitious plan to “Make Work Pay” aims to “boost wages, make work more secure, and support working people to thrive.” With a proposed introduction of new legislation within 100 days of entering government, Labour’s New Deal promises to bring significant changes to the employment landscape. This is, of course, subject to consultation with businesses, workers, and civil society on how to put their plans into practice before legislation is passed.

Our expert team here at Hibberts have put together a comprehensive look at what to expect.

Key Proposals of Labour’s Plan

Banning Exploitative Zero-Hours Contracts and One-Sided Flexibility

Labour plans to ensure all jobs have a baseline level of security and that everyone has the right to have a contract that reflects the number of hours they work. Further details are needed however, our predicted changes to implement this include:

–   Contract Changes: Labour states that they will ’ensure all workers receive reasonable notice of shift changes or working time, with compensation for cancelled or curtailed shifts.’ We anticipate seeing further guidance in due course, but we predict that this will involve significant changes or additional provision within employment contracts to accommodate this proposed policy including the mechanism to calculate the relevant compensation payable. 

Fixed-Term Contracts: This policy may be a potential concern for employers due to a decrease in flexibility and its financial implications.  As a result, we anticipate that there may be an increase in fixed-term contracts whilst employers adapt to new regulations.

Ending Fire and Rehire

Labour intends to addresses the practice of ‘fire and rehire’.  This is a controversial practice of firing workers to rehire them, often on less favourable terms, in order to change the terms and conditions of an employee. Labour proposes to target this practice through:

– Strengthened Code of Practice: Labour will replace the existing statutory code with a more robust one, balancing the need for business restructuring with worker protections.

– Effective Remedies: Labour hopes that their new measures will offer better protection against this practice, but it will be interesting to see how the balance of protection against necessary business restructure within the new code of practice will be achieved. Failure to reach a balanced consideration for both employers and employees may result in unintentional consequences. For example, employers restructuring  as necessary may  find themselves leaning more towards ‘fire’.

Single status of worker 

Employment worker status is a topical area of Employment Law, with numerous high-profile cases applying various legal tests to establish whether an individual is classed as an employee, worker or self-employed. Every case is unique with its own set of facts leading to a constant risk of wrongly categorising an individual. 

Labour aims to simplify employment status into a two-part framework, distinguishing between workers (and merging employees into this ‘worker’ category) and the genuinely self-employed. This plan requires further details including guidance on financial implications for employers (for example for National Insurance and pension payments). Failure to implement clear and concise legislation to address this change may result in an unintentional consequence of employers engaging in the services of self-employed contractors more often.

Day-One Rights for All Workers

In light of the proposed changes to employment status discussed above, it is worth noting that the topic relating to basic day one rights within Make Work Pay specifically uses the term ‘worker’. It is unclear whether the legislative changes to employment status will be introduced in conjunction with new basic day one rights. Employers should already be aware that currently there are significant differences between the rights afforded to employees who have reached their qualifying two years of service compared to those with a worker status. 

Assuming that the basic day one rights will extend to all workers, we expect to see basic rights from the first day of employment, including immediate eligibility for parental leave, day-one entitlement to statutory sick pay and protection from unfair dismissal. Labour states that the basic day one rights will not prevent fair dismissal for reasons like conduct, capability or redundancy. Probationary periods with fair and transparent rules and processes are also included. 

It is worth noting that any proposal to remove any qualifying period and to extend relevant rights to a new worker status will require extensive review and involves a huge overhaul of the current legislation. However, the changes are aimed at helping drive up standards in workplaces.

Employment Tribunal Reforms

Labour’s Plan to Make Work Pay intends to increase the time limit for making employment claims from three months to six months, aligning with statutory redundancy and equal pay claims. Labour hopes that this change will allow more time for internal resolutions. 

However, as it stands, there is a huge backlog of employment tribunal cases and reaching an internal solution is never guaranteed. Until we see further proposals from the Labour government on how they will address the growing number of employment tribunal cases currently, we anticipate that a significant increase in time limits will only aggravate the existing delays. This is problematic for both employer and employees, leaving both parties uncertain for much longer. 

Single Enforcement Body

Labour aims to establish a new body to ensure employment rights are upheld, providing a centralised approach to enforcement. The plan is for the Single Enforcement Body to have extensive powers which include the ability to inspect workplaces and enforce Labour’s plan to ensure a genuine living wage. In line with this, is the intention to ensure all adults receive the same minimum wage, eliminating discriminatory age-based pay differences. 

Right to Switch Off

Labour will introduce the “right to switch off,” modelled after similar laws in Ireland and Belgium, to prevent remote work from turning homes into 24/7 offices. This will encourage constructive employer-employee dialogues to develop suitable workplace policies or contractual terms that benefit both parties. We anticipate that workers will have the ability to switch off from work outside of their contractual working hours without the fear of reprisal.  It will also potentially allow different industries to create appropriate models which meet their specific business needs.

Trade Union Legislation Updates and Union Membership Rights

Labour is proposing an update to trade union laws to fit a modern economy, removing unnecessary restrictions and promoting good-faith negotiation and bargaining between employers and unions. A new duty will require employers to inform new employees of their right to join a union, included in the written statement of particulars given to new workers, and a regular reminder of this right.

Strengthening Redundancy Rights

Labour’s Plan to Make Work Pay identifies redundancy rights as an area to be strengthened by ensuring consultation rights are determined by the number of affected individuals across the business, not just at a single workplace. This is linked to Enhanced TUPE Protections for workers undergoing Transfer of Undertakings (Protection of Employment) processes, who will also see strengthened rights and protections.

Strengthening Leave and Sick Pay Rights

Pregnancy and Care Leave: Labour will make it unlawful to dismiss a woman for six months after returning from maternity leave, except under specific circumstances, and will review the benefits of introducing paid carers’ leave. The specific circumstances for this need to be outlined in more detail, especially around the impact on small employers.

Bereavement Leave for All Workers: Labour’s introduction of the right to bereavement leave for all workers will be another significant change.

Improved Sick Pay: A strengthened Statutory Sick Pay will remove the lower earnings limit and the waiting period, making it available to all workers.

Menopause Action Plans

Large employers (over 250 employees) will need to create Menopause Action Plans, detailing support measures for employees. Guidance will also be provided for small employers.

In summary, Labour’s Plan to Make Work Pay promises extensive reforms aimed at enhancing job security, improving wages, and supporting workers’ rights. Following Labour’s landslide victory, it is clear that UK Employment Law is set to change dramatically. While some proposals will be implemented swiftly, others require detailed review and consultation. As these changes unfold, they could significantly transform the employment landscape, and employers and employees will need support to ensure these are reflected within their organisations and working practices. For help on employment law, including the new reforms, contact the Hibberts team here.