UK general election: Labour’s proposed changes to employment law
Released On 15th May 2024
Prime Minister Rishi Sunak has said that he expects the next UK general election to take place "in the second half of this year" (possibly in October, although there has been speculation that it may be sooner), and the election must take place before 28 January 2025. Given the outcome of the recent local elections, it looks increasingly likely that change lies ahead, with the Labour Party strongly touted to form the next government. Below, we look at some changes the Labour Party has indicated it would make to employment rights.
Labour’s vision
In 2021, the Labour Party published its Employment Rights Green Paper, “A New Deal for Working People ” (the “New Deal”), setting out its vision for employment law and labour market regulation. The initiatives were wide-ranging, with Labour pledging to “strengthen workers’ rights and make Britain work for working for people”.
We have already seen some changes to the original New Deal proposals, and Labour has been listening to employer organisations like Make UK. Recent press reports have indicated that Labour may be in the process of further “watering down” its proposals in relation to workers’ rights, and this has been met with significant union resistance. At its 2023 Party Conference, Labour committed to introducing an Employment Rights Bill within the first 100 days of entering office. It is reported that Labour will now “commit to starting the legislative process” within 100 days if it wins the next general election (i.e. “publish draft legislative proposals” in that timeframe), meaning any changes may not be as swift as was initially suggested.
It is currently unclear which employment measures Labour would seek to implement first. In recent discussions with the Labour Party, the Make UK Policy team has flagged with Labour that our members would value a better understanding of what is most likely to change in the short to medium term, to assist with business planning. We have been liaising closely with Labour and will continue to do so over the coming weeks to better understand its proposals.
Key proposals
In the meantime, the following plans are likely to be of particular interest to employers:
1. Extension of unfair dismissal and redundancy rights: Perhaps one of the most headline grabbing plans to note is that Labour has indicated that it will remove the qualifying period for individuals to claim basic employment rights such as unfair dismissal and redundancy pay. Currently, employees can only claim for unfair dismissal and redundancy pay if they have two years’ service. Labour has previously stated that it plans to make these day one rights (which could also become available to ‘workers’ as well as ‘employees’ – see point 4 below). This, coupled with the plan to remove the statutory cap which currently limits how much compensation individuals can claim for unfair dismissal, would amount to a significant change. However, recent press reports indicate that this change to unfair dismissal law would be ‘subject to contractual probationary periods’ (i.e. there is the suggestion that employees will not generally be able to claim unfair dismissal if the dismissal takes effect during a contractual probationary period). Hopefully Labour will clarify this aspect of the proposals.
2. Lengthening of tribunal limitation periods: Labour has indicated it would extend the time period for bringing employment tribunal claims. The current time limit for individuals to bring most employment tribunal claims is three months from the date of the act complained of.
3. Broadening of statutory sick pay entitlement: Currently, employees and workers must be absent from work for more than three days in row before they can start to receive statutory sick pay (SSP). Labour has indicated that it would make SSP available from the first day of sickness absence and remove the lower earnings eligibility threshold (with a view to both improving working conditions and addressing risks around increased economic inactivity).
4. Changes to employment status: Labour plans to consult on creating a “simpler framework” in relation to employment status, which currently recognises three tiers (‘worker’, ‘employee’, and ‘self-employed’, with employees having the greatest protection). Labour has indicated that it plans to differentiate between these categories in a way that would “properly capture the breadth of employment relationships in the UK” as well as ensuring workers can still “benefit from flexible working where they choose to do so”. Regardless of the specific details of the policies Labour ultimately chooses to include in its election manifesto, any changes to the system of categorising employment status are likely to have a significant practical and financial impact on employers.
5. Changes to secure more predictable working patterns: Labour committed in the New Deal to ending ‘one-sided flexibility’ and contracts without a minimum number of guaranteed hours. The New Deal referred to giving anyone working regular hours for 12 weeks or more the right to a regular contract, and ensuring all workers get reasonable notice of any change in shifts or working time, with compensation for any shifts cancelled without appropriate notice. These proposals go further than steps the current Government has taken to address unpredictable working patterns (legislative changes are due to come into force from September this year). The debate about whether there should actually be a ban on zero-hours contracts continues to rumble on. Make UK has been in contact with the Labour Party in relation to its plans, and Labour does acknowledge the mutual benefits that some zero hours arrangements can provide (for example, flexibility for over-50s workers and seasonal workers). It appears likely that Labour may look to preserve this flexibility where it works in the interests of both parties, rather than banning zero-hours contracts completely (as was originally stated in the New Deal).
6. Extension of flexible working rights: Labour aims to make flexible working the default for all workers from day one. Again, this proposal goes further than the changes to flexible working legislation which were introduced by the current Government. (With effect from 6 April employees have the “right to request” flexible working from day one of employment, see here ). Labour has indicated that employers will still be able to decline flexible working requests according to their business needs, but only in ‘reasonable’ circumstances.
7. Ban on ‘fire and rehire’: The current Government is working on an updated Code of Practice on Dismissal and Reengagement to address the business practice of ‘fire and rehire’ (i.e. where employers force through changes to employees' terms and conditions of employment by terminating employment and offering re-engagement on inferior terms) - see our April FAQs for further detail. Labour had previously indicated that it wanted to ban this business practice entirely, however recent press reports indicate that Labour may take a more business friendly stance moving forward.
8. Greater trade union support: Labour has stated that it would offer more support for trade unions via new rights and protections. The New Deal, for example, referred to strengthening trade unions’ right of entry to workplaces to organise, meet and represent their members and potential members (and to contact remote workers), and to increasing the protections for representatives against unfair dismissal and for union members from intimidation, harassment, threats, and blacklisting. Labour has also indicated that it would simplify the law around industrial action and union recognition (for example, it would consult on whether unions should automatically be entitled to statutory recognition where 50% or more workers in a bargaining unit are union members). Labour has stated it would allow trade unions to use secure electronic and workplace ballots (rather than just post), and introduce a new duty on employers to inform all new employees of their right to join a union and to inform all staff of this on a regular basis.
Other possible developments
In addition to the proposals above, the Labour Party has indicated that changes to the following aspects of employment law could be on the horizon if it forms the next government:
1. Introduction of “Fair Pay Agreements”, effectively establishing a process of collective bargaining to determine employee pay and conditions in some sectors. Make UKunderstands from recent discussions with Labour that this proposal will be focused on the adult social care sector; there is no indication that manufacturing would be considered a sector where this would be desirable.
2. Introduction of the ‘right to switch-off’ (i.e. giving workers a new right to disconnect from work outside of working hours and not be contacted by their employer outside of working hours). We understand from Labour however that this proposal may be limited to an Acas Code of Practice, rather than being included in legislation.
3. Introduction of measures to tackle the gender, ethnicity and disability pay gaps, plus the introduction of dual (or intersectional) discrimination rights.
4. Creation of a single enforcement body to enforce workers’ rights.
5. Placing mental health on a par with physical health in the workplace (including a review of health and safety law, and taking steps to raise awareness of neurodiversity).
6. Ban on unpaid internships
7. Review of the shared parental leave system.
In addition, Labour has announced plans today for a new law allowing interns and volunteers to pursue businesses for compensation if they fail to protect them from sexual harassment.
Watch this space
Labour’s plans, if implemented, could have a significant impact on the employment law landscape. However, it remains to be seen of course whether the Labour Party will take office and, if so, how many of these proposals will be brought into force. It is worth remembering too that public consultation is likely to be needed before many of these proposals can take effect. According to recent press reports , Labour has promised a “full and comprehensive” consultation with business and other groups about its New Deal proposals.
Notably, though, some of the plans Labour outlined in its New Deal have already been implemented, at least in part, by the current Government (for example, changes to paternity leave and increased redundancy protections for pregnant workers).
We expect the Labour Party to provide further information about their proposals over the coming weeks and of course it will need to publish full details in an election manifesto. The Make UK Policy team will continue to liaise closely with Labour to better understand its plans and put forward our subscribers’ concerns. We will keep you updated.
How we can help
If you are a Make UK subscriber, you can speak to your regular adviser with any queries and to request further consultancy support. Subscribers can also access guidance on a wide range of employment law topics, including template policies and drafting guidance, in the HR & Legal Resources section of our website. If you are not a Make UK subscriber, our expert HR and legal advisers can offer guidance on a consultancy basis. For further information, contact us on 0808 168 5874 or email enquiries@makeuk.org.
