It’s a New Deal, it’s a New Day: What to expect in Employment Law under the new Labour Government

The election results will of course lead to a number of changes in all walks of life, but perhaps none more so than in the world of HR professionals and Employment Lawyers.  Labour’s well-publicised 100-day plan is sure to keep us all busy and will signify a significant increase in employment rights.

So, what are we to expect in the coming months in the world of Employment Law?  Below we have summarised the most significant changes as well as (where relevant) highlighting what actions you may need to take as a result.  Beware: this is invariably a relatively long read as a lot of changes have been proposed.  However, we have broken this down into a number of relevant areas in order to assist:

Unfair dismissal, redundancy and Employment Tribunal time limits

Unfair dismissal claims

Labour has said it intends to remove the two-year service requirement for employees to bring unfair dismissal claims.  However, it says that this proposal is not designed to prevent employers from operating probationary periods with ‘fair and transparent rules and processes’.  In practice, many commentators expect that this will be managed through a six-month qualifying period for unfair dismissal claims, but this remains to be seen. 

Time limits

Labour has committed to extending the time limits within which Employment Tribunal claims must be lodged from three to six months.  This, along with the change to the qualifying period, is likely to lead to a significant increase in the number of claims lodged and an increasing burden on the already overloaded Employment Tribunal’s caseload.  It has also been suggested that the cap on awards for unfair dismissal and on a ‘week’s pay’ may be disapplied, increasing the financial risk of such claims for employers.

Redundancy

The new Labour Government is expected to strengthen redundancy protections, so that the number of redundancies proposed for the purposes of collective consultation will be based on the total number of redundancies proposed across the organisation as a whole, rather than being based on the numbers proposed in one particular workplace, as is currently the case.

This change will inevitably increase the number of cases in which the collective consultation obligations are triggered. 

Worker status and zero-hours contracts

Worker status

Labour has said that the ‘three tier’ system which we currently have of employee/ worker/ self-employed will be simplified, with a move to a simpler two-part system comprising only workers and the truly self-employed.  This would mean greater rights for all workers and is, along with the change to the unfair dismissal qualifying period, arguably the most significant change proposed.

The stated intention is that employers should not be able to use ‘novel’ arrangements to avoid their legal obligations, whilst still ensuring that workers can benefit from flexible working arrangements where they wish to do so. 

Labour has also stated that the rights of self-employed workers will be strengthened, including: the right to a written contract; action to tackle late payments; and extending health and safety blacklisting protections.

Zero-hours contracts

Labour has committed to ending ‘one-sided flexibility’ in zero-hours contracts.  This includes by banning ‘exploitative’ zero hours contracts and entitling workers to a contract that reflects the number of hours they regularly work, based on a 12-week reference period.  In addition, they propose that workers will have the right to reasonable notice of any change in shifts or working time, with compensation for cancelled shifts. 

Diversity, Equity and Inclusion

Labour has identified a number of areas in the DEI arena which will be subject to change in its 100-day plan.

Equal Pay

Labour’s stated aim is to close the gender pay gap.  This includes:

1. requiring large firms (more than 250 employees) to publish action plans to close their gender pay gap;
2. ensuring that outsourcing of work cannot be used to avoid paying equal pay; and
3. strengthening Equality Impact Assessments for public sector bodies. 

Labour also proposes to put in place a new ‘enforcement unit’ for equal pay, with Trade Union involvement.  Labour views the Equal Pay legislation as complex and often inaccessible, with Employment Tribunal waiting lists taking many months if not years for cases to be heard.

Gender Recognition

Labour has stated it will modernise gender recognition law to ‘remove indignities’ for trans people.  However, Labour has also said that it will maintain the exemptions in the Equality Act which allow for single-sex spaces.

It remains to be seen what impact the Labour policies in this area may have on employment policies, but it is clear that Labour will not make the changes proposed by the Conservative party, which would have meant that ‘sex discrimination’ could only arise on the basis of a person’s biological sex.

Harassment

Labour is expected to strengthen the legal duty on employers to prevent harassment in the workplace, including harassment by third parties.  There has also been suggestion that legislation will be amended to protect interns and volunteers from harassment, and that a new duty on employers to stop harassment before it starts may be introduced.

Disability pay gap reporting

This is expected to become compulsory for employers with more than 250 staff, to mirror existing gender pay gap reporting.

Race Equality Act and race pay gap reporting

The Labour manifesto pledged to introduce a Race Equality Act to tackle equal pay on grounds of race, introduce race pay-gap reporting for large employers (over 250 employees) and to ‘root out other racial inequalities’.   It has also been suggested that Labour will introduce the ‘dual discrimination’ provisions of the Equality Act, which to date have not come into force.

Menopause

Menopause action plans will be required for all employers with over 250 employees.  This will need to include details of how women will be supported through the menopause.  Guidance will also be published covering matters such as uniform and temperature, flexible working and menopause-related absences.

Statutory Sick Pay

Labour has promised to remove the Lower Earnings Limit applicable to SSP, so that it will be available to all workers.  There had originally been suggestion that SSP would become a day one right, with no waiting days before receiving payment, but it remains to be seen whether this will be implemented.

Family Friendly

There are a number of proposed changes to family friendly rights proposed by Labour.  This includes:

1. Review of the parental leave system;
2. Parental leave to be a day one right;
3. Making it unlawful to dismiss a woman during pregnancy or in the 6 months following maternity leave, other than in very specific circumstances;
4. Extension of the entitlement to bereavement leave; and
5. Review of unpaid carers leave and consideration of paid leave.

Family friendly rights were increased in April 2024, and it seems that this is likely to continue under the new Labour Government. 

Flexible working

Flexible working became a day one right from 6 April 2024, so that any employee can now make a request immediately on commencing employment.  However, Labour has said that it will go further, and make flexible working the ‘default’, except where it is not ‘reasonably feasible’. 

Right to disconnect

The right to disconnect has been discussed more and more frequently since the pandemic, as hybrid and remote working has become ‘the norm’.  This has also led to an increase in workers in many industries feeling that they are always ‘on’, as they can be contacted at any time, day or night. 

In response to this and following an increasing number of other countries introducing such legislation, Labour has stated that it will introduce a new ‘right to switch off’.  This would entitle employees to disconnect outside of working hours, and not to be contacted by their employer.

Fair Work Agency

Labour has proposed to introduce a Fair Work Agency, with authority to inspect workplaces and bring civil and criminal proceedings for breaches of:

1. Health and safety;
2. National minimum wage;
3. Worker exploitation, including discriminatory practices against migrant workers; and
4. Discrimination legislation.

It has been suggested that this body will have ‘real teeth’ and will have the ability to fine any employer found not to be compliant with legislation. 

Dismissal and re-engagement

Labour has again made clear its commitment to ending the practice of ‘fire and re-hire’ and has said that it will introduce a strengthened Statutory Code of Practice.  It has made clear that employers must ‘must follow a proper process based on dialogue and common understanding between employers and workers’, and that it will introduce effective remedies for employees if such procedures are not followed.  It is likely that any failure to follow the Statutory Code of Practice will lead to an uplift in any Employment Tribunal award in the event of a successful claim.

Trade Unions

Perhaps unsurprisingly, Labour has promised to remove some of the tighter controls on Trade Union activity we have seen in recent years, including:

1. the shortened mandate for action of only six months (following which a new ballot would be required);
2. the requirement for longer notice of industrial action;
3. higher ballot thresholds; and
4. the ability to impose a requirement for minimum service levels to be maintained in certain industries.

These changes could have a significant impact on the levels of industrial action we see going forwards. 

In addition, Labour has proposed that it will simplify the process for union recognition and require all employers to inform all new employees of their right to join a union, including setting this out in all contracts of employment.  Whether this will lead to an uptake in union membership remains to be seen.

Other changes are also proposed regarding access to union facilities, new protections for union representatives whilst undertaking their work, updates to the rules on blacklisting to take account of technological advances and the introduction of Fair Pay Agreements, initially in the adult social care sector. 

National Minimum Wage

Finally, Labour has pledged that the age bands in the NMW will be removed so that all workers are entitled to the same minimum hourly rate.  Increases to the NMW will also need to take account of the costs of living, and as set out abode, the Fair Work Agency (along with HMRC) will be tasked with enforcement of the NMW.

Next steps

1. Consider whether changes are required to contractual probationary periods, following any developments in this area. 
2. Review existing, and introduce new, policies and procedures as any changes are proposed, including flexible working, sick pay, redundancy and right to disconnect policies.
3. Ensure that gender pay gap information is available and consider proposed ‘action plans’ for closing any gap identified.
4. For large employers, plan for disability and race pay gap reporting, reviewing any disparities, and taking measures to reduce in advance.
5. Review harassment policies and plan training for staff, as well as any other ‘reasonable steps’ to prevent harassment occurring.
6. Implement menopause policies and, for larger employers, consider what menopause action plans will look like.
7. For those employers who are considering a restructure, keep abreast of any new Statutory Code of Practice on dismissal and re-engagement which may be introduced and ensure that this is followed.
8. For those employers with active unions, will the proposed changes potentially increase activity?  Consider whether there anything that you can to do minimise this.  Where there is no recognised union – is there any suggestion that this could change?  Is there anything you could do to minimise the impact of this?
9. For anyone currently paying the banded minimum wage rates, start looking at budgets to ensure that the proposed changes would remain economically viable, and if not, consider whether any pre-emptive action needs to be taken if these changes come to fruition.

How can we help?

The team at Tyr are always happy to help should you require any assistance with the updating your policies, procedures and contracts, or more general advice in navigating the proposed changes. We can also provide training to your HR team and managers should this be required, tailored to your organisation. 

We will, in any event, keep you updated with the changes as and when further information is known.

GEMMA SHERBOURNE
Legal Director, Employment
gemma.sherbourne@tyrlaw.co.uk
+44 (0) 7535 652758