Labour Party’s Proposed Employment Reforms: What UK Employers Need to Know
10 Aug 2024
It’s fair to say that we all know by now that there’s a new government in power.
Whatever your political views, there’s no doubt that Sir Keir Starmer and the Labour Party have hit the ground running in their first few weeks in office.
And nowhere is the pace of change being felt more keenly than in the business community.
The new government is bringing forward a package of significant reforms which will change the way we all work, and which every company in the UK will need to be on top of to stay the right side of the law.
Here’s a look at the key points.
1. Basic Employment Rights from Day One: New legislation will grant basic rights (such as parental leave, sick pay, and protection from unfair dismissal) from the first day of employment. This significant change will greatly widen the rights of employees from the moment they join a new company and will require firms to adjust many of their existing policies.
2. Fire-and-Rehire Restrictions: The UK’s first Statutory Code of Practice on dismissal and re-engagement came into effect on July 18, 2024, covering England, Wales, and Scotland. This code provides practical guidance for employers proposing changes to employees’ contractual terms, especially when agreement cannot be reached. It emphasises consultation and alternative solutions before resorting to ‘fire and rehire’ practices, which involve dismissing employees and offering new contracts with less favourable terms. Employment tribunals can increase compensation by up to 25% if the code is not reasonably followed.
3. New Enforcement Body: The Fair Work Agency (FWA) will oversee workers’ rights and strengthen their enforcement. A Fair Pay Agreement will be created for adult social care workers. This will then be assessed to see if it can be rolled out to other sectors.
4. Day One Rights: The right to protection from unfair dismissal, parental leave and sick pay will become day one rights, although employers will retain the right to operate probationary periods to assess new employees. Flexible working will also be the default from day one, with employers required to accommodate this so far as reasonable.
5. Extended Tribunal Time Limits: Time limits for bringing claims will extend from three to six months. Employers will need to change and adapt policies – such as on record keeping – as a result.
6. Zero-Hours Contract Ban: The Employment Rights Bill will give workers the right to a contract reflecting the number of hours they regularly work. Companies must give “reasonable notice” and compensation if shifts are changed or cancelled. But people who want to opt in to zero-hours contracts because of the flexibility they offer can still do so.
7. Employment Status Reform: The government is moving towards introducing a single status of ‘worker’ for anyone who is not genuinely self-employed. This would simplify the framework and address ‘bogus’ self-employment. Consultations will determine the details, but employers should prepare for potential changes.
8. Enhanced Equal Pay and Anti-Discrimination Laws: Stronger protections and regulations are a key part of the new government’s approach, meaning close attention must be paid to existing policies which cover these areas.
9. The ‘Right to Switch Off’: To promote work-life balance, Labour proposes a right for employees to disconnect outside working hours. This right aims to maintain clear boundaries between work and leisure time. It includes the right not to work routinely outside normal working hours, the banning of penalties for workers who decline to work outside normal hours and a duty to respect the personal time of staff.
These are just some of the headline moves and there will be a lot more devil in the detail as the new government starts to bring bills before parliament.
It’s vital that all employers stay on top of the new legislation and make sure they stay the right side of the law. We are here to help. Just get in touch for your free consultation.
