What does the new Labour government mean for employers?

As the Labour Party steps into power, employers across the UK are bracing for significant changes in employment law. Labour’s manifesto outlines a sweeping agenda aimed at enhancing individual employment rights and bolstering Trade Union powers. Here’s a summary of the key proposals and what they mean for HR professionals and business owners.

Employment status

A significant proposal is the reduction of employment status categories from three to two: “worker” and “self-employed”. This change would combine the current employee and worker statuses, extending rights such as sick pay, redundancy pay, and unfair dismissal protections to a broader group of workers.

Unfair Dismissal - Day 1 rights

Another one of Labour's boldest promises is to grant employees the right not to be unfairly dismissed from the first day of their employment. Currently, the qualifying period for unfair dismissal is two years, allowing employers considerable leeway in dismissing employees within that period. Reducing this to zero is unprecedented and will require employers to be more diligent in their recruitment, hiring, and performance management processes.

Labour has suggested allowing the use of probationary periods, though the specifics are yet unclear. These periods would need to be fair and transparent, potentially leading to more rigorous contractual agreements and processes.

Fire and Rehire

Labour plans to tighten the regulations around fire and rehire practices. This method, often used to change contract terms, will only be allowed when the survival of the business is at stake. The Workers Predictable Hours regulations will also be updated to ensure employees have a statutory right to regular hours, based on a 12-week reference period.

Trade Union influence

Labour aims to enhance Trade Union rights by simplifying the process for unions to gain recognition and access workplaces. Anti-strike laws will be abolished, and new protections for union representatives and members will be introduced. Employers will also need to confirm employees’ right to join a union in their terms of employment.

Tribunal time limits and caps

Labour intends to extend the time limit for raising Tribunal claims from three to six months. Additionally, directors could face personal liability for unpaid tribunal awards. The statutory cap for claims, currently set at ￡115,115 or 12 months’ gross pay, may also be removed, presenting significant financial implications for businesses.

Rights to Disconnect

Employers may soon be required to establish policies ensuring workers are not routinely contacted outside of working hours unless necessary. This ‘right to disconnect’ is aimed at improving work-life balance for employees.

Flexible Working

Flexible working requests will become much harder for employers to refuse. Labour plans to make flexible working a default right, with refusals only permissible for compelling business reasons. This raises the bar significantly from the current legislation, promoting a more adaptable work environment.

Collective redundancy consultation

The criteria for collective redundancy consultation will be adjusted. Currently, consultation is triggered when 20 or more employees at a single establishment are at risk. Labour proposes making this dependent on the number of redundancies across the entire organisation, which could complicate redundancy processes for larger businesses.

Enhanced rights and protections

Labour’s manifesto includes several measures to enhance workplace equality and protection:

• Strengthening rights to equal pay and protection from discrimination, including maternity, menopause, and sexual harassment.
• Introduction of a Race Equality Act to ensure equal pay for black, Asian, and other ethnic minority employees.
• Reforming the Work Capability Assessment to support disabled people into employment.
• Requiring large employers to produce ethnicity and disability pay gap reports, alongside existing gender pay gap reports.
• Mandating employers with over 250 employees to implement a menopause action plan.

As these proposals come into play, employers must stay informed and prepared. The Labour government’s commitment to actioning these changes within the first 100 days signals a rapid transformation in the employment landscape. Businesses will need to adapt quickly and ensure their ongoing compliance.

If you need bespoke advice on how these updates will affect your business, please contact us at Demos HR Solutions - we're here to help you understand and implement any necessary changes with expert advice. Please contact me directly on 07974 695 365 or email [email protected] .