On May 24 the Labour Party published an update to its proposals on employment law in "Labour's Plan to Make Work Pay: Delivering A New Deal for Working People" (the Plan). Our review of the proposals included in the Green Paper which was initially published in 2021 can be found here. Should they win the election, the Labour Party has stated that it will introduce an Employment Bill within the first 100 days of being in power which will cover many of these issues. It also confirms that it will consult fully with businesses, workers and civil society on how to put the plans into practice. The Plan proposes a significant number of changes to employment law.
Zero hour workers
The Labour Party has confirmed in the Plan that it will ban what it terms "exploitative" zero hours contracts and will ensure that everyone has the right to a contract that reflects the number of hours they regularly work based on a twelve-week reference period. Labour will also ensure that all workers receive reasonable notice of any change in shifts or working time with compensation that is proportionate to the notice given for any shifts cancelled or curtailed. The Plan does confirm that overtime and fixed-term contracts, including for seasonal work, will not be affected by these proposals.
The aim of the Labour Party is to end "one-sided flexibility" but although some employers are already moving away from zero hours contracts, there are certain sectors, where this flexibility is used and there is no detail as to whether certain sectors will still be permitted some form of contract of this nature.
Fire and Rehire
The Labour Party has reinforced that it proposes to end the use of fire and rehire where an employer dismisses the workforce and re-engages it on new terms which are generally less favourable. While acknowledging that it is important that businesses can restructure to remain viable, preserve their workforce and the company when there is genuinely no alternative, the Plan states that this must be done following a proper process based on dialogue and common understanding between employers and workers. It therefore proposes to reform the law to provide effective remedies against abuse and replace what it regards as the inadequate statutory code of practice brought in by the Conservative Government with a strengthened code of practice. However, the Plan does not set out any further details on how this will be achieved and how employers will have the flexibility to dismiss employees in the situation where, despite significant consultation, no agreement has been reached.
Basic day one rights
One of the most significant proposals which was initially in the Green Paper and is now in the Plan is the proposal to strengthen the protections afforded to all workers by ending the qualifying periods for basic rights. The Plan refers to unfair dismissal, sick pay and parental leave, and it is not clear which other rights are included. Currently, employees generally are required to meet a qualifying period of two-years' service before they can, for example bring a claim unfair dismissal (unless the dismissal falls within one of the categories which is automatically unfair). The Labour Party's view is that wait for basic rights means that the risk of moving falls on individuals. This change will give workers the security to change jobs. In addition, extending this right to all workers will significantly increase those entitled to some fundamental employment rights from day one.
The Plan states that this will not prevent fair dismissals or probationary periods with fair and transparent rules and processes. Making the right to bring an unfair dismissal claim a day one right is a radical change to the law and will require a significant adjustment in how employers deal with their employees in the initial months of the employment relationship. It will likely require more rigorous recruitment processes to guarantee that the employee is a good fit with the employer from day one and also more effective use of probationary periods. Employers will also have to ensure they have more robust processes and procedures on dismissal for all workers.
Single status of worker
Another of the main proposals put forward by the Labour Party in their Green Paper was a change to employment status and this remains a key proposal in the Plan. Currently in the UK, there are three categories of employment status: "employee", "worker" and "self-employed contractor". The employment rights and protections that an individual is entitled to depends on their employment status, with employees entitled to the widest range of rights. However, determining which category an individual falls into depends on legal tests set out in case law and many workers do not have a clear picture of "where they sit". The situation has become more complex as a result of the novel forms of working and operating with new technologies. The Labour Party therefore proposes the creation of a single status of "worker" for all those except the genuinely self-employed.
There is some softening since the Green Paper in that the Labour Party proposes to enter into consultation on this change. Creating a single status of worker will have a significant impact on the rights available, increasing the number of individuals entitled to the minimum rights which, in in turn, could have significant cost implications and impose additional administrative burdens on employers. Employers need to be aware of how such a change could impact their workforce and prepare an audit of their workforce in advance. The change may also mean significant number of people who are currently taxed under the self-employment rules being subject to PAYE.
Redundancy Rights and TUPE
The Labour Party have set out a new right in the Plan which had not been set out in the Green Paper. They confirm that as part of their proposals to strengthen redundancy protections and rights they will ensure that the right to redundancy consultation is determined by the number of people impacted across the business rather than in one workplace. Currently whether collective consultation is required will depend on the number of individuals being impacted at one particular establishment. However, this proposal would reverse the existing case law and is likely to mean that collective consultation will be required in more situations.
In relation to TUPE the Labour Party simply states that it will strengthen the existing set of rights and protections for workers subject to TUPE processes. It is yet to be seen the extent of this proposal. The Conservative Government has recently issued a consultation which proposed reaffirming that only employees, and not workers, are protected by TUPE, following case law which cast this into doubt. The reference by the Labour Party to workers indicates that their proposals would go beyond those set out in that consultation.
Whistle blowers
The Labour Party proposes to strengthen protection for whistle-blowers, including by updating protection for women who report sexual harassment at work. No further information is given in the Plan.
Self-Employment
The Plan contains a separate section on self-employment and sets out that the Labour Party will strengthen rights and protections to help self-employed workers thrive in good quality self-employment including providing for the right to a written contract, action to tackle late payments and by extending health and safety and blacklisting protections to self-employed workers.
Changes to flexible working and other family friendly rights
The Labour Party proposes to make flexible working a day one right and employers will be required to accommodate this request as far as is reasonable. With regard to flexible working, the Labour Party acknowledges that the Government has made some welcome shifts on flexible working including the right to request flexible working has become a day one right, but the proposal by the Labour Party seems to go slightly further with the statement that it will adapt and build on this baseline to ensure flexibility is a genuine default. This may imply that there will be a removal of the current statutory grounds for refusal.
With regard to other family friendly rights, the Labour Party has set out proposals in the Plan:
- To review parental leave within the first year after the election including shared parental leave. Parental leave will also become a day one right.
- Making it unlawful to dismiss a woman who is pregnant for six months after her return to work, except in specific circumstances.
- Helping more carers in the workplace. While recognising that new legislation for unpaid carers' leave was introduced in April 2024, the Labour Party will review the implementation of this policy and examine all the benefits of introducing paid carers' leave, while being mindful of the impact of any changes on small employers.
- Introducing bereavement leave for all workers. Whilst the vast majority of employers give their workers the time off that they need, the Labour Party proposes to clarify the law and entitlement.
Right to switch off
The Labour Party will bring in the 'right to switch off' so working from home does not, in their view, become homes turning into 24/7 offices. The Plan clarifies that this will follow similar models to those that are already in place in Ireland or Belgium, giving workers and employers the opportunity to have constructive conversations and work together on bespoke workplace policies or contractual terms that benefit both parties.
In addition, the Plan sets out that recognising the advancement of technologies at work, the Labour Party, if elected would introduce new rights to protect workers from remote surveillance. This would include working with workers and their trade unions, employers and experts to examine what AI and new technologies mean for work, jobs and skills, and how to promote best practice in safeguarding against the invasion of privacy through surveillance technology, spyware and discriminatory algorithmic decision making.
Fair Pay
There are various proposals set out in the Plan to cover the proposals regarding fair pay. These include:
- Implementing a genuine Living Wage: This includes removing the current age bands which the Plan describes as discriminatory to ensure every adult worker benefits. This could impact certain sectors. It also wants to ensure that the remit of the Low Pay Commission is changed so that the national minimum wage takes into account the cost of living. It also proposes that the Single Enforcement Body (see below) and HMRC will have the powers necessary to ensure that the genuine living wage is properly enforced, including penalties for non-compliance;
- Amendments to sick pay: The Plan states that a Labour government would strengthen statutory sick pay, remove the lower earnings limit to make it available to all workers and remove the waiting period, which is currently 3 days;
- Ensure fair tips are paid;
- Ban unpaid internships except where they are part of an education or training course; and
- Establish a Fair Pay Agreement in the adult social care sector: There will be a full consultation on the design of the Agreement. This will also include working with the Single Enforcement Body to ensure that current regulations on travel time are enforced as many home care workers are not paid correctly for this time. There is no further information on the Fair Pay Agreements. In the Green Paper, the suggestion was that these agreements would extend beyond the adult social care sector. These forms of agreements are used in other jurisdictions but would be novel in the UK. If it is extended beyond the adult social care sector then more employers will find themselves engaging with workers representatives or trade unions on the content of such agreements.
Voices at Work – Changes to trade union legislation.
The Labour Party wants to strengthen the rights of workers to organise collectively and boost worker representation. The Plan reflects many of the proposals included in the Green Paper: It will repeal the Trade Union Act 2016, the Minimum Service Levels (Strikes) Bill and the Conduct of Employment Agencies and Employment Businesses (Amendment) Regulations 2022. Will allow modern, secure, electronic balloting and workplace ballots removing the current restriction which requires ballots to take post via post.
Simplify the process of union recognition and the law around statutory recognition thresholds. This will be particularly relevant for workers in the gig economy. Labour will review the process for statutory recognition claims, stating that the existing thresholds present too high a hurdle in modern workplaces that are increasingly fragmented. They will also remove the rule that means that unions must show that at least 50% of workers are likely to support their claim before the process has even begun. The Labour Party will also modernise the rules governing the final ballot in which workers vote on whether to recognise a trade union, requiring unions to gain a simple majority to win.
The Labour Party will 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. This will be required as part of the written statement of particulars and so will require employers to amend their contracts.
The Labour Party also propose to update regulations to outlaw the use of predictive technologies for blacklisting and safeguard against singling out workers for mistreatment or the sack without any evidence of human interaction.
Employers who have trade unions already involved should monitor any proposals for strengthening the activities of trade unions. We would also expect that lowering the thresholds for recognition will see more requests and higher amounts of trade union recognition.
Equality at work
There are various proposals set out in the Plan to tackle the position of equality at work, particularly with regard to Equal Pay. Much of this was not originally included in the Green Paper. Measures will be included to ensure that outsourcing of services can no longer be used by employers to avoid paying equal pay to women; Implement a regulatory and enforcement unit for equal pay; Ensuring that the provisions to allow employers to draw on equal pay comparators where workers' terms and conditions can be attributed to a single source are enshrined in UK law. The Conservative Government have passed regulations to this effect; and Protect and uphold the Equality Act 2010 including the Public Sector Equality Duty.
Pay Gap Reporting: Further information is given regarding pay gap reporting. Large firms (those with more than 250 staff) will be required to develop and publish and implement action plans to close the gender pay gap. Outsourced workers will also be included in the reporting. If the Labour Party wins the election then large firms will also be required to publish ethnicity and disability pay gap reports. This is very complex and how this is to be defined must be carefully considered.
The Plan does not contain additional proposals which were circulated in the press in February 2024 suggesting that there were plans to extend equal pay rights to black, Asian and ethnic minority staff Nor is there any mention of enacting protections against dual discrimination (which are in the Equality Act but have not yet been implemented).
Menopause: The Plan contains proposals that the Labour Party will require large employers with more than 250 employees to produce Menopause Action Plans, setting out how employers will support employees through the menopause. In addition, guidance will be published on measures that employers should consider relating to uniform and temperature, flexible working and recording menopause-related leave and absence
Rights at work
Single Enforcement Body: The Labour Party states that it will establish a single enforcement body, (an idea initially promised by the Conservative Government) to enforce workers' rights. The body will be established with trade union and TUC representation, to ensure greater coordination in the face of complex enforcement challenges. It will have the powers it needs to undertake targeted and proactive enforcement work and bring civil proceedings upholding employment rights.
Employment Tribunals: The Plan includes provisions for improving and strengthening enforcement of employment rights through Employment Tribunals to provide quicker and more effective resolutions. This means that in line with the Law Commission recommendation in April 2020, the time limit within which employees are able to make an employment claim will be increased from three months to six months, bringing the time limit for all claims in line with the time limit for statutory redundancy and equal pay claims. This may mean that employers may see more claims being brought. However, the Plan does not include the proposal which was included in the Green Paper to remove the statutory cap on unfair dismissal compensation. Another proposal in the Green Paper was the introduction of tougher penalties such as the introduction of personal liability for directors where an employer failed to comply with Employment Tribunal orders.
Collective Grievances: Another new proposal in the Plan is to make it easier for workers to raise grievances about conduct at work, including enabling employees to collectively raise grievances to ACAS.
Safer workplaces: The Labour Party will, if they get into government, review health and safety guidance and regulations with a view to modernising legislation and guidance where it does not fully reflect the modern workplace.
Conclusion
Further details on all these proposals was awaited and we may see this in the manifesto when published. Many of the areas we have covered in this briefing expand on the proposals in the Green Paper, such as the proposal for single worker status, banning of zero hours contracts, changes to trade union legislation and review of various family friendly rights. There have also been new areas covered in this paper, such as the change to the collective consultation thresholds and the proposal regarding collective grievances, However, there are also some proposals which were initially suggested which are not in the Plan: these include removing the compensation cap for unfair dismissal claims, extending the equal pay claims regimes and liability for directors for failure to comply with employment tribunal orders.
Neither the results of the election nor the timing of any changes are certain. However, employers should be aware of the impact of the measures proposed by the Labour Party and be planning for any steps that they need to take should Labour win the election.
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