With the upcoming UK General Election, many employers are carefully considering changes each party may implement and the corresponding impact on their businesses. Employment law and workers' rights are a key focus in each of the main parties' (i.e., the Labour Party, the Conservatives, and the Liberal Democrats) manifestos. In short, Labour's employment-related pledges focus on enhancing protections and rights for workers, the Conservatives emphasise deregulation and reducing burdens on businesses, and the Liberal Democrats aim to improve access to public services for the workforce and introduce additional rights for workers.
While the broader strategies and specific proposals differ between the parties, there are a number of common hot-button issues. Much has already been made of Labour's proposal to make unfair dismissal a day-one right for employees, as well as the Liberal Democrats' proposal to establish a new authority for enforcing worker protections. Against that backdrop, this alert provides an overview of the proposed changes in three key areas: employment status and zero-hours contracts, the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE, i.e., the automatic transfer regulations), and family-friendly rights.
Employment Status and Zero-Hours
Both Labour and the Liberal Democrats seek to enhance employment rights for workers by overhauling the current categories of employment status and addressing laws related to zero-hours contracts. Labour has focussed on simplifying employment status categories and banning what they view as “exploitative” contracts, while the Liberal Democrats are proposing to introduce a new employment status and additional protections for gig economy workers. By comparison, the Conservatives have not offered specific proposals in this area.
- Labour: Labour is proposing a transition from the current three-tier system of employment status (“employee,” “worker,” and “self-employed person” categories) to a two-tier employment status framework (“worker” and “self-employed person”). The intention is to better capture the wide range of employment relationships and enhance protections for individuals who are currently classified as workers. Additionally, Labour aims to ban what they view as exploitative zero-hours contracts, which are pervasive in the gig economy. Namely, workers on zero-hours contracts would have the right to a contract reflecting the hours they are required to work based on a 12-week reference period.
- Liberal Democrats: The Liberal Democrats propose the creation of a new “dependent contractor” status to regulate the gig economy. This new status would include basic rights such as minimum earnings, sick pay, and holiday entitlement. The party also advocates for a 20% higher minimum wage for zero-hours workers during normal demand periods to help compensate for the uncertainty linked with such roles, as well as introducing the right to request a fixed-hours contract after 12 months. To reinforce this protection, the Liberal Democrats also propose shifting the burden of proof in employment tribunal cases regarding employment status from the individual to the employer (i.e., putting the onus on employers to prove an individual's employment status).
- Conservatives: The Conservative manifesto does not specifically address zero-hours contracts or employment status changes. The Conservatives' general focus remains on maintaining flexibility within the labour market and raising the living wage within the existing framework.
The legal rights that workers and contractors have are intrinsically linked to their employment status. While the changes proposed by the opposition parties present a fundamental change to the current employment law framework, it is likely that reforms in this area will take time to come into effect given the processes required to bring such legislation into force and the impact on other areas of law (such as tax and pension benefits). Nonetheless, even if any potential changes result in differences of degree and not kind, the overall employment environment is trending toward stronger protections for workers (and particularly those in the gig economy).
TUPE
TUPE, the UK's implementation of the EU's Acquired Rights Directive, provides for the automatic transfer of employees for cases in which there is a transfer of a business' assets or an outsourcing, insourcing, or retendering of services (and employees who are dedicated to those transferring assets or services transfer with them). While TUPE is generally viewed as having gold-plated employers' obligations under the corresponding EU directive, there has been a push by political parties to reform certain aspects of these regulations. In particular:
Labour plans to strengthen protections workers have under TUPE, although specific details are yet to be disclosed. If elected, Labour's changes are likely to result in employees and workers having greater legal recourse against employers who propose changes to their terms and conditions as part of any TUPE transfer.
- Conversely, the Conservatives have opted for minor reforms to the TUPE regulations. Their proposed changes are intended to simplify the TUPE process for businesses during mergers and acquisitions, prioritising ease and clarity for companies undergoing such transitions. In this vein, the Conservatives recently issued a consultation proposing to clarify that TUPE protections are intended to apply only to employees (rather than workers), limiting its application.
While the development of the TUPE regulations has been largely driven by case law since its implementation, legislative changes being discussed by the main political parties would present the most significant change to business transfers in recent years and will directly impact how transactions are approached going forward.
Family-Friendly Rights
Labour and the Liberal Democrats both proposed substantial enhancements to family-friendly rights, with Labour focusing on immediate rights to parental leave, enhanced maternity protections, and bereavement leave and the Liberal Democrats offering broader reforms, including higher pay rates for parental leave and specific provisions for carers and fathers. The Conservatives also proposed a number of enhancements to family-friendly rights (albeit more limited than the opposition parties), targeting enhanced paternity leave in specific bereavement situations.
- Labour: Labour proposed several
enhancements to family-friendly rights, including:
- Reviewing parental leave within the first year in government, making it a day-one right
- Implementing enhanced maternity protections, making it unlawful to dismiss a woman for a period of six months after returning from maternity leave, except in specific circumstances
- Exploring the benefits of paid carers' leave
- Introducing a right to bereavement leave for all workers
- Liberal Democrats: The Liberal Democrats
propose:
- Implementing day-one parental pay and leave rights, including for adoptive parents and kinship carers, extending these rights to self-employed parents
- Increasing Statutory Maternity Pay and Shared Parental Pay to £350 a week
- Increasing paternity leave pay to 90% of earnings, with a cap for high earners
- Introducing an extra “use it or lose it” parental leave month for fathers and partners, paid at 90% of earnings with a cap for high earners
- Requiring large employers to publish their parental leave and pay policies
- Introducing paid carers' leave to support employees with caring responsibilities
- Conservatives: The Conservatives propose enhanced paternity leave for fathers whose partners die in childbirth, providing additional support during bereavement.
While the various political parties differ on the number and types of additional family-friendly rights that should be introduced, this is clearly an area in which all parties are looking to enhance employees' rights and benefits. As such, depending on the types of leave or additional rights that will be introduced, employers will need to review and update their existing policies and benefit offerings. For businesses looking to get ahead of the curve, introducing these benefits early to their workforce can be a differentiating feature when seeking to attract or retain talent.
As outlined above, the 2024 UK General Election manifestos present distinct visions for employment law and workers' rights from the Labour Party, the Conservatives, and the Liberal Democrats (and there are a number of additional areas of employment law in which each party has sought to distinguish themselves by proposing further reforms). Employers should closely monitor these proposed changes and be prepared to adapt to the evolving employment law landscape following the election, regardless of the outcome.
The authors would like to thank Harriet Worthington for her contributions to this alert.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.