What Do Labour’s Proposals for Employment Law Reform Mean for UK Employers?

The Labour Party in the UK has laid out comprehensive plans to reform employment law, addressing various aspects of workers’ rights and conditions. This ambitious agenda seeks to create a fairer and more equitable workplace environment.

The key areas of focus include employment status, employment rights, family-friendly rights, zero-hour contracts, fire and rehire practices, redundancy processes, trade unions and industrial action, Transfer of Undertakings (Protection of Employment) regulations (TUPE), and equality at work. Here is a summary of the proposed changes and their implications for UK employers.

Overview of Labour Party’s Employment Law Reform Plans

Employment Status: Simplification to a two-category framework – ‘workers’ or ‘genuinely self-employed.’
Employment Rights: Equal basic rights for all workers from day one, including sick pay, holiday pay, and protection against unfair dismissal.
Family-Friendly Rights: Day one parental leave rights, extended maternity/paternity leave, and paid family and carer’s leave.
Zero-Hour Contracts: New regulations to prevent abuse, replacing an outright ban with standards against exploitative practices.
Fire and Rehire: Ending fire and rehire practices with improved consultation and legal protections.
Redundancy: Strengthening redundancy rights, focusing on business-wide impact rather than individual workplaces.
Trade Unions and Industrial Action: Enhanced union rights, repealing restrictive legislation, and easier union recognition.
TUPE: Reversing outsourcing presumption, promoting public sector insourcing.
Equality at Work: Stricter harassment laws, ethnicity/disability pay gap reporting, and Menopause Action Plans for large employers.

Detailed Proposals and Implications

The Labour Party has proposed significant changes to UK employment law, aiming to transform workplace rights and protections. These reforms are detailed in the “New Deal for Working People,” published on May 24, 2024. Here’s a closer look at the key proposals and their implications for employers:

Overview of Labour Party's Employment Law Reform Plans

Simplified Framework: Labour plans to replace the current three-category employment status (employees, workers, self-employed) with two categories: ‘workers’ and ‘genuinely self-employed.’
Consultation and Tax Implications: This change will involve detailed consultations and could affect tax statuses, potentially merging tax treatments for workers and employees.

Day One Rights: All workers would receive basic rights from the first day, including sick pay, holiday pay, and parental leave.
Unfair Dismissal Protections: Scrapping the two-year qualifying period, making unfair dismissal protections available from day one, with possible exceptions for probationary periods.
Statutory Sick Pay (SSP): Removing the three-day waiting period and the lower earnings limit.
Right to Disconnect: Encouraging negotiations on disconnection policies rather than imposing a blanket right.
Flexible Working: Making flexible working the default from day one unless impractical.

Parental Leave: Introducing parental leave from day one, extending statutory maternity/paternity leave, and implementing paid family and carer’s leave.
Dismissal Protections: Making it unlawful to dismiss a woman during pregnancy or within six months of returning to work, with specific exceptions.

Regulations: Instead of banning zero-hour contracts, Labour plans to regulate to prevent abuse, with minimum standards and rights to predictable working patterns.

Ending Practices: Prohibiting fire and rehire tactics with reforms to provide legal remedies and improve consultation procedures.
Legislative Changes: Adapting unfair dismissal and redundancy laws to protect against exploitative contractual changes.

Business-Wide Consultation: Ensuring redundancy consultations consider the entire business rather than individual workplaces, reversing the Woolworths case precedent.

Enhanced Rights: Repealing the Trade Union Act 2016 and the Strikes Act 2023, allowing electronic ballots, and simplifying union recognition processes.
Employer Obligations: Mandating that employers inform new hires about their right to join a union and regularly remind all employees.
Collective Grievances: Allowing collective grievances to be raised with Acas.

Public Sector Insourcing: Ending the presumption in favour of outsourcing public services, promoting insourcing instead.

Harassment Protections: Extending protections to interns and volunteers and reintroducing third-party harassment safeguards.
Pay Gap Reporting: Mandating ethnicity and disability pay gap reporting for large employers, including outsourced workers.
Menopause Action Plans: Requiring large employers to support employees through the menopause.

Implications for UK Employers

The proposed changes by the Labour Party would have significant implications for UK employers. Businesses would need to adapt to new regulations and ensure compliance with enhanced workers’ rights and protections. This might involve revising employment contracts, updating HR policies, and potentially facing increased administrative and financial burdens.

Conclusion

Labour’s proposed reforms represent a major overhaul of UK employment law.
Key changes include simplifying employment status, enhancing employment rights from day one, regulating zero-hour contracts, and banning fire and rehire practices.
The reforms also focus on strengthening family-friendly rights, redundancy protections, and trade union powers.
Equality measures include stricter harassment laws and mandatory pay gap reporting.
These changes will pose challenges for employers but aim to create a fairer and more equitable workplace.

These proposals are expected to be implemented swiftly if Labour is elected, with an Employment Rights Bill promised within the first 100 days. However, the actual implementation may take longer, particularly for complex reforms.

In conclusion, Labour’s employment law reform proposals represent a substantial shift towards protecting and enhancing workers’ rights in the UK. While these changes pose challenges for employers, they also offer an opportunity to create a more stable and equitable labour market.

The Conservative and Liberal Democrat parties have yet to announce their full employment law policies, but differences in approach are anticipated.

What can Employers do now?

The outcome of the General Election is far from certain but there are several steps employers can take now that will not only improve their general compliance but will put them in a strong position if Labour secure power in July and execute their ‘New Deal for Working People’.

Review existing working relationships to better identify those who are genuinely self-employed from those who are workers or employees.
Undertake a review of existing workplace practices to identify any potential areas of concern pertaining to equality, diversity and inclusivity, bullying, harassment, recruitment, onboarding and termination processes.
Review HR policies to ensure they are fully up to date and that staff are both aware and have a clear understanding of what is expected of them.
Review onboarding training plans for new employees on key HR policies such as equality, diversity and inclusivity, as well as bullying and harassment and review training plans for managers on key HR policies such as managing disciplinaries and grievances, performance issues and staff absence.

Where Can You Get Help with Employment Law?

If you’re an employer and need support with reviewing employment status, reviewing HR policies and procedures and reviewing staff training plans, our employment law experts for businesses UK can help. Book a free consultation online today or contact our team if you have any questions about our services.