Labour’s New Deal for Working People – what will a Labour Government mean for employers?

By Nicola Smyrl

Partner

06 March 2024

Article Insights

Labour has announced plans to introduce various changes to employment law under its ‘new deal for working people’ if it wins the General Election. The new deal aims to improve the lives of working people using the slogan “decent work, secure work, safe work, fair work”.  Full details can be viewed here: https://labour.org.uk/updates/stories/a-new-deal-for-working-people/

In this article, we have summarised the more significant changes that Labour has promised, in order to assist businesses in starting to think about what they may need to do in preparation for the changes.

Employment status

 Employment status will be reformed to create a single status of “worker” for all but the “genuinely self-employed.”    It will ensure all workers have the same basic rights and protections.  Labour have said that “unscrupulous employers will no longer be able to treat their staff like regular employees whilst falsely claiming they are not, denying staff rights they are owed as employees. The many good businesses that treat workers well will not be undercut by those that chose to use loopholes in the system to deny workers their rights.”

Increasing the employment rights of all individuals, even those working on a casual basis, will possibly reduce the ability of employers to have flexibility in their workforce.  Employers will need to consider reviewing and revising contracts, policies and procedures to ensure that all staff are being treated appropriately.

Amending unfair dismissal requirements

The proposals on unfair dismissal will require employers to completely rethink how they manage and dismiss their staff.  Proposed changes include:

Day One Right – Currently, an employee must be employed for 2 years to claim unfair dismissal.  Labour intends to introduce a day one right to unfair dismissal protection.  The length of service requirement has fluctuated with previous Conservative and Labour Governments, but this would be the first time that the qualifying period would be removed altogether. A day one right could make probationary periods obsolete, meaning a greater emphasis on due diligence within the recruitment process, and better management of staff performance once employment starts.

Remove limit to Compensation – Labour intends to remove limits on compensation for unfair dismissal claims, aligning it with whistleblowing and discrimination claims.  Taking into account that such claims could become very expensive, especially for higher paid employees, careful attention will need to be paid to management and dismissal processes.

Extend protection to workers – Unfair dismissal protection is currently only available to employees. Labour intends to extend the protection to all workers in line with its promises on changes to employment status.

Extend the time limit: No more detail is provided, but it can be expected that the three-month limit to being a claim in the employment tribunal would be extended to six months.

Banning ‘fire and rehire’

Labour have long been critical of the practice of firing and re-hiring. This is the practice of changing employment terms by way of dismissal and re-engagement, typically in situations where it has not been possible to obtain employee or trade union consent to proposed changes of contracts.  Whilst the current Government have introduced a statutory Code of Practice to regulate fire and re-hire practices, banning them all together will further reduce the ability of employers to deal with the workforce in a flexible way, leaving employers in a situation where it will be difficult to enforce new terms on reluctant employees, even if absolutely necessary for business reasons.  Coupled with the changes to worker status and unfair dismissal rights, this could cause significant difficulties for businesses who need to make changes to terms to avoid redundancies.

Flexible Working

Labour will make flexible working a day one right.  This is different from the current position where employees have the right to request flexible working, but the employer can reject this on certain specified grounds.

Under Labour’s plans, employers will have to accommodate flexible working so far as is reasonable.  This suggests that there will be situations where the employer does not have to accommodate a flexible working pattern but how widely this will apply remains to be seen.  Labour has committed to supporting small and medium sized businesses to support flexible working practices.

Enhanced Family Friendly rights

Labour have committed to extending statutory maternity and paternity leave, introducing the right to bereavement leave and strengthening protections for pregnant women by making it unlawful to dismiss a woman who has had a baby for six months after her return from leave, except in specific circumstances.  There are also plans to review the Shared Parental Leave system with reforms to incentivise sharing of leave.

Introducing collectively bargained fair pay agreements in social care sector

Labour plan to introduce sectoral collective bargaining, a policy that would give workers the right to negotiate fair pay agreements through sectoral collective bargaining. This would involve negotiations between employers and employee representatives, empowering workers to collectively secure fair pay and fair terms and conditions.  Whilst the current intention is to implement this practice in the social care sector, it is possible that this would be extended to other sectors in the future.  This means that many employers may find that they are engaging with trade unions for the first time.

Introducing a right to switch off

Labour have promised to introduce a positive right for workers to disconnect from emails, calls and messages received from employers outside of working hours to ensure that homes do not become ‘24/7 offices’. The right focuses on three points:

• A right for individuals to not have to routinely work outside their normal hours.
• A right to not be penalised for refusing to attend to work matters outside normal hours.
• A duty to respect another’s right to disconnect.

The active use of this right may be minimal as workers are likely to worry about its potential impact on their future careers.

A trade union reform

Labour plan to repeal anti-trade union legislation, including the Trade Union Act 2016, in order to remove restrictions on trade union activity. This legislation currently limits workers’ rights to ballot and stipulates minimum service levels.

Labour intends to simplify the statutory union recognition process to enable gig economy workers to access trade unions more easily. Labour has also promised to create new rights and protections for trade unions to undertake their work. This will include establishing a reasonable right of entry for trade union representatives to organise, meet and represent their members.

Health and Safety

Enforcement will be overhauled, and healthy and safe working environments will be actively encouraged.  The law on health and safety will be reviewed and revised.  Awareness of neurodiversity will be raised and provision for stress, mental health, the impact of new technology and new materials and the impact of emerging health and lifestyle issues (e.g. long Covid) will be reviewed.  The intention is for mental to heath to be regarded as equally important to physical health.

These are just some of the wide-ranging reforms proposed by Labour.   In the event of a Labour Government in 2024, all employers will have to address fundamental changes in the workplace, necessitating significant operational changes in some areas.   In due course, Taylor Walton’s employment team will be ready to assist you to prepare for and comply with the changes that may come with a new Labour Government.

If you wish to discuss any of the issues raised in this article, or any other employment law matter, please contact TW’s employment team here.

Disclaimer: General Information Provided Only
Please note that the contents of this article are intended solely for general information purposes and should not be considered as legal advice. We cannot be held responsible for any loss resulting from actions or inactions taken based on this article.