A Labour victory: what does this mean for employment law?

read time: 4 mins

Following a landslide victory for Labour in the general election on 4 July, focus has turned to what a Labour government has in store for the country over the next four years. 

The election campaigns and manifestos gave us some insight as to what we can expect, and Labour has a number of proposals which will see significant changes to employment law. Labour has committed to deliver a ‘new deal for working people’ and has pledged to introduce an Employment Rights Bill within its first 100 days of entering office. 

This article highlights Labour’s proposals that will affect employment law.

Basic day one rights for all workers, including for unfair dismissal

This will substantially reduce flexibility for employer’s to dismiss employees with less than two years’ service. It appears there will be a different test for dismissals in probationary periods with ‘fair and transparent rules and processes’. Employers will likely want clarification about whether they can reasonably increase the length of their probationary periods to compensate for the flexibility lost.

A ban of zero hour contracts and an introduction of predictable contracts

A ban on ‘exploitative’ zero-hour contracts will likely raise costs for many employers. Employees will also have a right to a regular contract to reflect their normal hours in a 12-week reference period, which could be problematic for seasonal businesses. On the one hand, workers may welcome this change due to the uncertainty of zero-hour contracts, however it may be that many workers do not want a fixed commitment.

An end to the abuse of fire and rehire

The proposal appears to be a strengthening of the new statutory code for fire and rehire. Employers will still be able to operate fire and rehire, but only when there is ‘genuinely no alternative’. This will protect employees from employers making unilateral changes to their employment contracts. The new statutory code is due to be published on 17 July.

A single worker status for all but the genuinely self-employed

A single worker status will increase business costs, as all workers will presumably be entitled to the same benefits, in particular sick pay. It is also likely the tax treatment will be the same for every ‘employee’, which will add further costs to businesses. For the individual, this change would increase the statutory protection of those currently classed as workers so that. For example, they would be able to bring a claim for unfair dismissal, which currently only employees can do. 

A reform to the law around unions

The proposed reforms include simplifying union recognition and industrial action, creating new rights and duties, and boosting collective bargaining. The devil will be in the detail, which we do not yet have, and employers will need to keep a close eye on these reforms to ensure compliance with any new laws.

Ethnicity and disability pay gap reporting

Large employers with more than 250 employees will be familiar with gender pay gap reporting.  Mandating employers to report on ethnicity and disability pay gap, however, is likely to be much more complex.  

An extension of the time period for bringing employment tribunal claims from three months to six months

An extension of the time period for bringing employment tribunal claims may result in an increased number of employment tribunal claims.  

A right to ‘switch off’

(or, at the very least, the right for employees to discuss switching off with their employer)

Employers would not be able to contact their employees outside of working hours. This follows in the footsteps of some European countries and Australia, who have implemented similar rights for workers. 

An increase to the National Minimum Wage

There are plans to increase the National Minimum wage to at least £10 per hour for all workers. Currently below this are 18-20 year olds at £8.60 and 16-17 year olds and apprentices at £6.40. The criteria for determining National Minimum Wage will also change. Instead of determining the rate based on age bands, it will instead consider the cost of living so all adults are entitled to the same minimum wage. 

Whether Labour introduces everything it pledged in its manifesto within 100 days remains to be seen, but what it is clear is that should their proposals be implemented, collectively, they will significantly change the landscape of UK employment law.

If you are an employer and have questions about how these changes might impact your business, or need any other employment law advice, please contact the employment team at Ashfords.

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