New UK Government: What it Means for Employers

Labour’s key proposals for employment law include:

• Removing the qualifying period for unfair dismissal protection and making it a day one right – employees in the UK have the right not to be unfairly dismissed. This is subject currently to a qualifying period of two years’ continuous service, save in exceptional cases (e.g. where the reason for dismissal is that the employee is a whistleblower). Labour proposes to make this a day one right for all workers. It has, however, been indicated that it will remain permissible for employers to operate probationary periods with fair and transparent rules to assess new hires. It remains to be seen what precisely it means by this.
• Restricting fire and rehire – “Fire and rehire” is a shorthand term describing the practice of an employer dismissing an employee and reengaging them on different terms and conditions. There have been calls, particularly from trade unions, for this practice to be banned outright. In its New Deal, Labour has recognised, however, that it is important that businesses can restructure to remain viable, to preserve their workforce and the company when there is genuinely no alternative. It proposes to continue to allow “fire and rehire”, but provided that businesses follow a proper process based on dialogue and common understanding between employers and workers. A new code of practice in this area was already due to come into effect from 18 July 2024, which Labour has said that it proposes to “strengthen”.
• Banning “exploitative” zero hours contracts – zero hours contracts are casual worker agreements under which typically an organisation is not obliged to offer any minimum amount of work and the worker is not obliged to accept any work offered. Labour has committed to end “one-sided” flexibility, ban “exploitative” zero hours contracts and ensure that workers have the right to a contract that reflects the number of hours they regularly work, based on a twelve-week reference period.
• Lowering the threshold for collective redundancy consultation – currently, collective redundancy consultation obligations arise where an employer is proposing to dismiss as redundant 20 or more employees at one establishment within a period of 90 days or less. Case law has found that an establishment for this purpose is the local unit or entity to which workers are assigned. Labour has indicated that it will broaden this to be determined by the number of people impacted across the business as a whole rather than in one workplace. As such, the obligation for an employer to engage in collective consultation in relation to redundancy proposals could arise more frequently in future.
• Further strengthening and expanding collective rights – Labour proposes a range of changes to remove what it has termed “unnecessary red tape on trade union activity that work against their core role of negotiation and dispute resolution”. This is expected to include measures:
  • repealing the strike minimum service legislation introduced by the previous Conservative government
  • allowing statutory trade union ballots to be undertaken electronically
  • simplifying the process of trade union recognition, including by lowering the thresholds at which recognition can be achieved
  • ensuring that workers in “precarious and gig-economy sectors” have a meaningful right to organise through trade unions
  • introducing a right for trade unions to access workplaces to meet, represent, recruit and organise members, subject to giving appropriate notice and complying with reasonable requests by the employer
  • ensuring that employers provide sufficient facilities time for all trade union representatives
  • introducing a new duty on employers to inform all employees of their right to join a trade union (e.g. as part of the mandatory written employment particulars issued on hiring) and to inform all staff of this on a regular basis
  • revising the current laws on blacklisting
• Introducing a mechanism for raising collective grievances – Labour proposes to introduce a mechanism enabling workers to collectively raise grievances about conduct in their workplace. It has stated that it anticipates that this will be in line with the existing ACAS code of practice for individual grievances.
• Ethnicity and disability pay gap reporting – currently, UK employers must publish gender pay gap data if, on a specific date each year, they employ 250 or more employees. Labour proposes to expand this obligation for such employers to also report on disability and ethnicity pay gap data. Labour has also indicated an intention to introduce, via a new Race Equality Act, race equal pay claims and the strengthening of dual discrimination protection.
• Equal Pay – Labour has committed to put in place (as yet unspecified) measures to ensure that outsourcing of services cannot be used by employers to avoid paying equal pay, including for work of equal value, to women.
• Introducing a right to “switch off” – Labour proposes to introduce a “right to switch off”. It has committed to following similar models to those that are already in place in Ireland and 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”.
• Banning unpaid internships – Labour proposes to ban unpaid internships except where they are part of an education or training course.
• Greater protection from dismissal for new mothers – Labour has committed to strengthening protections for pregnant women by making it unlawful to dismiss a woman who is pregnant for six months after her return, except in “specific circumstances”.
• Greater accessibility to statutory sick pay – Labour proposes to remove both the waiting period and lower earnings limit in order to make statutory sick pay available to all workers.
• Minimum wage reform – Labour proposes to remove the age bands currently applicable to the national minimum wage and also to change the remit of the Low Pay Commission so that, alongside median wages and economic conditions, the minimum wage will also take account of the cost of living.
• Parental leave rights – Labour has committed to review the current parental leave system and as part of which it will ensure that parental leave is a day one right.
• Further enhanced duty to prevent sexual harassment – Labour proposes to strengthen the new legal duty already due to come into effect in October 2024 by requiring employers to take “all” reasonable steps to prevent sexual harassment, including by third parties.
• Single status of worker – the UK currently recognises three categories of employment status for employment rights purposes: employee, self-employed and worker. Labour proposes to consult on introducing a simpler binary two-part framework that differentiates between workers and the genuinely self-employed.
• Increased time limit for employment tribunal claims – Labour proposes to increase the time limit within which employees are able to submit a claim to an employment tribunal from the three months that applies in most case currently to six months.
• Creation of a Single Enforcement Body – Labour proposes to introduce a “Single Enforcement Body”, with trade union and TUC representation, whose remit will be to “enforce workers’ rights”, including “strong powers to inspect workplaces and take action against exploitation”. Labour has stated that this body will be given the power to bring civil proceedings upholding employment rights.

What happens now? 

Clearly, the New Deal sets out a wide-ranging and significant programme for reform of existing UK employment laws.

Labour has committed to hit the ground running and introduce legislation in Parliament within 100 days of entering government (so, by mid-October). That does not, however, necessarily mean that new laws will take effect by then.

Employers will, of course, rightly now be eager to understand the full detail of Labour’s proposals as soon as possible.

In the meantime, employers can take some comfort from the fact that, alongside its stated intention to move quickly, Labour has also committed to consulting fully with businesses, workers and civil society on how to put its plans into practice before legislation is passed.

*Rebecca Geers (Trainee Solicitor) contributed to this article.