2024 has already seen considerable legislative changes, but we’re in store for another surge…
Labour’s Plan to Make Work Pay: Delivering A New Deal for Working People promises plenty of updated and new legislation. This means businesses will need to be ready to make the necessary changes. But what are those changes?
In the following article, we’ll explore some of the most significant changes in employment law and, most importantly, what these mean for you and your organisation.
What are the proposed changes to employment law under the new labour government?
If your first question is, “What will change for me and my business?”, we aren’t surprised.
Let’s take a look at the most impactful proposed changes to employment law under the new labour government. A lot will depend on your specific industry, but the general big game changers are as follows:
Unfair dismissal protection from day one
This change is considered to be one the most radical changes proposed. It would see employees and workers being able to claim unfair dismissal from their first day in a new role. This will most likely lead to more employment tribunal cases in a system which is already experiencing large back logs.
What it means for your organisation
Companies and organisations will need to review and tighten recruitment policies, contracts of employment and the probation process to ensure they all reflect appropriate probation periods of the correct length with timely, regular reviews to ensure an employee is performing as expected. Labour have stated they will ensure probation periods can be used to fully review new hires and it will be important to train managers to ensure they are both holding and recording the outcome of review meetings during the probation period. This will provide documented evidence of discussions should they need to be used later as part of a dismissal process before the probation is passed. It will also be necessary to ensure training is provided during that probation period to help new hires who are struggling to perform at the expected level. It is thought that Labour will also look to tighten the probation period itself to ensure there is cap on the length of these periods. It’s also worth noting that once the worker and employee statuses are amalgamated (as discussed earlier), we could see an increased amount of new hires with an entitlement to unfair dismissal (currently workers are not usually entitled to make a claim for unfair dismissal). We all know how expensive and time-consuming recruitment can be so training and nurturing new hires during that probation period, and addressing any issues that arise early on, will help to protect both organisations and new hires going forward.
Flexible Working – the default from day one
Many organisations have recently amended flexible working policies and procedures to bring them in line with the April change to allow a request for flexible working from the first day of employment. Labour proposes to make flexible working the default arrangement for all workers from day one except where it is not “reasonably feasible”.
What it means for your organisation
Should this change come into force, policies and procedures will need to be updated to reflect this default position. Employers will need to consider how this default day one right will affect their business practices and how they can adapt to meet the requirements of this change. There are a number of examples of how the term flexible working can be applied (these can be found in the ACAS Code of Practice on requests for flexible working) and it is likely that job hunters will search for roles expecting these arrangements to be met by default. The Employment Rights Act 1996 sets out 8 genuine business reasons for why a current flexible working request may be rejected. It remains to be seen whether some (or all) of these would be considered as suitable reasons under Labour’s proposals. If so, it may be possible for organisations to outline in job applications where and why a specific flexible working arrangement is considered reasonably unfeasible to prevent any misunderstanding going forward.
Ban “exploitative” zero-hour contracts
This proposal is another change that has got people talking. Many businesses use zero-hour contracts, with some claiming that their employees request them for their flexibility. Labour has not proposed an outright ban on the use of these contracts (a change from its previous stance on the topic) but has said it will end “one-sided” flexibility. It seems Labour has recognised the potential benefit of zero-hour contracts in many organisations, such as those operating seasonally. However, it is keen to avoid the exploitative potential of these contracts where employees are required to be available for work without having any guarantee that work will be available. Instead, Labour has proposed a contract which reflects the hours an individual works, based on a 12-week reference period. Notice will be given to any changes to working patterns with compensation provided to match the level of notice provided. Labour has said that pay for overtime will continue.
What it means for your organisation
Organisations who rely on zero-hour contracts are understandably eager to hear about the detail of this proposal. Whilst an outright ban on the use of zero-hour contacts would have seen a large change in contractual working arrangements, this proposed “right” to a contract which is not “exploitative” provides some flexibility for organisations. The duty to provide notice of changes will require tighter resource planning and could cause some financial penalties if work is cancelled at short notice. More detail will be provided over the coming months and organisations who use zero-hour contracts on a regular basis should be thinking in advance about how these proposals could affect their working practices and resource planning.
Extending maternity protection
We have recently seen changes to the legislation surrounding pregnancy and maternity protection. From April of this year, any women who is pregnant (and has informed their employer) and has been selected for redundancy, has the right to be offered a suitable alternative role before anyone else. This same right is afforded to women on maternity leave from the date their child is born and for the following 18-month period. This essentially means that if a woman is on maternity for 12 months following the birth of her child, she will be protected both during pregnancy and for 6 months following her return to work. Labour intends to go even further than this, making it unfair to dismiss any women from the date of birth of her child to 6 months after her return to work.
What it means for your organisation
Whilst this proposal will be welcomed by many of those lobbying for women’s rights in the workplace, it could create issues for smaller organisations who have a genuine need for redundancy but don’t have suitable alternative roles for those whose positions has been confirmed as redundant. This could result in organisations delaying key restructuring activities. It’s important for organisations to consider how this policy may implement them. Any relevant redundancy policies will also need to be changed to reflect this new change should it come into force.
Right to switch off
Originating in France, this right is already enjoyed in many European countries, as well as by Scotland’s civil servants. The right to switch off recognises the changes in working practises arising from the pandemic, with many working beyond office hours by logging in remotely and monitoring and responding to emails. Labour argues this has led to a blurring of the distinction between work and family life and Keir Starmer has said that he will not work beyond 6.00pm on a Friday so that he can spend time with his family. Labour says it recognises the need for workers to switch off and not turn homes into 24/7 offices which lower morale and engagement. Its ambition is for workers and employers to have “constructive conversations” that benefit both parties.
What it means for your organisation
Working from home has allowed for a more flexible way of working, which is appreciated by a great number of workers. Whist there has been a recent push to get many people back into offices, it’s not a practise that looks set to disappear any time soon. Many of those who utilise this way of working are happy to work outside of traditional office hours to ensure they achieve a healthy work-life balance. Others may feel pressured to maintain a constant online presence and it is these individuals Labour wishes to protect. Conversations around this matter will require an underpinning cultural shift in organisations where presenteeism is expected. Organisations already using flexible ways of working successfully probably won’t require cultural shifts, however, their policies will need to be updated to reflect this new right. Those who haven’t yet embraced flexible working, will need not only to update their policies but also to consider their working cultures to provide room for this default way of working.
Extended redundancy protection
This proposal would see a small but significant change to the definition of an “establishment” when considering the requirement for collective consultation in redundancy exercises. Currently, an establishment can be a separate workplace, which manages its own workforce, separate to other sites within an organisation. When an organisation anticipates the need to make 20 or more roles redundant at a single site, collective consultation is required. Labour proposes to change this so that the number of redundancies is considered across the organisation rather than a single establishment.
What it means for your organisation
Organisations will need to amend policies and procedures, managing redundancies. We’ll also see a greater use of collective consultation processes and therefore more involvement from trade union and employee representatives. The change may lead to the creation of more employee representative bodies in organisations that currently lack a trade union or employee representative presence.
Sick pay
Labour has said it will remove the lower earnings limit on statutory sick pay as well as the current three-day waiting period required to be entitled to statutory sick pay.
What it means for your organisation
Absence policies will need to be updated in line with these proposals and some organisations may be concerned about sickness rates as a result of the removal of the waiting period. Short term absence reporting will be key in the months following the change to assess any difference in reported sickness rates.
Increased reporting of pay gaps
Currently any organisation with over 250 employees needs to report on its gender pay gap data. Labour proposes to extend this reporting requirement to ethnicity and disability data to help tackle inequalities.
What it means for your organisation
All organisations currently reporting on their gender pay gap data will need to prepare to also report on ethnicity and disability. This will require organisations to ensure they hold this data and that it is accurate and up to date. With the proposed changes in the employment status of workers, organisations may also see some individuals brought into scope who are not currently included in the data. HR analytics becomes ever more important as these gaps in the data highlight the demographic profile of organisations.
Increased protection from sexual harassment
Existing legislation places responsibility for any discrimination (including harassment) experienced by an employee in the workplace in the hands of the employer. Employers have a defence only if they can prove they took all reasonable steps to prevent the discrimination from taking place. Legislation created under the Conservative government, which was due come into effect this October, requires employers to take “reasonable steps” to proactively prevent sexual harassment (defined in the Equality Act 2010 as unwanted conduct of a sexual nature which has the purpose or effect of violating dignity or creating an intimidating, hostile, degrading, humiliating or offensive environment) in the workplace. Labour’s proposal extends this protection so that employers are required to take “all reasonable steps”, not just “reasonable” ones and includes protection from third party sexual harassment.
What it means for your organisation
This distinction may seem small but has potentially large consequences. Taking all reasonable steps as opposed to just reasonable ones means employers will need to ensure they are aware of all steps that could be considered reasonable and that they have been taken. Policies will need to be up to date and regularly reviewed. Regular training with the aim of preventing sexual harassment will need to be carried out. Training records will need to be closely monitored to ensure companies can prove they are taking proactive steps to prevent sexual harassment. In addition, agreements with third parties will need to be amended to include expectations regarding the treatment of staff (if not already included).
End fire and rehire
Fire and rehire refers to a process where employers terminate an employee’s contract and then rehire them on less favourable conditions. The Conservative government was due to implement a new statutory Code of Practice on dismissal and re-engagement which would enable employment tribunals to offer an increase in employee’s compensation of up to 25% if an employer failed to comply with the code. The code aimed to ensure employees were properly consulted of any changes and treated fairly. It sought to achieve this by preventing employers from using dismissal as a threat to pressure employees into accepting less favourable terms and conditions. Labour has called the code “inadequate” and has stated it would replace it with a strengthened code of practice.
What it means for your organisation
Whilst Labour states that its strengthened code will provide workers with more security regarding the ability to plan for the future, it does not provide detail on how it will achieve this security. It is not promising a ban on fire and rehire and has recognised that businesses may sometimes need to restructure to ensure future viability, however, states thar this should only occur as a last resort following “proper…dialogue”. Organisations should familiarise themselves with the Conservatives Code of Practice and ensure their practices are fully compliant so that any future amendments required by a Labour code can be easily added.
When will these changes be introduced?
There are no definite dates to any changes just yet. However, Labour has committed to introduce some legislative change within its first 100 days in government.
It’s worth noting that the much-discussed change from the current three types of employment status (employee, worker and self-employed) to two – worker and self-employed, is not part of Labour’s first 100-day commitment. The Party recognises the need to fully consult with relevant organisations regarding this monumental change and have therefore stated that this element, along with that to review Parental Leave, will take place within the first year of government.
To put specific dates to that 100-day commitment, Parliament resumes on 17th July. 100 days from this date is 25th October. The Party has committed to extensive consultation with businesses, organisations and trade unions on many of its key proposals before legislation is passed.
The journey from introduction to Royal Assent and implementation of an act can be a lengthy one. Whilst some proposals will require secondary legislative change rather than the implementation of a new act, all changes need to be passed through both houses in Parliament, which can take time.
However, Labour do have a large majority so it may be able to move through the various stages relatively quickly. Therefore, whilst we won’t require any changes in our day-to-day policies and procedures in the next couple of months, all organisations should be ready to adapt quickly and effectively to ensure they’re up to date and ready for these changes.
How we can help
Make sure you’re ready for the proposed changes to employment law under the new labour government.
Whether it’s conducting a full HR audit or providing training on the proposed changes, our team of experts can guide you through what’s expected to be the biggest overhaul in employment law in the last 14 years.
Contact our team on 0330 223 5253 or office@fitzgeraldhr.co.uk
