Top 11 takeaways from Labour’s ‘Plan to Make Work Pay’

The election of a new Labour government will bring huge changes to workers’ rights in the UK. On 24 May the party published their Plan to Make Work Pay – A New Deal for Working People which sets out its ambitious agenda for changes. In their election manifesto they committed to implementing this agenda in its entirety, describing our current UK employment laws as not fit for the modern economy.

The scale and speed of the Labour employment law changes will be enormous, having a significant impact on all UK employers. Labour considers these reforms to be a top legislative priority and has committed to introducing an Employment Bill within their first 100 days in government.

The Plan documents over 30 key employment law reforms. Let’s take a look at the 11 changes which are likely to have the most impact on UK businesses and you need to keep an eye out for over the coming months.

 

The Labour Party employment law proposals

Day One Rights: Unfair Dismissal Rights from the Get-go

The Labour government believes that the two-year wait to earn unfair dismissal rights acts as a deterrent to people moving jobs, which in turn has a detrimental impact on productivity. They’re therefore removing the service requirement to make the right to claim unfair dismissal a day one right.

They point out that this will not prevent fair dismissals and employers will still be able to exercise probationary periods “with fair and transparent rules and processes”. These changes will mean that it will be more important than ever for employers to handle conduct and capability problems correctly from the very start of employment.

The Fair Work Agency: A Single Enforcement Body for Employment Rights 

Labour considers the current system for enforcing employment rights to be ineffective and will introduce a new Single Enforcement Body, likely to be called the Fair Work Agency, which will bring all labour market enforcement within one organisation.

The new government has promised that this new agency will have “real teeth” to deliver “swifter access to justice” for workers in areas such as holiday pay and sick pay. It will include trade union and TUC representation and will have strong powers to inspect workplaces and bring proceedings to enforce employment rights.

Zero-hours Contracts: An End to One-Sided Flexibility

Labour has committed to ending ‘one sided flexibility’ and ensure that all jobs provide a baseline level of security and predictability.

To achieve this, they will ban “exploitative zero-hours” contracts and make sure everyone has the right to have a contract that reflects the number of hours they regularly work, based on a 12-week reference period. It will be interesting to see what these measures look like in detail with so many business models relying heavily on a flexible workforce. However, the government has already assured employers that they will still be able to offer fixed-term contracts including seasonal work.

They will also introduce new measures to ensure all workers get reasonable notice of changes to shifts or working hours, with compensation that is proportionate to the notice given for any shifts which are cancelled or curtailed. Again, this is likely to have a very big impact on businesses that rely heavily on a wide degree of flexibility with changes often being communicated at the eleventh hour. In future, the flexibility of last-minute changes is likely to come at a cost.

Reforming Employment Status: A Move to Single Status of Worker

Employment status has been one of the thorniest issues in employment law over recent years. Whether you’re classed as an employee, a worker or self-employed determines your rights and protections, but this must be assessed on the facts of each case, leaving both employers and workers confused as this assessment “requires knowledge of complex legal tests and an encyclopaedic knowledge of case law”.

The new government believes that the ambiguity in the current three-tier system has contributed to the rise of bogus self-employment. They propose to move to a single status of worker which differentiates between workers and the genuinely self-employed.

This would be a massive shift for employers, with so many relying on casual workers to provide them with flexibility to adapt quickly to changes in business needs. This proposal was previously considered and rejected in the influential Taylor Review of Modern Working practices. There will be extensive consultation on the proposal, but employers should review the make-up of their workforce to assess what a shake-up in employment status could mean for their business.

In tandem with these changes, the government plan to raise worker awareness on employment status and their rights.

Flexible Working: The Default from Day One

This year has already seen significant changes to flexible working, but these reforms do not go far enough for the new government and Labour has committed to introducing legislation to make flexible working the default from day one for all workers “except where it is not reasonably feasible”.

It’s not yet clear how this will be assessed or what, if any, changes there may be to the current eight broad reasons employers can rely upon to reject a request. Employers should review working arrangements in their business to see whether it would be possible to offer more flexible arrangements in these roles, not just to get ready for legal changes in this area, but to gain a competitive edge in the market for new talent as recruitment experts report that flexibility is the number one priority for candidates today.

The Right to Switch Off: Achieving Work-Life Balance

The emergence of more flexible work arrangements post-COVID has often led to a blurring of lines between home and work. While the government recognises that there will always be times when employers need to contact their workers outside of their normal hours of work, they believe it is equally important for workers to ‘switch off’.

Another of the labour employment law changes therefore proposes to follow a similar ‘right to switch off’ model to those already operating in other EU countries. For example, Ireland have a Code of Practice based on the right of an employee to not have to routinely work outside their normal working hours, the right not to be penalised for ‘disconnecting’ and a duty on employers to respect another person’s right to disconnect.

It would be sensible to start reviewing your working practices at this point, not only in preparation for new obligations but to tackle any potential areas where employees may feel that their work/life balance is out of kilter. Employee burnoutis at a record high, posing issues for performance, productivity, absence, engagement and retention levels. Encouraging employees to disconnect when they are not in work and nipping any issues in the bud can reap dividends across the business.

Extended Tribunal Time Limits: From Three Months to Six Months

In addition to increasing the number of people eligible to make a claim by scrapping the service requirements for unfair dismissal, the government also plan to increase the time limit for bringing an employment tribunal claim from three months to six months.

One of the reasons cited for this change is to help those who wish to make claims for pregnancy discrimination as they may struggle to make claims within the three-month timescale. The change is also likely to help other groups who may also struggle to get advice and support in time to make their claim, particularly those struggling with mental health issues.

Pay Reforms: Changes in National Minimum Wage and Statutory Sick Pay

The Plan includes several changes affecting pay.

Future National Minimum Wage (NMW) levels will be set considering the cost of living in addition to median wages and economic conditions and the current age bands will be removed.

The lower earnings limit will be removed to make Statutory Sick Pay (SSP) available to all workers. They will also remove the current three-day waiting period, meaning that SSP will be payable from the first day of sickness absence.

The Plan reveals that one of the first areas of focus for the Fair Work Agency will be ensuring compliance with NMW rules on travel times in sectors working between multiple sites, such as domiciliary care, and that employment contracts accurately reflect the law.

Addressing Equality and Harassment: New Laws, Harsher Penalties

On 26 October the Worker Protection (Amendment of Equality Act 2010) Act 2023 is due to come into force, requiring employers to take reasonable steps to prevent sexual harassment. The Labour government will build upon this by requiring employers to show they have taken “all” reasonable steps to prevent sexual harassment and introduce an obligation to prevent harassment by third parties (for example, your customers or suppliers).

They also plan on increasing maternity protections by introducing a measure making it unlawful to dismiss a woman within six months of her return from maternity leave, except in specific circumstances (which have not been clarified yet).

There will be more support for people going through the menopause. Employers with 250 plus employees will be required to produce Menopause Action Plans setting out how they will support employees. Guidance will be published for small employers on measures they should consider in areas such as recording menopause-related absences, flexible working, uniforms and workplace temperature.

Finally, measures to address the pay gaps related to gender, ethnicity and disability are also included, with new reporting obligations being introduced for employers with more than 250 employees.

Fire and Rehire: Banning Unfair Dismissals and Unjust Practices

The Statutory Code on Dismissal and Re-engagement comes into force on 18 July. However, with penalties for breach of the Code being set at an uplift of up to 25% in damages, it does not go far enough for Labour who’ve vowed to effectively ban the practice unless there is genuinely no alternative for the business and a proper process is followed.

They will seek to achieve this by strengthening the Code and introducing more effective remedies.

Union Reforms: Updating Legislation and Empowering Representatives

Labour believes worker representation is key to delivering a strong economy. They have committed to reforming the existing framework on collective bargaining, viewing it rife with “inefficiencies and anachronisms” and plan to update the legislation by removing what they see as “unnecessary restrictions” on trade union activity.

All major trade union legislation introduced by Conservative governments over the last 14 years will be repealed. They’ll also introduce measures to allow electronic balloting, simplify the process of union recognition and change the final recognition vote rules to require unions to gain a simple majority to win. They will also revamp rules in the following areas:

• Rights to reasonable access within workplaces.
• Introduce a new obligation on employers to inform all new employees of their right to join a union, to remind all staff of this on a regular basis and introduce this as a new legal requirement for contracts (by adding it to the list of statutory particulars which must be provided in writing).
• Creating new rights and protections for trade union representatives carrying out their work.
• Updating blacklisting rules, particularly regarding the use of new technologies.

Labour is promising its agenda will provide the biggest upgrade in workers’ rights for a generation. A thorough understanding of the requirements of the new rules and how to get your business ready will be essential for employers to embrace the potential benefits of these changes and avoid the pitfalls.

 

How Citation can help

We hope this blog helped you understand some of the potential Labour employment law changes. With over 300 expert HR experts, Employment Law consultants and Health & Safety consultants backing your business, you can have confidence that you’re doing everything by the book with Citation’s 24/7 support and unrivalled advice guarantee. We can be the partner that can help you get ready for anything and keep your business in safe hands.

For when things get tough – and when they’re smooth sailing – find out how we can support your business with our Employment Law services. Contact us today or call us on 0345 844 1111.