What next for employment law?
Hanna Davies looks at the Labour Government’s plans for overhauling employment law.
The Labour Party won a substantial majority following the UK General Election held on 4 July 2024 and now sits as the UK Government.
In the lead up to the election, the Labour Party proposed extensive reforms to UK employment law as part of “Labour’s Plan to Make Work Pay: Delivering A New Deal for Working People” (the “New Deal”).
On 17 July 2024, two new employment law bills were announced in the King’s Speech:
- the Employment Rights Bill; and
- the Draft Equality (Race and Disability) Bill.
We have summarised below Labour’s 10 key pledges which relate to employment law, some of which form part of the new employment law bills:
1. Additional day one rights
Employees will have the ability to pursue unfair dismissal claims in the employment tribunal without the need for two years’ service. Furthermore, flexible working will be a ‘default’ right, unless it is not reasonably feasible. It is also expected that parental leave and sick pay will also become a day one right.
This was covered in the Employment Rights Bill and announced in the King’s Speech.
2. Dismissal and re-engagement
Labour intends to clamp down on the practice of “fire and re-hire” unless there is genuinely no alternative. It has also committed to introduce a strengthened code of practice and provide remedies against the abuse of this practice by employers.
3. Harassment and Sexual Harassment
In October this year, the Worker Protection (Amendment of Equality Act 2010) Act 2023 will come into force. This will place a new duty on employers to take ‘reasonable steps’ to prevent sexual harassment of employees. Labour wishes to go a step further by requiring employers to create and maintain working conditions free from harassment, including by actions of third parties. We could therefore potentially see the duty to prevent under the Worker Protection (Amendment of Equality Act 2010) Act 2023 extend to cover the actions of third parties.
It is expected that there will be a duty on employers to stop sexual harassment before it starts, and a new statutory code of practice is likely to be introduced. If employers are informed of any sexual harassment incidents and had not taken steps to prevent this from happening in the first place, employers could be liable.
4. Pay gap reporting
Labour has committed to introducing mandatory reporting of race and disability pay gap for businesses with more than 250 staff. These changes could potentially lead to equal pay claims based on race and disability.
This has been reflected in the Draft Equality (Race and Disability) Bill.
5. Employment Status
We can expect to see Labour consult on a two-tiered, simpler employment status framework. The UK currently has three categories of employment status: ‘worker’, ‘employee’ and ‘self-employed’. Labour will likely look to combine employees and workers into one category and the genuinely self-employed in another category. This means that it is likely that workers will receive the same rights as employees.
6. Employment Tribunal Proceedings
In their plan, Labour has committed to bringing employment tribunals up to standard, providing a quicker and more effective resolution to claims. In doing so, they will increase the time limit to bring an employment claim to the tribunal from three months to six months. Labour have noted that it is hoped that this will also allow sufficient time for internal procedures to be completed, which may result in a lower number of claims being brought by employees.
7. Right to switch off
Labour are looking to introduce the ‘right to switch off’. In Labour’s plan, they have simply stated that they will follow models which are currently in place in Ireland and Belgium. We therefore do not yet have a clear idea of what this will entail but it is likely to provide employees with the right not to work longer than their core hours on a regular basis and for employees not to be at a disadvantage as a result.
8. Zero hour contracts
To end ‘one sided’ flexibility, Labour intends to ban ‘exploitative’ zero hours contracts. Labour wants to ensure that every worker has the right to a contract that reflects the number of hours that they regularly work, based on a twelve-week reference period. They also want to put in place anti-avoidance measures such as providing workers with reasonable notice of any changes in shifts and proportionate compensation for cancelled shifts.
This will form part of the Employment Rights Bill.
9. Family friendly rights
Labour’s intention is to make dismissing an employee within 6 months of their return from maternity leave unlawful, except in specific circumstances
Labour is also expected to make the following changes to family friendly rights, which has not yet been confirmed:
- Parental rights – Labour has committed to reviewing the parental leave system and introducing the entitlement as a ‘day one’ right.
- Carer’s leave – Labour will continue to review the implementation of this legislation.
- Bereavement leave – the law surrounding bereavement leave will be clarified and such leave will be available to all workers.
10. Fair Pay
Documentation published by Labour in May of this year also sets out Labour’s plan to achieve ‘fair pay’ across the British workforce through making the following changes:
- Genuine living wage – Labour will take the National Minimum Wage regulations further and ensure that this reflects a real living wage, taking into account the cost of living. Furthermore, the age brackets that are currently used under the National Minimum Wage regulations will be removed.
- Sick pay will be a day one right to all workers.
- Unpaid internships will be banned.
With the advent of a new Labour Government, we are therefore anticipating significant changes to the employment landscape in the UK over the coming year. We will provide further updates once draft legislation has been published implementing these changes.
Hanna Davies is a Solicitor in Hugh James’ Employment law department.
