Labour has pledged to implement a number of changes to employment laws during their term, in order to improve working conditions and employee benefits as laid out in their Plan to Make Work Pay. Given their commitment to start introducing draft legislation within 100 days of being elected and their landslide victory, these changes could be implemented relatively quickly, so its important to plan and prepare to avoid falling foul of any new laws.
We’ve set out below some of the key reforms Labour has indicated it will make to employment laws.
1. Banning ‘exploitative’ zero-hours contracts
Labour has indicated that it intends to ban ‘exploitative’ zero-hours contracts and ensure that everyone has the right to a contract that reflects the number of hours they regularly work, based on a 12-week reference period. Labour wants to end ‘one-sided’ flexibility in such contracts. Workers would continue to have the right to be paid overtime rates and employers would not be prevented from offering fixed-term contracts, including for seasonal work.
For more information on what zero-hours contracts are, see our Q&A.
2. Ending ‘fire and rehire’ practices
Another key Labour pledge is to end ‘fire and rehire’, which is the practice of an employer making an employee redundant and then re-engaging the employee on new terms and conditions. The practice already involves significant risks, from damage to working relationships, to reputational damage and the risk of legal claims against an employer’s business. Labour has advised it would replace the existing statutory Code of Practice on dismissal and re-engagement with a strengthened Code.
For more information on dismissing and rehiring employees, see our Q&A.
3. New ‘day one’ rights
Labour’s proposals include the introduction of ‘day one’ rights to parental leave, sick pay and protection from unfair dismissal.
Currently, in order to be eligible for parental leave, an employee must have been continuously employed by their employer for at least one year (see our Q&A). In relation to sick pay, eligible staff are usually only entitled to statutory sick pay after they have been ill for four or more days in a row, including days off, weekends and bank holidays (see our Q&A). Employees are only eligible to bring a claim against an employer for ordinary unfair dismissal if they have at least two years’ service.
Labour’s proposed changes would not prevent fair dismissal, which includes dismissal for reasons of capability, conduct or redundancy, or probationary periods with fair and transparent rules and processes. If you’re dismissing an employee for gross misconduct, misconduct, capability or ill health, you can use our template Dismissal letter.
Labour also intends to make flexible working a default right, unless employers have a good reason to refuse it.
4. Improving equality at work
Labour has pledged to implement reforms to strengthen rights to equal pay and protections from maternity and menopause discrimination and sexual harassment. As well as taking action to reduce the gender pay gap, Labour wants to introduce a new Race Equality Act to enshrine in law the full right to equal pay for ethnic minority people, strengthen protections against dual discrimination and root out other racial inequalities. Full rights to equal pay for disabled people would also be introduced, alongside improvements to employment support and access to reasonable adjustments.
Other key election promises include:
- banning unpaid internships except when they are part of an education or training course;
- considering implementing paid carer’s leave;
- strengthening bereavement leave rights;
- strengthening protections for pregnant women from dismissal; and
- introducing a right to ‘switch off’ from being contactable by your employer outside working hours (or, at the very least, the right to discuss switching off with your employer).
5. Strengthening trade unions
Labour wishes to strengthen trade union representation, including removing restrictions on trade union activity and ensuring that industrial relations are underpinned by good faith negotiation and bargaining.
6. Simplifying the employment law system
Labour wants to consult on reducing the current three-tier system of workers, employees and self-employed, to an eventual move to a two-tier system of workers and the genuinely self-employed.
7. Enforcing rights
To ensure that employment rights are upheld, Labour has said it will create a Single Enforcement Body, which would have the powers required to undertake targeted and proactive enforcement work and bring civil proceedings upholding employment rights.
Labour wants to increase the time limit for bringing a claim in the Employment Tribunal from three months to six months, and wants to further digitise employment tribunals to reduce delays and make them more accessible.
Labour has also indicated that it intends to update health and safety legislation in order to reflect the modern workplace (for example, by addressing extreme temperatures at work, tackling sexual harassment, supporting employees through the menopause, and addressing long covid symptoms).
8. National Minimum Wage
Labour has said that it will ensure that the National Minimum Wage takes into account the cost of living. To achieve this, the remit of the independent Low Pay Commission would be changed so that it accounts for the cost of living, alongside median wages and economic conditions. Age bands would also be removed to ensure all adults are entitled to the same minimum wage.
As an employer, you are legally required to pay your staff either the National Minimum Wage or the National Living Wage and keep appropriate records to demonstrate your compliance. You could face enforcement action and penalties by HMRC if you fail to do so, including being publicly named. For more information on who is entitled to the National Minimum Wage or the National Living Wage, see our Q&A.
As an employer, you’ll need to stay up to date with the latest developments under the new government, and you may need to make plans in advance for changes that will significantly affect your workplace. We will keep you updated with regular blogs and newsletters, so that you don’t fall foul of the law.
The content in this article is up to date at the date of publishing. The information provided is intended only for information purposes, and is not for the purpose of providing legal advice. Sparqa Legal’s Terms of Use apply.
Marion joined Sparqa Legal as a Senior Legal Editor in 2018. She previously worked as a corporate/commercial lawyer for five years at one of New Zealand’s leading law firms, Kensington Swan (now Dentons Kensington Swan), and as an in-house legal consultant for a UK tech company. Marion regularly writes for Sparqa’s blog, contributing across its commercial, IP and health and safety law content.