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What the Labour election win means for Employment Law

July 4, 2024

The results from yesterday’s general election mark the start of a new era for employment law. Labour have promised in their Plan to Make Work Pay: Delivering A New Deal for Working People (“the New Deal”) to “hit the ground running” and introduce an Employment Rights Bill in parliament within 100 days of entering government.

The New Deal confirms that the new Bill will follow parliamentary process for legislative proposals with consultation, usual progress through both Houses and implementation after Royal Assent, implying that many of the proposals will not be implemented quickly. That said, some of the proposed changes may not be included in the new Bill but could simply be achieved by amending existing legislation if the new government want some quick wins. 

This blog looks at some of the key proposed changes, and the potential time scale for their introduction.

Basic day one rights – extension of unfair dismissal legislation.

One of Labour’s headline proposals is to introduce a day one right for all “workers” not to be unfairly dismissed, bringing an end to the two-year qualifying period to raise an ordinary unfair dismissal claim. This proposal includes a commitment that employers can operate probationary periods provided a fair and transparent process is followed. We will need to see more detail on this to understand how long a probationary period can be for and what fair process will be, but there will certainly be an increased concern for employers recruiting new employees. 

Whilst it seems more likely that there would be consultation on this first, it is possible this could be introduced relatively quickly, by a removal of the qualifying period in the Employment Rights Act 1996 (‘ERA’). This would mean employers need to rely on the existing “fair” reasons for dismissal (i.e. redundancy, conduct, capability, breach of a statutory obligation or some other substantial reason) and that they followed the ACAS code of practice on disciplinary and grievance procedures. It would also be possible for a further amendment to the ERA so that employees are unable to bring unfair dismissal claims during their ‘probationary period’ and ACAS asked to provide an amended code of practice to include termination in a probationary period.

Prior to publishing the New Deal, Labour had also announced an intention to remove the cap on compensation for unfair dismissal claims. This hasn’t been referred to in the New Deal document specially – but that doesn’t mean it won’t also be introduced.

Reforming employment law status

Labour has proposed a full and detailed consultation on the different status of ‘worker’, ‘employee’ and ‘self-employed’. They have proposed that whilst the self-employed status should be preserved, the status of ‘worker’ and ‘employee’ should be combined to achieve a single worker status where both groups are given the same basic rights and protections. This would be a significant change, and along with the proposed changes to day one right to claim unfair dismissal could have a significant impact on employers. It is likely this would require a detailed consultation, and given the complexities of legislating for this, and anticipated this is not something that would happen quickly.

Banning zero-hour contracts and ‘one-sided’ flexibility

Labour have been clear on their proposal to ban what they call “exploitative” zero-hours contracts. The New Deal sets out the plan to ensure everyone has the right to a contract that reflects the number of hours they regularly work, based on a twelve-week reference period. It also says that workers should be given reasonable notice of any change in shift or working time, with compensation that is proportionate to the notice given for any shifts cancelled or curtailed. Whilst this has been a headline promise for Labour, it is anticipated that the proposed changes will require consultation, and not a ‘quick win’.

Increased wages

One of the headline changes set out in the New Deal is to deliver a genuine living wage which they say will reflect the need for pay to take into account the cost of living. The proposals also include a removal of the differentials for age bands. There is a possibility for this to be implemented quickly through secondary legislation and if so, employers with younger employees /apprentices may find this a costly change.

End fire and rehire practices

The New Deal also sets out the plan to “end the scourges” of fire and rehire, which is referred to as being a “bulling threat”. The proposal is to ban dismissing employees who refuse to agree changes in their contracts and offer to re-employ them on new terms and to bring in a new Code of Practice to support this. Whilst no doubt a key term for Labour, and one they will wish to implement quickly, it is anticipated this would require significant consultation and new legislation. 

Greater trade union support

There is also a pledge to modernise current legislation on trade unions, including providing more support for trade unions and an aim to strengthen union rights and the rights of union representatives and their members in the workplace. It is anticipated this will be pursued quickly, potentially in the new Employment Rights Bill.

Other proposals

There is also an intent to create a single enforcement body for employment law, and an extension of the three-month limitation period to raise an Employment Tribunal to being six months.

There are a significant number of other proposals, some of which are less clear at this time, including reform of Statutory Sick Pay to be a day 1 right; Day one right to parental leave (although we don’t know what parental leave means in this context); Maternity discrimination; Redundancy rights and TUPE; a right to ‘switch off’; and a strengthening of protection for whistleblowers

The new Parliament has been called to meet on 9th July with the State Opening of Parliament and the King’s Speech to follow on 17 July 2024. This speech will be the first real indication of what measures will be introduced first and the likely time frames for the upcoming employment law changes.

Our team will keep you updated on this, but meantime if you have any questions on any other area of Employment law, please get in touch with Blackadders Employment Team, working in Aberdeen, Dundee, Edinburgh, Glasgow and across Scotland.

The opinions expressed in this site are of the author(s) only and do not necessarily represent the opinions of Blackadders LLP.

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