The first 100 days
Labour's Plan to Make Work Pay (the New Deal) and its Manifesto contained a significant number of employment law reforms and we expect to see more details of their proposals and plans emerge in the coming weeks. The King's Speech on 17 July 2024 is expected to introduce an Employment Rights Bill which will cover some of the issues outlined in the New Deal and manifesto in the lead up to the election. Some of the planned reforms are expected to happen quite quickly while others will need more time for consideration and consultation.
The short term
The new Government indicated in the New Deal that it intends to move quickly on some proposals including creating a single enforcement body and removing the lower earnings limit on statutory sick pay but acknowledges that some areas will take longer to review and implement. Where primary legislation is not needed to put policies into effect, the Government will be able to act quickly to implement measures. For example, on setting the level of the national minimum wage, the new Government has indicated it wants to change the Low Pay Commission's remit to take the cost of living into account. This will not need legislation to implement.
The longer term
In the longer term, we can expect a full and detailed consultation on plans to move towards a single status of worker but, given the complexities in terms of both employment legislation and tax implications, we may not see those changes in the first parliamentary term. The New Deal also promised a review of parental leave in the first year of government so it may be some time before we have any details on those proposed reforms. Similarly, proposals on zero hours contracts and fire and rehire are likely to require consultation before the details emerge and new rights for equal pay and pay gap reporting will also take some time to come to fruition.
As part of our series looking at the future for employment law and business immigration, we will bring you articles on national minimum wage reforms and trade union reforms, as well as expected changes to the immigration system.
What can employers expect?
Until we have more details of the Government's employment reform policies, there is not a great deal employers can do to prepare at this stage, but we should have a better idea over the course of the next few weeks as the Government put their first 100 days plan into action. From what we do know, moving forward we can expect to see more tribunal claims, trade unions having greater involvement in industrial relations, recruitment and dismissals will be impacted and business reorganisations and outsourcing are likely to become more complex.
Government's key employment reform proposals:
Employment contracts
Zero hours contracts - Banning "exploitative" zero hours contracts and ensuring everyone has the right to have a contract that reflects the number of hours they regularly work (averaged over a 12-week period) is one of the Government's flagship proposals so it is likely to be in the Employment Rights Bill. The Government wants to ensure that all workers get reasonable notice of any change in shifts or working time, with compensation that is proportionate to the notice given for any shifts cancelled or curtailed, although it has also confirmed that its plan does not prevent paid overtime or fixed term contracts for seasonal workers. This proposal is likely to need substantial consultation and secondary legislation so it is not expected to come into effect for some time.
The Workers (Predictable Terms and Conditions) Act 2023 giving workers the right to request a more predictable contract was expected to begin in September 2024 and just needs accompanying regulations to bring it into force. The Government could still choose to do this as a first step in ensuring everyone has the right to have a contract that reflects the number of hours they regularly work, but it remains to be seen if it will do so.
Fire and rehire – Not an outright ban on dismissal and re-engagement on less favourable contract terms, but it will only be an option where the business genuinely has no alternative to remain viable and after a proper consultation process. The Government has said it will also strengthen the "inadequate" statutory code of practice. Again, a flagship proposal likely to be in the Employment Rights Bill, but with consultation likely to follow before the details emerge.
Day one rights
Sick pay - The Government's New Deal and manifesto mentioned introducing basic rights from day one for all workers to parental leave, sick pay and protection from unfair dismissal. This proposal is also expected to be in the Employment Rights Bill. It is likely that the Government will move quickly to remove the three-day waiting period for Statutory Sick Pay and remove the lower earnings limit and we could see those changes effective by April 2025.
Parental leave - It is not clear if parental leave means all statutory family-related leave or unpaid parental leave (i.e. the right to take up to 18 weeks’ unpaid leave until a child is 18). Currently unpaid parental leave has a one-year qualifying period, which could be scrapped relatively easily using powers in existing legislation, as could the qualifying period for paternity leave (the right to take paid time off around the birth or within the first year) which currently requires six months’ employment. Therefore, providing a day one right to parental leave in this way could happen relatively quickly, although much depends on how much consultation the Government plans to do first.
Unfair dismissal protection – The removal of the two-year qualification period for unfair dismissal claims is another flagship policy, but the Government has also stated it wants to ensure employers can operate probationary periods to assess new hires which will need fair and transparent rules and processes. This proposal is therefore likely to require extensive consultation alongside an updated or new ACAS code of practice which will also require consultation.
Flexible working – Building on the current right to request flexible working from day one by making flexible working the default from day one for all workers, except where it is not reasonably feasible. Building reasonableness into the process will make it harder for employers to refuse requests. This proposal was not in the Labour manifesto, so it's more likely to be a medium-term policy.
Enforcement
Single Enforcement Body – This new body with trade union and TUC representation will have strong powers to inspect workplaces and enforce workers' rights. The Government has indicated it wants to move quickly to create this new body and it is likely to be included in the Employment Rights Bill.
Parental rights
Pregnant worker protection – Making it unlawful to dismiss a pregnant worker for six months after their return to work, except in specific circumstances. Following consultation, this is likely to be a medium-term reform.
Bereavement leave – Introducing the right to bereavement leave for all workers is likely to be in the Employment Rights Bill but could take a couple of years to be brought in.
Paid carer's leave – Looking into introducing paid carer's leave is likely to be a medium-term priority.
Review of the parental leave system – The Government has stated it will review the parental leave system within the first year of government. Parental leave reforms will need consultation following a review, so this is likely to be a longer-term reform.
Equality
Pay gap reporting - Large firms (which is not defined) would be required to develop, publish and implement action plans to close their gender pay gaps. Outsourced workers would need to be included in their gender pay gap and pay ratio reporting too. The Government has plans to introduce ethnicity and disability pay gap reporting for employers with more than 250 staff, but this is a complex area and will take some time to implement.
Equal Pay - The Government wants to put in place measures to ensure that outsourcing services can no longer be used by employers to avoid paying equal pay and implement a regulatory and enforcement unit for equal pay with involvement from trade unions. It also wants to extend the right to equal pay for ethnic minorities and disabled people which will need time for consideration and consultation.
Dual discrimination, socioeconomic duty – The socioeconomic duty would apply to public bodies. The Government has indicated it will enact these provisions in the Equality Act 2010. The provisions already exist in the Equality Act 2010 so it would not take long to implement, but commentators have been opposed to enacting the dual discrimination provision in the past and this provision may need some consideration and consultation. The Government has also indicated it will ensure that the provisions of the Public Sector Equality Duty cover all parties exercising public functions.
Menopause – The Government wants to introduce a requirement that large employers with more than 250 staff must produce Menopause Action Plans setting out how they will support employees through the menopause and it has promised to publish menopause guidance for small employers. If the Government consults on this, it is likely to be a medium-term policy.
Sexual harassment – To update whistleblowing protection for women who report sexual harassment at work and require employers to create and maintain workplaces and working conditions free from harassment including by third parties. The Government will strengthen the legal duty for employers to take all reasonable steps to stop sexual harassment before it starts. These proposals are likely to take time to implement.
Employment rights
TUPE – The Government proposes to strengthen the rights and protections for workers subject to TUPE processes, but we await further details. This proposal will need consideration and consultation.
Tribunal time limits – To increase time limits for all employment tribunal claims to six months (many are currently 3 months). This is likely to be in the Employment Rights Bill but would require consultation.
Collective grievances to ACAS – The Government wants to enable employees to raise grievances about conduct at work collectively to ACAS. We await further details.
Right to switch off – To introduce workplace policies on the right to switch off. We await further details.
Tips – The legislation is in place ensuring that workers receive their tips in full and decide how tips are allocated and the statutory code of practice was approved prior to the prorogation of Parliament in May 2024. The Government will therefore be able to bring this legislation into force relatively quickly.
Consultation
Surveillance technologies – The Government wants to ensure that employers will consult and negotiate with trade unions or elected staff representatives with a view to agreement before introducing surveillance technologies.
Collective redundancy consultation – To amend collective redundancy obligations so it is determined by the number of people impacted across the business rather than in one workplace.
Employment status
Single status of worker -The Government intends to move towards a single status of worker and transition towards a simpler two-part framework for employment status. This is complex both in terms of employment legislation as well as tax considerations and will require detailed planning and consultation. It will be some time before this policy is realised.
