What can employers expect from a Labour government?

With the next general election in the UK expected within the next 12 months, what can employers expect from the Labour Party’s position on employment law?

As the prospect of a general election becomes evident, it is suggested by the polls that the UK may see a Labour government returned.  Labour have declared themselves the ‘party for working people’ and have made it clear that we can expect radical reforms to employment law in the event of a Labour government.

The Labour Party’s current stance on employment law focuses on bolstering workers’ rights. The Labour Party published its green paper ‘A New Deal for Working People’ in 2021. In September 2023, Angela Rayner (Deputy Leader) made a ‘cast-iron’ promise that the Labour Party will build ‘an economy that works for working people’. This was followed by the Labour Party Conference in October 2023 where the Party made several pledges regarding employment law reform including implementing a single status of worker.

Key reforms

Labour state that it will prioritise quality, safety, security and reward for Britain’s employed workforce, strengthening workers’ rights from ‘day one’. The following represent the key proposed reforms:

1. Increasing the living wage to ensure that this addresses the rise in the cost of living and inflation
2. Banning unpaid internships except where they are part of an education or training course
3. Banning zero hours contracts as well as giving the right to a regular contract to anyone working regular hours for 12 weeks or more
4. Reforming employment status to create a single status of “worker” for all but those who are genuinely self-employed contractors. This will empower workers with consistent basic rights and protections, including sick pay, holiday pay and parental leave and protections
5. Tackling ‘sleep over’ hours in certain sectors, such as social care, and ensuring that travel time in sectors with multiple working sites is paid
6. Establishing flexible working rights from day one, with employers required to accommodate this “as far as is reasonable”
7. Replacing universal credit with a social security system that allows low-income earners on benefits to keep more of their take-home pay
8. Raising Statutory Sick Pay and making this available to all workers, including those who are self-employed and those on low wages currently not eligible due to the lower earnings limit
9. Expanding unfair dismissal protections for all workers, making this a day one right and removing the statutory limits currently placed on awards for successful claims for unfair dismissal
10. Establishing fair pay agreements across the economy to be negotiated through sectoral collective bargaining, covering issues such as pay and pensions, working time and holidays, training, work organisation and diversity and inclusion.

Takeaway

It is important to note that even if the Labour Party is successful in the next general election, it is not certain that all of the proposed reforms will be brought in.  The Party would not be the first  to make pre-election promises that they were unwilling or unable to keep.

It is fair to say that the proposals are quite radical when looked at in the context of how the UK labour market has been regulated in the last few decades.  Although it could take some time for  legislation to come into effect post general election, employers should take note of the proposals and start considering how the changes would impact their workforce.

Key issues to consider include:

1. If your organisation is reliant on zero-hours workers, how might you restructure your workforce if zero-hours contracts are banned? Would increasing the use of agency workers be the solution?
2. If unfair dismissal becomes a day one right, it will be more difficult to let go of new joiners:
   • How will you adjust your recruitment process to reduce the incidences of employing someone who ends up not being the right person for the role?
   • Consider how you manage your probationary period and how you might be able to show that the dismissal of an employee due to failing their probation was a fair reason to dismiss and that a fair process was followed? This is going to require more ‘evidence’ then we are used to seeing.
3. Review your workforce and identity the numbers and distribution of employees, workers and self-employed individuals. Impact assess who might be affected by creation of a single status of worker and the extension of all employment rights to the current pool of workers.