We provide an overview of some of the key policy statements and pledges made by the Labour Party.
The Labour Party's election manifesto which was published in the lead up to the General Election set out wide ranging employment law changes and it confirmed that it would implement 'Labour's Plan to Make Work Pay: Delivering a New Deal for Working People' (New Deal) in full, with legislation for reforming employment law being introduced within the first 100 days of entering office. This has now been confirmed in the King's Speech, since coming to office, and a new draft legislation is expected in October, for debate in the Commons.
The key areas for change are as follows:
Zero-hours contracts
Labour commits to ending one-sided flexibility and ensuring that all jobs provide a base-line of security and predictability by banning 'exploitative' zero-hours contracts and ensuring workers have the right to a contract which reflects the numbers of hours they regularly work, based on a twelve-week reference period, and reasonable notice of changes to shifts or working time, with compensation which is proportionate to the notice given for any shifts cancelled or curtailed.
No detail is given on how this will work in practice. However, the change will restrict the flexibility of both employers and workers and is likely to increase business costs and challenges in industries where staffing demands fluctuate, a prime example being the hospitality sector.
Some commentators have suggested that the emphasis of the word 'exploitative' suggests that there will be no outright ban. However, this very much depends on the definition of 'exploitative'. There is no detail on in what circumstances, or if, an employer would be able to resist an average hours contract.
We do know that employers will still be able to offer fixed term contracts, including those for seasonal workers.
Dismissal and re-engagement
Ending 'fire and rehire' as a lawful means of changing terms and conditions of employment. There will not be an outright ban as it accepts that where there is genuinely no alternative, businesses must be able to restructure to remain viable. However, it considers that an employer must "follow a proper process based on dialogue and common understanding between employers and workers".
Labour has said that it will replace the new statutory code of practice on 'fire and rehire' (which came into force on 18 July 2024) with a stronger version. Details are unknown, but it could make it harder for employers to change terms and conditions of employment than currently.
The law will be reformed to provide effective remedies against abuse.
Day one rights
Introducing a day-one right to sick pay, parental leave, and more significantly unfair dismissal. The New Deal document indicates that probationary periods will have a special status so that employers can assess new hires.
The shortest service requirement for being protected from unfair dismissal since unfair dismissal rights were introduced in 1971 is six months.
It is not known what steps employers will need to take to dismiss those who are still within their probationary period, save that changes introduced by the New Deal state that fair and transparent rules and processes will need to be followed and that new hires are not dismissed without cause. This might be akin to the processes employers need to follow currently when dismissing those with at least two years' service. This is likely to make employers more wary when recruiting.
The change to the qualifying period will inevitably significantly increase the number of tribunal claims.
Redundancy
The New Deal states that redundancy rights will be strengthened, giving the example of making collective redundancy consultation requirements dependent on the number of redundancies across the whole business rather than the number at each 'establishment' or workplace as is currently the case. This will increase the number of redundancies which trigger the need for collective redundancies and might cause headaches for employers in managing and keeping track of multi-site redundancies.
The wording of the New Deal suggests other changes will be introduced, but it does not provide any detail.
Family-friendly rights
In addition to the day-one right to parental leave (as mentioned above), the New Deal states that:
- a right to unpaid bereavement leave would be introduced (currently only available following the death of a child);
- it would be unlawful to dismiss a woman during her pregnancy and within six months of her return, save in specified circumstances. It does not say what those circumstances would be;
- the introduction of paid carers leave would be examined; and
- flexible working would be a default right unless employers have a good reason to refuse it.
Right to disconnect
A new right to "switch off" would be introduced (or, at the very least, the right for workers to discuss switching off with their employer), so that workers can disconnect from work outside of working hours and not be contacted by the employer. Similar models would be followed that are already in place in Ireland and Belgium.
Wages
Altering the criteria for determining the national minimum wage to include consideration of the cost of living and removing the age bands, so all adults are entitled to the same minimum wage. This is going to increase costs for employers and could result in reductions to staff headcount in industries which rely on younger workers.
Statutory sick pay
The lower earnings limit would be removed so that statutory sick pay is available to all workers. The three-day waiting period would also be removed. Again, this would increase costs for employers.
Diversity, equality and inclusion
There are several commitments in the New Deal in the areas of equality and diversity, including:
- Strengthening the sexual harassment regime, so that employers will be required to create working environments free from harassment, including harassment from third parties.
Employers will be under a more proactive duty to prevent sexual harassment in the workplace, created by the Worker Protection (Amendment of Equality Act 2010) Act 2023, which had been expected to come into force in October 2024, although Labour's commitment goes further, in that harassment would also cover harassment from third parties, which will be more challenging for employers to meet. On 9 July 2024, the Equality and Human Rights Commission published its guidance on sexual harassment at work which significantly references third party harassment. Further detail and our comments can be found here.
It also seems likely that those who complain about sexual harassment will be automatically treated as whistleblowers.
- The publication of ethnicity and disability pay gaps will be made mandatory for employers with more than 250 staff, to mirror the gender pay gap reporting. The latter will be problematic; it is not clear how reporting will be meaningful as there is currently no consensus around how to ask about or define disabilities.
- Employers with more than 250 staff will be required to publish Menopause Action Plans, setting out how they will support employees going through the menopause. Many employers already have these in place.
Employment tribunals
The time limit to bring a claim would be increased from three months to six months. We consider that this will likely increase the number of claims at tribunal, although on the plus side, for employers who want to explore settlement, it will give them more time to do so.
Trade Unions
There will be a raft of measures surrounding trade union rights and recognition, which include:
- a requirement for terms and conditions of employment issued to all new starters to inform staff of their right to join a trade union;
- the reversal of the changes made under the Trade Union Act 2016 (which increased required turnout for ballots, added more required information for ballot papers, limited strike mandates to six months and required two weeks' notice to be given of a ballot for industrial action rather than one);
- simplify the process for trade union recognition and lower the threshold to get it. The current requirement that 40% of those entitled to vote on recognition need to vote in a ballot for it to be valid for recognition will be removed, as will the requirement for a union to show that at least 50% of workers are likely to support recognition for the process to begin. Labour would grant recognition to a union if it gains a simple majority vote in a statutory ballot. Thus, it will make it easier for unions to gain recognition.
- abolishing the Strikes (Minimum Service Levels) Act 2023;
- removing the requirement for fully postal ballots for industrial action;
- a right for trade unions to access workplaces for recruitment and organising purposes.
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