How Will the New Labour Government Employment Law Changes Affect UK Business?

August 11, 2024

By Chris Hadrill

After a 14-year Conservative rule, the Labour Party experienced a historic win with 412 votes, causing a shift in the political landscape. Given Labour’s manifesto on proposed changes, these results are seen by both businesses and employers as a potentially welcome change.

Prior to the elections, the Labour Party pledged to support businesses by reforming Britain’s economy through various legislative changes; these potential changes were reflected in the King’s Speech on July 17. We explore what UK businesses can expect below.

Upcoming Employment Law Changes Expected by the New Labour Government

Introduction of Day One Rights

The protection from being unfairly dismissed is currently offered to employees with two years of service. However, Labour’s Employment Rights Bill will make unfair dismissal protection a day-one right, meaning employees will be protected from being unfairly dismissed from day one of their employment. The bill is set to come into effect on 12th October 2024.

It is important to note that Labour has promised to incorporate exceptions relating to probationary periods. So, it is possible that probationary periods can still be a part of an employee’s contract to assess their performance. However, it is still unclear how long the probationary period could be.

In addition to this, Labour also wants to make Parental Leave a day one right and have Statutory Sick Pay be paid from day one of absence.

Strategies to Promote Fair Pay

As part of Labour’s “New Deal for Working People”, they have promised to deliver a ‘genuine living wage’. The party has acknowledged that the National Minimum Wage has helped many, but it has to now become a wage people can live on.

In that spirit, they plan on eliminating discriminatory age bands on all adult workers and ensuring a genuine living wage is enforced. Additionally, Labour will be establishing a ‘Fair Pay Agreement’ in the adult social care sector. Through this, workers and the unions that represent them can negotiate pay and conditions that are right for them.

They also plan on tackling the gender pay gap by ensuring large firms develop and implement plans to close that gap. The Equality (Race and Disability) Bill will ensure that employees from ethnic minorities or with disabilities are not discriminated against.

Plus, with the implementation of this bill, ethnicity and disability pay gap reports may be mandatory to draft and publish for companies with more than 250 employees.

Strengthening Trade Union Recognition and Worker Representation

Given Labour’s support for trade unions and the unions’ reciprocity, it is no surprise that their proposed changes further strengthen union recognition. Labour promises to empower workers by updating trade union legislation for today’s economy. They want to remove ‘unnecessary restrictions on trade union activity’.

Labour also plans on ensuring trade unions have access to workplaces to meet and represent employees. Hence, new legislation may be introduced that will give trade unions access rights to workplaces. It is worth noting that employers may not need to give express permission, rather unions would just have to give prior notice and comply with any reasonable request by employers.

Ending ‘Fire and Rehire’ and Zero Hour Contracts

‘Fire and Rehire’ has received a lot of traction over the last few months. Hence, this act of making employees redundant and then re-hiring them on reduced conditions has been on Labour’s radar.

Now, the ‘Fire and Rehire’ code of practice that was developed by the previous government and came into force on 18th July will be reviewed again. Labour plans to ultimately ban the practice of ‘Fire and Rehire’, but that’s not the only thing they want to ban.

The party is also looking at banning ‘exploitative’ zero-hour contracts to ensure all jobs provide a ‘baseline level of security’ and ‘effective remedies against abuse’

Extended Protection for Working Mums

Labour in its manifesto acknowledges that working people are already being provided with plenty of family-friendly conditions. However, there is still economic inactivity which pushes the need for more family-friendly rights.

Earlier this year, a new redundancy law extended protection to women who have returned from maternity leave by six more months after the leave ends. Labour plans to implement this law on not just redundancies but all times of dismissal. The manifesto does mention having exceptions to this but has not gone into detail.

How Can UK Businesses Prepare for Labour’s Employment Law Changes

The upcoming changes are likely to affect multiple aspects of a business such as its contracts, recruitment processes and workplace policies. Employers are advised to conduct thorough reviews and audits to make sure they are complying with legislation

With unfair dismissal potentially becoming a day one right, all employment contracts will have to be reviewed, including zero hour contracts to ensure they are not exploitative.
Empowering workers is the heart of Labour’s manifesto, and this includes pay gap reporting. Employers are advised to collect data on how employees pay to identify and rectify gaps. If a company does not collect ethnicity or disability related employee data, they may want to look into starting now.
Changes in the National Minimum Wage will impact employees and employment contracts as Labour plans to remove age bands. Employers are advised to take into account the potential increase in employee pay and plan the next steps accordingly.

Parting Thoughts

Labour’s changes in employment law are not only going to be a change to businesses but also to the legal system. The number of employment tribunal claims could increase due to the additional number of people being able to claim unfair dismissal.

Moreover, there may be a ‘settling in’ period before both the Employment Tribunal and the lawyers that use it, to properly understand the effect of the new legislation. Delays in the Employment Tribunal system could therefore potentially increase, and satisfaction in the system could be damaged as a result.

On the other hand, forward-thinking businesses can tackle this new legislation, and the rights that arise from such, head on. They can try and properly prepare how they will implement the new rights in the workplace – if you fail to prepare, you prepare to fail.

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