Labour’s proposed reforms to employment law

The results are in, and we have a new Labour government. A draft of the Employment Bill is ready and waiting for introduction. Labour has promised to enact legislation for its New Deal for Working People within the first 100 days of their administration, which means by October 12, 2024.

However, it is unlikely that new laws will be in place by October. Labour has promised a full consultation on their proposals, which will take time. After the consultation, the Bill must pass through both houses of Parliament. Additionally, many of the new laws will need separate regulations and statutory codes of practice before they can become law.

What changes are likely to happen first?

Of course we don’t have a crystal ball, but here are our thoughts on what employment law changes might happen first:

• A new Tips Act: A new Tips Act was already passed by the outgoing Conservative government and was expected to come into force on October 1, 2024. Labour has pledged to strengthen this law to ensure workers receive their tips in full, making it one of the quickest changes for the new government to implement.
• National Living Wage: Labour has indicated that this adjustment will consider the cost of living and involve removing the 18-20 age band. Typically, rates are set in October by the Low Pay Commission, with changes taking effect on April 1 of the following year. Therefore, this could be implemented from April 2025.
• Statutory sick pay: Labour has announced plans to eliminate the current requirement to wait until day four to receive SSP and the need to earn above the lower earnings limit to qualify. Both changes necessitate primary legislation and are anticipated to be included in the Employment Rights Bill. If the Bill passes swiftly, these adjustments could potentially take effect from April 2025.

What about the right not to be dismissed from Day 1?

This change has received a lot of attention in the media and is probably one of the most radical changes to employment law that Labour are proposing to introduce.  This is something that could, in theory, happen very quickly by using a power in existing law to scrap the current two-year qualifying period.

However, it’s uncertain whether this will be the chosen route, as the pre-election plan mentioned that employers could still dismiss employees during probationary periods. Therefore, implementing the proposed changes might take a bit longer using an alternative route, which could involve consultation on an amended or new Acas Code of Practice.

What other changes are on the horizon?

Labour’s plan to reform employment law also includes:

• Day 1 ‘parental leave’: As of yet it’s unclear whether this means extending the existing right to (unpaid) parental leave or more broadly other collective rights for parents to take family leave.
• Zero-hours contracts: Labour is proposing to ban “exploitative” zero-hours contracts and establish a right to a contract based on average working hours in the last 12 weeks. They also intend to introduce a right to reasonable notice of changes or cancellation, along with “proportionate compensation” for cancelled or curtailed shifts.
• Fire and re-hire: The proposed changes suggest that ‘fire and rehire‘ would only be permitted as part of a restructuring aimed at maintaining business viability and preserving the workforce when no viable alternative exists. Labour plans to replace the current code of practice on ‘fire and rehire,’ which takes effect on July 18, 2024, with a more stringent version.
• Flexible working: Labour plans to enhance the right to request flexible working from day one, except where it is not ‘reasonably feasible’.
• Right to disconnect: The details are unclear, but in practice, this is more likely to be a requirement for employers to consult with employees on a policy.
• Longer term proposals (subject to consultation):
  • Paid Carer’s Leave;
  • More regulation of AI;
  • Eventually replacing the UK’s three-part framework for employment status with a simpler two-part framework with just workers and the self-employed.

As it’s early days, there is still a lot of missing detail regarding these proposed changes, and employers will undoubtedly have many unanswered questions at this stage. However, it’s likely that some significant changes may take effect in the coming months. Employers are advised to stay updated to ensure that their policies and processes remain compliant with the evolving laws.