Our mlplaw Employment Law team carefully analysed the speech and came up with the following key topics that are poised to shape the new Employment Rights Bill, promising significant changes in employment law.
The Future of Zero-Hours Contracts and Unfair Dismissal Protections
Zero-Hours Contracts: Labour intends to end the exploitative use of zero-hours contracts, requiring employers to offer contracts reflecting regular working hours based on a 12-week reference period. This aims to provide greater financial security, improved work-life balance, and higher job satisfaction. However, employers may face increased administrative burdens and scheduling challenges, particularly in industries with variable demand.
Unfair Dismissal Protection: Labour plans to extend protection from unfair dismissal to all employees from their first day of employment. This change is expected to boost employee confidence and job satisfaction while reducing unfair dismissal cases. Nonetheless, employers might see an increase in tribunal claims, necessitating careful hiring decisions and robust performance management processes from the outset.
Banning ‘Fire and Re-Hire’ Practices
Labour aims to ban ‘fire and re-hire’ practices, where employees are dismissed and rehired on less favourable terms. This move seeks to promote a more secure and stable job market. While it increases job security and trust, employers might struggle to adjust their workforce in response to economic pressures. The legislation will explicitly prohibit such practices, with penalties for non-compliance.
Health and Flexibility: Statutory Sick Pay and Day-One Flexible Working
Statutory Sick Pay (SSP): Labour proposes to eliminate the three-day waiting period and lower earnings limit for SSP eligibility, entitling all employees to SSP from their first day of sickness absence. This change is expected to reduce long-term sick leave by making employees more comfortable taking short-term sick leave. However, employers will face increased costs and administration, potentially leading to higher levels of short-term sickness absence.
Flexible Working from Day One: Labour intends to make flexible working the default from the first day of employment, except where it is not reasonably feasible. This policy aims to enhance employee satisfaction, retention, and productivity. However, roles requiring physical presence and ensuring fairness in implementing flexible working across the workforce pose challenges. Clear criteria and effective management support will be essential.
Post-Maternity Leave Changes and New Enforcement Body
Labour plans to make it unlawful to dismiss a woman within six months of her return from maternity leave, except in specific circumstances. This initiative aims to combat discrimination and ensure job security for new mothers, although it may create operational challenges for businesses.
A new enforcement body, the Fair Work Agency (FWA), will be established to inspect workplaces and take legal action against employers failing to uphold employment rights. This consolidation of existing enforcement bodies into the FWA means employers must proactively comply with statutory employment rights and maintain adequate records.
Trade Union Reforms and Family-Friendly Rights
Trade Union Activity: Labour aims to simplify the trade union recognition process and increase trade union access to workplaces. This includes repealing the law on minimum service levels in industrial action and introducing a right for workers to access a union within the workplace. While this could lead to stronger collective bargaining, it might face resistance from employers.
Family-Friendly Rights: Labour proposes a day-one entitlement to parental leave, bereavement leave for all workers, and a review of carers' leave, exploring the possibility of paid time off for carers. These changes aim to support families and carers but will require businesses to adapt to new leave entitlements.
Implementing a Genuine Living Wage
Labour plans to introduce a genuine living wage based on the cost of living rather than national earnings. This aims to reduce in-work poverty and reliance on social benefits, providing financial security for workers. However, increased wage bills, especially for small businesses, pose a significant challenge. A phased wage increase may help businesses adjust.
Addressing Equality: Expanding Pay Gap Reporting and Redefining Worker Status
Pay Gap Reporting: Labour intends to expand pay gap reporting to include ethnicity and disability, making it mandatory for employers with at least 250 employees. This change aims to promote fairer pay practices and increase workplace equality and diversity, although it adds to employers' reporting requirements.
Worker Status: Labour proposes creating a single status of 'worker,' eliminating the distinction between employees and workers. This aims to ensure fairer treatment for all, particularly those in the gig economy. However, businesses benefiting from the current flexibility may resist this change, and legal complexities will need to be addressed.
The Right to Disconnect and Menopause Action Plans
The Right to Disconnect: Labour plans to introduce a right for employees to disconnect from work, promoting a healthier work-life balance. This could improve mental health and productivity but may be challenging to implement in industries requiring continuous availability.
Menopause Action Plans: Large businesses will need to produce menopause action plans demonstrating support for employees going through menopause. Labour will provide guidance on supporting such employees, aiming to promote a more inclusive workplace.
Navigating Change: Business Immigration and Collective Redundancy Consultation
Business Immigration: Labour plans to reduce net migration and reform the points-based immigration system, imposing new conditions on employers to train UK-based workers and introducing workforce and training plans for specific sectors. This could lead to skill shortages and increased recruitment costs, necessitating investment in local talent development and training programmes.
Collective Redundancy Consultation: Labour plans to change the rules around collective redundancy consultation, basing the obligation on the number of employees impacted across the business rather than at a single workplace. This aims to provide better protection for employees but will increase administrative burdens for businesses.
Protecting Workers: TUPE, Whistleblowing Protections, Tribunals, and AI
TUPE and Whistleblowing Protections: Labour aims to strengthen TUPE regulations and increase protections for whistleblowers, ensuring employees are not disadvantaged during business transfers and encouraging the reporting of wrongdoing. This will require enhanced legal protections and support mechanisms for whistleblowers.
Artificial Intelligence (AI): Labour plans to impose robust requirements around surveillance technologies and safeguard against discrimination in AI-driven decisions. This includes consulting with trade unions on high-risk technology and ensuring compliance with anti-discrimination laws.
Employment Tribunal: Labour proposes to increase the time limits for submitting Employment Tribunal claims to six months and remove the statutory cap on compensation. This aims to provide greater access to justice and fairer outcomes for claimants but may increase the burden on employment tribunals.
When to Expect These Changes
Labour has committed to passing a new Employment Bill within their first 100 days. However, it is unlikely that all legislative changes will be introduced within this timeframe. Some simpler proposals may be implemented early to demonstrate Labour’s commitment to improving workers' rights.
Overall, Labour's 'New Deal for Working People' promises comprehensive changes to employment law, aiming to enhance worker protections, promote equality, and ensure fair treatment across the workforce. Businesses will need to adapt to these changes, balancing compliance with operational efficiency.
Aurhor: Amy Jefferson, mlplaw Employment Law expert