The Impact of Labour's Election Win on Employment Law

With the election resulting in a landslide victory for the Labour Party, what impact will this change in government have?  As a specialist senior associate solicitor in employment law in our BLHR & Employment Team, Karen Morovic is focused on how the new Labour Government will impact the relationship between employers and workers. Karen provides her analysis of the key expected changes below.

Labour intends to make significant changes in employment law, following a promised prior consultation with businesses and workers. We await the details of what is proposed, but the points below represent a first analysis of the potential impact that some of the changes will have.

A new Growth and Skills Levy combined with a more focused approach to the points-based immigration system

According to figures from the Office for National Statistics, the number of young people aged 16 to 24 who are not in education, employment, or training has increased, with the total currently estimated to be 900,000. Labour wants to reduce these figures dramatically.

Access to skills and talent remains of key importance for employers. Labour plans to introduce a new Skills and Growth Levy for businesses, giving employers the flexibility to create opportunities and secure the skills needed for growth. Businesses will be able to use up to 50% of the Levy for non-apprenticeship training. A new body, “Skills England,” will collaborate with businesses to create a list of approved qualifications and training.

With the focus on upskilling workers, Labour intends to minimise the recruitment of overseas labour without formally capping any immigration routes.  It also plans to reform the current points-based immigration system, where migrant workers from both the EU and outside the EU need to gain 70 points to be eligible to apply for a visa. The government also aims to ensure that the Migration Advisory Committee (an independent non-governmental body that advises the government on migration) works closely with government agencies to identify skill deficiency and how urgently those skills are needed and to reflect this in the points-based system for visa applicants.

Labour further plans to stop companies from sponsoring workers where they are not doing enough to foster work-based training.  Penalties for employers who fail to comply with employment law, including the national minimum wage, will include lengthening ineligibility periods for obtaining a sponsor licence.

Increased protection for workers and more penalties for those employers who seek a competitive advantage by undercutting employment rights

Labour has stated in its “Plan To Make Work Pay”, that they want “basic individual rights from day one for all workers.” These rights extend to unfair dismissal, parental leave and sick pay. It is significant that Labour refers to “workers” as opposed to employees as it also intends to introduce a single status of worker to replace the differentiation which currently exists between employees and workers who are not self-employed.

In most cases, an employee has to be employed for two years before they gain the right to claim unfair dismissal. Labour says this is too long to wait. It says the current system encourages employees to stay in jobs they would otherwise leave to avoid the loss of rights. Labour wants to encourage employees to move to better paid jobs with the knock-on benefit for employers who offer the best package for the best candidates. More job security is seen as a bonus for the economy, with workers more likely to spend their hard-earned salaries.  Labour will, therefore, introduce the right to claim unfair dismissal from day one of employment subject to the proviso that “probationary periods with fair and transparent rules and processes” can be used to bring employment to an end but stating that workers should not be dismissed without reason or cause.

To underline the above changes, the time limit to bring claims would be increased from 3 months to 6 months, with statutory caps for compensatory awards for unfair dismissal claims (currently £115,115 or 12 months’ gross pay) to be removed.

Parental Leave

Currently, parents who have been employed for more than a year can take up to 18 weeks of unpaid parental leave for each of their children until the child is 18 years old. Labour plans to make this a day one right. It is not clear if this will also extend to other family-friendly rights, such as paternity leave. We await further details.

Genuine living wage and statutory sick pay

Labour intends to remove age bands to ensure every adult worker obtains the same wage. It also plans to increase penalties for non-compliance. Statutory sick pay would no longer be linked to lower earnings limits (currently, an employee needs to earn an average of at least £123 per week) and would be available for all workers. The waiting period (currently, employees need to be ill for more than 3 days in a row to be eligible) would also be removed.

Zero-hour contracts

Labour proposes to outlaw “exploitative” zero-hour contracts and introduce a new right to an average-hours contract reflecting the hours worked against a 12-week reference period. We await further details as to whether a minimum number of working hours will be required or whether an employer will be able to resist such a change. Labour has said that employees will continue to be able to earn overtime, and seasonal work could be managed with the use of fixed-term contracts.

Reasonable notice of work schedules and protection of wages when shifts are cancelled at short notice

Labour intends to increase worker protection by requiring employers to give specific notice of shifts and to safeguard pay if shifts are cancelled at the last minute.

Whistleblowing

Increased protection for whistleblowers is expected, but we await the details of what this will amount to in full. Employees who report sexual harassment will automatically qualify for whistleblowing protection.

Expansion of equal pay protection

Equal pay protection currently limited to differences in sex will be expanded to include black, Asian and minority ethnic workers and disabled workers. There will also be a new concept of “dual discrimination” whereby a claim can be made for discrimination on the basis of having two protected characteristics. It remains to be seen how it will differ from a claimant bringing several claims for discrimination based on more than one protected characteristic, which already regularly occurs in the Employment Tribunal.

Duty to take all reasonable steps to prevent sexual harassment

In terms of sexual harassment, we know that from October 2024, employers will have a new duty to take “reasonable steps” to protect employees from sexual harassment. However, Labour takes this further to include a requirement to take “all reasonable steps” to prevent sexual harassment, including that by third parties, which had previously been dropped from the change planned for October 2024.

Maternity discrimination

Continuing with its plans to increase job security, Labour intends to make it unlawful to dismiss a woman who is pregnant for six months after her return to work, except in specific circumstances. We await the details as to how this sits alongside the current protection against pregnancy, maternity and sex discrimination, as well as the automatic right to be offered any suitable vacancies if at risk of redundancy 18 months after the expected week of childbirth or placement in adoption leave cases.

A right to bereavement leave

Labour intends to introduce a right to bereavement leave for all workers. Currently, parents who are employees are entitled to 2 weeks’ leave and statutory pay (assuming employed for 26 weeks) if they lose a child under the age of 18.

A right to have disconnect from work

Countries such as Ireland and Belgium have introduced rules requiring an employer to introduce a right to disconnect policy, which encourages employees to disconnect from work outside of working hours. There is, however, no absolute right to disconnect. Labour seeks to do something similar by encouraging a dialogue between employers and their workers to allow workers to disconnect more effectively from work without imposing a ban.

Increased Trade Union access

Labour has promised to introduce reforms that would increase the accessibility of unions for workers, as it views collective bargaining rights as key to tackling job insecurity, inequality, and discrimination.  Currently, there is no right for a trade union to enter workplaces to recruit and organise members. Labour is proposing that unions be allowed to give employers notice to access workplaces. There will also be right to join trade unions included in the employee’s terms of employment.

Collective grievances and expansion of collective redundancy consultation applicability

Continuing with the expectation that workers who act collectively are more effective, Labour will introduce a right for employees to collectively raise grievances to ACAS. 

Currently, employers proposing to make 20 or more employees redundant at a particular establishment must collectively consult. However, Labour would expand this by removing the establishment requirement. If 20 or more employees were at risk, regardless of what area of the business that risk was in, the collective redundancy consultation rules would apply.

Fire and rehire

The statutory Code of Practice on Dismissal and Re-Engagement, which is due to come into effect on 18 July 2024, will be replaced. Labour wishes to end the practice of firing and rehiring employees where terms and conditions of employment are varied and no agreement has been reached with the employee.

Artificial intelligence

Strong regulation of AI is another tenet of the new Labour Government. It requires employers to consult worker representatives before introducing surveillance technologies and to monitor AI for bias or discrimination before it is used in the workplace.

New state enforcement body the “Fair Work Agency”

To help counter the pressures on the Employment Tribunal system, a new body will be set up with powers to enforce working time, holidays, pay, sick pay, agency rules and discriminatory practices against migrant workers. It may also include the enforcement of parental rights.

In conclusion, as outlined above, significant changes are expected in employment law. We can assist you by keeping you updated as more details on changes are announced and helping you implement these changes in an effective and cost-efficient manner. If you have any questions about employment or our BLHR service, please get in touch with Karen Morovic or any member of the Employment Team. We will be happy to discuss how we can help.