Fiona Hamor: What will a Labour government bring to UK workforces?

The votes have been counted, the polls are now closed, and the anticipation of a Labour Government has become a reality, highlights Fiona Hamor.

As Sir Kier Starmer’s assembled Cabinet gets to work, many will be revisiting the Labour manifesto and the bold promise to ‘introduce new legislation in Parliament within 100 days of entering government’.

Statement appointments, such as James Timpson as non-political prison minister, have certainly grabbed the headlines and whetted people’s appetite about what’s to come. But it’s the role of newly appointed Secretary of State for Business & Trade, Jonathan Reynolds, that will be of most interest to those in HR and employment.

While Labour’s manifesto was light on the detail, it did give us an indication of where possible reforms may come and where Reynolds will set his sights early on in his tenure.

‘Make work pay’

Labour pitched itself as the party that will ‘make work pay’ for working people, in a bid to improve both living standards for those in employment and economic growth. This includes stimulating more funding for training, skills and technology, to help make the UK more efficient and increase productivity levels – something we currently lag behind on compared to our international peers.

An important dynamic in the productivity debate is how workforces function and the legislation that sits around them. So what could we see over the coming months from Labour when it comes to employment law and HR? Let’s look at the detail.

Basic day one rights

Labour has indicated that it wishes to address what it sees as the unfairness of the current system that requires employees to have two years’ continuous service* before they can bring a claim of ordinary unfair dismissal. The party believes this is an arbitrary requirement which is preventing people from changing jobs and enjoying the resultant wage increases that often accompany such moves, and preventing employers from being able to hire the best candidates.

An unintended consequence of the two-year bar has been a rise in the number of discrimination claims brought by employees seeking to find a remedy for the termination of their employment in its early stages. It will be interesting to see if such claims reduce if the right of unfair dismissal becomes available from day one.

Labour has assured employers that they will still be able to operate probationary periods, although how this will work in practice is not yet clear. Commentators have speculated that perhaps dismissals within an employee’s probationary period will be deemed fair so long as a set process is followed.

*It is worth flagging a point that often catches employers out. Where an employee is dismissed with immediate effect and paid in lieu of notice, the statutory minimum notice period of one week is added on to the dismissal date, meaning that employees dismissed after 103 weeks (one week less than 2 years) can still claim unfair dismissal.      

Zero hour contracts

Labour’s plan to ‘make work pay’ includes ending “one-sided” flexibility by banning “exploitive” zero-hour contracts and providing a baseline level of security and predictability for all jobs.

The party believes that too many working people face insecurity when it comes to their working hours, bearing all the risk and being unable to plan and live well. However, the inclusion of the word “exploitive” suggests that Labour has moved away from its earlier pledge for an outright ban on zero-hours contracts.

Under Labour’s proposals, everyone will have the right to have a contract which reflects the number of hours typically worked by reference to a 12-week period.  Workers will also be entitled to receive reasonable notice of any change in shifts or working time, whilst also receiving compensation (proportionate to the notice given) for any cancelled shifts. Anti-avoidance measures will be implemented where necessary to protect the integrity of these policies.

The plans will not prevent workers from the right to be paid overtime rates, nor will it prevent employers from offering fixed-term contracts such as seasonal work.

Right to switch off

To address what it describes as the ‘inadvertent blurring of the lines’ between work and home life caused by the change in working practices following the pandemic, Labour has committed to bringing in a ‘right to switch off’.

This isn’t a new concept. We can look to a number of European countries which have already given employees some form of right to disconnect, including Ireland. A voluntary code of practice states that employees should not be required to carry out work outside normal working hours regularly and should not be penalised for refusing to do so. The code also sets out that employees must respect their colleagues by avoiding work-related contact outside of normal working hours.

Labour’s proposal indicates that it will follow a model similar to that adopted in Ireland, ‘giving workers and employers the opportunity to have constructive conversations and work together on bespoke workplace policies or contractual terms that benefit both parties.’ It seems most likely at this stage that a code of practice will be introduced which can be taken into account by employment tribunals on liability and compensation, but does not in itself create a standalone claim, much like the current Code of Practice on Disciplinary and Grievance Procedures.

Discrimination, equal pay, and the menopause

Labour’s ‘New Deal for Working People’ plan also includes proposals to promote equality, by tackling the gender pay gap and providing support in the workplace for those going through the menopause.

Large firms will be required to develop, publish and implement action plans to close the gender pay gap. Similarly, employers with more than 250 employees will be required to publish information about ethnicity and disability pay gaps.

There is also a commitment to re-instate the ability for equal pay claimants to draw on comparators in other organisations, where workers’ terms and conditions can be attributed to a single source, and to put a stop to employers outsourcing services to avoid paying equal pay. Labour plans to implement a regulatory and enforcement unit for equal pay with involvement from trade unions.

In relation to the menopause, businesses with more than 250 employees will be required to produce Menopause Action Plans, setting out how they will support employees going through the menopause. For smaller employers, Labour will produce and publish guidance on measures relating to uniform, temperature, flexible working and how employers should record menopause related leave and absence.

Working in partnership with trade unions

Unsurprisingly, one of the areas of employment law that the new Labour government plans to address is industrial relations.

Its stated aim is to bring in a new era of partnership that sees employers, unions and government working together in co-operation and through negotiation, rather than what it describes as ‘the Conservatives’ scorched earth approach to industrial relations.’

As a starting point, Labour plans to repeal the trade union legislation brought in by Conservative governments over the past 14 years, specifically, the Trade Union Act 2016, the Minimum Service Levels (Strikes) Bill and the Conduct of Employment Agencies and Employment Businesses (Amendment) Regulations 2022.  In particular, repeal of the Trade Union Act 2016 would potentially remove the requirement for at least 50% of all eligible members to vote in a ballot for industrial action in addition to a majority vote in favour, and reinstate the previous minimum period of seven rather than the current 14 days’ notice of strike action.

Referring to the disruption caused by strike action over the past two years, Labour believes its proposals will remove the barriers that currently make it harder for unions to engage in the bargaining and negotiation that settles disputes, and put the UK in line with high-growth economies that benefit from a more co-operative industrial relations culture.

A matter of time

If the manifesto is to be believed, we could see the employment landscape change quite quickly as Labour implements its new deal for working people within the first 100 days in government. Over the coming months, it’s essential that businesses keep a watchful eye over a changing landscape to ensure their policies and procedures keep up with the changes.

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Fiona Hamor is a Partner at Pannone Corporate.