Employment law solicitor, Charlotte Holman, discusses the employment law proposals set out in the King’s Speech.
With the election of the new Labour government and its pledge to introduce a ‘new deal for working people’ within its first 100 days in government, it is without question that we will see some significant changes being made over the coming months to existing employment laws.
Whilst many of the proposed changes Labour has put forward will require further debate and consultation over the detail before being passed into legislation, Labour has emphasised that it is committed to strengthening and enhancing employee rights and entitlements in the workplace. This has been confirmed in the King’s speech on 17 July 2024 which announced the government plans to ‘make work pay’ and will introduce legislation via an Employment Rights Bill to ‘ban exploitative practices and enhance employment rights’.
Although we are yet to see further detail in respect of the forthcoming Bill which is expected to comprise of a number of the proposals set out in Labour’s pre-election manifesto, employers will need to think about preparing their organisations for such changes and identifying potential areas of risk further to the new government’s commitment to enhancing employment rights in the workplace.
We will now take a look at some of the key pledges Labour has proposed it will look to introduce over the following months:
From day one, employees will have the right to protection from unfair dismissal (as opposed to requiring 2 years’ service before being eligible to bring a claim). It is envisaged that employers can still dismiss in the situation where an employee fails their probation provided the employer has followed a fair and transparent process.
Employers will need to consider reviewing and making changes to their current dismissal policies and processes to ensure they have a fair reason and go through a fair process before reaching a decision to terminate an employee’s employment where the employee has less than 2 years’ service. It will also be important for employers to review their probationary clauses to ensure this remains an effective tool in being able to fairly terminate employment, where it is considered appropriate and necessary to do so.
With Labour planning to merge the employment status of employee and worker this would potentially mean that those who would ordinarily be classed as ‘workers’ would also benefit from unfair dismissal protection as well as other rights and entitlements such as family related leave which, as it stands, is currently reserved for employees.
Currently, SSP is available to employees who have been off work with sickness for more than 3 consecutive days. SSP is payable for up to 28 weeks after the first 3 days which is known as the ‘waiting period’. For employees to be eligible for SSP, they must have average weekly earnings of at least the lower earnings limit.
Labour proposes to remove the 3 day waiting period and remove the lower earnings limit threshold to be eligible for SSP. This means that employees will be eligible for SSP from their first day of sickness absence, no matter how much they earn.
It is also envisaged that the rate of SSP will be increased.
Such changes will mean that employers will need to review their administrative and pay processes to ensure they remain compliant. Employers should also consider carrying out a review of their sickness absence and other related policies to ensure that such policies and processes can be effectively used in managing sickness absence issues given the likely increase in short term sickness absence as a result of the proposed changes to the SSP regime.
Under current employment legislation, there are three different categories of employment status. Put simply, these are ‘employee’, ‘worker’ and ‘self-employed’. The status of an individual is important for employment law purposes as ‘status’ will attach various different rights and entitlements to that individual. An ‘employee’ benefits from most of the rights and entitlements afforded by employment legislation whereas someone who is ‘self-employed’ has very minimal rights and entitlements in comparison.
As mentioned briefly above, Labour intends to merge the separate categories of ‘employee’ and ‘worker’ into one single status of ‘worker’. This would mean that those who were ordinarily classed as workers will receive greater protections and entitlements in line with employees under the new proposals.
‘Self-employed’ status would remain as a separate category under new legislation but with improved protections such as the right to a written contract and measures created to help recover late payments.
Employers should consider reviewing their current staff and determine who falls into what category e.g. employee, worker or self-employed. Where there are workers on the payroll, employers will need to consider and assess the financial impact arising from those workers potentially gaining additional employment rights and benefits (such as family related leave) and whether such costs will be sustainable or can be mitigated by the business.
Zero-hour contracts are a type of casual contract where an individual has no set or guaranteed minimum hours or pay. They are usually used to provide flexibility in a variety of sectors such as hospitality and care work where work levels might fluctuate at different times. In recent times, zero hour contracts have come under heavy criticism due to the lack of stability, benefits and low pay offered to workers under these types of arrangement.
Labour proposes to ban ‘exploitative’ zero hour contracts and give everyone the right to an employment contract reflecting the number of hours regularly worked over a 12-week reference period. It is not known what constitutes an ‘exploitative’ zero hour contract or whether Labour will look to introduce a set minimum number of hours as part of the changes.
Whilst such a proposal will inevitably need more fleshing out, employers should consider their current contracts and staffing arrangements. Employers will need to be wary of using zero hour contracts on a longer term basis and consider whether there may be alternative working arrangements which can be used to fulfil the same objectives or requirements which were intended to be met by the zero hour arrangement.
Under the new government proposals, Labour proposes to end the use of ‘fire and rehire’ practices where an employer dismisses the workforce and re-engages it on new terms which are generally less favourable. Employers may resort to this where they are looking to force through changes to employee contracts and employees refuse to accept such changes.
Labour intends to introduce effective remedies against the abuse of fire and rehire practices whilst acknowledging that some businesses may need to resort to such practices as part of a genuine restructure and where there is no alternative solution in order for the business to remain viable.
We have already seen the introduction of a new ACAS Statutory Code of Practice which comes into force today (18th July 2024) to limit dismissal and re-engagement so that it is used as a last resort. However, Labour has suggested that the latest Code does not go far enough and it will replace this and introduce a ‘strengthened’ Code of Practice.
No further details in respect of the envisaged changes have been given but on the face of it, the proposed changes would require employers carry out a proper consultation process with affected staff and have more than a ‘substantial reason’ for changing their terms of employment.
If someone wishes to pursue their claim in the Employment Tribunal then they will need to ensure that their claim is brought in time. Under the current regime, many employment claims have a relatively strict time limit of three months within which the claim must be brought although there are limited exceptions to this rule.
Under Labour’s proposals they have suggested that they will look to increase the time limit for all Employment Tribunal claims from three months to six months which in turn will likely lead to an increase in the amount of Tribunal claims being brought.
Additionally, with employees having a longer period of time to commence a claim in the Employment Tribunal, employers will need to stay alive to the risk that a claim may be pursued at a later date. It is sensible for employers, where they consider there may be a risk of a claim arising, that they put in preparatory work as early as possible and seek legal advice to explore their options.
At present, if an employer plans to make 20 or more redundancies within a 90 day period then it must consult collectively with employee representatives or Trade Unions on how it can limit or avoid the impact of redundancies. This requirement is currently only triggered if 20 or more employees are made redundant at one work place. If an employer has multiple sites and the overall number of affected workers at each site is below 20 then this does not trigger the collective consultation rules.
Under Labour’s proposals, collective consultation will be triggered where the threshold of 20 employees is met across the business as a whole. This would mean that employers will need to be even more mindful of triggering collective consultation where they are making multiple redundancies across different sites. Where collective consultation is triggered, the employer will be required to notify the Secretary of State.
In respect of TUPE changes, Labour mentions that they intend to strengthen the rights and protections for workers in a TUPE transfer. It is not clear what changes would be introduced by Labour but the use of ‘worker’ seems to denote an extension to workers to be protected under TUPE which is not the case under the current legislation where only employees are protected.
We have already seen plenty of changes in this area recently with the implementation of the extended redundancy protections, the right to unpaid carer’s leave and changes to how paternity leave can be taken. However, Labour considers more needs to be done in this area and has proposed to make various enhancements to existing family leave rights which include:
Whilst the details of the proposed changes to extend and enhance family friendly rights will need to be confirmed in more detail, employers will need to think about their current family friendly policies and ensure these are updated to remain compliant when such changes come into effect.
The Labour government has proposed changes to the national minimum wage rates by removing the ‘discriminatory’ age bands and replacing them with a single flat rate minimum wage for all age groups. Labour also plans to expand the remit of the Low Pay Commissions to ensure that the national minimum wage rate considers increases in the costs of living.
As a result, employers will need to review their payroll to ensure compliance with such changes, especially paying attention to younger staff members who will likely be entitled to a pay rise as a result of such changes being brought in.
The right to disconnect or switch off gives workers the right to disconnect from work outside of working hours and not be contacted by their employer. Labour suggests that they will give ‘workers and employers the opportunity to have constructive conversations and work together on bespoke workplace policies or contractual terms that benefit both parties’.
Under its proposals, Labour has promised to introduce rights for trade unions to access workplaces in a regulated and responsible manner for recruitment and organising purposes. Currently, trade unions have no general rights to enter workplaces to recruit and organise members. There are some limited exceptions where an employer voluntarily agrees access arrangements or where the Central Arbitration Committee orders access as part of a statutory recognition application. So far, there has been little detail provided about the new rights of access and so further information is awaited on this.
There will also be a new duty on employer to inform all new employees of their right to join a union and to remind staff of this on a regular basis. This will be included as part of the written statement of particulars which all new workers receive when starting their new job.
Additionally, Labour states it is committed to enabling employees to collectively raise grievances about conduct in their place of work to ACAS. Again, there is not much detail to go on but it would seem that Labour envisages extending the current framework of the ACAS Code of Practice on Disciplinary and Grievance Procedures to apply to collective grievances raised by employees on matters of common concern.
Over the course of the next few weeks and months, we should begin to get a more detailed picture of the proposed reforms and the impact these will have on workplace policy and practice. What is inevitable is that significant change to employment legislation is high up on the agenda and employers will need to ensure they are prepared and able to adapt quickly to remain compliant with new employment legislation as it comes into effect.
Holmes & Hills employment solicitors have a wealth of experience and can advise employers on contract and policy amendments and HR policies as well as providing support for employment law disputes.
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