New Deal talking points: How quickly can Labour implement its New Deal for Working People?

The Labour Party has ambitious plans for reforming employment law. It has promised to introduce legislation on its New Deal for Working People within the first 100 days of its new government. This means by 12 October 2024, now that Labour has won the general election held on 4 July 2024.

This doesn’t mean that new laws will be in place by 12 October 2024. It just means that Labour is committing to start the process as quickly as it can. In this article, we look at how long it might realistically take before key reforms start to take effect.

What will the legislative process look like?

The King’s Speech is scheduled to take place on 17 July 2024, shortly before parliament stops for the summer. This is the key first step for major legislative reform.

The King will almost certainly list a new Employment Rights Bill among the bills planned for the next session of parliament.  The Bill won’t include all of Labour’s proposed reforms but is likely to include many of the headline ideas. It’s not clear if Labour will table the Bill immediately or consult on a draft first, but it has promised a full consultation on implementing its New Deal.

Before being signed into law, the Bill would need to go through both houses of parliament. After that, many of the provisions still won’t take effect.  They may need substantial secondary legislation or codes of practice – or both – to flesh out the operational details.  Follow-up regulations and codes can take months to draft and be consulted on.

After all of that, there’s also a longstanding policy of only bringing in employment law changes in April or October, rather than drip feeding them throughout the year.  While Labour isn’t bound to stick with this, if it chooses to do so this could add more delay.

Even proposals that make it into the Employment Rights Bill could, therefore, take months or years to finally become effective.

What happened last time Labour came into power?

To help illustrate how long these reforms might take, we could look back to 1997……

Tony Blair’s Labour Party won the general election on 1 May 1997, having made the introduction of a national minimum wage a central part of its election manifesto. A National Minimum Wage Bill was introduced in parliament on 26 November 1997, and got Royal Assent on 31 July 1998. Detailed regulations then followed, and a consultation process. The National Minimum Wage eventually took effect on 1 April 1999 – so that’s nearly two years after Labour came into power.

So how quickly might the New Deal be implemented?

Unless and until Labour publishes more details, nobody can say with any certainty what’s going to be implemented when. But here are our thoughts on some of the potential quick wins, things that could potentially be driven though within the first two years, and things that will realistically take longer.

Possible quick wins for Labour – from now to April 2025

• National Living Wage. Labour has pledged that the NLW will take account of the cost of living and that the 18-20 age band will be removed. Normally the Low Pay Commission recommends a new rate in October - based on principles set by the government – then the rate takes effect on 1 April. Labour could set the Commission’s new remit immediately on coming into government, and ensure that a new cost-of-living-sensitive minimum wage takes effect from April 2025. Labour could abolish the 18-20 age band at the same time (this can be done by secondary legislation without going through any parliamentary process) although it might choose to delay that additional change, which could have a significant effect on businesses employing younger workers, pending further consultation.
• Tips Act. The new Tips Act – requiring employers to pass 100% of tips to workers - has already received Royal Assent and was expected to come into force on 1 October 2024. Labour has pledged to strengthen the law to ensure workers receive their tips in full. This is an easy win for Labour, since it involves simply enacting legislation that is already in place.
• Statutory sick pay reforms. Labour has promised to remove the need to wait until day four to receive SSP and the requirement to earn above the lower earnings limit to qualify. Both changes require primary legislation and are expected to be made via the Employment Rights Bill.If the Bill achieves Royal Assent very quickly, it’s just about possible that these changes could be made in April 2025, as they won’t require any substantial follow-up regulations to bring them in.
• Trade Union law repeals. Labour has pledged to change the law around trade unions in several ways. This includes repealing certain anti-strike laws including, for example, the laws around minimum service levels during public sector strikes.These repeals seem likely to take effect instantly when the Employment Rights Bill receives Royal Assent.
• Day 1 parental/paternity leave? Labour has promised “day 1 parental leave”. It’s unclear if this means parental leave within the strict (limited) legal meaning of that term, or any kind of right for parents to take family leave. Parental leave (the right to take up to 18 weeks’ unpaid leave until a child is 18) currently has a one-year qualifying period, which could be scrapped relatively easily using powers in existing legislation (but this type of leave is hardly ever used). Paternity leave (the right to take paid time off around the birth or within the first year) currently requires six months’ employment and Labour could also scrap this under existing powers. It’s therefore conceivable that these reforms could happen very quickly, although much depends on how much consultation Labour plans to do first.
• Predictable Terms Act? The Predictable Terms Act gives workers the right to request (but not to have) a more predictable contract. It has already received Royal Assent but needs accompanying regulations to bring it into force. It was expected to come into force in September. The Act falls a long way short of delivering what Labour wants to achieve for zero-hours workers, but it’s conceivable that Labour could choose to bring it into force as a stepping stone on the way to further reform.This is not something Labour has expressed a view about as far as we are aware.

Key priorities – within two years

• Right not to be unfairly dismissed from day 1. This is one of Labour’s headline proposals and we can reasonably expect it to be a priority. In theory, Labour could achieve this almost immediately - without any parliamentary approval - by using a power in existing legislation to scrap the current two-year qualifying period. In practice, however, this proposal is likely to be subject to extensive consultation particularly as to the new rules that are likely to be needed for dismissals during probationary periods, and an implementation period. It will also require an updated (or new) Acas Code of Practice, which will need to be consulted on. We don’t have a crystal ball, but it seems most likely that this will take effect in October 2025 or April 2026 at the earliest.
• Fire & rehire and TU reforms. Further restrictions on the practice of “fire and re-hire” and extensive reform of the law around trade unions are key pledges and we would expect them to be implemented within the first two years of the new Labour government.
• Bereavement leave. We’d expect the Employment Rights Bill to make provision for bereavement leave, but secondary legislation might be needed to bring the right into effect so this could take up to two years.
• Zero-hours contracts, right to contract based on average hours.Labour has made banning “exploitative” zero-hours contracts and creating a right to a contract based on average working hours one of its flagship proposals. We’d expect the Employment Rights Bill to include provision for this. It’s very unclear, however, how these new rights will operate in practice. Substantial consultation and secondary legislation will almost certainly be needed. It’s possible that new rights could take effect within the first two years but in practice this may be ambitious.

Longer term – not until towards the end of a first term of government

• Single worker status. Labour has said that it will carry out a full and detailed consultation on its plans to move towards a single worker status. This is an extremely complex and difficult subject to legislate on, so it may be that any changes will only take effect towards the end of the new Labour government’s first term in office.
• Single enforcement body (the Fair Work Agency). The Employment Rights Bill is likely to create this body, but as it seems inevitable that there will need to be extensive consultation about its remit, powers, staffing and funding, it may be years before it is fully up and running.
• Expansion of pay gap reporting. Labour’s plans to introduce ethnicity pay gap and disability pay gap reporting are also likely to take some time to implement in practice.
• Reform of family leave framework. Labour has suggested that it will review the family leave framework within the first year of coming into government. In the absence of any specific proposals at this stage substantial reforms are likely to be a long way off – not until the end of Labour’s first term in government at the earliest.

Conclusion

Labour has lots of other plans for employment law reform, as we’ve covered in our employment policy dashboard.We’re not speculating on the timing of all of them here, but it’s worth adding that the sheer volume of proposals seem likely to mean that some changes will need to be held back while others are prioritised. It is even conceivable that some changes will have to wait for a second term, if there is one. It’s hardly unknown for new governments of all stripes to discover that it is over ambitious to seek to pass all their manifesto commitments in one term.

In conclusion, employers should not worry too much about significant changes being rushed in by the end of this calendar year, despite all the talk of the first 100 days. Employment law reform takes time. The direction of travel is clear, though so, now that Labour has won the election, we are going to see very significant reforms sooner or later.

For more analysis of Labour’s plans and other articles in our talking points series, visit our Labour Policy Impact Hub.