UK election 2024: employment law reforms

Day one right not to be unfairly dismissed.

Labour would give employees the right not to be unfairly dismissed from their first day of employment (the shortest service requirement since unfair dismissal rights were introduced in 1971 has previously been 6 months). Employers could still dismiss an employee for failing probation but only after following a fair and transparent process. This would increase the process around probation and dismissal of new hires. It might make employers more cautious about recruiting and inclined to use alternative resourcing models such as agency work. Some employers might opt for fixed-term contracts but, since ending a fixed term contract counts as a dismissal in the UK, this would only manage expectations rather than avoid the new rules. These plans are also likely to significantly increase the number of tribunal claims. We have written about Labour’s plans for unfair dismissal in detail here.

Restrictions on ‘fire and rehire’.

Dismissing and offering to re-engage workers on new terms - or replacing existing workers with new workers engaged on new terms - would only be allowed as part of a restructuring for a business to remain viable and preserve its workforce when there’s genuinely no alternative. Labour would replace the new code of practice on ‘fire and rehire’ (which comes into force on 18 July 2024) with a stronger version. Further details are unknown, but the proposals would require employers to have more than a ‘substantial reason’ for changing terms (as currently required).

Thresholds for redundancy consultation.

Collective consultation requirements would be triggered if redundancies reach a defined threshold across the business as a whole, not looking at numbers within each site/workplace. This would bring the UK more in line with many EU countries. Labour has not said whether it would also amend the number of redundancies that would trigger collective consultation requirements (currently 20 within a period of 90 days). This plan would require multi-site employers to keep close track of redundancy numbers and would result in more collective consultation exercises.

Outsourcing/TUPE.

Labour says it would strengthen the rights and protections for workers transferred under TUPE (but has not said how). It would bring about the biggest wave of insourcing of public services in a generation, ensure that outsourcing can’t be used to avoid paying equal pay, and embed social value into the rules around public sector contracting.

Ban on ‘exploitative’ zero-hours contracts, and right to an average-hours contract.

With a view to giving employees more predictability in their income, Labour plan to outlaw ‘exploitative’ zero-hours contracts, introduce anti-avoidance measures, and bring in a new right to a contract that reflects hours that are regularly worked (as judged against a 12-week reference period). There is no detail on the minimum number of hours that must be guaranteed or the grounds (if any) on which employers would be able to resist an average-hours contract. Migrating employees to average-hours contracts could reduce flexibility (for both employers and employees), increase employer baseline costs, create resourcing challenges in sectors where demand fluctuates and potentially encourage greater use of self-employment models. Labour says the plans won’t prevent employees earning overtime or employers from hiring on fixed-term contracts including seasonal work. So it seems that seasonal surges could be managed either through hiring temps or offering overtime to regular employees.

We’ve written about Labour’s plans to rebalance “one-sided flexibility” here.

Right to reasonable notice of work schedules and wages for shifts cancelled at short notice.

This would add pressure on managers who create rosters. It’s unclear what exceptions will be introduced to address unexpected work shortage/increase.

Flexible working by default.

Labour says it will strengthen the right to request flexible working to ensure flexibility is genuinely the default from day one, except where it is not reasonably feasible. This would be a real policy change and could involve limiting the discretion for refusal and/or increasing tribunal powers to review employer decisions, but the specifics are unclear. Labour says it would mean that workers could benefit from flexi-time and term-time options, suggesting a focus on helping parents.

Right to disconnect.

Labour says it will bring in the ‘right to switch off’, giving workers and employers the opportunity to develop workplace policies or contractual terms. Details are unclear but the wording implies this could simply be a requirement to consult employees on a policy stance. Many employees don’t want to lose the flexibility to work around family and personal commitments and would resist a rigid approach. Labour mentions Ireland and Belgium as possible models. Ireland has a Code of Practice on disconnecting which has not resulted in significant change beyond email signatures and policy documents. Belgium initially gave employees the right to have a dialogue about disconnecting and then, in 2022, beefed up its rules to require that the relevant collective bargaining agreement/works rules address it – but there are no specific sanctions (yet). Both countries therefore have softer regulation than France, for example.

New single status of worker.

Labour wants – eventually – to abolish the UK’s current three-tier system for employment status. It wants a simple framework where people are either workers (both employees and those currently classed as ‘workers’) or self-employed. Labour accepts that this can’t happen quickly and that it needs further consultation. It’s not clear how rights such as sick pay and family leave etc would operate in highly flexible work models. Labour will also have to look at the tax regime - people with ‘worker’ status are currently generally taxed as self-employed but it would make little sense to have two groups with identical employment rights but different tax treatment. So will the new single status workers all be taxed as employees? This would increase employer costs (because of employer national insurance contributions) and (depending on the circumstances including whether those costs are passed on) create an incentive for individuals to argue for self employment.

Gig and other self-employed workers to have the right to organise.

Labour says it will ensure that self-employed workers enjoy the same improvements to trade union rights as workers, although it is unclear how this would work in practice.

Rights for the self-employed.

Labour would give self-employed people the right to a written contract, action to tackle late payments and extend health and safety and blacklisting protections to them. It’s not clear if all self-employed people would have the right to a written contract and if the client needs to supply the contract if the individual doesn’t provide their own contract.

National Living Wage.

The NLW jumped significantly in April 2024 but Labour would look to secure further improvements by linking it explicitly to the cost of living, ensuring that the Low Pay Commission’s remit is changed so that they must take account of the cost of living. Labour would also remove the 18-20 age band. This would especially impact the retail, leisure and hospitality sector, where under 21s are often employed.

Ban on unpaid internships.

Labour would introduce an explicit ban on unpaid internships except as part of an established training or education program.

Tips.

Labour would ensure workers receive their tips in full. This seems to be a commitment to continue with the Tips Act, which is already due to come into force on 1 October 2024.

Ethnicity pay gap reporting (for employers with 250+ employees).

Labour would make ethnicity pay gap reporting compulsory. The threshold is surprisingly low considering current guidance that employees need at least 50 employees in at least two out of five ethnic groups before they can report any meaningful data externally. It is possible that a more nuanced approach will emerge after consultation, but employers should be ramping up efforts to address incomplete data.

Disability pay gap reporting (for employers with 250+ employees).

This would be challenging to implement in a way that supports meaningful action to address inequalities given the current lack of consensus around what metrics to look at, how to ask about/define disability and the broad spectrum of disabilities. Detailed consultation seems likely.

Gender pay gap reporting - action plans to be published and outsourced workers to be included.

Many employers already tend to publish gender pay gap action plans. The inclusion of outsourced workers in gender pay gap reports would be material and would make pay gap reporting a bigger exercise, but it is currently unclear how this will work – will employers be given new rights to obtain pay data from outsourced service providers or exert control over what they pay?

Tougher sexual harassment regime. Sexual harassment likely to be treated as whistleblowing.

Employers will already come under a new proactive duty to take ‘reasonable steps’ to protect employees from sexual harassment in October 2024. Labour plan to raise the bar again to require employers to take ‘all reasonable steps’ to stop sexual harassment, including harassment by customers/third parties. This will be more challenging to meet. A key impact of always treating harassment as whistleblowing would be that a dismissed worker could claim ‘interim relief’ protecting their salary if they assert a link between their dismissal and a harassment allegation. Interim relief applications are urgent and resource-intensive. Labour might also look to strengthen the law around non-disclosure agreements although this is not explicit.

Race Equality Act

Labour would extend the right to make equal pay claims to black, Asian and minority ethnic and disabled workers. It would also enact the right to claim “dual discrimination”, where someone claims they have been discriminated against because of having two protected characteristics, such as because they are a Muslim woman. Extending the flawed equal pay regime to cover additional characteristics will simply make it vastly more complicated for people to complain about discrimination and this is a proposal that needs to be re-considered. We’d expect Labour to consult on these ideas before proceeding.

We have written about these ideas and their impact in more detail here.

Right for trade unions to access workplaces to recruit and organise.

Labour would introduce rights for trade unions to access workplaces in a regulated and responsible manner, on appropriate notice. This would be a big change to the current limited rights of entry ahead of a statutory recognition ballot. It is likely to include a new digital right of access enabling unions to get in touch with remote/platform workers. Unions may need to address their value proposition to the modern workforce before this is likely to result in a major increase in membership, but it’s likely to be regarded by unions as a significant win.

Simplify process of statutory union recognition and lower the threshold for a union to secure it.

Labour would grant recognition to unions if supported by a simple majority of votes in a statutory ballot. The current requirement that recognition must also be supported by 40% of those entitled to vote would be scrapped, as will the requirement to show that at least 50% of workers are likely to support recognition before the process can begin, making it easier for unions to secure statutory recognition.

Repeal of Strikes (Minimum Service Levels) Act 2023, Trade Union Act 2016,and introduction of electronic balloting.

These reforms would ease restrictions on industrial action, make ballot mandates easier to secure and scrap the minimum service levels which the current government is rolling out for public sector strikes. Electronic balloting would bring the law in line with modern technology and working methods.

Agency workers and strikes.

Labour says it would repeal the regulations allowing agencies to provide cover for striking workers. Those regulations have already been cancelled by the courts for being introduced without due process, so this proposal just preserves the existing position, in contrast to the current government which has been consulting on reintroducing the regulations in a legally-compliant manner.

Fair Pay Agreement in adult social care.

Back in 2021, Labour was pledging to roll out sectoral collective bargaining across all industries. Now, Labour is only going to do this in the adult social care sector, following which there will be a review to assess the benefit for other sectors. This approach may have limited success in the (predominantly state-funded) adult social care sector unless new funding is made available to enable higher pay rates to be negotiated.

Obligation to notify workers of their right to join a trade union.

The written statement of employment particulars (which must be given to all workers when they start a new job) would need to say that workers have the right to join a trade union, and all staff must be informed of this on a “regular” basis. This would require the updating of standard templates but seems unlikely to have a big impact.

Collective grievance process.

Labour says it will enable employees to collectively raise grievances about conduct in their place of work to Acas in line with the existing code for individual grievances. This is a confusing proposal. Individual grievances must be raised with the employer, not Acas. Nonetheless, this suggests that there would be a new process for workforces to raise collective grievances, possibly including the right to be represented by a trade union official even in non-unionised workplaces.

New protections for trade union reps and members.

The details haven’t been released but, Labour says it would give unions reps stronger protection from dismissal and create new rights for members in relation to intimidation, harassment, threats and blacklisting. As trade union reps and members already enjoy extensive protections, these changes are unlikely to be of major significance.

Ban on dismissing maternity returners for 6 months after return from maternity leave, except in specific circumstances.

Since 6 April 2024, women selected for redundancy have had the right to suitable alternative employment if they are pregnant (and have told their employer this) or if their expected date of childbirth was less than 18 months ago. Labour would go further and prevent the dismissal of those returning from maternity leave except in specific circumstances (to be defined). This could be challenging and arguably counter-cultural for even the most supportive employers, for example if the result is that better performing employees need to be made redundant instead. Presumably the new right would apply during maternity leave as well as afterwards – but that’s not made clear.

Bereavement leave to be introduced for all workers.

Many employers generally offer compassionate leave already but Labour would make this a statutory entitlement for all workers.

Paid carer’s leave.

The right to one week’s unpaid carer’s leave came into force in April 2024. Labour would look at making this a paid entitlement but is not promising to do so.

Parental rights review.

Labour would review the parental leave system within the first year of government. It would also make ‘parental leave’ a day one right. It’s unclear if this means parental leave specifically or any kind of right for parents to take family leave. For example, paternity leave currently requires six month’s employment and it seems highly likely that Labour would scrap this. There are no radical reform proposals currently on the table to overhaul the UK’s complex family rights framework.

Menopause action plans to be published (for employers with 250+ employees).

Many employers already have policies which could be converted into action plans.

Statutory sick pay reforms.

Labour would remove the waiting period so that statutory sick pay would be paid from day one of sickness (rather than day four) and remove the lower earnings limit so that very low earners qualify for sick pay. It’s not clear if Labour would also increase the rate of SSP, which remains low compared to other countries. The reforms would increase costs for employers who rely on the waiting period for any existing populations (e.g. employees on probation) or who have low earners (for example because they work very few hours) but it would assist those on very low pay who fall ill.

Terminal illness best practice.

Labour would encourage employers and trade unions to sign up to the Dying to Work charter. This sets out best practice around employing workers with terminal illness.

Guidance on working in extreme temperatures.

As the climate changes, employers will inevitably have to take more heat protection measures to meet their existing health and safety duties. Specific guidance could potentially help clarify rules and best practice.

Apprenticeship Levy reform

Labour would reform the apprenticeship levy and create a new, flexible, growth and skills levy.

Youth guarantee of access to training

Labour will create a youth guarantee of access to training, an apprenticeship, or support to find work for all 18-21 year olds.

Stronger protection for whistleblowers.

Labour says it will strengthen protection for whistleblowers but has not said how, except that it seems likely that employees who report sexual harassment will be automatically counted as whistleblowers (see discrimination).

Extension of time limits for bringing tribunal claims from 3 to 6 months.

This would increase uncertainty but also allow more time to resolve complaints before claims need to be filed. Overall, it is likely to result in more tribunal claims and tribunals will need to cater for this with increased resourcing and more judges.

New state enforcement body the “Fair Work Agency” with powers to inspect workplaces and take legal action.

More state enforcement of employment rights looks to be inevitable given the delays in the current tribunal system. For employers, however, state enforcement can sometimes be a blunt instrument lacking the careful scrutiny and assessment of an employment tribunal. Documentation and record-keeping will become more significant. The new body is likely to have powers to enforce working time, holidays, pay, sick pay, agency rules and ‘discriminatory practices against migrant workers’. It has been reported that this may also include parental rights, but it’s unclear if its remit would also extend to discrimination more generally.

Consultation on surveillance technologies

Labour would require employers to consult worker representatives before introducing surveillance technologies. Labour is rumoured to favour stronger regulation of AI -including a requirement on employers to monitor for bias or discrimination before deploying it - but the latest official proposals are non-committal. Although the TUC recently published its AI Bill, which would impose onerous risk assessment and consultation obligations on employers, the extent to which this might influence future Labour policy remains to be seen. The new EU AI Act is much further progressed and is going to impact employers in the UK as well as the EU.