What are the Labour Party’s plans for employment law if elected?

With a General Election on 4 July 2024 and the Labour Party ahead in the polls, we take a look at what the Labour Party pledge to do on employment law if elected.

The Labour Party has set out plans for far-reaching changes to workplace rights and protections if elected. These changes will have a significant impact on employers and workers and reshape employment law as we know it. 

The plans are set out in the Labour’s Party’s "Plan to make work pay - Delivering a new deal for working people" published on 24 May 2024 which waters down some of their original proposals on employment law (as set out in their earlier paper and at last year’s Labour Party Conference).

Key proposals made by the Labour Party on employment law include:

Employment status

• A move to a simpler two category framework for employment status whereby people are classified as either ‘workers’ or ‘genuinely self-employed’ for the purpose of workplace rights and protections. Currently people are classified as employees, workers or self-employed and each group has different rights and protections. This would be a substantial change for employment law, and would be preceded by a detailed consultation.
  
  It is not clear what would happen in relation to tax. If employees and workers share an employment status, would they also share a tax status?  Many workers are self-employed for tax purposes, whereas employees are taxed through PAYE. This would have significant consequences for employers and workers.

Employment rights

• All workers would be afforded the same basic rights and protections, including sick pay, holiday pay, parental leave and protection against unfair dismissal. This would be a substantial change and would mean people who currently count as ‘workers’ would gain significant additional employment rights. It would likely lead to an increase in Employment Tribunal claims with workers being able to claim unfair dismissal, rather than just employees as is currently the case. A consultation is expected before this change comes into effect.
• Giving workers a right not to be unfairly dismissed from the first day of work (scrapping the current two-year qualifying period). This would be a major change leading to a far greater number of people having the right to bring an unfair dismissal claim, particularly with the right to bring an unfair dismissal claim also being extended to people currently classified as workers.
  
  Revised proposals suggest there may be exceptions to this in relation to probationary periods. There is a suggestion that dismissals would still be fair if carried-out during ‘probationary periods with fair and transparent rules and processes.’ Employers may want to review their contracts to ensure they have clear, flexible and lengthy probationary periods. 
• Removing the three day ‘waiting period’ before statutory sick pay (SSP) is payable. This means workers would qualify for SSP from their first day of absence rather than their fourth as is currently the case. The lower earnings limit would also be removed.
• A new ‘right to disconnect’ - giving workers the right to disconnect from work outside of working hours and not be contacted by their employer. This would follow the lead of some European countries like Ireland and Belgium.  Although it now appears that this pledge has been diluted somewhat. It is expected that workers would have the right to constructive conversations on the topic with management to develop approaches that work for the business, rather than a blanket right to disconnect.
• Making flexible working the default from day one for all workers, except where it is not reasonably feasible. Full details of what is being proposed are not clear, but this could be a significant change from the current position where the right is to request flexible working, as opposed to flexible working being the default position.

Family-friendly rights

• Making parental leave a day one right. There is currently a one-year qualifying period for parental leave. Parental leave gives parents the right to take up to 18 weeks’ leave – at the rate of up to four weeks’ a year – for each child over the course of their childhood. Parental leave is unpaid.
• Strengthening family friendly rights. Labour’s plans include extending statutory maternity and paternity leave, introducing a right to bereavement leave and urgently reviewing the shared parental leave framework. Labour would also make it unlawful to dismiss a woman during pregnancy or within six months of her return to work, except in specified circumstances. They also plan to introduce paid family and carer's leave.

Zero hours contracts

• New rules designed to prevent the abuse of zero hours contracts are planned. Initially an outright ban on zero hours contracts was proposed but this appears to have been revised. Instead, we understand employers will be allowed to continue to use zero hours contracts provided they are not "abused" or exploitative. We will have to wait for further details of when a zero hours contract will be classed as exploitative.
  
  This is likely to include a situation where the employer does not guarantee that any hours will be provided but the worker is obliged to be available for any work that is offered. A new law is planned to set out the minimum standards expected, and there would be a new right to a contract that reflects hours that are regularly worked (as judged against a 12-week reference period).
  
  It seems possible that the planned right to request a predictable working pattern due to come into force in September 2024 could be dropped to allow for Labour’s more radical plans in this area.

Fire and rehire

• Labour has committed to end the practice of "fire and rehire" as a lawful way to change an employee’s contractual terms. This would include reforming the law to provide effective remedies against abuse and a strengthened statutory code of practice in place of the one being brought into force by the current government on 18 July 2024.
• Labour have highlighted three potential areas for change on fire and rehire including:
  • improving information and consultation procedures, to make employers consult with their workforce and reach agreement about contractual changes
  • adapting unfair dismissal and redundancy legislation to prevent workers being dismissed for failing to agree to a worse contract
  • ensuring that notice and ballot requirements on trade union activity do not inhibit defensive action to protect terms and conditions of employment in situations where an employer is using fire and rehire tactics.

Redundancy

• Strengthened redundancy rights and protections, for example, by ensuring the right to redundancy consultation is determined by the number of people impacted across the business rather than in one workplace. This is a significant new proposal and would, in effect, reverse the Woolworths case in which it was held that it is the entity or "unit" to which the workers made redundant are assigned to carry out their duties that constitutes the establishment when counting the number of dismissals to determine whether the duty to collectively consult has been triggered.

Trade unions and industrial action

• Strengthened trade union rights, including:
  • Repealing:
    • The Trade Union Act 2016 - which introduced turnout requirements for industrial action ballots and increased the notice that trade unions must give of any industrial action from one week to two.  It also placed a six-month time limit on the validity of strike ballots, introduced additional requirements on the wording of the ballot paper and placed additional restrictions on picketing
    • The Strikes Act 2023 - which introduced powers for the government to set minimum service levels in specified industries and issue work notices to require certain workers to refrain from strike action.
• Trade unions would be permitted to use secure and private electronic balloting when engaging, communicating with and polling members. Allowing electronic and workplace ballots would make it much easier for unions to organise industrial action, as postal ballots are more time consuming and expensive to organise.
• Labour would simplify the statutory recognition process by:
  • removing the requirement for a trade union to show that at least 50% of workers are likely to support recognition for the process to begin
  • modernising the rules on the final ballot in which workers vote on whether to recognise a trade union, requiring unions to gain a simple majority.
    These measures would make it easier for unions to win recognition from an employer.
• Trade unions would be given a new right to access workplaces to allow unions officials to meet, represent, recruit and organise members, provided they give appropriate notice and comply with reasonable requests of the employer.
• Labour would introduce a new duty on employers to inform all new employees of their right to join a union and to remind all staff of this on a regular basis.  This will be required as part of the written statement of particulars that all new workers already receive when starting a new job.
• In a new proposal, Labour says that it will enable employees to collectively raise grievances about conduct in their place of work with Acas. This would be in line with the existing code for individual grievances.

Equality at work

• Further strengthening of harassment laws, including plans to introduce protection from harassment for interns and volunteers and to reintroduce protection from third party harassment.
• The introduction of ethnicity and disability pay gap reporting for employers with more than 250 employees.
• Gender pay gap reporting and pay ratio reporting rules would be revised to include outsourced workers.  Employers would be required to devise and implement plans to eradicate pay gap inequalities.
• Interestingly, there is no mention in Labour’s latest plans of equal pay rights being extended to black, Asian and ethnic minority employees and also disabled employees as was announced earlier this year.
• Large employers with more than 250 employees would be required to produce Menopause Action Plans, setting out how they will support employees through the menopause.

TUPE

• Labour would end the presumption in favour of public sector outsourcing and oversee the "biggest wave of insourcing of public services for a generation".

These are some of the key proposals that employers should be aware of, but there are others as well, including the possibility that time limits for bringing Employment Tribunals claims would be extended to six months.

These proposals are set out in Labour's Plan to Make Work Pay: Delivering A New Deal for Working People published on 24 May 2024. 

When would these changes happen if Labour are elected?

If elected, the Labour Party have promised an Employment Rights Bill to introduce reforms within the first 100 days. It is unlikely that most reforms would actually take effect that quickly, but we could see some changes fairly quickly on workplace law.

Labour say that some of their proposals could be acted on quickly for example, removing the lower earnings limit on statutory sick pay. They acknowledge that other plans will take longer to bring into effect. For example, a review of parental leave would take place within the first year of a Labour government and a detailed consultation would be undertaken on the proposal to move towards a single status of worker.

What about the other parties?

The Conservative Party has not yet announced its employment policies if it remains in power after the general election. If it does form the next government, it is expected that the current legislative agenda for employment law would continue. For example, introducing the right to neonatal care leave and pay which is currently due to come into force in April 2025.

It also seems likely that a Conservative government would re-introduce employment tribunal fees, and potentially go ahead with plans to cap the duration of non-compete clauses. Getting people with health conditions back to work has also been a key priority for the current government, so we could see more plans in this area.

The Liberal Democrats have not yet made any significant policy announcements on employment law, except in respect of parental leave.

On parental leave, the Liberal Democrats would give all workers, including self-employed parents, a day one right to parental leave and pay on the birth or adoption of a child. Each parent would get an independent entitlement to six weeks' leave. The six weeks of paternity leave would be paid at 90% of earnings, subject to a cap for high earners.

In addition, parents would benefit from a further 46 weeks of parental leave, to share between them as they choose. This entitlement would be paid at the rate of £350 per week, significantly higher than the current rate of statutory shared parental pay.

We do not currently have the full picture of what each party proposes and further plans are likely to be included in their respective manifestos when they are published.

Labour’s Plan to Make Work Pay: Delivering A New Deal for Working People – The Labour Party

A Better Start in Life for Every Child - Liberal Democrats