During its election campaign, Labour made it clear in its ‘New Deal for Working People,’ that it would introduce sweeping changes to employment law that would impact employers. The King’s Speech on 17 July provided us with some indication of the government’s priorities for the months ahead, with the announcement of a new Employment Rights Bill.
Labour said it would make big steps towards employment law reform in its first one hundred days in office, which takes us up to 12 October 2024. Given this stated goal, we expect a draft Employment Rights Bill any day now. However, even if details of these proposals are put forward soon, the main changes will likely be implemented much later, probably at some point next year.
7 Upcoming Employment Law Changes
We outline the 7 main proposed changes, what they mean for your business and what you should do to prepare for them.
1. Making Unfair Dismissal a Day-One Right
Labour plans to scrap the current two-year qualifying period and give workers a right not to be unfairly dismissed from the first day of employment. This would be a major change, making it possible for more people to bring an unfair dismissal claim. This change should make employers more cautious about hiring and encourage them to take a more thorough and considered approach to recruitment. It may also lead to a greater reliance on alternative options, such as using agency workers or fixed–term contracts.
Revised proposals, however, imply there may be exceptions to this where an individual is on a probation period. As a result, dismissals would still be fair if carried out during a probationary period, but only after following a fair and transparent process.
We are currently awaiting more details on how this would work in practice. In the meantime, however, given that probation periods to evaluate new hires will become essential, you should consider reviewing your contracts to ensure you have well-defined, adaptable and lengthy probationary periods.
2. Banning ‘Exploitative Zero-Hours Contracts’
Labour plans to ban ‘exploitative’ zero-hours contracts to give employees more predictability regarding their income. It seems it has stepped back from a total prohibition on zero-hour contracts and will, instead, bring in a new right to a contract that reflects hours regularly worked (based on a 12-week reference period). Labour also wants to introduce a right to give workers reasonable notice of work schedules and wages for shifts cancelled by employers at short notice.
Labour has also scrapped the Workers (Predictable Terms and Conditions) Act 2023 which was introduced under the previous Conservative government. This would have given workers a right to request a more predictable working pattern, but Labour wants to go further and introduce a right to ‘have,’ not just ask.
It would be prudent to start auditing your existing use of zero-hour contracts and review alternatives. You may also want to think about your current working practices for managing shift changes at short notice.
3. Family Leave Entitlements
To strengthen the rights of new mothers, it will be unlawful under Labour’s proposals to dismiss a woman who has had a baby for six months after her return to work, except in exceptional circumstances.
Parental leave is also to become a day one right for all workers and all workers will also be entitled to bereavement leave.
It is worth reviewing your existing family-friendly policies and benefits to see whether changes are necessary. Also, consider establishing separate absence recording systems distinct from other policies for managing bereavement leave.
4. Simplifying Employment Status
Labour has outlined plans to move to a simpler two-category framework whereby people are classified as either ‘workers’ or ‘genuinely self-employed’ for the purposes of workplace rights and protections. Currently, there are three categories – employees, workers and self-employed and each group has different rights and protections. The change will likely involve the extension of certain rights such as unfair dismissal to individuals currently classified as workers.
Since this is a substantial change to employment law, it would be preceded by a detailed consultation. As a result, we are not expecting any changes to employment status in the short term.
5. Removal of the Three-Day ‘Waiting Period’ Before Statutory Sick Pay (SSP) is Payable
Labour will remove the three-day waiting period before statutory sick pay is payable. This means workers would qualify for SSP from their first day of absence rather than day four as is currently the case. The lower earnings limit would also be removed so that very low earners would also qualify for sick pay.
6. Ban on Unpaid Interns
Labour has stated that it will introduce a ban on unpaid internships unless they are part of a recognised training or education program.
7. National Living Wage
The NLW went up significantly in April 2024, but Labour wants to further improve it by linking it to the cost of living. As a result, it has asked the Low Pay Commission to take account of the cost of living when proposing the April 2025 rates.
Labour has also pledged to abolish the 18-20 age band, which presently permits employers to pay a lower hourly rate to those under twenty-one. This would have an impact on the retail, leisure and hospitality sectors, where under twenty-ones are frequently employed. The changes will put considerable pressure on employers as they are already grappling with an increasing wage bill.
Here to Help
We understand the complexities that come with keeping up with the latest employment legislation, especially when it involves significant reform such as the upcoming Labour government employment changes. We will continue to update you as more details on the new laws are disclosed.Furthermore, our expert employment team is on hand to help navigate the new laws and to prepare your business for the changes on the horizon. Contact us today at 0300 303 2071 or email us.
