Employment law – what changes are Labour proposing?

With a General Election now in the diary for 4th July 2024, the outcome may result in some significant changes to employment law and workers’ rights. With Angela Rayner having committed to an Employment Bill within the first 100 days should Labour win the election, the employment team at Geldards look at Labour’s proposals for employment law reform in more detail.

Employment Bill within 100 days

At the TUC Conference in September 2023, Labour made a commitment that should it take power, it will introduce a new Employment Bill within 100 days of gaining power. Whilst we don’t know exactly what the Employment Bill will contain, Labour’s 2021 Green Paper ‘A New Deal for Working People’ and the leaked amended Green Paper of May 2024, provide helpful insight in relation to potential changes that may come into force.

Employment Status

The UK currently recognises three categories of employment status: employee, worker and self-employed with varying levels of employment rights attached to each category. Labour’s 2021 Green Paper proposes a change to employment status by replacing the current three-tier system with two categories: worker and self-employed.

Under this proposal, the status of ‘worker’ will encompass employees and workers. Under a two-tier system, workers will have the benefit of all employment rights that are currently enjoyed by employees, including sick pay, maternity pay, redundancy pay and flexible working as well as protection against unfair dismissal.

This would be a significant change in employment law and expand the scope of employment rights significantly. The leaked amended Green Paper suggests that Labour will consult on the proposal first. As a result, this may not be an immediate change included in the Employment Bill but it is certainly something employers need to keep an eye on.

Day One Unfair Dismissal Rights

Easily the most ‘headline-grabbing’ proposal in Labour’s 2021 Green Paper is the proposal to provide a day-one right to claim unfair dismissal.

This would not be wholly novel. Currently the qualifying period is two years, but in previous years, it has been one year and even six months. The right to claim unfair dismissal from day one would however be a significant departure.

The change may not however be as significant as the headlines may suggest. The leaked amended Green Paper states that dismissals will still be fair if carried out during “probationary periods with fair and transparent rules and processes”. Accordingly, the right to claim unfair dismissal may only kick in on successful completion of a probationary period.

This will likely result in employers wanting to introduce longer probationary periods. It would be advisable therefore for employers to consider their probationary clause for new starters now and review their performance management and disciplinary processes.

Time Limits and Compensation Caps

Labour’s 2021 Green Paper states that Labour will extend the time limit for bringing claims to the employment tribunal.

Most tribunal claims must be brought within three months of the act complained of. This proposal suggests that those time limits will be extended to allow claimants to bring claims for a longer period. How long that extension will be and in relation to what type of claim is unclear. Such a change would however make it easier for claimants to bring claims in time.

A Right to Disconnect

Following the likes of France and Belgium, Labour propose bringing in the ‘right to switch off’ for workers ensuring they are not contacted by their employer outside of working hours. This proposed change is a result of increased remote working and technological advancements and is intended to prevent homes from becoming 24-hour offices.

Whilst this had previously been presented as the introduction of a new right for workers, the leaked Green Paper suggests that this may simply be an obligation on employers to have “constructive conversations” about disconnecting. There is a question therefore over the impact of such an obligation in practice.

Pay Gap Reporting for Disability and Ethnicity

Since 2017, it has been compulsory for large employers (those with over 250 employees) to publish gender pay gap reports. In their 2021 Green Paper, Labour proposed to extend pay gap reporting to cover both disability and ethnicity.

However, there are concerns as to how this would work in practice. It is not always easy to categorise people’s ethnicity, nor is it easy to know whether someone qualifies as disabled without asking the question. Some employees would prefer not to say which causes issues in terms of the employer’s data.

Many employers will already be collecting data on workforce ethnicity and disability, if not it would be advisable for employers to start gathering preliminary data now in readiness for the introduction of any potential statutory reporting obligation.

Personal Liability for Directors

Labour’s 2021 Green Paper also proposes to implement tougher penalties for those who breach tribunal orders, including personal liability for Directors who were Directors of the company at the time of the alleged act or breach.

With that in mind, we would advise employers to check their director’s liability insurance to ensure it covers liability for tribunal awards.

Third-Party Harassment

In response to the globally recognised ‘Me Too’ movement, Labour proposed in its 2021 Green Paper to create and maintain workplaces free from harassment, including harassment by third parties.

If enacted, employers will be required to take active steps to prevent their customers, suppliers, visitors – basically anyone – from harassing their staff on the grounds of any of the protected characteristics under the Equality Act 2010.

The third-party harassment provisions are not new, these provisions were originally included in the Equality Act 2010 before being repealed in 2013. The Worker Protection (Amendment of Equality Act 2010) Bill was introduced in 2023. If reintroduced, these provisions would require employers to actively promote their stance on third-party harassment and the consequences of any breach. This may result in a new dynamic in the relationship with customers and suppliers that will need to be managed.

When are these changes likely to take effect?

There are a lot of ‘ifs’ in relation to the answer to that question. If Labour win the election and if they follow through on the promise to introduce an Employment Bill within the first 100 days, then we could see draft legislation as early as autumn this year.

Contact us:

If you have any questions or you would like support or further advice, please do not hesitate to contact the Geldards Employment Team below.