What Can Employers and Workers Expect From the Labour Government?

Even before it came to power in July, Labour had set out plans for sweeping changes to workplace rights and protections.  We now wait to see how and to what extent those will be implemented.

The Kings Speech on 17 July 2024 outlined some of these substantial reforms, which are intended to improve what the Government views as outdated employment laws. In particular, it promised two new pieces of employment legislation: an Employment Rights Bill and an Equality (Race and Disability) Bill which are expected to be published in October 2024. 

Our employment law experts Nikola Southern and Kirsty Churm take a look at what we know so far about the main proposals and what they might mean for employers and workers.

Protection from unfair dismissal from day one

Currently unfair dismissal protection is afforded to employees with at least two years’ continuous service. The Government is proposing to make this available from Day One on the job.

While this would be a very significant change, the Government has said that employers will still be able to operate probationary periods to assess new hires, although how long this period will be and how it would work is unclear (the latest reports suggest the introduction of a maximum probationary period of six months).

So, what should employers think about?

• Tighten up your recruitment processes (reference checking, etc) to ensure that the right people are hired.
• Pay more attention to your probation periods and have clear processes, targets, milestones to assess suitability for the role and ensure this is done from the start of employment.
• Train your managers to ensure they follow through on these processes and provide constructive, thorough feedback throughout to avoid any difficulties terminating employment at the end of the probation period.

The right to switch off

Unsurprisingly this has caused quite a stir!  As with most of the proposals it is still not clear how this will be implemented, but it is likely to mirror the regime in either Belgium or Ireland.

Belgium passed legislation which in the private sector relates to employers with 20 or more employees.  Workplaces are required to have in place a written document on the right to disconnect outlining the practical arrangements for employees’ right not to be contactable after working hours and instructions for the use of digital tools to guarantee rest periods.  There are no specific sanctions for employers who have not implemented the right to disconnect, but this would be considered part of an employer’s general obligations regarding well-being at work

In contrast, Ireland has implemented a Code of Practice (not legislation) for all employers which is not legally binding, but can be used as evidence against employers in claims regarding breaches of employment rights.

The expectation in the UK is that the right will be implemented via a Code of Practice rather than legislation and that this would be after a period of consultation.  The Government is sensitive to ensure that the rules apply appropriately to each sector, so there is likely to be flexibility around what the right will mean and how it will be implemented across different sectors and workplaces.

It is not clear what the consequences of non-compliance will be.  The suggestion has been that breach of the new Code may result in an uplift to compensation awarded but there is no indication as to the level of that uplift.  It is also unclear whether the Code would apply to all employers, or if there would be exemptions for smaller employers or employers within certain sectors. 

It is not envisaged that breach of the right to switch off would give rise to a standalone claim in the UK.  Rather, breach (and any consequential uplift to compensation) would be claimed as part of some other relevant claim, but it is not clear what those other claims would be. 

So, what should employers think about?

• Monitor your employees’ workloads and ensure work is proportionately allocated.
• Encourage steps that support your employees’ ability to switch off (e.g. encourage the use of email footers which set out an employee’s working days/hours or which state that they do not expect a response outside working hours).
• Provide training on mental health awareness and on how to disconnect.
• Consider putting in place a right to disconnect/switch-off policy.  Although not a requirement (yet), this could be helpful in setting out your expectations and values. 

Flexible working

In April his year the law was changed to make the right to request flexible working a Day One right (as opposed to a right that applied after six months’ service) and to increase the number or requests that may be made in a 12-month period to two (from one).

The Government is now proposing to go even further, by making flexible working the default for all workers from Day One. This would shift the balance of power significantly from the employer to the employee.

The change will mean that all employers will have to accommodate flexible working “as far as reasonable” by default.  The key question will therefore be around what is “reasonable” in each case.  One can assume that that will depend on the role of the employee and the size, business and sector of the employer.

So, what should employers think about?

• Review your flexible working policy (if you have one) and consider what changes may be required.
• Consider what your justifications for refusing or amending flexible working requests would be if the eight existing reasons/justifications are removed.
• Carry out an audit of flexible working practices in your organisation and consider what works/could work in the event that further flexible working requests are received. 

Strengthening the protections of mothers and protection from sexual harassment

Labour intends to make dismissing an employee within six months of their return from maternity leave unlawful, except in specific circumstances.

While we don’t know what the “specific circumstances” will be, it is reasonable to assume that a genuine redundancy situation might be one.

Separately, on 26 October the Worker Protection (Amendment of Equality Act 2010) Act 2023 (passed by the previous Government) will come into force. This will place a new mandatory duty on employers to take “reasonable steps” to prevent sexual harassment of employees in the course of employment.  We consider this and steps employers can take to prepare for that new duty in our FAQs on this topic.

Labour wishes to go further by requiring employers to take “all reasonable steps” to prevent sexual harassment (a much higher hurdle) and by expressly including protection from third party harassment in the legislation. 

So, what should employers think about?

• With regard to the proposals around strengthening protections for new mothers, consider updating your redundancy policy (if you have one) and/or management training around dismissal and family-friendly rights.
• In relation to strengthened protection from sexual harassment, consider updating your policies, procedures and training (if you haven’t already) to include harassment by third parties and ensure that you strengthen steps already taken to comply with the existing new duty (see our FAQs for more on this).

Other proposals

The Government has said that Statutory Sick Pay should be available to all employees from the first day of sickness and they also want to remove the lower earnings limit on this.  This change is most likely to impact small/medium-sized businesses, given that larger businesses usually pay full pay from the first day of absence anyway.

The Government intends to ban “exploitative” zero-hours contracts (indicating a change to the rules governing these rather than an outright ban) and “end the scourges” of fire and rehire practices.  On the latter, it is unclear whether the Government has in mind a blanket ban, or changes to the existing statutory code of practice which came into force in July 2024.

The proposals for reform also include strengthening equal pay legislation to make it easier for ethnic minorities and disabled people to bring such claims and also the introduction of mandatory ethnicity and disability pay gap reporting for larger employers (those with 250+ employees). 

On pay gap reporting, the idea is that this would mirror the existing gender pay gap reporting model.  This is easier said than done, although some large employers are already doing this on a voluntary basis. 

It is unclear how equal pay legislation will be changed but it is difficult to see how any such claims will be “easy” to pursue as claims under the existing legislation are incredibly complicated, time-consuming and costly.

So what should employers think about?

• Consider whether the proposed changes to statutory sick pay would require changes to your existing sick pay policy.
• Carry out an audit of your contractual arrangements (zero-hours contracts in particular) and consider whether they are suitable for your business needs.  Monitor the hours worked by individuals on such contracts.
• Review the data you hold to understand potential gaps in the ethnicity and disability data that you hold.  Also consider reviewing the existing guidance on ethnicity pay gap reporting in preparation for what may come.

What is clear from all these proposals is that this could be biggest shake-up of UK employment law for many years. While there is still much detail to be worked out, there will undoubtedly be lots for employers to get to grips with in the months ahead to understand what these changes will mean for them.