Employment Law Digest July 2024 – We have a new Government, what comes next?

With a focus on protecting workers’ rights and promoting fair treatment in the workplace, the Labour Government has outlined a series of measures that will impact employers and employees alike- some proposals set to come into force in the first 100 days of power.

Employment Rights Bill

The King’s Speech on 17 July set out the Bills which the new Labour government intend to introduce. The main one in employment law terms is the Employment Rights Bill, which is expected to be in force by 12 October 2024: within the first 100 days of Labour being in power.

The Bill brings with it a whole host of changes, including: the plan to place significant restrictions on the ability of employers to “fire and rehire” employees, changes to day one rights to include: parental leave, protection from unfair dismissal, sick pay and flexible working, banning exploitative zero hour contracts, the creation of a Fair Work Agency, reforms around trade union laws and establishing a Fair Pay Agreement, amongst others.

Equal Pay

In addition to the Employment Rights Bill, plans for a Equality (Race and Disability) Bill have also been announced. The aim of this legislation is to ensure equal pay for disabled people and ethnic minorities. The government has also said that the intention is to remove any current barriers that prevent individuals from making claims for discrimination or unequal pay, although at present it is not clear what these barriers may be. The legislation will also introduce mandatory reporting for ethnicity and disability pay, in much the same way as exists for gender pay gap reporting.

Below we look in further detail at the proposed changes:

• National Living Wage

Labour has long been a proponent of raising the NMW to a level that provides a decent standard of living for all, and so the minimum wage is set to increase across the board, and the 18-20 age band will be removed, meaning that those in this age group will be entitled to the same level of pay as those in this age group will be entitled to the higher rate of pay currently applicable at age 21 and above. We are likely to see any changes enacted by next April.

• Unfair Dismissal law

As well as introducing new measures to prevent discrimination based on gender, race, age and disability, Labour have pledged to strengthen workers’ rights by introducing new regulations to protect employees from unfair dismissal. This will become a day-one right (currently the length of service requirement to bring this sort of claim is 2 years), subject to completion of a probationary period. The 3-month time limit for employees to bring an unfair dismissal claim will also be extended, although it is yet to be confirmed by how much. Although Labour is committed to introduce key changes within the next 100 days, this change will require significant consultation, a new ACAS Code and secondary and primary legislation changes.

Inevitably, this will lead to a likely rise in ET claims and a loss of the considerable flexibility employers have currently in relation to dismissing staff member with less than 2 years’ service.

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• New Employment Watchdog

A new Fair Work Agency will be established to oversee the creation of a watchdog that will be able to fine companies that breach employee’s rights such as holiday pay, sick pay and parental rights. This would merge the National Minimum Wage unit, the Employment Agency Standards Inspectorate and the Gangmasters and Labour Abuse Authority.

• Family friendly rights

In line with the new extended protection against redundancy for pregnant employees and those on maternity leave, the dismissal of those returning from maternity leave for 6 months is to be banned. This would be except for specific circumstances. Parental leave is to become a day-one right, but it is unclear yet is this applies to all types of parental leave.

Although there was talk of the introduction of a 4-day working week which would be a radical change to working patterns in the UK, insiders insist there are no real plans to do. It would be a decision for individual companies to introduce rather than a UK wide initiative. However, flexible working requests are to become a day-one right and Labour will be introducing a right to “switch off or disconnect” to promote work life balance. It is unclear what exactly this will entail.

• Zero-hours contracts

In addition to the introduction of the one status of worker, scrapping the current highly complex rules on employment status, there will be a crackdown on zero-hours contracts, which the government has widely criticised for their exploitative nature. Employers will be required to provide workers with guaranteed pay and hours and employees will be compensated for short notice change in shifts. Again, this is likely to significantly reduce the current flexibility employers enjoy in relation to this labour source.

• Trade Union reforms

A duty on employers to inform all staff of their right to join a trade union will come into force. The government also plan to simplify the union recognition process, repeal anti-strike laws around minimum service levels during public sector strikes and introduce the right for trade unions to access the workplace to recruit. This will require fundamental changes to legislation and will take time.

• Policies

Employers with more than 250 employees will have to publish menopause action plans.

• Sick pay

The government has said it will remove the lower earnings limit in order to make statutory sick pay available to all workers, as well as removing the waiting period so that sick pay is available on day one as opposed to day four. Again, these changes will require consultation and therefore won’t be implemented immediately.

Is 100 days too ambitious?

Now that Labour are in office, there is a lot of work to be done to implement its New Deal for Working People. There is the well-established policy of only implementing employment law changes in October and April rather than spread across the year and so if Labour do keep to this precedent, it will likely mean we won’t see changes until next Spring. Additionally, many changes may require codes of practice or substantial secondary legislation before being enacted, and this means many more months of drafting and consultation.

Fundamentally, we are likely to see a real shift in the employment law landscape, with significant impacts for both employees and employers alike.