Employment Law Overhaul? Labour’s Vision

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After Labour published their Green Paper “A new Deal for Working People” in 2022 there were numerous headlines about what changes they promised to make in their first 100 days if elected.

Now, off the back of their success in local council elections earlier this month and with a general election less than 6 weeks away, talk is once again turning to their proposals for the UK’s employment law landscape with rumours that a number of the promises made in the Green Paper may yet be watered down.

Employment law is ever evolving and since publication of the Green Paper in 2022 there have been various changes which may well make some of its suggestions less pressing. In particular, whilst Labour promised in 2022 to make flexible working a day 1 right, and to create an obligation on employers to create and maintain workplaces that are free from sexual harassment, two new statutory codes are due to come into effect this year which arguably achieve both of these aims (albeit in the case of flexible working it is a right to request flexible working not a right to work flexibly).

Similarly, when looking at the existing case law and statute there are other promises that are not as drastic as they first appear, protection against dismissal where employees refuse to accept less favourable changes to terms for example is arguably covered under unfair dismissal. Likewise, the working time of peripatetic workers has been considered to cover their travel time between sites for several years.

Whilst there are certain issues for which Labour wanted to implement solutions that are now less pressing, there do remain some promises that if enacted could have far reaching implications for not only employers but also tribunals. 3 particularly key ones are:

  • The promise to make protection from unfair dismissal a day 1 right (now rumoured to be made subject to probationary periods);
  • The promise to ban zero-hour contracts and instead require all contracts to provide for a minimum number of hours; and
  • The promise to create a single unified definition of worker entitling all workers to rights traditionally only enjoyed by ‘employees’.

Unfair Dismissal

All employees in England and Wales have the right not to be unfairly dismissed after 2 years continuous employment. This means that after 2 years an employer must have a potentially fair reason to dismiss the employee and follow a fair process in reaching its decision to do so.

There are 5 potentially fair reasons to dismiss:

  • Conduct
  • Capability
  • Redundancy
  • Breach of Statutory Restriction
  • Some other Substantial Reason

At present, an employee dismissed before attaining 2 years’ service will be unable to present a claim unless they are alleging their dismissal was related to discrimination or whistleblowing. If this qualifying period is removed, any employee may raise a claim for unfair dismissal irrespective of service and if as is now rumoured the right will accrue from the employee completing a probationary period, the proper use of probationary periods will become increasingly important.

A practical result of such a change will undoubtedly be increased administration for employers, and we may expect to see more employers introducing conditions to probationary periods to make it clear what its expectations for new employees are. We would also anticipate a large increase in tribunal claims, creating additional strain on the system. At a time when it may take up to 2 years for claims to reach final hearing in some areas, this is certainly a concern.

Zero-hours contracts

Zero-hours contracts are typically used for workers, though can be used for employees. Under these contracts an ‘employer’ is not obliged to offer the individual a minimum number of hours each week and will instead call on them as and when services are required. These are a very common form of contract within the hospitality sector where business demand fluctuates throughout the year and even from week to week. It’s also a popular contract for young workers, particular those in college or at university who are only picking up part-time or weekend work.

When used correctly these contracts provide flexibility for both parties, allowing the employer to offer work in a way that matches their needs and avoid finding itself over-staffed, whilst also allowing the individual to pick up additional work as and when they have availability to do so. There have been rumblings since the start of this month that suggest Labour may have backtracked on its initial promise to ban these contracts outright however at the time of writing Labour has not made any public comment on whether this promise is expected to change.

Defining Workers

In England and Wales, the term worker is a broad definition that refers to individuals providing services for another personally. Within the definition is the sub-category of employees who are those whose engagement includes ‘mutuality of obligation’.

Mutuality of obligation refers to the fact that an employer is obliged to give these individuals work for the hours specified in their contracts (if any), the employee is also obliged to work those hours. Employees enjoy extra protections (such as the right not to be unfairly dismissed) and rights (such as the right to statutory leave and pay) over their ‘worker’ counterparts, however they are also often subject to exclusivity clauses and restrictive covenants which limit their activities during employment and for a time thereafter.

Labour’s proposal to unify this definition is in reality a promise to extend those rights enjoyed by employees to the broader category of workers as a whole. Much like the promise to remove qualifying periods, this change would increase the administrative burden on businesses and is likely to result in an increase in claims.

The 100-day timetable

Whilst we wait for Labour’s revised employment plans to be published, rumours are also circling that the promise to deliver this ‘new deal’ in the first 100 days may also have been watered down.

100 days was certainly ambitious to make all the changes Labour previously proposed, however employers should be ready to adapt quickly in case the 100-day timetable remains for some of these promised changes.

If you’d like to read more about the proposals made by Labour in their 2022 Green Paper and what the current position is in England and Wales, you can view our summary table here.

(May 2024)