On 17 July 2024, King Charles addressed the Nation for the first time since Labour’s Kier Starmer was elected as Prime Minister.
Within his address, the King spoke about the new Government’s plans to reform employment rights, in a bid to ‘make work pay’. But what is Labour proposing? …
It is proposed that a new Employment Rights Bill will be introduced, and labour has committed to introducing this within the first 100 days’ of being in Government. However, realistically the new laws are not likely to come into effect within this 100-day period. This is because the bill will need to be passed through Parliament once it has been tabled, which could take some time.
Whilst it is not clear exactly what the bill will look like yet, it is expected that it will include the pledges made within Labour’s election manifesto earlier this year.
Introducing basic rights to Employees from day one
At present, under the Employment Rights Act 1996 (ERA), an employee must have at least two years length of service before they accrue the right to pursue a claim for unfair dismissal at the Employment Tribunal or, become entitled to receive redundancy pay. However, this has not always been the case. Over the years this position has fluctuated, depending upon the political party in power. The qualifying period was one year from 1999 until 2012, which was when the Conservative party re-introduced the current minimum qualifying period of two years.
Although this position has changed over the years, Kier Starmer’s Government would be the first Government in UK history to remove the qualifying period all together.
Single Status Worker
Labour have proposed the possibility of implementing a a ‘single status’ worker, thus ending the current distinction between an employee and a worker and creating a two-part framework for employment status that distinguishes between workers and self-employed individuals. This proposal has been in contemplation before, most recently by the Conservative Government in 2018.
The distinction between a worker and an employee has been a consistent area of contention in case law for a long time. So, some might argue that the removal of this distinction would be a way of avoiding litigation surrounding the issue.
The implementation of a single status worker will also allow those who would traditionally be considered as workers, the right to bring an unfair dismissal claim to the Employment Tribunal, considering that under current rules, only employees hold this right.
It is important to note that this issue was not mentioned in the King’s Speech. So, whilst it still forms part of the Government’s proposal, it is likely, given the potential significance of this change in law, that it will be heavily consulted on before being implemented.
Changes to Statutory Sick Pay and Increased Minimum Wage
It is expected that Labour will increase National Minimum Wage (NMW) before April 2025. It is proposed that NMW bands for adults will be removed, and that NMW will be increased to reflect the ‘genuine living wage’. Currently, NMW for people over the age of 21 is £11.44, whereas it is reported that the ‘genuine living wage’ is £13.15 per hour in London, and £12.00 per hour in areas outside of London.
Changes are also expected with regards to Statutory Sick Pay (SSP). Labour proposes to increase the rate of SSP, which is currently set at £116.75 per week, remove the ‘Lower Earnings Limit’ of £123 week so that more people will be entitled to SSP, and remove the current 3 day ‘waiting period’ (the period before the right to receive SSP kicks in).
Banning Exploitative Zero-Hours Contracts
The King’s Speech also confirmed Labour’s plans to ban ‘exploitative’ zero-hours contracts.
Whilst it is not clear yet, the wording of Labour’s proposals, i.e. the use of the word ‘exploitative’, would indicate that there will not be an outright ban on zero-hour contacts, which can be useful for employee’s who enjoy the flexibility attached to these types of contracts. Instead, it may be that we can expect that there will be more security offered to employees on zero-hours contracts, who wish to request permanent/more regular hours.
Additional changes expected
Some additional changes which are expected include:
- Increased flexible working rights for employees
- Increased redundancy protections for employees on, or returning from, periods of maternity leave
- A ban on the practice of ‘fire and re-hire’
- Reform with regards to collective redundancy consultations
- Enhanced protection for whistleblowers
- Repeal of the Strikes (Minimum Service Levels) Act
- Changes to trade union engagement
Likely Impact
The changes proposed by the new Government are likely to give rise to an increase in claims being pursued to the Employment Tribunal. Particularly if the government makes good on the pledge to extend the right to pursue claims for unfair dismissal to all workers, and from day one of employment. Naturally, this will subject the Employment Tribunal to increased pressure and, therefore, potentially create even more delay for claimants and respondents pursuing claims through the Employment Tribunal. However, it has been said that to combat this, Labour’s plan is to continue with the move towards digitising employment tribunal claims, which the previous Government initiated by introducing ‘MyHMCTS’, which is a system allowing claimants and respondents to submit their claim/defence and correspond with the Employment Tribunal online.
Whilst these changes will likely be welcomed by workers and employees, by contrast, many employers may feel apprehensive and concerned about how best to prepare. It is important for employers to remember that whilst the changes are not likely to be immediate, they should continue to keep an eye out for updates and seek advice from specialists when necessary.
Our related article on Labour’s Proposed Reforms to Unfair Dismissal rules can be viewed here.
