Labour’s New Deal for Working People

The Conservatives have not yet published their employment law proposals but if re-elected, we can expect a continuation of their current policies. These include trade union and industrial action legislation, return to work and fit note reform and the possible re-introduction of Employment Tribunal fees.

It was back in 2021 that Labour published its Employment Rights Green Paper about wide-ranging reforms. Unsurprisingly, a number of those proposals are included again in the New Deal along with many others.

At the outset, Labour say that they will “deliver the biggest upgrade to rights at work for a generation”. If elected, they have indicated that they will introduce legislation within 100 days and will consult fully before legislation is passed and will engage widely with employers and trade unions. However, they recognise that certain aspects of the New Deal will take longer to implement.

We highlight some of the key proposals below:

Zero hours contracts and one-sided flexibility

Labour will end “one sided” flexibility and ensure there is a “baseline level of security and predictability”. They will ban exploitative zero hours contracts and ensure that contracts reflect the number of hours regularly worked, based on a 12-week reference period. There is no intention to prevent employers from offering fixed-term contracts.

Fire and rehire

The practice of “fire and rehire” or the technical term, dismissal and re-engagement on new (usually less favourable) terms has become increasingly controversial over the past few years. An updated draft Code of Practice was published on 19 February 2024 and see our earlier article for more details Draft-code-of-practice.

Prior to the general election being announced, it was reported that the Code of Practice was expected to be brought into force on 18 July 2024. This was confirmed on 28 May 2024 but we don’t know what will happen if there is a new Government.

In the New Deal, Labour state that it is important that businesses can restructure to remain viable, preserve their workforce and the company when there is genuinely no alternative. However, this “must follow a proper process based on dialogue and common understanding between employers and workers”. Labour will ensure there are effective remedies against abuse and will strengthen the Code of Practice.

Basic day one rights

The proposal to confer day-one unfair dismissal rights has attracted considerable publicity. However, the New Deal makes it clear that this will not prevent fair dismissal, which includes dismissal for reasons of capability, conduct or redundancy, or “probationary periods with fair and transparent rules and processes”. It is important to remember though that there is already extensive protection from unfair dismissal from day one in many instances – for example, dismissals relating to whistleblowing, health and safety reasons and for trade union activity. Similarly, no qualifying period is needed to bring a discrimination claim.

Another proposed day-one right is in relation to statutory sick pay and that will involve removing the current waiting period (and the lower earnings limit).

Single status of worker

Identifying an individual’s employment status is crucial because this determines what employment rights, if any, they have. In the UK, there is a three-tier system: employees, self-employed or workers. For tax purposes there are only two tiers: employees and self-employed.

Labour are of the view that the three-tier system of employment status has contributed to the rise of bogus self-employment and propose a transition towards a simpler two-part framework for employment status: workers and self-employed.

This will be a difficult task. Identifying employments status has already resulted in many years of complex and high-profile litigation. Labour intend to consult in detail on this simpler framework. Unsurprisingly, this was one of the topics mentioned in the foreword to the New Deal that would take longer to review and implement.

Redundancy rights

Labour will strengthen redundancy rights and protections, for example, by ensuring the right to redundancy consultation is determined by the number of people impacted across the business rather than in one workplace.

Family-friendly rights

Flexible working will be the default from day one for all workers, except where it is not reasonably feasible.

Parental leave will become a day-one right. Currently 12 months’ service is needed for parental leave and 26 weeks’ service for shared parental leave.

It will be unlawful to dismiss a woman who is pregnant for six months after her return, except in specific circumstances.

The right to unpaid carers’ leave was introduced in April 2024 and Labour will “examine the benefits of introducing paid carers’ leave”.

Labour will introduce the right to bereavement leave for all workers. Currently, there is a right to parental bereavement leave.

The proposal to introduce the right to “switch off” has attracted headlines. The pandemic led to a change in working practices such as homeworking and hybrid working. It is accepted that for many people the boundaries between work and home became blurred. Labour will bring in the “right to switch off” and give workers and employers the opportunity “to have constructive conversations and work together on bespoke workplace policies or contractual terms that benefit both parties”. There are no other details at the moment.

Fair pay

The national minimum wage (NMW) introduced by a Labour Government came into effect in 1999. In the New Deal, that is described as one of the greatest achievements of the last Labour government.

Labour intend to go further by ensuring that the minimum wage is a real living wage that people can live on and will remove what they refer to as “the discriminatory age bands”. They will work with the Single Enforcement Body and HMRC and ensure they have the necessary powers of enforcement.

Voice at work

This comprehensive section of the New Deal looks at the important topics of strengthening collective bargaining rights, updating trade union legislation and ensuring industrial relations are based around good faith negotiation and bargaining. This will, in their view “end the Conservatives’ scorched-earth approach to industrial relations”. They will also simplify the trade union recognition process.

As expected, Labour will repeal the Strikes (Minimum Service Levels) Act 2023.

Equality at work

Labour is committed to tackling the gender pay gap. Although the gap is narrowing, it is slow progress. Large firms will be required to develop, publish and implement action plans to close their gender pay gaps. There will also be mandatory reporting of ethnicity and disability pay gaps for employers with more than 250 staff.

Regarding equal pay, Labour will implement a regulatory and enforcement unit for equal pay with involvement from trade unions.

Employers and trade unions will be encouraged to negotiate signing up to the Dying To Work Charter – a best practice charter for employing workers with terminal illness.

On the high-profile topic of the menopause, employers with more than 250 employees will be required to produce Menopause Action Plans about how they will support employees through the menopause. Guidance will also be published on issues relating to uniform and temperature, flexible working and recording menopause-related leave and absence.

Labour will also raise awareness of neurodiversity in the workplace and across society.

Rights at work

Currently, there are multiple different enforcement bodies reporting to different Government departments. A Single Enforcement Body for workers’ rights is proposed, with trade union and TUC representation. Proposals for such a Body were put forward by the Conservatives in 2019.

The time limit for bringing Employment Tribunal claims would be increased from three months to six months, which is in fact the current time limit for statutory redundancy and equal pay claims.

In relation to safer workplaces, Labour will work with employers, trade unions and other stakeholders to support the wellbeing of workers and their long term physical and mental health.

Labour will require employers to create and maintain workplaces and working conditions free from harassment, including by third parties. They will also strengthen the legal duty for employers to take all reasonable steps to stop sexual harassment before it starts. There are no details of what that duty will entail. Note that the Worker Protection (Amendment of Equality Act 2010) Act 2023 was expected to come into force in October 2024 and that would have introduced a duty on employers to take reasonable steps to prevent sexual harassment in the workplace.

Following the announcement about the general election, Parliament was dissolved on 30 May 2024. This means that all business in the House of Commons and House of Lords has come to an end. Some significant employment law changes were expected for the later part of the year and whether or not they progress at all, or in what form, won’t be known until after 4 July 2024. We will keep you updated.

Read the New Deal for Working People in full here.