Labour Government Employment Changes 2024

Introduction

In this Hot Topic, we consider the impact of the recent General Election, on the employment landscape and what it will mean for business owners and HR practitioners. We explore:

• The new parliamentary Bills that are to be introduced impacting employment
• Our recommendations for how businesses can prepare for these changes
• Legislation that has already been passed under the previous Government and that is due to come into force imminently

What will a new Labour Government do?

On July 17, we had the King’s Speech, in which King Charles III set out the Government’s commitment for the 2024/25 parliamentary year. This speech prioritised the Labour Party’s commitments set out in their manifesto. Several new Bills that will impact employment were introduced, and we expect to see them published after the summer recess. These are key Labour Government employment changes business owners should be aware of:

The Employment Rights Bill:

This Bill will introduce primary legislation that addresses the following:

Employment contracts and working arrangements

• Banning exploitative zero-hour contracts by giving employees a right to have a contract reflecting the hours they regularly work based on a 12-week reference period

• Introduce a right to give workers reasonable notice of work schedules and wages for shifts cancelled at short notice

• Adapt and build on the recently implemented changes to flexible working rules to ensure flexibility is a genuine default from day one, except when it is “not reasonably feasible”. This is already the default as of April 2024 so it’s unclear how things will change or what “reasonably feasible” will mean in practice.

These changes reflect a shift in employment law and are significant Labour Government employment changes that businesses should prepare for.

Our recommendation:

1. Audit your existing use of zero-hour contracts and review alternatives
2. Consider your current working practices for how you manage shift changes at short notice and when further detail is published, consider impact on employment contracts and pay.

Family leave entitlements

• Make parental leave a day one right for all workers

• Provide an entitlement to bereavement leave for all workers

• Strengthen protections for new mothers by making it unlawful to dismiss a woman who has had a baby, for the period of six months after their return to work (with certain exceptions).

These are crucial Labour Government employment changes, which reinforce employee rights from day one, and businesses will need to adapt accordingly.

Our recommendation:

1. Prepare for parental leave becoming day 1 right immediately
2. Establish separate absence recording system distinct from other policies for managing bereavement leave
3. Consider what additional support is required for maternity returners.

Industrial relations

• Make changes to the Trade Union Act 2016 and abolish certain rules on industrial action.

• All new starters to be informed of their right to join a Trade Union 

• Reinstating the School Support Staff Negotiating Body, to establish national terms and conditions, career progression routes and fair pay rates

• Making the process of statutory recognition for trade unions simpler.

• Creating a new right for workers (and union members) to access a union within workplaces.

These Labour Government employment changes aim to strengthen workers’ rights and will affect how businesses interact with trade unions.

Our recommendation:

1. Review existing Trade Union relations and the implications of developing these relationships.
2. Training for your HR and Senior Leadership team to improve their confidence and skills in working effectively with Trade Unions
3. Engage with your Trade Unions.

Pay and benefits

• Remove the lower earnings threshold for qualifying for statutory sick pay and to remove the waiting days, making it available from day 1 for all workers

• Remove the National Minimum Wage age bandings so all adults are entitled to the same minimum wage

• Change the criteria for determining the National Minimum Wage to ensure the cost of living is a factor when setting the minimum pay level

• Create a ‘Fair Pay Agreement’ to allow for sectoral collective bargaining in the adult social care sector

The Labour Government employment changes in this area will require businesses to review their current pay structures and ensure compliance with new minimum wage standards.

Our recommendation:

1. Audit your workforce to understand how many employees/workers will be impacted
2. Calculate the impact of removing the NMW age bands
3. Consider the impact of SSP changes
4. Consider ways to counteract the financial impact
5. Evaluate the impact on pension contributions.

Dismissals

• Unfair dismissal to become a day 1 employment right for all workers (subject to rules around probation periods)

• Further restrictions placed on the practice of fire and rehire (dismissal and reengagement)

These are essential Labour Government employment changes that aim to provide greater security for workers, and businesses must review their dismissal processes accordingly.

Our recommendation:

1. Audit your workforce to understand how many people
2. Ensure robust probationary procedures
3. Strengthen disciplinary, capability and redundancy procedures
4. Consider any current/forthcoming restructuring plans
5. Engage and consult with your workforce.

Enforcement 

• Create a single enforcement body to enforce employment rights, called the ‘Fair Work Agency’

Our recommendation:

1. Keep up to date with developments in this area as more information will be given as to the role of this new agency.

The Equality (Race and Disability) Bill:

This new Bill would:

• Enshrine in law the full right to equal pay for ethnic minorities and people with disabilities by making it easier to bring unequal pay claims. Current equal pay legislation is focussed on targeting sex discrimination, so this Bill proposes to expand this to include race and disability.
• Place a new duty on large employers (with over 250 employees) to produce ethnicity and disability pay gap reports.

Our recommendation:

1. Explore the practicalities of extending reporting on wider characteristics
2. Enhance policies and practices for equal pay.

The Digital Information and Smart Data Bill

This Bill is about how data can support economic growth and create a modern digital government that will improve people’s lives. It would improve current data laws to ensure greater protection by giving the Information Commissioner Office (ICO) greater powers, introduce legislation to place requirements on those who develop artificial intelligence models and will introduce a statutory basis to Digital Verification Services.  These are the services that enable individuals to participate in secure and trusted digital identification processes, such as when evidencing their legal right to work in the UK.

So, this is a far-reaching Bill covering all aspects of society but will inevitably impact on employment processes.

Our recommendation:

1. Spend time researching how AI is used in systems that are used in employment
2. Consider the businesses approach to AI and carry out an initial risk assessment
3. Prepare for use of AI within your business by creating an AI policy that governs its use in employment

The Children’s wellbeing Bill

Again, whilst not a specific employment Bill, this Bill does include proposals that would impact employment practices and specifically in safeguarding.  This Bill would make changes to current laws that would enable serious teacher misconduct to be investigated regardless of when the misconduct occurred, the setting in which the Teacher was employed and how the misconduct was uncovered.

Our recommendation:

1. Review current practices when recruiting teaching staff
2. Strengthen disciplinary procedures

Summary of key actions:

In summary, our recommendation for how you can prepare for these Labour Government employment changes include:

1. Audit your workforce
2. Audit your existing use of zero-hour contracts and review alternatives
3. Ensure employment records are up to date
4. Consider any current/forthcoming restructuring plans
5. Engage and consult with your workforce
6. Consider additional costs
7. Calculate the impact of removing the NMW age bands
8. Consider the impact of SSP changes
9. Consider ways to counteract the financial impact
10. Evaluate the impact on pension contributions
11. Ensure robust probationary procedures
12. Strengthen disciplinary, capability and redundancy procedures
13. Prepare to amend contracts and policies
14. Explore the practicalities of extending reporting on wider characteristics
15. Enhance policies and practices for equal pay
16. Prepare for immediate change to paternity leave becoming day 1 right
17. Consider what additional support is required for maternity returners
18. Establish separate absence recording system distinct from other policies for managing bereavement leave
19. Review existing TU relations and the implications of developing these relationships.
20. Training for your HR and Senior Leadership team
21. Management training

The Labour Manifesto

In addition to what was announced in the King’s Speech, there are several other areas of potential change that had been set out in the Labour Manifesto and ‘Make work pay’ document. These publications set out a broader approach to Labour’s commitment for the five-year parliamentary term and include:

• Introducing statutory carers pay
• Create a single status. Rather than differentiating employee, worker and self-employed and to have only employee or self-employed.
• Introduce a new statutory right for employees to have the right to disconnect from work. This would mean that all employees would have the legal right to turn their computers and phones off at the end of the workday.  This practice already exists in Ireland and Belgium and the models used in these countries will be considered for implementation within the UK.
• Introduce a Race Equality Act
• Introduce dual discrimination which will allow workers to claim discrimination based on a combination of protected characteristics rather than two individual ones
• Extend time limits for bringing tribunal claims from 3 months to 6 months
• Tougher penalties for employers breaching Tribunal orders, including personal liability for directors
• A requirement for employers with more than 250 employees to have a menopause action plan
• Make changes to the scope of collective redundancy consultation so that it is dependent on the number of redundancies across the whole business rather than at each establishment
• Enable employees to collectively raise grievances about conduct in their place of work in line with the current code for individual grievances
• Tackling the “Access to Work” backlog and improving access to reasonable adjustments to support employees with a disability in the workplace
• Reform of the Apprenticeship Levy, including giving employers flexibility to use 50% of funds towards existing staff and the creation of a Growth & Skills Levy.

New legislation coming into force

Alongside these proposed Labour Government employment changes, there are other developments that are set to be introduced in the coming weeks, which had been introduced by the previous Conservative Government.

September/October 2024: The Workers (Predictable Terms and Conditions) Act 2023

Announced on 5 September 2024, by the new Government, it has been confirmed that this piece of legislation will not be introduced.  Instead, Labour will be looking at legislation that limits the use of zero hour contracts and will be introducing a minimum number of hours to be written within each contract of employment.

1 October 2024: The Employment (Allocation of Tips) Act 2023

This legislation when in force, will give workers the right to receive in full, tips, gratuities and service charges that are paid by customers, and not for them to be passed on by their employer with deductions (except for tax and NI). As part of the legislation, it will require an employer to have a written policy where tips are awarded on more than an occasional and exceptional basis.

26 October 2024: The Worker Protection (Amendment of Equality Act 2010) Act 2023

Next month sees the introduction of a new legal duty requiring employers to take reasonable steps in preventing sexual harassment from occurring during the course of employment.

Whilst harassment has been unlawful for many years under both the Protection from Harassment Act 1997 (criminal law) and the Equality Act 2010 (employment law), this new duty, introduced under the Worker Protection (Amendment of Equality Act 2010) Act 2023 will give greater protection to workers and employees.

From October 26, 2024, under this new Act, employment tribunals will have a new power in which to increase compensation by up to 25% when they find in favour of the claimant for a claim for sexual harassment and the employer has breached their duty to take reasonable steps to prevent it.  In addition, the EHRC can take enforcement action, which could involve investigations and issuing warning notices.

You can watch our webinar that we ran last month and read our Hot Topic on the subject.

TBC: The Paternity Leave (Bereavement) Act 2024 

This is a piece of legislation was passed quickly in the months leading up to the General Election.  We are awaiting a commencement date set by the new Government.

This new entitlement would provide a new statutory right to partners where the mother of a baby/the primary adopter of a baby passes away.

Expected 2025: Neonatal Care (Leave and Pay) Act 2023

This is a piece of legislation that was passed some time back but has never had a commencement date.  However, the expectation is that it would come into force April 2025.

This new legislation will give employees a new statutory right to take a period of leave of absence when their baby requires neonatal care.

TUPE reforms

In May this year, under the previous Conservative Government, the Department for Business and Trade launched a public consultation on reforms to the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE). The consultation sought views from employers, Trade Unions, professional bodies on three proposals:

1. Reaffirming that only employees are protected by The Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE)

In Dewhurst v Revisecatch Ltd t/a Ecourier, the ET concluded that TUPE regulations were to be construed as to include “limb b workers” (casual workers, gig economy workers, agency workers) because in other areas of protection, they would be protected.  The consultation considers reversing this decision by making TUPE apply only to “employees”.

2. Removing the complex obligation to split employees’ contracts between multiple employers where a business is transferred to more than one new business

In ISS Facility Services NV v Govaerts and Atalian NV, the European Court of Justice ruled that a full time contract could be split between several employers when the TUPE transfer involved multiple employees transferring. The consultation is seeking views on this complicated position to look at how it could be simplified.

3. Abolishing the legal framework for European Works Councils.

Following Brexit, legislation was introduced that stopped the introduction of new European Works Councils with existing ones being allowed to continue.  The proposals set out in the consultation paper is to repeal the legal framework that allows these to continue.

Although the consultation to introduce change to TUPE legislation was brought in by the previous Government, it is unclear what the new Government will do with the results following the public consultation. However, the Labour Government employment changes are expected to strengthen the existing rights and protections for workers subject to TUPE processes, as committed in their manifesto.

We’re here to help

We understand the complexities that come with keeping up with the latest employment legislation, especially during times of significant change such as the upcoming Labour Government employment changes. Whether you need help navigating new laws, preparing your business for compliance, or managing everyday HR challenges, we’re here to support you.

Get in touch with us today by calling us on 0844 324 5840 or completing one of our contact forms.