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How might Labour’s new proposals affect employers?

The Labour party has proposed a multitude of changes to employment law and, whilst some of these proposals have been watered-down from Labour’s original plans, they would still entail a large departure from the law as we know it. In this article we outline some of the key suggested changes and how they might affect employers.

Day one rights

There are multiple key rights within employment law, which can only be accessed by having met a qualifying time period. Relevant examples include:

  • Ordinary unfair dismissal claim – requires two years’ service.
  • Entitlement to statutory sick pay – only eligible on day four of sickness absence.
  • Parental leave – must have worked continuously for the employer for a year before being eligible.

Labour intends to remove these periods, providing employees with the above-mentioned rights from day one of employment and, in relation to sick pay, without a waiting period. These changes are intended to create fairer working conditions and would certainly provide employees with greater security in the first two years of employment.

Employers, however, would need to be alert to the suggested changes, particularly in relation to ordinary unfair dismissal. There will be increased risks when dismissing an employee with under two years’ service, who would then be entitled to bring a claim. Employers would need to actively manage concerns as they arise from the start of the probationary period and pay close attention to the procedures followed in relation to dismissal on the basis of conduct, capability or redundancy.

Status for employees

The new reforms intend to create one single status for employees, which will be referred to as ‘workers,’ who will all have the same basic rights and protections. This will cover all individuals, aside from those who are genuinely self-employed. This intends to combat situations where employers treat their workers as employees, yet in reality these individuals may have fewer statutory rights.

Employers would need to be aware of this, and the notion that workers would then be entitled to bring an unfair dismissal claim where they formerly could not.

Ban on zero-hours contracts

Another significant proposed change is the ban of zero-hour contracts, alongside ensuring that everyone has the right to have a contract that reflects the number of hours they regularly work. The aim behind this is to prevent ‘one sided’ flexibility.

For employees, this will provide more certainty and security in respect of their working pattern and subsequent income. Employers will be required to provide workers with reasonable notice of any change in shifts or working time.

However, the zero-hour contract provides flexibility, which many employers find desirable as the demand for work may vary, particularly in some sectors.

Ban on fire and rehire

Fire and rehire is a method utilised to make contractual changes, where the employee does not agree to the variations. Following a formal process, the employee is dismissed and then rehired under the new contractual terms. The practice is considered controversial, as the threat of dismissal can be utilised to force through changes and creates an unbalanced power for negotiation.

The Labour Party intends to ban this practice. Employers must be aware that should this be introduced, it may be increasingly difficult to introduce new terms which are challenged by employees, even where vital for the business’ success.

The right to switch off

The right to switch off has already been introduced in other European countries, including France. This proposal would mean that workers and employers have the opportunity to have constructive conversations and work together on bespoke workplace policies or contractual terms that benefit both parties. The intention behind this proposal is to improve work-life balance and ensure that working from home does not become homes turning into 24/7 offices.

Whilst we are yet to see how this would be implemented in practice, particularly where employees wish to work more flexibly and outside of their typical hours, it is suggested that this will pose a benefit for both employers and employees, reducing staff burnout and increasing productivity during working hours, alongside staff retention.

Increasing employment tribunal claim time limits

Under the current law, employees have three months to bring a claim before an Employment Tribunal in relation to unfair dismissal and discrimination, however Labour intends to increase this limitation period to six months, bringing the time limit for all claims in line with the time limit for statutory redundancy and equal pay claims.

The extension of the limitation period could have numerous effects. In one respect, this may encourage an increased number of claims, as individuals would no longer need to feel pressured to jump into litigation directly after exiting employment. However, the increased limitation period could have the opposite effect, providing former employees with some time to consider their employment and whether they actually wish to bring a claim, without having to rush into this decision. Nevertheless, there is of course the risk of the tribunal system becoming increasingly overwhelmed, as it already faces significant backlogs.

Comment

Employers should be alert to the results of the general election as the Labour proposals reflect a big departure from the current law and, as the intention is to implement an employment bill within the first 100 days of office, changes could be made swiftly.