The first week of a new Labour government – what should employers be doing?

Posted: 05/07/2024

Now that the election results are in, all eyes are on what the new government will do next. The Labour Party manifesto, Change, suggests that in the field of employment law, at least, significant changes are likely to be on the horizon.

While the new government is committed to publishing an employment bill within its first 100 days in power, some changes will take time to materialise, despite the Labour Party’s overwhelming majority in the House of Commons.

Further commentary from our employment and industrial relations specialists, providing detail on the changes, will follow over the next few weeks and months; however, as the dust settles on the election campaign, this article asks what employers should be doing right now to prepare themselves for the likely changes. 

Unfair dismissal 

One of the biggest changes proposed by Labour is reducing the qualifying period for making an unfair dismissal claim, and it is likely that all employees will have the right not to be unfairly dismissed, save during their probationary period where there will be a requirement for fair and transparent rules and processes. It will therefore be more important than ever for employers to ensure that processes are robust and that performance issues are tackled in a timely manner. 

• Review recruitment practices to ensure you have the right people in place.
• Do you operate probationary periods, and are they adequately monitored?
• Look at performance review and performance management processes – are they robust enough to pick up issues at an early stage?
• Should you be acting now to manage underperforming staff who do not yet have two years’ service?

Employment status

Labour proposes abolishing the status of ‘worker’, meaning only those who are genuinely self-employed will not benefit from employment rights, such as unfair dismissal. Similarly, it intends to ban ‘exploitative’ zero-hours contracts and ensure everyone has a contract in place which reflects the number of hours they regularly work over a 12-week reference period. 

• Consider your use of workers – are they likely to be reclassed as employees?
• Are your consultancy agreements robust? Can you engage more consultants to minimise your exposure as an employer?
• Restructure your staffing needs to remove reliance on zero-hours contracts. 

Flexible working, family friendly rights and benefits

Labour will make flexible working the default from day one, except where this is not reasonably feasible. It will also make parental leave a day one right, introduce a right to paid carer’s leave, and increase the National Minimum Wage and statutory sick pay.

• Monitor these changes and factor additional costs into your business.  
• Ensure your policies and procedures are up to date. 

Trade unions

Labour has historically been the party of the trade union, and this is set to continue, with the proposed repeal of the minimum service levels legislation and the Trade Union Act. 

The new government wants to encourage trade union membership, and will seek to ‘modernise’ the existing legislation in respect of industrial action, simplify the union recognition process, and introduce a duty on employers to notify staff of their right to join a union. They will also strengthen protections for union members. For many employers, this will increase the voice of the trade unions in their business, whereas for others this may mean working alongside trade unions for the very first time. As the unions get stronger: 

• if your workforce is already unionised, work to strengthen relations with staff side and ensure processes are clear and robust;
• understand the practicalities of dealing with a recognition request; and
• make sure you know how to handle a ballot for strike action.

The Labour Party has also indicated that it intends to make changes in other areas of employment law, including strengthening redundancy rights and protections for employees, abolishing the practice of ‘fire and rehire’, and introducing a ‘right to disconnect’ outside working hours. Labour has confirmed it will consult over any changes, and employers may wish to participate in any consultations in order to oppose, support or develop the future of employment law as we know it.

What is clear is that the next few months will bring a number of changes to employment law and are likely to pose challenges to employers. Employers who are informed about what these changes may mean, and who are proactive in adapting their business in anticipation of these changes, will be best placed to navigate this brave new world in employment law and industrial relations.

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