Changes in UK Employment Law: As the summer break draws to an end and autumn approaches, many of us—including the new Labour Government—will be returning to work and school when Parliament reconvenes on September 2, 2024.

Labour has made it plain that there will be significant changes that will impact employers while it is in government, and it plans to take significant action in that direction during its first 100 days in office, which ends on October 12, 2024. We covered in our piece the ambitions of the newly formed Labour Government in the wake of the election results and Sir Keir Starmer’s July 5 appointment as prime minister.

Since then, the King’s Speech on July 17, which outlined the New Labour government’s priorities for the upcoming months, has added more flesh to the bone. The Employment Rights Bill and the Draft Equality (Race and Disability) Bill—discussed below—are the two employment law bills that were announced.

What is covered by the two employment bills?

1. Employment Rights Bill

It is expected that the Employment Rights Bill, which will be introduced to Parliament by October 12, 2024, would serve as the main piece of legislation needed to implement Labour’s Plan to Make Work Pay: Delivering A New Deal for Working.

The King’s Speech states that the following policies will be covered by the Employment Rights Bill:

1. Labor’s proposal to abolish zero-hours contracts that are deemed “exploitative.” (Workers will be entitled to a contract of employment with an average number of hours that corresponds to their work schedule based on a reference period).
2. Putting an end to the practices and rehiring people as they happen. The objective is to reinforce and substitute the recently enacted statutory code on July 18, 2024, as originally proposed by the former Conservative Government. View our piece about these modifications.
3. Important employment rights, such as parental leave, sick pay, and the right to an unjust dismissal, are applicable to all employees from the first day of work (new hires may be subject to probationary periods).
4. Reform of trade union laws, such as removing barriers to union activity, streamlining the statutory recognition process, and granting unions access to workplaces for the purpose of recruiting and organising.
5. Eliminate the waiting period and reduce earnings cap from the SSP qualifying requirements.
6. Making flexible work arrangements the norm from the moment of hire, with companies expected to comply to the greatest extent possible.
7. It is illegal to fire mothers for six months following their return to work, unless certain conditions are met.
8. To improve the enforcement of workplace rights, a single enforcement body should be established.
9. Establishing a fair pay agreement in the adult social care sector with the intention of determining whether or not other sectors could also gain from such an agreement.
10. Re-establishing a national bargaining body for school support staff to negotiate for equitable wage rates, career advancement opportunities, and terms and conditions.

It’s possible that the Employment Rights Bill contains additional measures that the government declared prior to taking office. For specifics on Labour’s manifesto promises and recommendations, see our articles on the subject.

2. Draft Equality (Race and Disability) Bill

A second employment law bill was announced as part of the King’s Speech, and its goals are to:

1. Extend the legal guarantee of equal pay based on a person’s gender to encompass rights to equal pay for people with d1sabilities and members of ethnic m1norities, facilitating their ability to file equal pay claims.
2. In order to close the disparity in ethnicity and disability pay, mandated reporting on these topics should be made necessary for firms employing more than 250 individuals.

To put this in perspective, the background briefing notes for this draft Bill from the King’s Speech 2024 state that, on average, disabled people earn less than non-disabled people (there was a 13.8% disability pay gap in 2021) and that the majority of ethnic minority groups earn less than the White British group.

When do you think these modifications will be implemented?

Before putting its New Deal into effect, Labour has pledged to do a thorough consultation. It’s possible that this may involve a consultation on a draft Employment Rights Bill, although this is not yet known. The law will be presented to Parliament by October 12 of this year, as indicated by its pledge to “introduce” it within the first 100 days. The Bill would have to pass both chambers of Parliament in the customary manner. To fully implement some of the new, suggested employment policies, codes of practice and secondary legislation would surely be required.

Furthermore, there may be a delay because it is customary to propose new employment laws twice a year, in October and April. That is not to imply, though, that a Labour Government would have to adopt this strategy. In summary, it may take several months to several years or longer for recommendations in an Employment Rights Bill to become legislation.

The Draft Equality (Race and Disability) Bill might not become statutory law until the conclusion of the first term of government, at the very least. It might take some time to put Labour’s plans for disability and ethnicity pay gap reporting into effect.

Are there any upcoming plans to modify employment law?

Labour might potentially score rapid wins by implementing the following low hanging fruit amendments to employment legislation from Autumn 2024 to April 2025.

• The National Minimum Wage

The Labour Government has declared the removal of the age brackets for the national minimum wage (NMW) for adult workers, which it views as discriminatory, and the introduction of a true living wage that accounts for the cost of living. It is acknowledged that as the amendments do not call for primary legislation, they will be accomplished independently of the Employment Rights Bill. Therefore, it is entirely probable that as early as April 2025, a new minimum wage that is sensitive to the cost of living would be implemented.

• Statutory sick leave benefits

In an effort to uphold the principle of “one day, one right,” Labour plans to enhance workers’ access to Statutory Sick Pay (SSP) by eliminating the three-day waiting period and the lower salary cap. It is expected that these modifications will be part of the Employment Rights Bill and that they might be put into effect as early as April 2025 with moderate ease.

• Tips Act

A new law mandating businesses to make sure all tips, gratuities, and service charges are distributed equally and openly among their employees is already scheduled to take effect in October 2024. The Labour Party has affirmed that it intends to improve the legislation pertaining to the tipping of hospitality workers. It appears that Labour intends to move forward with enacting the current legislation, which would be an expedient victory. For more information, see our article.

• Act of Predictable Terms

If their current pattern is unpredictable, this draft law aims to give employees the opportunity to request (not to have) a more predictable one. This Act has already been ratified by the King, but rules still need to be implemented. Labour may utilise it to advance its goals for zero-hour workers as it is currently scheduled to go into effect in September 2024. However, it appears that Labour has not stated its plans in this regard to date.

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What are the UK government new plans have regarding employment law?. Plans for significant adjustments to employment rights and protections have been laid forth by the Labour government. Both employers and employees will be significantly impacted by these changes. We examine the current state of knowledge regarding the plans and their anticipated implementation dates.

The plans call for the elimination of trade union restrictions, the banning of “exploitative” zero-hour contracts, the reform of employment status, the introduction of flexible working arrangements as the default, the introduction of pay gap reporting pertaining to race and disability, and the elimination of minimum service levels and other restrictions on industrial action that were put in place by the Conservatives.

Over the next year or two, employers should anticipate significant changes to employment law; however, it is unclear exactly when these changes will become law, especially considering the Labour government’s platform pledge to properly consult before implementing legislation.

What are the planned changes?

The Prime Minister’s briefing notes on the King’s Speech and the Labour Party’s “Plan to make work pay – delivering a new deal for working people” (the Plan) contain the recommendations. Important suggestions consist of:

Status of employment

• In order to provide workers with workplace rights and protections, Labour has proposed a more straightforward two-category framework for employment status. Individuals will be defined as either “workers” or “genuinely self-employed.” People are currently categorised as self-employed, employees, or workers, and each group has unique rights and protections. This would be a significant amendment to employment law, and from what we gather, extensive consultation would take place first. This indicates that we do not anticipate any immediate changes to your work status.

What would happen with regard to taxes is unclear. Would workers and employees share a tax status if they had the same job status? While employees are subject to PAYE taxes, many people who are currently categorised as “workers” are actually self-employed for tax purposes. Would “workers” be subject to employee taxes under the new system? If so, both companies and employees would face serious repercussions. Due to employer national insurance contributions, it would raise employer costs. Moreover, some “workers” might claim that they are actually self-employed as a result. Before any changes are made in this area, much thought must be given.

Workplace rights

• Labour will eliminate the current two-year qualifying time and grant workers the right to be free from unjust termination on their first day of employment. This would be a significant shift that would grant a lot more people the ability to file an unfair dismissal claim.

There might be an exception to this rule if a person is still in their probationary period, according to revised plans. It is suggested that if dismissals occurred under “probationary periods with fair and transparent rules and processes,” they would still be justified. We’re waiting on more information about how this would operate. Employers should check their contracts to make sure the probationary periods are long, flexible, and unambiguous.

Employers should be more cautious when hiring as a result of this change, and it may encourage the use of other options, such as fixed-term contracts or agency workers, which could help manage expectations to lower the likelihood of claims and lower the amount of compensation awarded by Employment Tribunals in cases where someone is found to have been fired unfairly.

• Labour laws provide that all employees have the same fundamental rights and safeguards, such as paid time off for holidays, parental leave, sick pay, and protection from wrongful termination.

It is unclear if the goal is to protect workers from unfair dismissal in addition to employees. If so, this would be a significant change that would probably result in an increase in Employment Tribunal claims since workers, not just employees, would now be able to file such claims. We’re waiting on further information about the plans.

The Labour government is likely referring to all forms of family leave, such as shared parental leave, maternity leave, paternity leave, and adoption leave, when they use the term “parental leave.”

• The three-day “waiting period” before statutory sick pay (SSP) is due will be eliminated by labour. Instead of waiting until their fourth day of leave, as is presently the case, employees would be eligible for SSP from their first day of absence. Additionally, the lower earnings cap would be eliminated.
• Labour wants to grant employees a new “right to disconnect,” which would allow them to stop working after hours and avoid receiving calls from their employer. This would be in line with the actions of many European nations, such as Belgium and Ireland, albeit it now seems that this promise has been slightly watered down. Instead of a general right to disconnect, it is envisaged that employees would have the right to engage in productive discussions with management about the matter in order to develop solutions that benefit the company. This proposal might not be as high on Labour’s list of priorities as it was not included in the King’s Speech.
• Labour aims to mandate flexible working from the outset for all employees, with the exception of those situations in which it is not practically possible. Although the specifics of the proposal are unclear, it appears that this would be a substantial departure from the present arrangement, in which employees have the option to seek flexible work hours rather than having them by default.
• Labour has announced plans to grant self-employed individuals additional rights, such as the right to a written contract, the ability to pursue legal action for unpaid invoices, and safeguards against bl*cklisting and health and safety violations. Once more, it’s unclear just how this will operate, and more information is anticipated.
  -To improve the enforcement of workers’ rights, Labour intends to establish a new Fair Work Agency, often known as a Single Enforcement Body.

Rights that are family-friendly

• Within the first year of the government, Labour intends to examine the parental leave policy.
• “Parental leave” will become a fundamental right under the Employment Rights Bill. Whether this refers to parental leave in particular or to any kind of family leave (like maternity leave) is unclear. Parents who qualify for parental leave may take up to eighteen weeks of unpaid leave.

-At a maximum annual rate of four weeks – for every child throughout their youth. Parental leave currently has a one-year qualifying period.

• Labour wants to make family-friendly rights stronger. The Labour Party intends to expeditiously review the shared parental leave framework, extend statutory maternity and paternity leave, and grant all workers a right to bereavement leave. In addition, labour would forbid firing a pregnant woman or a woman who returns to work within six months of becoming pregnant, unless certain conditions are met. Additionally, they intend to investigate the possibility of paying carers’ leave, which is now unpaid.

Zero-hour contracts

There are plans to implement new regulations to stop the misuse of zero-hour contracts. Zero-hours contracts were originally suggested to be completely prohibited, but this seems to have changed. Rather, we recognise that businesses will be permitted to keep using zero-hour contracts as long as they’re not “abused” or exploitative. The exact day on which a zero-hours contract will be deemed exploitative will have to wait for more information.

This probably includes situations where the worker is required to be available for any work that is given, but the employer does not promise that any hours will be worked. There would be a new entitlement to a contract that represents hours that are routinely worked (as measured against a 12-week reference period) and a new statute that would outline the basic standards required.

It appears likely that Labour’s more ambitious intentions in this area will need the planned right to seek a predictable working pattern, which is scheduled to take effect in September 2024, to be scrapped.

• Employees will now be entitled to a contract that indicates how many hours they typically put in. In addition, they will be entitled to appropriate remuneration for any shortened or cancelled shifts as well as reasonable notification of any changes in shift.

Fire and rehire

• Labour has pledged to stop using “fire and rehire” as a legitimate tactic to modify an employee’s employment contract. This would entail strengthening the statutory code of practice in lieu of the one implemented by the Conservative administration on July 18, 2024, and amending the law to offer effective remedies against abuse.

Three possible areas for change regarding fire and rehire have been identified by Labour. These include:

-Enhancing employee consultation and informational processes to force businesses to engage with workers and come to a consensus on contract modifications

-Modifying laws pertaining to redundancy and unjust dismissal to stop employees from being fired for refusing to sign a worse contract

-Making sure that, in cases where an employer is employing fire and rehire methods, notice and ballot rules on trade union activity do not prevent defensive action to defend terms and conditions of employment.

Inconsistency

• Labour intends to amend the law governing collective redundancy consultation so that, instead of focussing on a single workplace, the number of individuals affected throughout the company will determine whether or not the duty to collectively consult has been triggered.

This is a major proposal that would essentially reverse the Woolworths case, wherein it was decided that when counting the number of dismissals to determine whether the duty to collectively consult has been triggered, the entity or “unit” to which the workers made redundant are assigned to carry out their duties constitutes the establishment. But the King’s Speech made no mention of this modification.

It’s unclear if Labour intends to alter the threshold for mandatory collective consultations, which is the amount of layoffs. At the moment, it is 20 or more in a 90-day window.

Employers with multiple sites will need to closely monitor the number of redundancies they plan across sites in order to determine whether or not collective consultation obligations have been triggered by this plan. Additionally, collective redundancy consultation will be necessary more frequently than it is at the moment.

Equality at work

• There is a bill titled Equ*lity that will grant people of colour, Asians, and other ethnic min0rities the ability to request equal compensation. We would anticipate that before any modifications are made, this would be discussed.
• Employers with more than 250 workers will also be required to report on ethnicity and disability pay gaps under the proposed legislation. This is a complicated subject, therefore it will be important to carefully evaluate how this would function in real life.
• In order to incorporate outsourced workers, Labour plans to amend the laws governing gender pay gap reporting and pay ratio reporting. Additionally, employers must create and carry out programs to eliminate pay disparity discrepancies.
• Plans to re-establish protection from third party harassment and to provide protection against harassment for interns and volunteers are among the measures Labour has made to further tighten anti-harassment laws.
• Large companies with more than 250 workers would have to create Menopause Action Plans outlining their plans for helping staff members transition through the menopause.

TUPE

TUPE reforms: Labour will supervise the “biggest wave of insourcing of public services for a generation” and abolish the premise that public sector outsourcing is preferable.

Tribunals for Employment

• Labour intends to increase the allotted period of time to file claims in Employment Tribunals from three to six months. Although this would give disagreements more time to be settled before claims are made, it is likely to lead to an increase in the total number of Tribunal claims, which will raise expenses for companies.

There are other important recommendations as well, but these are the main ones that employers need to be aware of. Over the next few weeks and months, more information regarding the plans and their practical implementation will become available.

How soon will this all come to pass?

It’s unclear exactly when the plans will become law, especially considering the Labour government’s pledge in its campaign to conduct thorough consultations before enacting laws.

Labour is pushing through with its vow to “introduce” the Employment Rights Bill within the first 100 days of taking office, as evidenced by a recent, first-of-its-kind meeting involving business, union, and government leaders to discuss workers’ rights. That is, by October 12, 2024. We will have to wait and see which of the aforementioned measures end up in the Employment Rights Bill because the notes to the King’s Speech do not make this obvious.

The Bill would need to pass both Houses of Parliament before it could become law, and it might be changed as it goes along. This is going to take a few months, and as was already noted, Labour promised in their manifesto to thoroughly consult before enacting laws, so it is likely that this would require planning for a consultation process.

We do know, however, that Labour is still determined to implement the measures included in their Plan to Make Work Pay. In response to a written inquiry on August 12, 2024, Baroness Jones of Whitchurch, a Labour peer, stated that the government is dedicated to implementing the Plan in its entirety.

According to Baroness Jones, ministers are determining the best ways to carry out the promises made in the Plan, such as the Employment Rights Bill, which will be brought before Parliament within a year of taking office. She stated that efforts are being made to find and implement measures via secondary and non-legislative channels.

It is anticipated that a draft of the Equality (Race and Disability) Bill will be released for public comment. This implies that it might take longer to pass into law.

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