The employment law related legal changes that could be coming under the new Labour government

So, what’s next? The Employment Law Bill is set to be introduced before 4 October (within 100 days of Labour entering government) and will play a crucial role in delivering the plan.

Once the Bill arrives, we will know for certain what parts of the plan are being pushed forward now, and which have (at least temporarily) fallen by the wayside.

Trade unions and collective consultation

Labour’s ‘voice at work’ section of the plan centres around the idea of bringing in a new era of partnership by:

• repealing the minimum service levels in relation to industrial action as per the Minimum Service (Strikes) Act;
• repealing the Employment Agencies and Employment Business (Amendment) Regulations, the High Court quashed the Regulations in 2023 and so they are not currently in force, however they have remained on the statute books;
• reversing the changes made under the Trade Union Act 2016: increase in ballot turnout, additional information for ballot papers, 6-month mandate for strike action, and two weeks’ notice of industrial action (whereas previously it was one week);
• unions will be allowed to ballot members electronically, in addition to ballot via post;
• simplifying the process of statutory recognition for trade unions, for example, unions will no longer be required to show that 50% or more of their workers are likely to support their claim before the process begins, and unions will no longer be required to obtain a simple majority on the final ballot;
• ensuring additional rights for trade unions to access workplaces to recruit and organise; union reps to meet, represent, recruit and organise; ensuring appropriate facility time; strengthening protections against unfair dismissal, threats and blackmail; and
• introducing a new duty on employers to inform all new employees of their right to join a union on a regular basis as well as putting this in their contract of employment.

New day one employment rights

Labour plans to introduce new ‘day one rights’ for all workers. These will be basic individual rights on parental leave and sick leave and protection against unfair dismissal for all workers on ‘day one’ of their employment

Fair dismissal will not be prevented, for example dismissal for capability, conduct, redundancy, or probationary periods with fair and transparent rules and processes.

Flexible working will also become the default for all workers from day one – employers will be required to accommodate this as far as reasonably possible.

Fair pay

Labour also intend on strengthening statutory sick pay by removing the lower earnings limit and waiting period to ensure that all workers will be able to receive it. They also intend to provide fair earnings replacement for people earning below the current rate of statutory sick pay.

It is also planned that a Fair Pay Agreement will be introduced to the adult social care sector.

A genuine living wage

In addition to the Bill, Labour intends to create a ‘genuine living wage’ to account for the cost of living. They will do this by:

• changing the remit of the Low Pay Commission to take into account the cost of living when setting rates, in addition to median wages and economic conditions;
• removing age bands so that everyone aged 18 and over will get the same hourly rate of pay; and
• ensuring that workers who work across multiple sites receive the National Minimum Wage for their travel and that this is reflected in their contract.

They plan to work with the Single Enforcement Body and HMRC to ensure that they have the powers necessary to make sure Labour’s genuine living wage is enforced. There will be penalties for non-compliance.

Others

Zero-hours contracts are to be banned, to ensure that workers have a right to a contract that reflects the hours that they regularly work. This is to end the one-sided flexibility and ensure all jobs provide a baseline level of security and predictability. The proposals so far reflect some of the recommendations that were previously made in the 2017 Taylor Review of Modern Working Practices.

‘Fire and rehire’ and ‘fire and replace’ schemes are to be reformed by the Employment Rights Bill and replace the statutory code introduced by the Conservative government, which came into force on 18 July 2024.

The worker status is also subject to change, with Labour planning on abolishing the three separate types of employment status (employees, workers, self-employed) and move towards a single status of worker. Labour have acknowledged that this will take some time and we therefore do not expect to see the change come into place straight away.

The plan is to provide further protections for women returning from maternity leave by proposing to make it unlawful for an employer to dismiss a woman who has had a baby for a period of six months after she returns to work. There will be certain exceptions to this, which are yet to be set out.

The establishment of a new single enforcement body, the ‘Fair Work Agency’, which aims to enforce workplace rights and levy fines.

In addition to this, improvements to and the strengthening of enforcement through employment tribunals is planned in order to provide quicker and more effective resolutions. Employers should note that Labour have intentions to increase the time limit within which employees can bring a claim from three to six months.

A draft Equality (Race and Disability) Bill proposes to ‘enshrine a full right to equal pay law’ for disabled people and ethnic minorities. The Bill also proposes mandatory ethnicity and disability pay gap reporting.

The likely impact

Out of all of the proposals, the ‘new day one rights’ are likely to have the most profound immediate impact. Flexible working, parental and sick leave will all present economic and organisational challenges to employers. With flexible working, employers may find themselves faced with a request immediately on commencing employment (or even before), and will have to make decisions without having had an opportunity to build a rapport with the employee, to establish a proper relationship of trust, or to really understand where their strengths or weaknesses lie. That is going to make the flexible working process that much more difficult.

The major change is the day one right not to be unfairly dismissed. Previously, the benefit for employers was that, during normal probationary periods, if things didn’t work out, or the employee wasn’t suitable, parting company was relatively risk free, unless there was a protected characteristic or whistleblowing, or something like that. Now, the process will need to be much more rigorous than it has been. This is no doubt good news for employees; however, it is certain the majority of employers will need to review how they deal with probationary periods to avoid the risk of claims.

The ‘fire and rehire’ procedure has come under a lot of criticism due to fairly high-profile instances of abuse of the procedure, such as P&O Ferries dismissing nearly 800 employees and replacing them with less costly agency workers in 2022. This was rightly criticised and it will be beneficial to bring in provisions that prevent such abuse. However, dismissing an employee for refusing to agree a necessary change to their terms and conditions should be a last resort and is a vital tool for employers to keep their undertakings flexible enough to withstand change. When done properly, with genuinely compelling business reasons for the change, and proper consultation, dismissing employees and then offering to re-employ them on the amended terms was a potentially fair dismissal. Removing that procedure completely could foreseeably increase the likelihood of redundancies or even business insolvencies. So, any proposed changes should keep the benefits and prevent the abuses.

Extending the period of protection from dismissal for women returning from maternity leave to six months after their return to work is a helpful extension of women’s protections in the workplace, but the exceptions need to be well thought out to prevent inflexibility. For example, effectively protecting female employees from a genuine redundancy dismissal for six months after their return to work may not be genuinely justified as a protection and may be unworkable unless carefully worded.