A New Deal for Working People?

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Ahead of the General Election, expected to take place later this year, the Labour Party has announced a number of reforms called “A New Deal for Working People” to strengthen workers’ rights should the party be elected. Angela Rayner, Labour’s Deputy Leader, explained that the party would be introducing an employment rights bill within the first 100 days of the party being in office. The idea behind these new rights is Labour’s belief that jobs need to be rewarding again for employees to tackle the cost-of-living crisis and its effects on workers and the UK economy. While we are still waiting for details of the implementation of the reforms, some radical changes have been proposed.

The proposed reforms include:

  • introduction of a (higher) real living wage;
  • banning zero hours contracts;
  • strengthening family friendly policies;
  • strengthening trade union rights; and
  • introduction of further day one workers’ rights (including in relation to unfair dismissal and paid family leave).

The first reform proposed by Labour is to boost employees’ income via a higher living wage, which the party argues would end the “self-defeating low wage, low investment, and low productivity cycle that the country is in” as well as tackling the cost-of-living crisis. The National Minimum Wage increased to £11.44 in April 2024 for anyone over the age of 21, but the party argues that this is still not a genuine living wage in the current economy.

The next proposal Labour makes involves reforms to strengthen protections afforded to all workers by banning zero-hours contracts and contracts without a minimum number of guaranteed hours, ending fire and rehire, and scrapping qualifying periods for basic employment rights which have been identified as unfair dismissal, sick pay, and parental leave rights, which Labour wants to grant working people from day one of their employment. Along with making the right to protection from unfair dismissal a day one right, it is also proposed that the cap on compensation for unfair dismissal claims (currently c.£115,000 or 12 months’ salary, whichever is lower) is removed. Statutory sick pay will be available for all employees including those who earn less than the earnings threshold, who currently do not qualify under the statutory scheme.

Particularly highlighted were Trade Union reforms. The Labour Party is planning to update the trade union legislation restricting union activity so that it will be easier for working people to collectively secure fair pay, and better employment terms and conditions.

Labour is also planning to strengthen family friendly rights by extending statutory maternity and paternity leave. The party also wants to introduce stronger rights for families dealing with emergencies, via paid family and carers’ leave (the right to one week of unpaid carers’ leave was introduced in April this year). Furthermore, Labour believes that employees should have better work-life balances including the right to disconnect from work and not be contacted by their employer outside of working hours following the example of European countries such as Germany and France which already have similar protections in place.

Various other changes have also been discussed.

Should the Labour party be elected and implement the package of proposed reforms, this will represent the biggest change to UK employment law in decades. Whilst there would likely be a period of grace for employers to prepare for the changes, with such significant reforms potentially on the horizon, employers need to start considering now the measures they would be required to take, not just in relation to contracts and workplace policies, but also to their budgets, recruitment strategies and culture.

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