The New Government’s Proposed Changes to UK Employment Law: A New Era for Employers

The Labour Party’s victory in the recent general election has brought with it a promise of significant changes to UK employment law within the first 100 days of the party gaining power. While the promised changes are not yet formalised or finalised, the Party’s 2024 manifesto and its ‘Plan to Make Work Pay: Delivering a New Deal for Working People’ provide a good indication of likely changes to come, which are discussed below.

Basic Rights and Employment Tribunals

The new Government has proposed to introduce ‘basic individual rights’ from day one for all workers, removing the qualifying period to bring a claim for parental leave, sick pay, and unfair dismissal. It also plans to increase the time limit within which an employee or worker can bring an Employment Tribunal claim from 3 months to 6 months, providing workers with more time to consider their options and seek legal advice before deciding to bring a claim. Collectively, these changes are likely to lead to an increase in the number of claims as more individuals gain certain employment rights from day one and will have a longer period to enforce such rights.

Unfair Dismissal

The most impactful of these changes is removal of the qualifying period for unfair dismissal claims (currently two years for most claims relating to unfair dismissal). Day one unfair dismissal rights will likely mean that companies will have to carry out a fair procedure every time they dismiss an employee to help evidence a potentially fair reason for the dismissal (e.g. a redundancy consultation or performance management procedure), which is not always strictly necessary currently. Helpfully, the Government has suggested probationary periods will continue to remain lawful, but it is unclear how they will interact with the new day one unfair dismissal right.

Dismissals during the probationary period may need to follow a transparent and fair process to establish poor performance as the potentially fair reason for dismissal, which might require the employer giving the employee a short opportunity for improvement. Alternatively, the Government may introduce a 6^th potentially fair reason for dismissals (currently there are 5 potentially fair reasons for dismissal) being the failure to complete the probationary period. The Government may even introduce regulations to prevent unfair dismissal claims for employees still within their probationary period. We will need to await the actual proposals to be certain, but employers will likely need to review their processes, policies and employment contracts to reflect these anticipated changes.

Strengthening Statutory Sick Pay Rights

The new Government also aims to strengthen the current statutory sick pay (SSP) regime by removing the lower earnings limit and the 3 day waiting period before SSP becomes payable. The first of these changes will extend the right to claim SSP to a significant number of low-paid workers who are currently excluded. The second (and arguably more impactful) change will entitle workers to claim SSP from the first day of their illness, rather than having to wait for several days as is currently the case. Without the 3 day waiting period, sick pay is going to become a noticeable additional expense for some employers as sick pay will soon become payable for each instance of sickness absence, even if it’s only a single day.

Zero-Hour Contracts

During its campaigning, Labour had initially proposed an outright ban on zero-hour contracts. It has since taken a slight step back and confirmed that it intends to ban only exploitative zero-hour contracts. The Government’s focus will be on ending the ‘one-sided flexibility’ that some current zero-hour contracts entail and ensuring that all jobs provide employees with a baseline level of security in their day-to-day lives. It’s therefore likely that we will continue to see zero-hour contracts being utilised by employers, but with certain restrictions being placed on their use, to favour the employee. The Government has also committed to putting anti-avoidance measures in place where necessary to ensure employers can’t ‘work around’ the planned protective measures.

So far, the Government has not clarified what it believes constitutes an exploitative zero-hour contract and so we are still in the dark as to what the proposed measures could be. Given the focus on the ‘one-sided’ nature of these contracts, it’s believed that the Government will be looking to ban contracts where the balance of power is too heavily weighted in favour of the employer. However, should it decide to enact the ban, that balance of power and employees’ current inability to be certain of their working hours (and therefore their monthly salary) is the likely target of the Government’s plans.

Reform of Employment Status

The Government intends to remove the current three-tier system of employment status in the UK (currently employment, self-employment and worker (a hybrid of the two)). It has suggested amalgamating employees and workers and creating a single status of ‘worker’. This status would cover each individual who is not genuinely self-employed and create a simpler framework under which individuals are either self-employed or a worker. The Government suggests that moving to this two-tier system will clamp down on ‘bogus’ self-employment and help prevent employers exploiting the complexity of the current framework to deny individuals certain employment rights.

This proposed change could have far-reaching implications for businesses that rely on flexible workforce arrangements, such as those operating in the gig economy. However, the Government has confirmed its intention to consult on exactly this to ensure that ‘workers’ can still benefit from flexible working arrangements if they wish to do so.

Right to Switch Off

Following a similar model to that already in place in Ireland and Belgium, the Government plans to introduce a “right to switch off”. This would give employees the right to disconnect from work-related electronic communications outside of their normal hours. This is a response to the increasing blurring of boundaries between work and personal life, particularly with the rise of remote working. While this may be welcomed by many workers, it will require employers to rethink their expectations around their employees’ availability and responsiveness, and to put in place clear policies and procedures to ensure compliance.

The Government is aiming to prevent homes becoming 24/7 offices and to promote healthier working practices, which should hopefully result in a more motivated and productive workforce. This is a part of its goal to encourage positive work-life balance for all workers.