The London Times has reported again on Labour’s proposals for a radical reform of UK employment law. The Times reports that Sir Keir Starmer has framed Labour as the “party of business” ‒ but in our view, the pledges in Labour’s “new deal for working people” perhaps jar with that definition.
As we have reported previously, Angela Rayner, Labour’s deputy leader, promises a “revolution” in employment law legislation within 100 days of an election of a Labour government.
Depending on your view, the reforms are either an exciting and necessary change to enable a fair employment deal ‒ or are worrying and potentially very expensive for employers and likely to cause more workplace disputes. In this update, we delve into some of the most critical of these proposed reforms.
Perhaps unsurprisingly, Labour intends to drastically enhance the right to bring a claim for unfair dismissal. Currently, most employees are unable to bring a case of unfair dismissal against their employer unless they have been working for them for a minimum of two years. The London Times reports that Labour intends to scrap this and give workers “day one” rights. Again unsurprisingly, Labour has pledged to scrap existing caps on how much compensation employment tribunals can award for unfair dismissal, which is currently 52 weeks’ gross pay.
This new law would inevitably increase claims in the employment tribunals. Unless there is a corresponding significant increase in investment in the tribunals, we will see even further delays in the resolution of disputes. It can currently take two years-plus for a multiday trial of an employment tribunal claim to come to trial. We suggest that as part of its reforms, Labour considers introducing a practical route to early summary judgement on claims that are considered to have little prospect of success ‒ even where those claims include allegations of discrimination.
Labour proposes a right to disconnect and to flexible working. Following with the zeitgeist on flexible working and working from home, Labour states that it is “committed to achieving a better work-life balance while raising pay”. Nirvana indeed. It proposes doing this by giving working people a “right to switch off”, meaning they could not be contacted by employers outside of working hours.
France previously and controversially introduced a similar policy and Ireland has introduced a code of practice that gives flexibility for contact in some cases.
Almost inevitably, Labour also pledges to repeal all legislation restricting union rights since 2010. The party is proposing to make it easier for unions to be recognised ‒ and will consult on plans to give unions automatic recognition where 50 per cent or more workers in a bargaining unit are members.
Labour is promising to raise sick pay, and to make the same available to all workers irrespective of status and earnings, including perhaps surprisingly, the self-employed.
Linked to all of this is the truly revolutionary proposal to have a single category of worker. Under a Labour government, all workers will be given the same rights to sick pay, holiday pay, parental leave and protection against unfair dismissal under a policy designed to end what is described as “bogus self-employment”. Labour is pledging to ban zero-hours contracts which do not specify a minimum number of paid hours. Firms varying shift patterns will have to do so in a predictable way that does not require staff to adapt to last-minute changes. Internships will be banned outside of education and training courses and workers will be paid for travel and sleeping time in sectors such as social care.
A Labour government will reform the Low Pay Commission to ensure that the minimum wage rises with the cost of living. It is specifically promising an immediate increase to the national living wage to £10 for workers under 20, who can currently be paid £7.49, or £5.28 for workers under 18.
In a dramatic return to what might be regarded as “old labour” policy, trade union collective bargaining will be expanded across the economy, with Labour encouraging every sector to agree to “fair pay agreements” with staff, setting binding terms and conditions for all workers. The party states that this would prevent good employers from being “undercut”, and confirms that such collective agreements would be modelled on similar schemes to those adopted in Scandinavia and New Zealand.
The right for employers to amend employment contracts on sound commercial reasons and following consultation and notice has been part of our employment law for decades. The decision by P&O in March 2022 to sack 796 staff and replace them with cheaper workers is the most notorious recent example of a practice which Labour says has “spread like wildfire”.
In that case, employees were dismissed with immediate effect due to redundancy. Some had face-to-face meetings with their local management although many were dismissed via SMS, phone call, email or were sent a “three-minute pre-recorded” video. Some employees were removed by force from ships. The company then replaced the crews with cheaper agency labour – these workers were mostly former P&O staff. The case caused an uproar in Parliament and brought the practice into acute political scrutiny.
P&O has explained on record to Parliament that it did not commence consultation with the unions because its proposed new agency worker terms would “never be accepted”.
Currently it remains potentially legal for employers to sack staff and reemploy them on new contract terms. The current government has put forward a code saying the threat of such action must not be used to pressure staff into accepting new terms. Labour says this is not sufficient to protect workers and is proposing to ban the practice, and to protect workers from being sacked if or because they will not agree to less beneficial contract terms. The London Times reports that the Institute of Directors has stated that in “exceptional circumstances” the ability to unilaterally rewrite contracts can be the “key factor in enabling a company to stay afloat and avoid employees losing their jobs”.