In anticipation of a Labour government, businesses should brace for significant employment law changes.
- Labour proposes restricting ‘fire and rehire’ practices to save businesses as a last resort.
- Changes in collective bargaining laws may increase costs and slow decision-making.
- Introducing a new ‘worker’ status could alter employment rights and taxation.
- Strengthened discrimination protections aim to create fairer workplaces but may increase litigation.
The Labour Party has outlined a series of proposed reforms to employment law that could significantly impact businesses if they come into power. One of the most notable proposals is to restrict ‘fire and rehire’ practices, allowing them only as a last resort after exhaustive dialogue between employer and workers. There is a concern that Employment Tribunals may not be able to handle the complexity of litigating whether a company genuinely had no choice but to ‘fire and rehire’. This could discourage its use altogether, with employers opting instead for redundancies to avoid costly legal battles.
A significant shift may also occur in the realm of collective bargaining, with Labour planning to enhance trade union rights. Measures include easing strike actions, simplifying union recognition processes, and possibly creating a Fair Pay Agreement for the adult social care sector which could later expand to other industries. For employers, these proposed changes might mean navigating increased union presence, which could lead to higher operational costs and less flexibility in decision-making.
The introduction of a new single status of ‘worker’ aims to simplify employment status distinctions, merging current categories of employee and self-employed worker. This reform could lead to increased costs for employers due to higher National Insurance Contributions and could also result in new employment rights for those currently deemed self-employed. The transition might provoke more legal challenges as the new boundaries of worker status are tested in court.
Labour’s proposal to make unfair dismissal and other core employment rights available from the first day of employment marks another potential change. Employers would still be able to implement probationary periods but would need to follow fair and transparent processes. These changes would likely increase tribunal claims and require employers to allocate more resources to probation management regardless of service length.
Among other reforms, Labour plans to ban exploitative zero hours contracts and introduce contract rights to reflect regular work hours. This might restrict flexibility for both employers and employees, particularly in industries with fluctuating demand such as hospitality or agriculture.
Moreover, strengthening protections for working parents, enhancing pay gap reporting, and expanding discrimination protections are on Labour’s agenda. These include enhanced gender pay gap action requirements and new reporting standards for disability and ethnicity pay gaps. While these measures aim to foster equity, they also pose increased compliance challenges and could lead to further discrimination claims, causing a contentious work environment.
Labour’s comprehensive plan covers almost every aspect of employment law, with Ben Smith, a Senior Associate at GQ| Littler, noting these are perhaps the biggest changes since the Equality Act. Employers will need to stay informed and proactive in adapting to these potential legal landscapes to avoid increased costs and litigation risks.
These potential reforms necessitate businesses to remain vigilant and adaptable amidst upcoming legislative changes.
