HR Hub: How a Labour victory might affect HR and the workplace?

The current polls are holding steady in their prediction that the 4 July election will bring a Labour victory. In the event of a successful campaign, Labour have promised to introduce a number of workplace policies within their first 100 days through an ‘Employment Bill’.  These new policies promise to introduce the biggest changes to employment law since Labour were last in government 14 years ago.

Before we look at the possible changes, some thoughts from Vicky and Kate:

“There is always a lot of noise and activity when a new government comes into power, particularly when it is a change in party. New governments come in with high energy and want to bring about change quickly. Their mandate is particularly robust after an election win, so they move fast. There will undoubtedly be changes for these reasons, not least in how a new Labour-led government will approach working with industry and unions. It will be different.

At the REC, we expect to see new policy and consultation around worker rights, worker status and the effective enforcement of these regulations. We were talking to them about the concepts before an election was called, so it will be about defining the detail. Some of this will make assessments on what is meant by ‘fair’ and ‘good’ work – and we’re going to need to approach these consultations with an eye on why people choose to work flexibly. Our sector will need to provide detailed insight on how the labour market has changed fundamentally to the one we had pre-pandemic and continues to evolve. We will come to these conversations with evidence, while always making the case for how, when supported effectively, the UK’s dynamic labour markets are engines for growth.”

Kate Shoesmith, REC

“Since the announcement of the election in June, the teams at Juice have really felt a sense of energy and enthusiasm back in the market when speaking to their clients. Businesses have felt for some time that change has been needed and this in turn, has affected their confidence to acquire new skills based on economic conditions and a general lack of growth in the economy.

It has been very apparent that businesses have worked hard to retain their people based on the skills shortages we all saw last year following the effects of Brexit. New talent entering the market has been largely driven by natural attrition as opposed to volume redundancies.

We have also been surprised to see some ‘bucking of the trends’ in the temporary market. Commonly, in an uncertain market, temporary recruitment increases as businesses use temporary support to provide flexibility to react to market conditions. Ironically, we have not seen this in 2024 with the market appearing uninspiringly stable.

Recruitment and employment is always a barometer of the economy and with no real growth seen for some time, this has effected businesses confidence to invest in new talent.

This is why, when speaking to our clients, they are now feeling a real sense of excitement. Everyone is hoping that the election will promote and more importantly provide, a long and well deserved boost in our economy allowing businesses to start fulfilling their long awaited growth plans.”

Vicky Kingston, Managing Director of Juice Recruitment

Perhaps the most radical of the proposals would be the introduction of day 1 rights. This would include a day 1 right to sick pay (SSP), to parental leave and to claim unfair dismissal.

In relation to sick pay, in addition to making it a day 1 right, the party’s intention appears to also be to remove the 4-day waiting period before one qualifies for SSP and to take away the lower earnings limit (currently set at £123/week), ensuring individuals are not forced to put their health second to work.

The party also promises to review and reform parental leave, in addition to ensuring it becomes a day 1 right for all workers and employees.

Unfair dismissal is generally only available if someone has accrued at least 2 years of service. Making this a day 1 right has the potential to drastically shift the employer-employee relationship. Though they have not expanded on this further, Labour does suggest however that probationary periods with “fair and transparent” rules will still be respected and available to employers to mitigate this day 1 right.  We will have to wait and see how this probationary point works in practice (we don’t have any detail yet) and how it may water down day 1 unfair dismissal rights.

In lieu of the existing three tier system, Labour envisions only two tiers: the single status of “workers” (to encompass the current tiers of ‘employees’ and ‘workers’), and those who are truly self-employed.

We expect this will be one of those proposals that will take quite some time to be formally rolled out and take effect because of the difficulties (which we envision there being many) of defining ‘worker’ in such a binary way. The courts and Tribunals have struggled with worker v self-employed status for a long time now.  It will not be an easy task putting these two tiers into law.

Labour intends to impose a ban on “exploitative” zero hour contracts and introduce a worker’s right to request a contract that reflects the amount of hours they have worked over a period of 12 weeks, thereby providing them with a contractual minimum number of hours of work per week.  In addition, they would have the right to reasonable notice to a change in shift times or hours.

As with all of Labour’s proposals, we won’t know the specifics of this proposal until they look to turn it into reality. There is certainly an argument from both sides of the contract to say that zero hour contracts have a time and place in the current economy. To do away with them entirely is not a practical solution, but it remains to be seen by what Labour will define as “exploitative”.

The usual time limit for most employment claims will be doubled if Labour follows through with their plan. The current 3 month window will become 6, giving workers a bit more time to consider their next steps, including obtaining advice if/where necessary.

This is one of those proposals that does not appear controversial or particularly difficult to roll out. We therefore anticipate seeing this take effect in those first 100 days should Labour win.

Businesses with more than 250 employees (soon to potentially be known as ‘workers’) will need to update their reporting policy to include reporting the ethnicity and disability pay gaps within their workforce. This is in line with the existing Gender Pay Gap Reporting obligations, which Labour intends to hone-in on further by requiring large employers to take more action in relation to gender pay gaps.

Whereas currently, employers need only concern themselves with the number of people impacted within one workplace when reviewing their collective consultancy obligations under TUPE, under Labour’s plan, employers will need to consider how many people will be impacted across the business instead. This will affect the redundancy process by potentially widening the parameters of the trigger threshold for collective consultation.

Labour also intends to strengthen the existing rights and protections within the TUPE process, although they have not yet clarified what this means in practical terms.

Rather unsurprisingly, Labour intends to reverse a fair amount of the changes the Conservatives introduced in recent years which restricted trade union activity. It is the party’s intention to repeal the Trade Union Act 2016, which introduced thresholds for ballots and restrictions on pickets. It will become a requirement that employers inform new hires of their right to join a union, information which will be expected to form part of a worker’s Section 1 Statement when they start their new job. Trade unions will also obtain new rights and protections, including the ability to access the workplaces of their members for the purposes of recruitment and organisation.

Indeed, the changes Labour proposes to introduce are varied and numerous in relation to trade unions. Whilst much has been written about Labour’s intentions on this subject, as with everything else, we will have to wait and see what specifically is put forward if/when the time comes.

Labour have stated their intention to significantly curtail the use of fire and rehire. They do not intend to implement an outright ban of the practice, but certainly, they have made clear their intention to significantly reduce employers’ ability to use it.

On 18 July, a new statutory Code of Practice will come into force which will introduce provisions for limiting a company’s ability to rely on the practice of fire and rehire (also referred to as ‘dismissal and re-engagement’). Labour’s plans will see this Code amplified and strengthened further.

The above is not an exhaustive list of the changes Labour proposes to make once in power. Many of these proposals will likely take the form of consultations rather than outright policy changes, though some have the potential to come into force right away.

The vision which underpins these proposals is clear: protect the working individual. This of course will need to be balanced against the current economic backdrop and consequently, not all final proposals may come to fruition in the way they are currently set out.