In focus by topic
The Labour Government’s key employment policy changes, by topic
Quick links
Diversity and inclusion
What is Labour’s plan for change?
- Pay/other reporting: Introduce mandatory ethnicity and disability pay gap reporting for employers with 250+ employees, require employers to implement action plans to close gender pay gaps, to publish Menopause Action Plans and to include outsourced workers in pay gap and pay ratio reporting
- Equal pay: Act to prevent the outsourcing of services “defeating” equal pay obligations, introduce equal pay rights for disabled people and ethnic minorities
- Harassment: Introduce protection from harassment by third parties (e.g. clients, customers), strengthen an employer’s duty to take all reasonable steps to prevent sexual harassment and update whistleblowing protections for women who report sexual harassment
Practical implications?
- Pay/other reporting: Prepare to invest time in the new pay reporting duties, reflecting their complexities and noting the reputational risk. Detailed consultation is expected, given practical and legal issues involved (such as defining new reporting categories and lawfully collecting data on outsourced workers)
- Equal pay: If existing equal pay legislation is extended to include disability and ethnicity, it risks exposing both claimants and employers to a system which is acknowledged as being complex, burdensome and lengthy
- Harassment: Employers should proactively assess their harassment risks and review policies, contractual terms, whistleblowing and complaints handling, training and procedures to prioritise effective prevention and to address third party harassment. A new Code of Practice would be expected to provide guidance on “all” reasonable steps to prevent sexual harassment
Progress to date and links
- A draft Equality (Race and Disability) Bill will be published. The draft Bill will include ethnicity and disability pay reporting and equal pay changes and is expected to be subject to consultation. We await developments on the other changes identified above
Family-friendly rights
What is Labour’s plan for change?
- Flexible working: Make flexible working a day one right for all workers, except where it is not reasonably feasible
- Parental leave: Strengthen protection from unfair dismissal for pregnant women until six months after their return from maternity leave and, more broadly, review the parental leave system and ensure it is a day one right
- Other leave: Introduce bereavement leave for all workers (currently available on the death of a child) and consider introducing paid carer’s leave (currently unpaid)
Practical implications?
- Flexible working: Employers should anticipate a narrowing of the lawful reasons for rejecting flexible working and a change in enforcement, such as increased tribunal compensation for non-compliance. Expect an increase in flexible working (or costs for maintaining the status quo), when implemented
- Parental leave: Training line managers and updating procedures, to address pregnancy or maternity related automatic unfair dismissal risks, should be prioritised. The parental leave review has been promised in Labour’s first year of office
- Other leave: Existing policies, including compassionate leave, should be reviewed in readiness for a decision on both bereavement and carer’s leave
Progress to date and links
- The government has indicated that an Employment Rights Bill, to be introduced to Parliament within the first 100 days (before the end of October), may include the above changes to flexible working, day one parental leave rights and protection from unfair dismissal for new mothers. We await developments on the other changes identified above
Trade unions and collective labour law
What is Labour’s plan for change?
- Industrial action: Reduce industrial action regulation (e.g. repeal minimum service levels regulations and the 2016 legislation which increased requirements for industrial action ballot mandate thresholds, strike notices, picketing supervision and introduced a 6 month ballot mandate), and introduce electronic balloting for strikes/action short of strike
- Collective bargaining: Boost collective bargaining (e.g. give trade unions a new reasonable right of access to workplaces, including to workplaces with no union presence, “simplify” the statutory recognition process and change the law to lower statutory recognition thresholds and introduce electronic balloting for recognition), and ensure the right to trade union representation includes gig and platform workers
- Collective rights: Create new rights and protections for union reps and members, to include a new right for union equality reps, sufficient facility time, strengthened protection against dismissal, detriments and blacklisting and an employer duty to inform all employees of their right to join a union
- Other proposals: Establish a Fair Pay Agreement covering adult social care (a new form of sectoral collective bargaining), reinstate the School Support Staff Negotiating Body (to establish a national terms handbook and more) and enable employees to collectively raise grievances to Acas
Practical implications?
- Industrial action: De-regulating strikes, as proposed, might result in increased trade union negotiating leverage and a greater risk of industrial action, more ballots taking place (electronic balloting being cheaper and simpler to administer) and a potential rise in ballots supporting action (as voting requirements are decreased and electronic balloting delivers a higher turnout)
- Collective bargaining: These measures would affect both workplaces with recognised unions and those workplaces currently not unionised, given new rights for unions to access workplaces for recruitment and organising and other changes. While these changes may be subject to consultation, employers should review their industrial relations and engagement strategy, and the state of their union relations, as a minimum
- Collective rights: Unionised employers should review, and update where necessary, facility/time-off agreements and ensure line managers have appropriate training in working with unions reflecting enhanced rights and protections. In time all employers will need to amend processes for new starters, and existing staff, to inform them of the right to join a union
- Other proposals: Given the complexity of Fair Pay Agreements, affected employers in adult social care sector should prepare to engage with a consultation and implementation process. In due course, such Agreements may be established in other sectors (after a review). The raising of collective grievances is currently unclear but could potentially involve trade unions supporting groups of employees to raise issues about workplace conduct
Progress to date and links
- The government has indicated that an Employment Rights Bill, to be introduced to Parliament within the first 100 days (before the end of October), may include the above plans to repeal some industrial action legislation, establish a Fair Pay Agreement, reinstate the School Support Negotiating Body, simplify the statutory recognition process and give trade unions a new reasonable right of access to workplaces. We await developments on the remaining changes
AI in the workplace
What is Labour’s plan for change?
- Regulation: Ensure that employment rights keep pace with technological change and the use of algorithms, to include a strengthening of discrimination law and the promotion of best practice to safeguard privacy. A new Regulatory Innovation Office will help improve existing regulatory processes
- Engagement: Put worker voice “at the heart of” the digital transition and ensure worker representatives are involved in the introduction of remote surveillance
Practical implications?
- Regulation: Employers should anticipate reform and stay updated. To mitigate AI workplace risks, employers should, as a minimum, review AI policies and training, refresh contractual terms, assess employee engagement, review the level of transparency around the use of algorithms, and audit workforce risks (including privacy and discrimination risks)
- Engagement: Labour’s proposals are expected to include a duty to meaningfully consult with trade unions, or elected employee representatives where there is no trade union, on AI, remote surveillance and automation in the workplace. It reflects the direction of travel in recent EU legislation (e.g. on platform workers, which requires employers to involve worker representatives on the use of AI and algorithmic decision-making)
Progress to date and links
- Awaiting next steps
Business immigration
What is Labour’s plan for change?
- Reduce net migration by improving the training and working conditions of British workers
- Introduce legislation providing for skills improvement plans in high-migration sectors
- Reform the Apprenticeship Levy into a flexible Growth and Skills Levy to support upskilling
- Restrict entry to the immigration system for those employers breaching employment law
- Introduce legislation to prohibit employers from defaulting to hiring under Skilled Workers visa route
Practical implications?
- In anticipation of further restrictions on the Skilled Worker route it would be prudent for employers to have a good visibility of the areas where this route is used. For example, are there particular roles, locations, levels of employee where there is higher reliance on non-settled workers? Having the data prepared and up to date will allow for a speedy assessment if further changes are announced of the type we saw take effect in April 2024
- Given the focus on the training and upskilling of British workers, another use for this data will be to assess what steps might be possible to reduce reliance on the Skilled Worker route in the medium to longer term
- Audit pre-employment and ongoing right to work processes. Under current rules, receiving a civil penalty will put a sponsor licence at risk but the new government’s emphasis on compliance suggest less tolerance in the future
Progress to date and links
- The government has announced legislative plans to establish Skills England. Part of its remit will be to create a formal link between worker migration data and a skills policy, including working with the Migration Advisory Committee (MAC), to better meet the needs of the labour market
- The MAC has been commissioned to identify sectors overly reliant on international recruitment, focusing initially on IT and engineering. It will also review the Family Immigration Rules, including the minimum income requirement, and continue measures to prevent abuse of student and Graduate visa routes
- The government confirmed its support for recent changes made under the previous government including: restricting overseas students and care workers from bringing dependants; raising salary thresholds for Skilled Worker visas; and abolishing salary discounts for shortage occupations
- It has increased immigration enforcement which could result in a range of sanctions, including financial penalty notices, business closure orders and potential prosecution against employers hiring illegal workers
Enforcing workplace rights: by the state and in tribunals
What is Labour’s plan for change?
- Fair Work Agency: Establish and fund a single enforcement body, the Fair Work Agency, empowering it to inspect workplaces, levy fines and bring prosecutions or civil proceedings
- Time limits: Extend the time limits for bringing employment tribunal complaints to 6 months (most are currently 3 months) and continue to digitise tribunals
Practical implications?
- Fair Work Agency: Reflecting constrained public finances, employers should expect the new single enforcement body to take a targeted approach to enforcement (e.g. Labour has identified enforcing the minimum wage, including on travel time between multiple working locations, and the treatment of migrant workers, as priorities). While legislation to establish the new Agency may happen without delay, creating the infrastructure and commencing work may take longer. Employers paying at or near the minimum wage should consider undertaking a pay audit of their workforce (see the National minimum wage section for further information). Careful consideration should also be given to an employer’s treatment of its migrant workforce to ensure parity and fair treatment
- Time limits: A doubling of most tribunal time limits may lead to an increase in tribunal claims, particularly when combined with changes to the qualifying period for unfair dismissal (see the Dismissal section for more information). However, the longer period also increases expectations that employees act to mitigate their loss, by finding new employment, and could provide extra time for complaints to be settled. If claims are not settled, employers should consider drafting witness statements earlier in the proceedings to preserve the recollection of events (given a potential longer passage of time with extended time limits). Employers should review their litigation strategy and processes, to take account of this proposed change and consider what additional level of resource, if any, may be required to address an expected rise in employment litigation
Progress to date and links
- The government has indicated that an Employment Rights Bill, to be introduced to Parliament within the first 100 days (before the end of October), may include measures to establish the Fair Work Agency. We await developments on the other changes
Worker status
What is Labour’s plan for change?
- Workers: Consult on creating a single status of worker for all but the genuinely self-employed (this could give ‘workers’ the same rights as ‘employees’, including unfair dismissal, by merging the two tiers into one)
- Self-employed: Enhance the rights of the genuinely self-employed
Practical implications?
- Workers: Labour is seeking to simplify the legal framework for employment status. However, successive governments have struggled to deliver on this aspiration, reflecting the challenges involved and the need to avoid creating new, inadvertent status litigation risks
- Employers should expect a lengthy consultation, including clarification of whether the proposal includes the PAYE tax treatment of the new single worker status. Currently, workers may be taxed as self-employed and moving them to PAYE would increase costs for both parties. A more consistent approach to status for employment rights and taxation matters has been called for on previous occasions but the difficulties involved have deterred governments from addressing the issues
- If these proposals are implemented, employers should expect changes to workforce staffing models, costs, risks and incentives. The significance of the changes will be potentially greater for employers who rely on those currently classified as workers/self-employed individuals
- Self-employed: The details of how Labour would enhance self-employed rights are unclear, apart from a stated intention to extend health and safety and blacklisting protections, and provide trade union representation rights for gig workers
Progress to date and links
• Awaiting next steps
Atypical and casual workers
What is Labour’s plan for change?
- Ban “exploitative” zero hours contracts (ZHCs)
- Introduce a right to a contract that reflects hours regularly worked, based on a 12 week reference period
- Require employers to give reasonable notice of any change in shifts or working time
- Require employers to pay compensation, proportionate to the notice given, for any shifts cancelled or curtailed
- Introduce anti-avoidance measures
- Make statutory sick pay available to all workers, removing the lower earnings limit and waiting period
Practical implications?
- More detail is needed but employers of casual and ZHC workers should expect increased costs, administration and fewer ZHCs
- It is anticipated that Labour’s proposal to ban “exploitative” ZHCs could permit arrangements which are in both parties’ interests, but seek to end one-sided arrangements
- Employers may consider moving away from some ZHCs in favour of fixed-term contracts, agency workers, outsourcing or increased overtime. Labour’s proposals are unlikely to prevent the use of flexible contracts to deal with foreseeable spikes in activity (such as seasonal demand)
- Employers who utilise ZHCs should consider the cumulative impact of Labour’s other changes when reviewing their engagement models (e.g. the impact of day one rights and consulting on extending employment rights to workers)
Progress to date and links
- The government has indicated that an Employment Rights Bill, to be introduced to Parliament within the first 100 days (before the end of October), may include all of the above changes relating to zero-hour and casual contracts
- It will not implement the previous government’s legislation, due for implementation autumn 2024, which set out a right to request predictable working as it prefers to start afresh to avoid confusion
National minimum wage, sick pay and tips
What is Labour’s plan for change?
- NMW: Change the Low Pay Commission’s (LPC) remit, linking the minimum wage to the cost of living. Currently, the Living Wage Foundation, which is based on the cost of living, is £12 (£13.15 in London) compared to £11.44 for the statutory National Living Wage
- Remove the age bands to equalise the rate for adult workers (this would remove the band for 18-20 year olds)
- Ensure HMRC and a new single enforcement body have the necessary powers to enforce national minimum wage breaches (with a focus on travel time between work locations)
- Ban unpaid internships (except where part of education or training)
- Tips: Ensure workers receive their tips in full and that workers decide how tips are allocated
- SSP: Make statutory sick pay available to all workers, removing the lower earnings limit and waiting period
Practical implications?
- NMW: Changing the LPC’s remit and starting to remove the 18-20 years wage rate will increase employer costs as well as compliance risks
- Employers should audit their minimum wage compliance, reflecting the complex rules and risks of inadvertent breaches, given a renewed focus on enforcement
- HMRC’s enforcement policy makes no distinction between deliberate and accidental breaches and failure to pay the appropriate rate risks reputational damage, large financial penalties and back pay to affected workers for up to six years
- Tips: New legislation regulating tips, finalised under the previous government, already aims to ensure that workers receive their tips in full
Progress to date and links
- NMW: The Government has changed the LPC’s rate-setting remit to include the cost of living and, in relation to the rate for those aged 18 to 20, instructed it to narrow the gap with the National Living Wage, taking steps year by year in order to achieve a single adult rate. It has asked that the under 18 and apprentice rates are set as high as possible without damaging the employment prospects of each group. Draft legislation to establish the new enforcement body is expected this year
- Tips: It has also confirmed that the existing Employment (Allocation of Tips) Act 2023 and related code of practice will come into force on 1 October 2024
- SSP: An Employment Rights Bill, to be introduced to Parliament within the first 100 days (before the end of October), may include changes to SSP
Restructuring and dismissal
What is Labour’s plan for change?
- Unfair dismissal: Make unfair dismissal a day one right and extend this right to all workers (see the section on Worker status for Labour’s proposal to create a single category of ‘workers’). Reflecting employer concerns, fair dismissals during probationary periods “with fair and transparent rules and processes” would be provided for
- Changing terms: End so-called ‘fire and rehire’ practices (where employers seek to change employment terms upon dismissal and re-engagement), unless there is genuinely no alternative to allow the employer’s business to remain viable and a process involving workforce engagement has been followed
- Redundancy: Strengthen redundancy rights, including a proposal to widen the duty to collectively consult (by changing the trigger from 20 or more employees at one establishment, to that number across the employer)
- TUPE: Strengthen TUPE rights and protections (including the effect of creating a single category of ‘worker’ which would extend TUPE rights to all workers)
Practical implications?
- Unfair dismissal: Review recruitment practices, including current probationary periods (and how they are monitored and extended), dismissal processes and prepare to amend contractual clauses, procedures and line-manager training to meet any new requirements. The details are currently unclear, including whether there will be a limit on the length of probationary periods. Employers should prepare for an increase in unfair dismissal claims and consider how they will resource their management. A renewed focus will be needed on having robust recruitment processes to find the right candidate. Some employers may reduce recruitment in favour of agency and contract workers (but note the effect of creating a single status of ‘worker’, if implemented), or increased automation
- Changing terms: Employers should expect that ‘fire and re-hire’ would be lawful only in a small minority of circumstances (after following a process supported by a strengthened Code of Practice) and subject to new penalties for non-compliance, necessitating the evaluation of other options. These may include redundancies and/or TUPE transfers (e.g. outsourcing), meaning that all of Labour’s proposed changes should be viewed together by employers undertaking change or restructuring programmes
- Redundancy: Changing the trigger of collective redundancy consultation, as proposed, will result in the possibility of a rolling consultation exercise for larger, multi-site employers experiencing ongoing change, in order to comply with the new ‘whole’ employer numbers test. Managing this process in practice will require more focussed attention and a closer examination of each redundancy exercise performed (e.g. the reasons for the redundancies may not be related)
- TUPE: We await further details on how Labour will strengthen TUPE protection. However, it has stated that public sector outsourcing will change, including introducing a new public interest test before a service is outsourced, extending the Freedom of Information Act to apply to private contractors providing public services and reinstating a strengthened two-tier code to “end two-tiered workforces”. It is also possible that TUPE could be clarified to confirm that it protects individuals who do not fall into the current definition of ‘employee’
Progress to date and links
- The government has indicated that an Employment Rights Bill, to be introduced to Parliament within the first 100 days (before the end of October), may include the above changes to ‘fire and re-hire’ and to make unfair dismissal a day one right (while ensuring that “employers can operate probationary periods” – details awaited). We await developments on the other changes
Health, safety and wellbeing at work
What is Labour’s plan for change?
- Right to disconnect: Introduce a new ‘right to switch off’, protecting workers from potentially blurred lines between work and home life
- H&S review: Review, and modernise, existing health and safety (H&S) regulation, including taking steps to strengthen the H&S rights of the self-employed and addressing extreme temperature risks at work. It will also extend statutory sick pay to all workers and remove the waiting period and lower earnings limit
Practical implications?
- Right to disconnect: The new ‘right to switch off’ is not expected to be a mandatory statutory right. The wording used by Labour indicates that it may require employers to introduce local policies, possibly reinforced by a code of practice, which reflect the needs of different workplaces. If so, this will align with a number of other countries which have chosen to steer clear of legislating. Politicians are mindful of not stifling business growth or blocking the potential advantages to be had by workers from more flexible working arrangements
- H&S review: The scope of this review is unclear and employers should stay updated. Trade unions have been campaigning for a legal maximum temperature (reflecting, in part, climate change) and regulation in this area might follow. In addition, Labour’s policies are expected to increase collective bargaining levels (see the Trade union section), potentially leading to more workplaces having trade union H&S committees/representatives
Progress to date and links
- Awaiting next steps
ESG and sustainability: employment policies
What is Labour’s plan for change?
Sustainability, or ESG, issues feature in Labour Party policies, including:
- Diversity and inclusion (D&I): The Party’s proposed mandatory reporting duties would provide stakeholders with new measurable ESG data (see the D&I section for more information)
- Working conditions in the private sector: Labour has stated that it will use public procurement to support social value, including mandating the consideration of a company’s record on worker treatment, equality policies and trade union recognition as part of the contract award process
Practical implications?
- D&I: If and when the proposed D&I mandatory reporting duties are implemented, employers should ensure that their broader corporate sustainability and ESG reporting is aligned and considered, particularly for global employers reflecting the proliferation of reporting duties in different jurisdictions (e.g. to ensure consistency and to reduce potential social washing and other risks)
- Working conditions in the private sector: ESG already has a presence in procurement undertaken by some public sector and private sector bodies (reflecting its increased importance in public and corporate policy and brand image), and Labour’s policy suggests that this is set to increase. Employers should prepare for its social record to be included as part of new public procurement selection criteria. Those unable to meet these criteria may find it increasingly difficult to secure certain public procurement contracts
Progress to date and links
- Awaiting next steps
Pensions
What is Labour’s plan for change?
- Review: Undertake a review to consider what further steps are needed to improve pension outcomes and increase investment in UK markets
- Reform: Introduce a Pension Schemes Bill to encourage consolidation, deliver value and good outcomes for savers and enables pension schemes to invest in a wider range of assets, driving economic growth
- Climate change: Require pension schemes to develop and implement credible transition plans that align with the 1.5°C goal of the Paris Agreement
Practical implications?
- Review: Employers should look closely at the extent of the pensions review, in particular, whether it will consider the case for increasing minimum employer contribution rates and reforming the pension tax system
- Reform: Review your pension arrangements and consider how consolidation within the market might impact them. Consider the impact of reforms such as implementing a solution to tackle the growing number of deferred small pots and requiring all DC schemes to offer a range of decumulation options for their members
- Climate change: Consider how these transition measures might impact your scheme’s investment strategy
Progress to date and links
- A Pension Schemes Bill was announced in the King’s Speech. Further detail on the policy measures announced is awaited
- The timing and scope of the government’s pensions review is still to be confirmed
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