Labour’s Manifesto: employment law proposals

“Britain’s outdated employment laws are not fit for the modern economy” is the scene-setting quote for the employment proposals within the Labour Party Manifesto. Beyond that bold statement, the Manifesto does little beyond reaffirming their commitment to implement the "New deal for working people" in full. Whilst the detail of how and when Labour plan to implement the “biggest upgrade to rights at work for a generation” largely remains to be seen, the Manifesto arguably gives us an insight into Labours’ key priorities amongst its wide-ranging list of proposals.

Ahead of this week’s general election (and the increasing likelihood of a change in government), this article explores the proposals that were featured in the Labour Party’s Manifesto. It briefly recaps some of the key proposals from the New Deal document, discusses when we might expect to see these changes come into place, and highlights certain changes (some of which had previously been proposed) that were missing from the Manifesto.

What changes were mentioned in the Manifesto?

The key proposals highlighted within the Manifesto include:

• Zero Hour Contracts: Banning “exploitative” zero hours contracts, a slight weakening of earlier proposals for an outright ban.
• Fire and Re-hire: Ending fire and re-hire (the practice of dismissing and then rehiring employees under new, often less favourable, contractual terms), save where a business has no alternative option to remain viable and where a proper process (based on dialogue and common understanding) has been followed. Whilst the proposal falls short of an absolute ban (again reflecting a watering down of earlier proposals), this reflects Labour’s views that the recently updated Code of Practice on Dismissal and Re-engagement (due to come into effect on 18 July 2024, our commentary on which can be read here) is not sufficient.
• Day One Rights: Introducing basic rights (parental leave, sick pay and unfair dismissal rights) from day one. In respect of unfair dismissal rights, Labour have made clear that although the current two-year qualifying period will be removed, the use of probationary periods will be permitted (subject to fair and transparent rules and processes).
• Trade Unions: Strengthening the collective voice of workers by enhancing union’s rights of access to the workplace and imposing a duty on employers to inform their staff of their right to join a union.
• Enforcement of rights: Creating a Single Enforcement Body to ensure “workplace rights” (currently undefined) are enforced.
• Minimum Wage: Making the minimum wage a genuine living wage and ensuring all adults are entitled to the same minimum wage regardless of age (ie removing the current age bands).
• Equal Pay: Strengthening working women’s rights to equal pay and taking action to reduce the gender pay gap. Labour have also committed to introduce the right to equal pay for disabled people and Black, Asian, and other ethnic minority people, and to introduce disability and ethnicity pay gap reporting for large employers.
• Discrimination and Harassment: Strengthening working women’s protections from maternity and menopause discrimination and sexual harassment (by imposing a duty on employers to take all reasonable steps to prevent sexual harassment: something already due to come into effect in October; see here for more information). Additionally, Labour propose to introduce a Race Equality Act to enshrine in law the right to equal pay for ethnic minorities, and strengthen protections against dual discrimination.
• Rights of Disabled People: Labour has committed to championing the rights of disabled people by improving employment support and access to reasonable adjustments.
• LGBT+: Labour proposes to protect LGBT+ people and ensure that everyone is treated with respect and dignity.
  
  

What additional changes are proposed in the New Deal?

Our previous blog (which can be found here), discussed the proposals in Labour’s New Deal green paper. Since then, the New Deal document itself was announced. As mentioned above, the Manifesto re-affirmed Labour’s commitment to implement the New Deal in full. We have not set out details of all of the proposals within the New Deal, but rather highlighted our top ten proposed changes: 

1. Increase the time limit for bringing employment tribunal claims to six months from three months.
2. Amend the threshold for collective redundancy consultation obligations to apply to the number of affected individuals across the business rather than at each separate establishment.
3. Provide that the written statement of particulars must inform staff of their right to join a trade union and to inform staff of this regularly.
4. Ensure flexible working is “a genuine default” from day one for all workers except where it is “not reasonably feasible”.
5. Introduce a right for employees to have a contract reflecting their regular working hours (based on a 12-week reference period).
6. Introduce a right to bereavement leave for all workers and the possibility of paid carers’ leave.
7. Permit collective grievances to be raised “to Acas”. It is currently unclear exactly what is meant by this proposal as grievances are made to an employer and not to Acas. It is possible that the intention is for Acas early conciliation to be permitted on a collective basis, but more likely that the intention is to allow for the possibility for collective grievances to be raised with employers.
8. Make it unlawful to dismiss a pregnant worker for six months after their return to work “except in specific circumstances” (yet to be defined).
9. Strengthen the rights and protections for workers subject to TUPE processes.
10. Ban unpaid internships except when they are part of an education or training course.
    
    

When might we expect these changes to be implemented?

Despite media reports casting doubt on the promise to do so, Labour has reiterated its proposals to introduce legislation within 100 days and proposes to consult fully with employers, trade unions, experts and stakeholders before secondary legislation is passed. The New Deal document acknowledges that some proposals will take longer to review and implement than others. One would also hope that transitional arrangements would be put in place to allow employers time to prepare for the new employment landscape.

What changes were missing from the Manifesto?

There are a number of proposals, made within the "New deal for working people" green paper, that are not replicated in either the New Deal document or the Manifesto, including the proposal to:

• Remove the limit on compensatory awards for unfair dismissal claims (perhaps a reflection of the fact that those who are likely to benefit most from this change are high earners, and probably not the demographic labour is primarily targeting), and
• Introduce personal liability for directors of companies who fail to comply with tribunal orders (for example, by not paying compensation awarded).
  
  

Given that the Manifesto included certain proposals that had not previously been included in the New Deal document, it is possible that the above proposals may be put back on the table during any consultation down the line.

It is also interesting (although perhaps not surprising) that, given the wealth of changes proposed, an increase to the £30,000 limit to tax-free termination payments has not been proposed despite having stayed at that level since the 1980s. This would be a welcome change for employees (although we wouldn’t suggest holding your breath!).

Whilst much of the detail of the proposals remain to be seen, meaning it is too early to do much by way of meaningful preparation, it is safe to say that in the event we do get a new government on Thursday, employers will have a very busy few years ahead.

This publication is a general summary of the law. It should not replace legal advice tailored to your specific circumstances.

© Farrer & Co LLP, June 2024