Labour’s employment proposals: what schools need to know

Insight

03.07.2024

On 13 June, Labour clarified its proposals in its “Plan to change Britain” committing to the “Make Work Pay: Delivering a New Deal for Working People” initiative. The latest version was published in early June and should be read alongside the Manifesto. This article provides an update on three significant commitments across the Manifesto and New Deal document and considers their potential impact for schools.

Proposed changes to unfair dismissal law

The headline proposals are to:

Make unfair dismissal a day one protection, removing the qualifying period (currently two years continuous service for ordinary unfair dismissal claims).
Extend unfair dismissal protection to workers (see below for comment on proposed changes to employment status).
Extend the three-month time limit to bring claims to six months, as set out in the New Deal document.

To state the obvious, these proposals would likely result in a surge in Employment Tribunal claims, which would increase pressure on an already strained Tribunal system. As a result, schools could face more and longer litigation processes.

If these proposals become law, schools may react by taking precautionary measures, such as:

Carrying out more thorough recruitment process to limit the risk of hiring unsuitable candidates.
Making greater use of probationary periods for new recruits. It is not yet clear how Labour’s proposal is intended to interact with probationary periods, but either way, justifying terminating for failing to pass a probationary period is likely to be easier than at a later date.
Reviewing existing probationary periods for new joiners to ensure they provide enough protection in terms of length (six months is advisable) and the ability to extend this at the employer’s discretion.
Carrying out a fair process when dismissing all employees. Ensure managers feel comfortable handling performance management processes and are aware of the importance of starting them promptly to make effective use of probationary periods.

The manifesto is not, however, as expansive as previously envisaged. Absent are two previous proposals: removing the cap on compensatory awards for unfair dismissal claims and introducing personal liability for directors of companies who fail to comply with tribunal order. It is unclear whether these proposals will be reintroduced.

Proposed changes to employment status

Whilst not mentioned in its manifesto, in its New Deal document Labour also proposes to create a two-tier system of “worker” and “self-employed”, rather than the current three-tier system of self-employed/worker/employee.

As it stands, those in the worker category have some, but not all protections. For example, they have protections under the Equality Act 2010, and statutory holiday pay, but they don’t benefit from other rights, including:  

Unfair dismissal protection,
Statutory minimum notice,
Statutory redundancy pay,
Statutory maternity/paternity, adoption leave and pay, and
Right to request flexible working.

Under the proposals, anyone who falls within the enlarged employee category would have access to the full suite of rights, thus increasing worker protections.

For schools, this could present a particular issue for those currently considered to be workers, who may now be granted the full suite of employment protections (eg peripatetic music teachers, sports coaches or invigilators etc, depending on the nature of the working arrangements).

We expect many schools will need to review those arrangements if this proposal becomes law.

This expanded protection could also pose issues for those individual workers themselves, many of whom may enjoy the benefits of being "self-employed" from a tax perspective (noting that there are already only two categories of employment status for tax purposes: employed or self-employed). It is unclear how the employment status regimes for tax and employment rights purposes would tie together, but it would seem to be problematic for an individual to claim to be "employed" for employment rights purposes, but "self-employed" for tax purposes.

It remains to be seen whether this proposal would achieve the desired goal of reducing disputes over employment status. Employment status is a notoriously difficult concept to pin down. While reducing the number of categories from two to three may simplify the position somewhat, the reality is that establishing the true nature of working arrangements is likely to remain a nuanced and complex issue.

Proposal to “end fire and rehire”

Labour has been very open in its criticism of “fire and rehire” which is the practice of dismissing employees and re-engaging on new (often less favourable) terms. The political appeal of targeting this practice is obvious, and it comes as no surprise that it features in Labour’s plans.

We have recently written about the updated draft code of practice on fire and rehire here. Labour does not appear to consider this to be sufficient and has committed in its manifesto to simply “ending fire and rehire”. More substantively, in the latest version of its New Deal document Labour says it will “reform the law to provide effective remedies against abuse” and “replace the inadequate statutory code”. Whilst it’s not entirely clear what this means, it appears that rather than an outright ban on any use of fire and rehire at all, Labour will look to prevent abuse of the practice.

We can understand why this appears to have been watered down from an absolute ban. It is already the case that fire and rehire should be an absolute last resort. However, is it right that fire and rehire will never be appropriate? We have done quite a lot of work with independent schools who have been facing astronomical increases in the costs of ongoing membership of the Teachers’ Pension Scheme (TPS), and in some cases fire and rehire may be the most viable route to achieving that. For some schools, remaining in the TPS would have meant the school having to close down. Banning the practice altogether would risk some employers being left with no option but to make redundancies or at the extreme face potential closure. We, and many schools, will wait with interest to see draft legislation on this point, but it appears from this latest document that Labour may stop short of a complete ban.

Potential timing

Labour’s original promise was to bring forward an employment bill of rights within the first 100 days of Labour coming into power. Media reports in recent weeks have, however, cast doubt on this promise. There have been suggestions from various leaks that the party will drop the commitment to start legislating in that period and will move to a promise to consult on legislation instead. 

However, 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.

Other proposals

Labour has made many other proposals relevant to schools, including:

School Support Staff Negotiating Body: Reinstating this body to establish a national terms and conditions handbook, training, career progression routes and fair pay rates for support staff, to address the crisis of support staff recruitment in schools.
Enhanced family friendly rights: Extending maternity/paternity leave, introducing a right to bereavement leave and strengthening protections for pregnant employees.
Enhanced sick pay rights: Removing qualifying period of continuous service for sick pay, raising SSP and making it available to all workers.
Introducing a right to “switch off”: Right for individuals to not regularly work outside normal working hours.
Discrimination law: Various changes proposed, including making it unlawful to dismiss a woman who is pregnant for six months after her return, except in specific circumstances.
Zero-hour contracts: Proposal to ban “exploitative” zero hour contracts, and providing a right to have a contract reflecting the number of hours regularly worked over a 12 week period.
Strengthening trade union rights: Including rights of entry into workplaces to organise, meet and represent their members, more secure electronic workplace ballots and a duty on employers to inform all new employees of their trade union options available to them.
Internships: Ban unpaid internships except when they are part of education or training course.
Wages: Various changes are proposed to minimum wage law, including the removal of what Labour describe as “discriminatory” age bands (though it is again not clear if Labour consider all age banding in the minimum wage to be discriminatory) and increasing enforcement of regulations on travel time in sectors with multiple working sites.
Review of Health and Safety law: Including reviewing provision for mental health, extreme temperatures and requirements to take preventative action.