A new government means a change in direction, and after 14 years of Conservative Government, it is unsurprising that the Labour government is keen to implement its policy agenda quickly. The UK economy has struggled since Covid, particularly when it comes to productivity, which ranks poorly compared with countries such as Germany, France, and the United States.
Part of the blame for the UK’s poor productivity has been attributed to the number of people who have dropped out of working altogether since Covid, a uniquely British phenomenon which hasn’t been reflected elsewhere. Long-term sickness is at record levels, rising sharply after the beginning of the pandemic in 2020.
The newly-elected government will therefore hope to improve workers’ rights in order to encourage people to come back to work. In their manifesto, Labour announced that they will introduce what they call a “New Deal for Working People” within 100 days. This ‘New Deal’ includes the following reforms.
Employment law is an issue which affects all of us who work, so cannot be ignored ahead of some of the more high-profile issues such as immigration and housing. Let’s take a look at what the new government has planned.
Banning exploitative zero hours contracts
Zero hours contracts have received criticism from unions and politicians alike over the instability they offer in terms of work. However, this is sometimes countered by some of those working in zero hour contract jobs, who say that it gives them flexibility in their work.
Instead, Labour have promised to end ‘one sided’ flexibility and ensure that all jobs provide a “baseline level of security and predictability”. In practise, this will mean ensuring that everyone has the right to a contract at work which reflects the number of hours they regularly work based on a 12-week reference period.
Ending fire and rehire
The Labour government have also promised to end fire and rehire, a controversial practise which allows some employers to threaten employees with termination of their contracts in order to change an employee’s terms and conditions.
This will be done by reforming the law to prevent abuse by employers and strength the code of practise.
Introducing day one employment rights to parental leave, sick pay and protection from unfair dismissal
Labour have also proposed introducing what they describe as basic individual rights from day one for all workers, such as unfair dismissal parental leave and sick pay. Currently, workers have limited rights to appeal against dismissal if they have been with their current employer for less than 2 years.
Despite this, employers will still be able to remove employees for reasons of fair dismissal, allowing employers to continue operating probationary periods to assess new hires.
Merging employee and worker status
Another significant proposal made by the Labour Party is to move from a three-tiered system of employment status made up of employees, self-employed people and workers, to a two-part employment status framework of workers and the self-employed.
Pay
Significant changes are also set to be made to pay. Let’s take a look at a few of these.
Making the minimum wage a “genuine living wage”
To do this, Labour would change the remit of the Low Pay Commission so that the minimum wage takes into account the cost of living in addition to median wages and economic conditions.
While the minimum wage currently differs depending on a person’s age, up to a maximum of £11.44 for those aged 21 and over, this would be equalised for all age groups. As a result, under 18s currently earning £6.40 an hour would earn the same as those aged 21 or over.
Sick pay
The Labour Party would also reform sick pay to “strengthen” statutory sick pay, remove the lower earnings limit so that it is available to all workers and remove the waiting period.
Unpaid internships
Unpaid internships will be banned unless they are part of an education or training course.
While it is currently illegal for employers to not pay workers at least the national minimum wage, there are exemptions for those doing an internship of less than a year for a UK-based higher education course, those who are volunteering at a charity or voluntary organisation, or those who are work-shadowing.
Unpaid internships are often criticised as a barrier to those from poorer backgrounds, with those from wealthier backgrounds able to be supported by their family when undertaking an unpaid internship in order to get into a specific industry.
Our thoughts
The aforementioned changes contained with the “New Deal for Working People” would have a seismic impact in the workforce if implemented. For example, the change to making unfair dismissal a day-one right will force employers to carry out a fair procedure in all dismissal cases regardless of how long someone has been employed. The merging of worker and employee statuses would also greatly expand rights to those classified as workers. For instance, workers do not currently benefit from the right to unfair dismissal protection.
Nevertheless, it is worth bearing in mind that some of the government’s other proposals, such as the merging of employee and worker status, would take longer than others.
At Lisa’s Law, we will keep you updated on any changes the government makes to employment law to help keep you in the loop, whether you are an employer or an employee.
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