How to prepare for the changes to Labour’s employment rights bill

Richard Port • 11 July 2024

An Employment Guide for Businesses

"The biggest upgrade to rights at work for a generation"

Last month, we looked at what changes we might expect to see in the event of a Labour victory in the General Election. Following Labour’s decisive win, we outline below the steps which businesses can take now in order to prepare for significant reforms, with Labour’s employment rights bill, which are likely to reshape the employment landscape in the UK.

What changes will Labour’s employment rights bill bring?

The new Government promises to introduce legislation, though what that actually means in reality remains vague. From a business perspective, the Government has said it will consult fully with businesses before legislation, which is positive.

Here are the key areas of change that we believe businesses should focus on:

- Employment status: rights for all workers

Labour proposes to eliminate the distinction between employees, workers and self-employed, and settling on ‘worker’ and ‘self-employed’, granting equal rights to all workers, with a consultation ‘in detail’ prior to introducing any changes.

Steps to take:

audit your workforce: identify who is currently classified as a worker, as opposed to an employee;

undertake an impact assessment: evaluate the financial and administrative implications of extending employee rights to all workers, for example increased costs in relation to sick pay and holiday pay. Consider how any additional cost and administrative burden can be absorbed into your current business model;

update contracts: prepare for a unified contract type for all staff going forward;

engage in the Consultation: look out for and participate in the proposed Consultation, to shape practical outcomes for your business.

- Enhancing family-friendly rights

Labour aims to expand flexible working and to review parental leave systems.

To get ready:

audit policies: review your existing family-friendly policies and benefits, and your absence management policy, to see what changes might be required;

prepare for the Consultation: engage in upcoming consultations to shape these changes;

check your current record keeping processes: ensure that you have a robust system for recording all absences across the business, including number of days and reason for absence;

support returnees: develop support systems for maternity returnees and others taking extended leave;

consider impact of introduction of paid carers’ leave: assess cost implications for your business, and consider how many staff are taking time off currently on a compassionate basis

train your managers: ensure that managers are away of the different types of leave, and that all requests for leave are recorded correctly. Consistency of approach across the business is essential.

- Expanding day one rights

Labour’s employment rights bill intends to extend basic individual rights from day one, including protection from unfair dismissal (there is some debate as to whether there will be any qualifying time in employment, such as a probationary period) and the right to sick pay and parental leave.

To prepare:

review probationary procedures: ensure that your probationary period processes are robust and transparent, to enable fair dismissal;

update disciplinary and redundancy procedures: ensure that these are fair and comprehensive beyond any probationary period;

plan for parental leave: anticipate potential changes, such as paid parental leave, and assess cost implications.

- Fair pay

Labour proposes to introduce a ‘real living wage’, including the abolishment of age bands which set different minimum wages for those between the age of 16 and 21. Under these plans, we would see the introduction of a single National Living Wage for all workers aged 16 and over.

Actions to consider:

calculate the cost implications for your business: assess the financial impact of wage increases, particularly for younger workers;

pension contributions: bear in mind the impact of a wage increase on pension contributions;

travel time: consider how you can factor in this cost, especially in you have multiple working sites;

audit internships: ensure compliance with fair pay standards for internships and work experience placements.

- Banning ‘exploitative’ Zero-Hours contracts

Labour plans to end ‘exploitative zero-hours contracts’, possibly banning zero-hours contracts entirely.

Steps to take:

audit your zero-hours contracts: evaluate the extent of your current reliance on these contracts;

consider alternatives: plan for guaranteed hours or other flexible working arrangements;

update records: keep detailed and up-to-date records of employment terms.

- Ending fire and rehire

Labour aims to ban fire and rehire practices (the practice of an employer making an employee redundant and then re-engaging them on reduced terms and conditions), promoting a dialogue-based approach.

To comply:

review any restructuring plans which might be in the pipeline: ensure that future restructuring plans include a thorough consultation process;

understand the Code of Practice in this area: stay informed about the implementation and details of the new Code of Practice (there is discussion about this coming into force on 18 July 2024).

- Equality Measures

Labour seeks to enforce equal pay for race and disability characteristics and focusses on equality, including menopause action plans and protection from discrimination.

Steps to take:

implement pay audits: regularly review your pay practices to ensure compliance;

monitor and report: prepare for mandatory pay gap reporting for race and disability;

update outsourcing practices: ensure that outsourcing does not bypass equal pay requirements;
enhance diversity policies: strengthen your policies around diversity, inclusion and discrimination prevention;

train your managers: ensure that managers are well-versed in handling discrimination issues and supporting a diverse workforce, so that they are aware of potential red flags.

- Extending redundancy and TUPE rights

Labour proposes changes to redundancy and TUPE rights, affecting rules surrounding collective consultations in particular.

To prepare:

review your redundancy policies: update policies to comply with potential changes, especially for multi-site operations;

track redundancies: ensure that you have a system in place to keep detailed records of redundancies across all business units.

- Developing Trade Union Rights

Labour plans to simplify trade union recognition and enhance employee engagement with unions.

To adapt:

build relationships with Unions: foster constructive relationships with trade unions;

prepare for electronic balloting: stay informed about changes to balloting processes and consult accordingly.

Summary

The proposed changes with the Labour employment rights bill present certain challenges for UK businesses, whilst enhancing rights and protections for workers. Costs for businesses will increase.

We believe that the key action points are, in summary, as follows: stay informed, review your current practices and policies, plan for the financial impact of the changes, and make necessary adjustments sooner, rather than later, to navigate this period of change successfully.

At Boardside, we have a comprehensive suite of employment policies and contracts that can be adapted for any given business. We regularly receive enquiries about the effectiveness of employment documents and policies, and we should be pleased to provide more detailed advice and suggested documents on a case-by-case basis. Please do not hesitate to contact us with any queries or concerns.

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