Labour pledges and the impact on business owners

With the Labour party now in power they will begin to implement ‘Labour’s Plan to Make Work Pay: Delivering a New Deal for Working People’ – introducing legislation within 100 days.

The focus for business owners will be around the cost of these new policies and the impact they will have on their businesses. We highlight the key employment pledges made by the Labour party:

Key pledges:

• Introduction of a single status of ‘worker’ to minimise confusion around worker status – individuals will either be workers, or self-employed.
• Increased access to union support. There will be clearer communication from a company to its workers regarding their rights to join a union, along with improved access to the workplace for unions and potentially reduced thresholds for union recognition.
• Exploitative zero hours contracts will be banned. All workers will be entitled to contracts that reflect the hours they regularly work.
• Removing the lower earnings limit and the three unpaid waiting days in respect of Statutory Sick Pay (SSP).
• Creation of a genuine living wage based on the actual cost of living and removing the age bands currently applied to the National Minimum Wage (NMW).
• Unpaid internships will be banned except when part of a course or training.
• Revisit recent flexible working legislation and expand on this to further support workers access to flexibility at work.
• Introduce statutory bereavement leave from day one of employment.
• Extend workers’ rights in relation to disability and race protection, including increased pay gap reporting, additional protection relating to equal pay claims which are currently limited to sex to include race and disability.
• Protection from dismissal for up to six months following maternity leave. Some level of protection already exists, but Labour’s proposal will make it unlawful to dismiss someone within that six-month period except in specific circumstances (which have not yet been set out).
• Bring an end to fire and rehire practices. There will be a strengthened code of practice that will prevent fire and rehire as a standard restructuring method, unless there is genuinely no alternative and a proper process has been followed.
• Introduce day one employment rights. This would see additional protection offered in respect of unfair dismissal, parental leave and sick pay. Perhaps the most significant change is the protection from unfair dismissal – whilst probationary periods will still be acceptable, it is assumed that further guidance regarding the limits and rules around probationary periods will be to follow.
• Increase the window to bring a tribunal claim from three months to six, meaning employees have twice as long to bring a claim.

Tribunal claims

The Labour party has pledged transformational reforms to employment law in their manifesto. The main concern for business owners may be in relation to tribunal claims. With Labour pledging to give greater access to tribunals, this will invariably increase the number of claims brought against employers and businesses.

Labour does however plan to extend the time limits for bringing tribunal claims from three to six months, which might contribute to a lower number of claims. As claimants are more likely to find another job in that timeframe, and they may ultimately move on and withdraw their claims.

Day one right not to be unfairly dismissed

It is Labour’s intention to give employees the right not to be unfairly dismissed from their first day of employment as pledged in their party manifesto. Employers would still be able to dismiss an employee if they have failed probation, but only after a fair process.

At the time of writing, Labour is yet to deliver their preferred method of implementing this policy however this change is likely to result in an increase in claims. We will endeavour to keep you updated when this process is announced.

Fairer practices

Other ‘bans’ on employment law practices simply relate to the misuse and abuse of certain processes – there is no blanket ban on these practices altogether, simply a pledge to ensure the experience and process is as fair as possible for both parties.

The key for many small businesses will be how they manage the shift from the ability to make quick, commercial decisions to a more measured, proportionate approach acting only after following a fair and robust process.

Whilst a lot of these proposed changes sound substantial and may cause concern for business owners, how significant the impact will be remains to be seen. There will still be the ability to fire and rehire, there will still be the ability to dismiss someone post-maternity leave, to decline flexible working requests and so on, but only where a genuine reason exists and a fair process has been followed. Partnering with an outsourced HR service to undertake a best practice approach in each case will ensure you are supported every step of the way.

National Minimum Wage

The change that will potentially impact most business owners is will be the abolition of age ranges in relation to National Minimum Wage. Smaller businesses will no doubt feel the impact of this change significantly, as will young people entering the job market for the first time – employers may favour more experienced workers at the same rate of pay.

Stay up to date with professional support

Practical steps can be taken. For example, having clear and measurable objectives for the probationary period from day one will ensure transparency for workers and employers, as well as having evidence-based decision making at the end of the probationary period. Reviewing disciplinary and capability procedures to ensure that clear steps for managing these issues are outlined and applied consistently, and having appeals are heard fully by an independent party will reduce the potential for unfair dismissal claims.

Having access to dedicated HR expertise throughout the first 100 days of these new employment measures and beyond will help to ensure your business is proactive, prepared and compliant throughout this period.

Please get in touch with our team of experts for guidance through this new legislation.