Just when you thought you were up-to-date on HR legislation the new Labour Government were elected. Many employers are concerned about the big impact this will have. We’re all bracing for the biggest shake up in employment law in over 3 decades. So ahead of the Kings Speech on 17th July we’re sharing some employment law changes being proposed by the labour government.

HR shake-up in the wake of the UK Election

It’s a busy time for employers and HR teams, and all these changes and uncertainty can leave you with a real feeling of dread.

You start to ask yourself questions like:

• How will we tackle all the extra HR admin?
• Will the new rules interfere with my business plans?
• How do I make sure I don’t miss any new important legislation

Get ahead of the curve by first understanding what the expected changes are likely to be. You can then formulate plans to thrive under the new changes and support your people to thrive too.

Here’s what could happen in the critical first 100 days of the Labour Government.

Day One Rights

There are plans in place to bring in day one rights to extend protections against dismissals, elevate access to sick pay and introduce more family-related leave entitlement. These may however be watered down, for example bringing the 2-year service rule down to 6 months or 12 months.

Removing the 2-year service rule for unfair dismissal

Currently unfair dismissal rights are under a 2-year service rule but the labour government are looking to change this to a day 1 right. The Labour government claims that “the lengthy wait for basic rights means the risk of moving jobs falls too heavily on the worker.”

In a recent poll it was found that 64% of respondents supported the idea of unfair dismissal, from day one, being introduced as part of worker’s protection rights.

What it means for employers

This means it will be harder to dismiss an employee in the early days. It should also be noted that Labour is exploring the option to extend the timeline to raise a claim as an employment tribunal, potentially raised from 3 months to 6 months, so employers will want to be extra vigilant. As a result, hiring people who are a good fit for your organisation will be even more crucial.

It also means management training will become a key part of your HR strategy as ensuring correct procedures take place and evidence is collected will be key.
You will also want to pay close attention to employee engagement initiatives. With the 2-year service rule potentially being abolished this may remove another incentive for long serving members of your team to stay.

What it means for employees

The new rules will come as a welcome relief to employees who worry about their job security or are moving roles. With the knowledge that they have extra safeguards in place. It will also remove the current disparities between newly hired employees compared to their longer serving peers.

However, this also means job hunting could become more difficult as employers are likely to become stringent in who they hire. This may draw out interview processes as employers fear getting it wrong.

Unfortunately, another side effect is that employers will be less likely to take a chance on people with less experience. This will reduce the flow of new talent in certain industries. This will have a significant effect in talent poor industries which will create additional barriers, recruitment being one of them.

Changes to Employee Status

Currently there are 3 types of employment status in the UK: Employees, workers and self-employed. Those categorised as employees have more extensive statutory rights and protections, for example a right to minimum wage and holiday pay. Those who are self-employed have even less access to these rights.

Labour hope to simplify this framework to clamp down on omissions to worker rights, with some playing the system.

Impact on employers and employees

On the plus side this will make things certain elements easier for employers in terms of certain HR and payroll admin. Categorisation will be simplified, and this would align employee status more closely to the current tax rules.
Meanwhile employees in the worker category will benefit from heightened worker rights.

Zero-hour contract changes under labour

A more stringent regulation of zero-hours contracts is in the works. In particular, the party plans to prevent the “abuse” of “exploitative” zero-hours contracts and plans to put an end to what it calls “one-side flexibility.”

The proposal is to provide predictable hours to workers with an employment contract, based on hours worked in the preceding 12-week period. Critics argue that the government has not defined what the word “exploitative” consists of and that the zero-hour contract system works well for some workers.

Impact on employers

The change will significantly impact sectors within the “gig economy” which means employers in these industries will need to plan carefully, especially around planning for seasonal periods such as Christmas and Black Friday.
In fact 1 in 4 businesses use some kind of flexible working arrangements, including zero-hours contracts so this would shake things up significantly.

It’s important to review your suite of employee contracts so you can adapt quickly if the law changes. Some employers might add in new probationary clauses to mitigate the 2-year service rule being removed.

Change for employees

Labour appears to not be looking at an outright ban at this stage which means workers used to working under zero-hours contracts may still be able to utilise these under strict circumstances. There is a concern that employers will find other loopholes.

However, a reduction in zero-hours contracts will hopefully make things easier for people looking for security in their work. This may potentially open other doors financially, such as applying for loans and mortgages if they have annualised hours.

Proposed Changes: A round up of other Labour employment law proposals

The proposals will continue to evolve so please check back for updates or contact us directly for up-to-date insights. Here’s a round up of some of the employment law the Labour government are looking to bring in.

Payroll changes

Ethnicity and disability pay gap

The proposed E&D pay reporting would effect companies with over 250+ employees.

Larger companies already need to participate in gender pay gap reporting, but these changes would take things one step further. With ethnicity and disability pay gaps needing to be reported too.

Advocates say this would break down inequality, support pay equity and encourage companies to focus on their DEIB initiatives. Critics say these will these would be hard to categorise and would increase the payroll admin burden significantly.

Extra protection for gender pay

A proposed ban on using outsourcing to avoid equal pay for women. Gender pay gap reporting rules are expected to be extended to outsourced workers too with action plans required for larger business

National Minimum Wage and Abolishing of wage bans

Increasing National Minimum Wage Pay Rates (NMW) has been proposed along with removing the age bands. Supporters say this would support low paid staff and their families and help young people who are starting out in the workforce.

Critics argue it would place unfair pressure on certain sectors who require a large workforce. They also caution that the incentive to hire younger employees with less experience will be removed. Meaning it will be harder for young adults to find jobs and climb the job ladder.

SSP (Statutory Sick Pay) changes

The waiting days, 3 in total, could be removed. These tweaks to Statutory Sick Pay take things in the opposite direction to the Tory Government who were focusing on sick-note reforms.

Worker Protections

Fire and Rehire: Potential ban – The Statutory Code of Practice on Dismissal and Re-engagement has already come into force as HR legislation in July 2024.

The proposed fire and rehire changes would take things further. To avoid firms taking advantage of employees as part of cost-cutting exercises. Critics argue this could put more companies out of business and leave people out of work who would overwise still have the option to keep their job. Albeit on reduced wages with less rights.

Harassment Laws

Greater protections are expected to be brought in which means reviewing your HR policies will be even more important.

Menopause action plan policy for big businesses

It’s proposed that big businesses could be made to produce action plans to support people experiencing the menopause.

In addition paid leave could be proposed in a move to promote the wellbeing for women in the workplace. There have been campaigns recently to ensure those experiencing menopausal symptoms at work have the right accommodations in place, and to reduce any associated career setbacks.

Parental leave review

The labour government will explore the option to extend parental leave rights including maternity and paternity leave as day one rights. Some welcome this it means men and women will have more fluidity in their job moves. However this can cause complications for employers.

Strengthening trade union rights

Labour has included promises to introduce “rights for trade unions to access workplaces in a regulated and responsible manner, for recruitment and organising purposes.”

Unpaid internships

It’s possible that labour will follow in the EUs footsteps and ban unpaid internships, expect when they are part of an education of training course. Many are campaigning for this to prevent inequality.

Work Life Balance

Right to Switch Off

The proposed Right to Switch Off has been in the pipeline for a while. To prevent employers from contacting staff outside working hours. This proposal has proved controversial as many employers worry this will prevent contact with staff during intense project periods and accuses labour of nanny-state meddling.

However, supporters say this will help work-life balance and prevent employers from exploiting their workers without the proper compensation. Switching off from work has become harder, from WhatsApp work groups to working from home. It’s already hard to walk away from work in the modern world.

Right to flexible working

A potential extension of the Flexible Working Bill which would make this the default with employees needing to justify otherwise.

Family-friendly rights

These include extending maternity/paternity leave, introducing a right to bereavement leave as well as strengthening protections for pregnant employees in the UK. Including making it more difficult to make staff redundant during or after their maternity leave.

How to prepare for the first 100 days of labour as an employer

The best way to deal with all the employment changes is to be proactive and stay up-to-date. Here’s some of the things we recommend:

HR support and Advice – Ensure you have the right resources in place and superior access to in-house or outsourced HR expertise. These will be crucial when the changes come in. Explore outsourced HR services from Talk Staff here.

HR Policy Reviews – Review all your current policies to ensure you’re up-to-date and look at these regularly. See if any of the proposed changes could be implemented into your business without too much impact. This will put you ahead of the work and could make you more attractive as an employer. You may wish to explore a HR policy review service from a HR provider to get extra insights and views from outside your organisation.

Management Training – Ensure all HR teams and people managers stay up-to-date with the latest changes and processes are clearly followed. Managers already have enough management challenges already!

Recruitment Process – Review your hiring process to heighten the chances of recruiting someone who is the right fit. This may include extra scenario questions or mini assignments. Be careful not to stretch your interview process out too long however or you’ll lose the best talent who will likely have other options. Need support with your hiring process? Reach out for a friendly chat.

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Please note that the information in this blog was created based on the integrity of reputable links at the time of publishing with HR and payroll insights from our Talk Staff team too. These blogs should be used for guidance only, you should always check information further before taking action as sources may update over time. Especially with the nature of how fast these government changes are happening. Talk Staff holds no responsibility for implementation or loss.