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Labour’s key employment law reform proposals and what they mean for employers

16 May 2024

In a Green Paper published earlier this year, Labour outlined a swathe of proposed reforms as part of its New Deal for Working People, making it clear that employment law is intended to be a pillar of their campaign. With a general election drawing closer, in this article we examine some of the key proposals in the Green Paper and what they would mean for employers should they be enacted by a Labour Government.

Unfair dismissal as a day-one right

Employees currently only qualify for protection against unfair dismissal if they have been employed for over two years, with some limited exceptions. Labour is proposing to remove the qualifying period entirely, although it is anticipated that employers will still be able to use probationary periods to assess performance.

Should this change go ahead, employers will be opened up to an increased risk of litigation and will have to take significant steps to protect themselves. Employers will need to ensure they have formal and fair dismissal procedures in place when dismissing all employees, which is an increased administrative burden when considering the comparative ease with which a large proportion of employees can currently be dismissed as a result of the two-year qualifying period. The increased costs associated with this may make it advisable for employers to take additional care during the hiring process, for example by increasing the rigour of their assessment and interview procedures, and may lead to extended probation periods and shorter notice periods once an employee is hired.

Single ‘worker’ status

There are currently three main categories in employment law: employee, worker and self-employed. Some rights, such as protection from discrimination, are available to both workers and employees, but others, such as unfair dismissal protections, are only available to those deemed to be employees. The line is not clear-cut, and determining a particular individual’s status is a fact-sensitive exercise, the difficulty of which is demonstrated by the number of cases up to Supreme Court level dealing with this issue. Labour is proposing that all but the genuinely self-employed will share a single status and set of rights, with further consultation to be undertaken.

This would be a radical change to the employment landscape, albeit not entirely novel given jurisdictions such as France and the US already take a two-tier, rather than three-tier, approach. It is partly intended to combat a trend towards bogus self-employment, increasingly recognised as a problem following a recent slew of cases regarding the proper classification of workers at companies including Uber, Pimlico Plumbers and Deliveroo. While the single worker status may be a simplification to the law, and would likely prevent many status disputes from arising, it would mean that many companies will need to undertake significant expenditure to conform to the new legal landscape, particularly in assessing which segments of the workforce will require new contracts to reflect their new entitlements.

Banning zero hours contracts

Labour initially proposed banning zero hours contracts entirely, while also proposing a right, after twelve weeks, for workers to receive a contract reflecting their normal working pattern. Recent developments now suggest it is unlikely there will be a ban at all, with Labour also planning to allow workers to opt to remain on a zero hours contract at twelve weeks rather than move onto a more regular contract.

Although zero hours contracts were initially touted as offering flexibility for both workers and employers, this model can be abused by employers, who are able to use their stronger bargaining position to ensure they have access to workers on demand while not offering stability or enough hours for a worker to support themselves without seeking additional work elsewhere. The change in Labour’s position in this matter demonstrates that there is value to the flexibility that zero hours contracts provide, however. Should the changes come into effect in their current form, employers who use zero hours contracts will have to ensure they keep track of workers’ normal working patterns and are prepared to issue new contracts after twelve weeks to reflect these.

Right to flexible working

Employees are currently able to request flexible working patterns from day one of employment, but Labour are proposing going further and creating a day one right to flexible working for all workers, with employers being required to accommodate this as far as is reasonable.

This would make flexible working the default, presumably with the current list of business justifications for refusing a flexible working request making way for a more general ‘reasonableness’ assessment, although it is likely that business justifications such as additional costs and insufficient work available would still be relevant for determining reasonableness. This new right would require employers to consider how to accommodate flexible working and put in place formal procedures to manage the various flexible working arrangements that may be required. This also may lead to more discussion of flexible working at the recruitment stage to ensure that the employer gets a sense of the employee’s needs and can proactively consider these.

The right to switch off

There is currently no legislative protection in place to prevent employees from being contacted by employers or pushed to work outside of their normal working hours. Labour has proposed a ‘right to switch off’ to remedy this, although further developments suggest that this will now be incorporated into a code of practice rather than being put on a legislative footing.

A code of practice would flesh out best practice in this area, but it is likely employers will have to implement their own policies to address out-of-work communications. These may define the circumstances in which it is acceptable to contact workers of hours, such as in emergencies, and set out requirements such as scheduled emails if someone chooses to work outside of conventional working hours. Given that the ‘right to switch off’ is unlikely to be given legislative force, however, it is unclear to what extent this will change a culture in which 24/7 availability is increasingly expected.

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