Assuming the pollsters and pundits are right, within the next twelve months or so, a new Labour government will be settling into their seats in the House of Commons and dropping the word ‘Shadow’ from their job titles. And whilst the size of any potential majority remains up for debate, Labour’s chances of winning the next election mean that keen bean employers and HR professionals will be interested in their proposed reforms to our employment laws.
That said, even the keenest of beans, might be forgiven for asking ‘Reforms? What reforms?’ as Labour’s Green Paper: New-Deal-for-Working-People-Green-Paper.pdf (labour.org.uk) issued at the end of September 2022 received surprisingly little attention. However, alongside a commitment to introduce many of the proposals which the current government is already progressing, the Green Paper included a swathe of far-reaching reforms.
Shadow Deputy Prime Minister, Angela Rayner, is the strategic lead for Labour’s New Deal for Working People. In her speech at the TUC conference in September this year and reiterated in her address to the more recent Labour Party Conference, Ms Rayner set out a timeframe for delivery of these reforms giving a ‘cast-iron commitment’ of a new Employment Rights Bill implementing the New Deal to be brought before Parliament within 100 days of office.
Working on the overarching premise that fair and decent conditions of work improve productivity, economic opportunity, health and wellbeing, the Green Paper considers how Labour will address issues around pay, security, inequality, and discrimination. Developed in collaboration with the trade unions and with an emphasis on their continued engagement and involvement, there are a wealth of proposals – some lean towards the aspirational whilst others are more specific.
An in-depth review of each proposal would involve me writing rather more than you might want to read (not to mention more than I want to write!) so I’ll pick out some headline points which have caught my eye:
‘Labour will create a single status of worker’
Understanding employment status in the UK is not for the faint-hearted. Currently individuals may be classed as ‘employees’, ‘workers’ or ‘self-employed’ with employees enjoying the highest levels of employment protection and the self-employed the least. Classifying who falls into which category is far from straightforward – made more confusing because under our tax system only two categories are recognised, that of ‘employee’ and ‘self-employed’. Unsurprisingly a wealth of case law has sprung up, most recently centred around what rights should be afforded to those who work in the gig economy, where the legal tests traditionally used to determine status are more difficult to apply.
The complexities around classifying employment status leads to some employers erring on the side of caution and affording people more rights where their status is uncertain whereas others take a more bullish (or to use Labour’s terminology) a more ‘unscrupulous’ stance. The Green Paper roots the justification for change in a desire to clamp down on ‘bogus self-employment’.
A proposal to simplify this complex area may, at first blush, be welcome (and indeed the Conservatives looked to tackle this some years ago as part of ‘Good Work: the Taylor Review of Modern Working Practices’ albeit the recommendations from the Report in this area were never progressed).
Under Labour’s proposals, it seems the status of ‘employee’ will disappear. People will either be ‘workers’ or ‘self-employed’ (which still doesn’t tally with our tax terminology but let’s leave that for a different blogger…). How Labour will look to define the distinction between ‘worker’ and the ‘genuinely self-employed’ is not explained and will be interesting to see – it won’t be easy. The end result is likely to see many more people entitled to a much wider range of employment rights.
‘Labour will give all workers day one rights on the job’
Hand in hand with the proposal to simplify the rules on status comes another significant proposal – and that is to extend what are referred to as ‘basic rights’, currently only available to those classed as ‘employees’, to all workers. ‘Basic rights’ aren’t defined - unfair dismissal, (increased) statutory sick pay and parental leave are given as examples. However if the category of ‘employee’ is to disappear then the logical conclusion (on the assumption that Labour is unlikely to remove rights) is that all existing employment rights will apply to all workers. This would include, for example, the right to a redundancy payment, rights under TUPE and the right to pay during family leave.
Leaving to one side whether this is the right thing to do – that is a political decision and not one for me to comment on here – this will represent a substantive change particularly for those employers who use casual workers. Currently people classed as ‘workers’ (under today’s definition) are protected by a number of important rights, including the right to paid holiday, to be paid the national minimum wage and to be protected under anti-discrimination legislation. Labour’s proposals will significantly extend the rights available to those workers.
Alongside this sits a proposal to remove the qualifying periods for these basic rights so that workers will benefit from their protection from day one of employment. The reality is that many employment rights are already effective from day one. However, the extension of the right not to be unfairly dismissed to the wider class of ‘workers’ and for that to become a ‘day one’ right will be significant for employers.
Currently two years’ service with an employer is (in most instances) required before an employee can bring an unfair dismissal claim. So what might be the result of removing the requirement for qualifying service?
There is an argument that if the qualifying period for an unfair dismissal claim is removed, this may lead to a reduction in the more complex (and therefore costly and time-consuming) claims of discrimination and/ or whistle-blowing (which currently have no qualification period). Claimants may consider the option of an unfair dismissal claim to be more appropriate for their circumstances – not least as the Green Paper also proposes the removal of the statutory cap on the amount of compensation that can be awarded in an unfair dismissal claim.
However, for all that there might be arguments in favour of reducing the qualifying threshold, requiring employers to follow current ACAS dismissal procedures from day one will inevitably lead to an increase in management time and cost not to mention myriad practical issues. This is particularly so for those employers who have large numbers of casual workers. As such, this is likely to give rise to pushback from business as to how this change can be said to align with Labour’s stated desires of improved productivity and economic opportunity.
If unfair dismissal does become a day one right, one option to help combat employers’ concerns whilst still affording additional protection for workers, might be to introduce a (much) shorter, ACAS-approved dismissal process to apply during a worker’s first 6/12 months of employment.
Aside from unfair dismissal, the proposals to extend basic rights to casual workers from day one will also lead to a number of practical issues which will be difficult to resolve – for example the entitlement to and calculation of sick pay. The devil, as they say, will be in the detail.
These proposals to extend employment protections also raise another over-arching issue which Labour will need to address if it wants to deliver benefits to workers. Our Employment Tribunal system is currently under tremendous strain with claimants (and respondents) facing severe delays before their claims are heard. Tribunals in some areas are currently listing claims into 2025 – bad news for claimants and respondents alike. Providing additional rights to a much broader range of people will only add to those delays which is to nobody’s benefit. Additional resource for the Tribunal system will therefore need to be allocated if these new rights are to be meaningful.
Additional initiatives in the Green Paper include the outlawing of ‘fire and rehire’ – a practice which employers, on occasion, adopt when seeking to change terms and conditions of employment. The principle behind a ban may, on the face of it, appear attractive for employees – however does it risk employers simply opting for ‘fire’ if the employees won’t accept the changes?
Protections in relation to home-working are also proffered. A right to ‘switch off’ giving workers a right not to be contacted by their employers outside of working hours is proposed and employers looking to introduce surveillance technology to monitor staff will need to consult with and agree methods with their trade union or elected worker representatives.
Alongside the above, there is much more…
Labour’s Green Paper is bold and, if the ‘cast-iron commitments’, are delivered will represent a sea-change for employers. On the basis that forewarned is forearmed, a copy of this Green Paper should be on every employer’s reading list, keen bean or otherwise.
From day one, a Labour government will strengthen workers’ rights and make Britain work for working for people.