With a general election nearing and the polls continuing to suggest a Labour majority, the Labour Party’s proposals for sweeping employment law reform have come under increasing scrutiny. And with business leaders warning of the potential for adverse economic consequences, it seems that Labour may now be in listening mode.   

Labour initially presented its wide-ranging employment reforms in its Green Paper ‘A New Deal for Working People’. These reforms included ‘simplifying’ employment status by combining ‘employee’ and ‘worker’ as one status (with the result that workers would enjoy the same employment rights as employees do now), removing the qualifying periods for unfair dismissal protection and various other rights, banning certain employment practices including zero-hour contracts and so-called ‘fire and rehire’, giving employees a new ‘right to switch off’ and introducing sector-wide collective bargaining. 

However, recently, what purported to be a revised version of the ‘New Deal’ was leaked to the Financial Times, which suggested that Labour may be about to re-think some of these proposals. 

The trade unions, who were heavily involved in the drafting of the initial New Deal, were reportedly unhappy at this. A subsequent meeting, last week, of the Trade Union and Labour Party Liaison Organisation (TULO) and the Labour party resulted in a joint statement from Labour and TULO about the New Deal, describing the discussions as ‘constructive' with a commitment to continue to work ‘at pace’ on how a Labour government would implement the New Deal in legislation.

So what can we glean from this activity? Well, the sands, it seems, are certainly shifting.  Whilst it remains to be seen where the compromises will ultimately lie, this is how the picture looks currently…

Labour initially indicated that they would move fast to introduce their employment law reforms with a commitment to introduce an Employment Rights Bill within its first 100 days of office. Whilst they are still likely to do this (on the assumption that they do come to power), what the Bill will contain remains to be seen. 

For example, Labour is now reportedly proposing to ‘consult in detail’ on how to ‘transition towards’ a simpler employment status which could imply we may not see imminent change – and this seems sensible. The simplicity of a single status of ‘worker’ (sitting alongside the genuinely self-employed) is appealing. However, the rapid growth in flexible employment models in recent years which are often (albeit not exclusively) linked to new digital platforms, means the switch to a two-status model could unintentionally stifle flexibility and innovation and/ or could lead to employers switching to the use of more self-employed contractors – which one might assume would not be Labour’s intention. A consultation on employment status which seeks to understand and reduce the risk of unintended consequences might, therefore, be desirable. 

Another area which has caused concern for employers is Labour’s proposal to make the right not to be unfairly dismissed a day one right by scrapping the two-year qualifying period currently needed to bring (most) unfair dismissal claims. This coupled with the proposal to extend full employment rights to ‘workers’ (meaning many more people would have the right not to be unfairly dismissed) would represent a very significant change for employers. 

Whilst it seems Labour will retain this proposal, they have clarified that this change will not prevent the dismissal of employees for reasons of ‘capability, conduct or redundancy, or probationary periods’ with ‘fair and transparent rules and processes’. Quite what this means remains to be seen but it is likely to lead to employers reviewing and extending their use of probationary periods.

Zero-hour contracts is another interesting area. Labour had originally proposed an outright ban on their use as a way of protecting vulnerable workers. Whilst this protection is clearly important, not all people who work on zero hours contracts would be classed as vulnerable workers – some workers on zero hours contracts benefit from and enjoy the flexibility they offer every bit as much as the employer does. An outright ban risks curtailing this flexibility and so it is interesting to note a reported shift of position whereby workers would be offered the right to switch to a contract that reflects their regular hours, based on their previous twelve-week working pattern. The extent to which this differs from the newly-introduced right to a predictable working pattern which will come into force later this year remains to be seen. Currently, this will see a right for employees to request a regular working pattern – employers will still be permitted to refuse a request on certain grounds. 

And there’s more…taking into account the uptick in hybrid working and the onward march of tech, Labour had also intended to introduce a ‘right to switch off’ – a practice already adopted in France and Belgium, for example, which would have given workers the right not to be contacted by their employer outside of their working hours.

Again, whilst recognising the importance that workers should not be ‘on’ 24 hours a day, the proposal gave employers little room for flexibility and could have posed considerable problems in practice. The leaked New Deal extracts indicate that the Labour’s stance on this may change with Labour reportedly considering the introduction of a statutory code of practice which would give workers and employers ‘the opportunity to have constructive conversations and work together on bespoke workplace policies or contractual terms that benefit both parties’. 

It was always unclear how a hard and fast right to switch off would have worked in our increasingly flexible working world, where many employees have far more choice over when and how they work their hours. Questions were raised over the circumstances in which employers might be permitted to breach the right and whether employees would be able to opt out. Offering up the ability for employers and employees to craft a bespoke model should allow for a range of different workplace practices to be accommodated. Interestingly, however, this revised approach appears similar to the model adopted in Ireland in 2021, which has reportedly led to limited changes in working practices beyond an increase in the use of email disclaimers. 

Turning to collective rights, another headline-generating topic is the use by employers of ‘fire and rehire’ where an employer, unable to agree changes to terms and conditions of employment with their workers, fires their employees and rehires them on the less favourable terms. Labour had promised to ‘outlaw’ this practice but it looks like this may no longer be the case as they are reported as having acknowledged that “It is important that businesses can restructure to remain viable and preserve their workforce when there is genuinely no alternative”. The Guardian has reported that Labour is now considering strengthening the government’s recently updated statutory code of practice on dismissal and re-engagement and reforming the law to provide for ‘effective remedies against abuse'. 

A second potential change, in terms of collective rights, relates to fair pay agreements which Labour initially proposed to establish across the economy. This would have led to the introduction of collective bargaining between employers and trade unions in different sectors to establish minimum and binding terms and conditions – a way of working very common in Europe. This would have represented a big change for employers, but it looks like, for now, Labour would look to introduce this within the social care sector only.  In addition, they have also committed to ‘consulting widely’ on the design of the agreement before it is introduced. 

For now, all of the above are only reported changes in position. Nothing has been confirmed by Labour and given the joint statement from TULO and Labour, this is clearly a moving feast. It is almost certain that if a revised ‘New Deal’ is issued and/ or when Labour publishes its manifesto the thinking will have moved on again. 

What is interesting is that Labour is clearly accepting there is a need to listen to business, as well as to the unions, as they shape their employment reforms. Whilst their final proposals will doubtless continue to give employers some cause for concern, the speed of change may well be slower than anticipated, for some proposals at least, and employers are likely to have the opportunity to air their concerns through consultations which may lead to refinements and nuance. 

Whatever happens, there will be plenty to keep on top of – so hold on to your hats, it could be quite the ride.  

This article was co-authored with Kate Redshaw, Head of Practice Development (Employment)