Prepare for ‘game changing’ reforms to employment law from the new Labour government

Labour’s election manifesto committed the Government to introduce new employment legislation within 100 days of entering office, based on the implementation of “Labour’s Plan to Make Work Pay: Delivering A New Deal for Working People” which it published in May 2024. It also committed to consulting fully with businesses, workers and civil society on how to put its plans into practice before passing legislation. 

Patrick Glencross, a Senior Associate in Furley Page’s Employment team, said: “Labour has proposed some major reforms to employment law, some of which are likely to have a significant impact on employers, who may need to take action to prepare for the new regulations. 

“Evidently some of the changes will be brought in imminently, while others may take longer come to fruition. The pace of reforms will also in many cases depend on whether primary legislation (i.e. an Act of Parliament) is required, whether the reform can be achieved through secondary legislation such as a statutory instrument, or if no legislation is needed to make the change.” 

Day one unfair dismissal rights

The right not to be unfairly dismissed has always depended on an employee having a qualifying period of employment. Since 2012, as a rule an employee needs to have been continuously employed for a minimum period of two years in order to be eligible to bring an unfair dismissal claim.  

Patrick said: “The new Government plans to remove this rule so that unfair dismissal rights are enjoyed by employees from day one of their employment. This stands to be a game-changer in the UK labour market in terms of providing working people with greater security around their employment.  

“It will require employers to put in place and follow suitable policies and procedures for managing probation periods, coupled with clear probation period clauses in employment contracts, as well as ensuring that their performance management and capability processes remain fit for purpose.” 

Statutory sick pay (SSP)

At present those earning below the lower earnings limit (LEL), currently £123 per week, are excluded from any entitlement to SSP. It is planned to remove this exclusion so that SSP is available to all workers. According to figures from the TUC, this change will benefit 1.3 million people, 70% of whom are women. 

A second major change to SSP will be the abolition of “waiting days”, so that an employee is eligible to receive SSP from day one of their absence, rather than only from the fourth day of sickness. Some 70% of all sick days currently do not qualify for SSP as they fall within the first three days of a period of sickness. 

Patrick said: “These changes to the SSP regime should encourage employers towards a more active management and monitoring of sickness absence from the start, such as improving their systems for employees to self-report absence and putting in place rehabilitation and return to work plans at an earlier stage.” 

National Minimum Wage (NMW)

The new Government will legislate so that all workers over the age of 18 are entitled to the full National Living Wage (NLW) rate. This will specifically affect workers aged 18-20. It is not yet clear whether this will include apprentices who are aged 18 and over. Other changes include updating the remit of the Low Pay Commission, and the creation of a ‘Single Enforcement Body’ to undertake targeted and proactive enforcement work. 

Patrick said: “Employers can prepare for these changes by identifying which of their employees fall in age 18-20 category and generally ensuring that their pay arrangements are compliant with the NMW legislation, such as correctly paying employees for travel time.” 

Flexible working

Since April 2024, the right to request flexible working under the statutory scheme is a “day one” right for all employees. It was previously the case that an employee needed to have been continuously employed for at least 26 weeks to have this right. 

Patrick said: “The new Government plans to build on these changes to ensure that the right to work flexibly is a genuine default, unless there are very good reasons why flexible working is not reasonably feasible. It will also promote opportunities for flexi-time contracts and working hours which better accommodate school terms and school holidays, where these are not currently available. 

“Employers should make sure that their flexible working procedures are kept up-to-date, and that their managers receive appropriate training so that they can properly handle flexible requests and implement a presumption in favour of flexible working wherever possible.” 

Zero hours contracts

As part of its measures to give working people greater security and to end one-sided flexibility, the new Government promises to ban exploitative zero hours contracts, and to ensure the right to a contract which reflects the number of hours regularly worked based on a 12-week reference period. 

It also promises to introduce measures to ensure that workers receive reasonable notice of any change in shifts or working time, and a right to compensation if any shifts are cancelled or curtailed at short notice. 

Patrick said: “Employers should prepare for these changes by reviewing their suites of employment contracts, and in particular consider the merits of offering employment contracts with fixed hours to staff currently engaged on zero hours contracts or casual contracts but have regular patterns of work. 

“It is currently not clear which employment measures the Labour Government will seek to implement first but, given the promise to consult with business and introduce a bill within its first 100 days of office, the clock is already ticking. Details will be required very soon to help businesses prepare and plan for these changes, some of which will have a significant impact on the employment law landscape.” 

For more information about Furley Page’s employment law services, please email Patrick Glencross [email protected] or call 01227 763939. You can also follow the firm on Twitter @furleypage and on LinkedIn.