The Labour manifesto is anticipated to be the biggest upgrade to workers’ rights for a generation, with its far encompassing day one rights and its potential to represent a seismic shift in the landscape for the worker and their employer. 

Whilst employers and HR professionals could be forgiven for feeling some trepidation over what is in store, Labour has provided limited information as to the timeframe for implementation of its reforms, having only stated that an Employment Rights Bill will be brought forward within 100 days of entering government. There is also limited information as to how some of the proposals will operate in practice.  

Unpicking Workers’ Rights Proposals 

Labour has confirmed its intention to “hit the ground running” in moving away from our current three-tier system of employee, worker and independent contractor towards a two-tier system of worker and the genuinely self-employed. This simplified system is intended to provide more certainty as to the employment rights that attach to each category, leaving significantly less scope for employers to avoid, for example, holiday pay and statutory sick pay.

As well as uncertainty surrounding the timescale for reform, Labour appears to have rowed back on some of its previous policy proposals. In particular:-

• Rather than an absolute ban on fire and rehire (where employees are dismissed so that an employer can impose worse terms and conditions of employment) the practice of fire and rehire will instead be permissible, but regulated by a new Code of Practice.  
• Rather than an outright ban on zero-hour contracts, they are proposing to:- 

– ban “exploitative” zero hours contracts;

– give workers a right to a contract that reflects the number of hours they regularly work, based on a 12-week reference period; and

– give workers a right to reasonable notice of any change in shifts or working time, with compensation proportionate to the notice given for any cancelled shift

• Whilst Labour’s 2021 Green Paper included introduction of a “right to switch off” (in other words, to disconnect from work outside of working hours and not be contacted by their employer), its Plan to Make Work Pay  (which is backed by a manifesto promise to implement it in full) says that they will give “workers and employers the opportunity to have constructive conversations and work together on bespoke workplace policies or contractual terms that benefit both parties”.  

The area of reform which arguably found most traction during the general election related to “day one rights”.  This comprises various measures aimed at ending minimum qualifying periods which an employee must have served before benefiting from certain employment rights. 

The most significant is the proposal to abolish the two-year qualifying period for unfair dismissal rights. Labour’s Employment Rights Bill will give employees the right not to be unfairly dismissed from their first day of employment.  Employers could still dismiss an employee for failing probation but only after following a fair and transparent process.  Further details are currently unclear, but this would increase the process around probation and dismissal of new hires. 

Whilst we have previously had qualifying periods of 6 months and (until 2012) one year, this is likely to make employers more cautious about recruiting.  Some employers might increase their use of fixed-term contracts but, as the ending of a fixed term contract counts as a dismissal in the UK, this might help manage expectations but will not avoid the new rules. 

There are various other proposals in relation to which further detail is awaited.  

Do Employers Act Now on Employment Rights? 

In terms of what (if anything) employers should be doing right now, before it becomes law the Employment Rights Bill will need to go through both Houses of Parliament.  This will take several months. Even after the Bill becomes law, many measures still won’t take effect as further steps will be required to put them into practice.  Significant change is therefore very unlikely to happen this year. The introduction of day 1 unfair dismissal rights (the most significant change) will require an updated (or new) ACAS Code of Practice, which will require consultation. Realistically, it is unlikely change will be implemented until October 2025 or April 2026.

Boost to Temporary Recruitment Sector

The temporary recruitment sector is likely to see an uptick in companies using their services as employers try to manage unfair dismissal risk by engaging temporary workers first with a view to making them permanent later. This is more costly for employers but may mitigate some risk. The proposals could also lead to a boom for recruitment agencies.

We will provide insights on the new reforms on our website and social media as and when they are available.

Thanks to Jackie Turner, Partner at Knights PLC for the guest article.