The impact a Labour future could have on the labour market

July 5th saw a shift in the political landscape and as a result Labour is set to make sweeping changes to the labour market and employee rights. How will these reforms and policy changes impact employers in the immediate future and over the next few years?

Soon it will be time for employers to review HR policies and employee contracts to avoid legal issues down the line.

What changes might we see now Labour are in power?

The Labour Party’s approach to employee rights centres on significantly enhancing protections and working conditions for workers across the UK. Key proposals and pledges outlined in their Employment Rights Green Paper, “A New Deal for Working People,” include:

Unified worker status: Labour plans to eliminate the distinction between “workers” and “employees,” ensuring all workers have the same basic rights and protections, including sick pay, holiday pay, and protection against unfair dismissal
Ban on zero hours contracts: The party will ban zero hours contracts, ensuring that anyone working regular hours for at least 12 weeks receives a regular contract. They also plan to outlaw unpaid internships
Unfair dismissal protections: The party aims to make protection against unfair dismissal immediate from the start of employment, remove statutory compensation caps, and extend the limitation periods for claims beyond from three to six months
Minimum wage and wage increases: Labour intends to raise the National Minimum Wage to at least £10 per hour for all workers, including apprentices and younger staff. They also plan to adjust the minimum wage based on the real cost of living
Enhanced parental and bereavement leave: Labour proposes extending statutory parental leave – making it a day one right – and introducing an express right to bereavement leave. They also plan to protect women from dismissal for six months after returning from maternity leave
Strengthened union rights: Labour will bolster trade union rights, promoting collective bargaining through new “Fair Pay Agreements,” and simplify laws around industrial action and union recognition
Strengthen statutory sick pay (SSP) making it available to workers as well as employees and removing the waiting period
Review carer’s leave and examine the benefits of making it paid
Introduce a new right to ‘switch off’ and protect workers from remote surveillance
Ending fire and rehire practices: Labour will end the practice of “fire and rehire,” ensuring that employment terms cannot be changed under threat of dismissal
Combating inequality and discrimination: The party plans stronger actions against workplace harassment, new protections for those with caring responsibilities, and measures to close gender, ethnicity, and disability pay gaps. They also propose establishing a single enforcement body to oversee these rights.

What could these changes mean for your organisation and how can you prepare?

Labour administrations have historically favoured the priorities of individuals over corporations; Labour’s trade union funding model necessitates a natural tension between them and employers. That said, there can be no doubt that Labour have attempted to redefine themselves as a balancing force between employee rights and the needs of a private sector stifled by a lack of growth and flatlining productivity.

Regardless, many of these proposals are likely to increase employer costs and risks. Here are some elements to be mindful of and changes to look out for:

Hiring and onboarding: A change in the balance of power towards the employee means you need to have robust, defensible processes in place to manage any employment-related issues which may arise. You should ensure your hiring and onboarding processes are effective to reduce the frequency of any such issues arising.
Organisational design and structure: With restrictions on zero-hour contracts this is a time for you to consider your organisational design and structure, the types of contracts you offer, and the mix of senior and junior employees.
Learning and development: Another aspect to focus on would be learning and development – again, with the aim of reducing performance issues and the need to manage these in a more proactive way.
Performance management: Clarity in managing performance from day one of employment becomes of key importance in a labour market where it will become easier for employees to claim unfair dismissal.
DE&I: Take this opportunity to review how you manage equality, diversity, and inclusion in the workplace – with a promised new focus on this it will be vital to ensure you operate on a ‘best practice’ basis.
Adjust payroll budgets: Plan for increased wage bills and adjust budgets accordingly. Ensure compliance with new minimum wage regulations across all levels of the organisation.
Mental health and employee wellbeing: Labour has emphasised the importance of mental health and overall employee wellbeing. Think about whether you need more focus on your benefits offering including wellbeing strategies and programmes, enhanced leave and flexible working policies.
Be prepared: Prepare for the potential increase in union activity, exacerbated by periods of high inflation and dwindling pay rises.

Labour might still not be perceived as the party of business (in a recent report, only a quarter of those surveyed believed Labour has become more ‘pro-business’), but if employers can demonstrate the importance they place on employee rights, and if the business at large can evidence how their ideas for reform can benefit the private sector without compromising Labour’s strategic imperatives, this could be a win/win for all involved.

If you are looking for help with planning for any of the above changes and their impact on your business, feel free to get in touch and one of our consultants would be happy to have a chat to discuss your requirements. Additionally, read our blog on fractional HR – this could be an answer to your HR concerns as changes in the labour landscape come into force.

Sources:

Northridge Law & Conventus Law

The Labour Party: https://labour.org.uk/updates/stories/a-new-deal-for-working-people/

Headland Consultancy: https://www.headlandconsultancy.com/wp-content/uploads/2023/03/What-can-business-expect-from-Labour-Headland-Consultancy.pdf