Labour party proposals for changes to Employment law

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The Labour party’s proposals for employment rights have been set out in a document – Labour’s plan to make work pay – delivering a new deal for working people – and they commit to the introduction of legislation within 100 days of a new Parliament to implement the plan in full.

Let’s look at some of the significant issues.

Immediate employment protection

Spoiler alert – this is significant. Currently, an employee must have been employed continuously for two years to pursue an ordinary unfair dismissal claim against their employer. They can clearly pursue discrimination claims on the basis of protected characteristics with less than 2 years but the new proposals would make protection from unfair dismissal a day one right for all employees. In simple terms, this means that an employee dismissed after 2 or 3 days could bring an unfair dismissal claim and it also makes probation periods somewhat worthless although it is understood that there will be a process to enable employers to operate probation periods to assess new hires. This will lead to a significant increase in employment tribunal claims, where the system is already unable to deal with the hefty backlog of cases.

Whilst the onus will be on employers to invest more time in the recruitment process to prevent poor hires, it effectively means that an employee with a few weeks service will have nothing to lose by bringing a claim of unfair dismissal. Even if the dismissal is subsequently found to be fair, the employer will have probably incurred considerable costs defending the claim. This may lead to employers being more inclined to settle out of court through settlement agreements or an ACAS COT3.

Also, there is currently a cap on the compensation that an employee can receive for ordinary unfair dismissal but this cap will be removed.

Zero hours contracts

Zero hours contracts are widely used giving flexibility to employers to react to peaks in demand but some unscrupulous employers abuse them and the Labour party will look to ban these contracts which they see as “exploitive”.

Initially, this was seen as an outright ban but there has since been a softening in their position and if employees wish to stay on zero hours contracts, they will have the option to do so. The devil will be in the detail about how that would work but the Labour party and the Unions are opposed to the imposition of these contracts because they don’t guarantee the employee any hours, however, there are many employees who like the flexibility afforded by zero hours contracts.

What is unclear is what will happen to employees currently on a zero hours contract but what we know is that this will have a significant impact on employers to use these contracts as a means of taking on employees unless hours are guaranteed.

Enforcement and pay

The obvious impact will be that a Labour government would determine the levels for national minimum wage and by giving additional powers to the Low Pay Unit, this will mean that statutory levels of minimum pay will be more aligned to the cost of living. Also, the removal of age bands in national minimum wage rates will have an immediate cost impact on payroll if Companies have high levels of employees under the age of 20.

Union recognition

Very few SMEs have formal union recognition agreements, however, there is a statutory right for employees to have the opportunity to be accompanied to disciplinary, redundancy and grievance meetings if they are a union member.

Such rights may be extended but they would propose a range of measures to make it easier for Unions to be recognised and to promote their organisational arrangements in the workplace. Union membership has been declining and they will want to reverse this decline but, to be clear, an employer cannot stop an employee from belonging to a Union and these provisions should not have a massive impact on a small business that already has good employee relations.

Fire and re-hire

Fire and re-hire is an American expression but it is effectively a lawful process that employers can use to change terms and conditions of employment. Employers use it to change terms and conditions – or specifically – to make them less generous and under this process, the employer effectively gives the employee notice where they are “fired” and they then return on less favourable terms – ie they are “re-hired” with continuous service.

Although the “fire and re-hire” expression is relatively new, the concept of issuing notice of termination to an employee and re-employing on less favourable terms is not new and has been around for years but there is a widely held view that the “fire and re-hire” model is being abused and it will be outlawed.

These proposals will change employment law as we currently know it and will ultimately lead to enhanced employee rights in the workplace and greater costs for SMEs especially if they don’t have access to HR support to navigate them through these new regulations.

Whilst the plan to implement these changes within 100 days is ambitious, the Unions will be pushing hard to get these changes through as quickly as possible. As ever, the devil will be in the detail.

Adrian Berwick offers HR support to SMEs and GP Surgeries and if you want any advice or guidance on the issues raised in this article, please either contact me on 07885 714771 or adrian@abhrsolutions.co.uk

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