Proposed changes to Employment Law under the new Labour government: The Plan to Make Work Pay

Introduction of day-one rights for all workers 

Labour intends to provide ‘basic individual rights’ from day one for all workers. This includes the right to bring an unfair dismissal claim from day one, which would end the current system that requires employees to have two years’ qualifying service to do so.  This, therefore, has the potential to be the most significant change to employment law in recent years.

Labour have stated that they will ensure that “employers can operate probationary periods to assess new hires”, however the details of this are yet to be confirmed. In any event, it is likely that there will need to be clarity on the use of probationary periods going forward, with the boundaries clearly communicated to employees from the outset of their employment to prevent abuse of excessively long probation periods.

Further proposed day-one rights include entitlement to sick pay and parental leave.

Banning zero-hour contracts

Labour have proposed to end ‘one-sided flexibility’ in relation to exploitative zero-hour contracts.

Whether this will encompass all zero-hour contracts, or if this will be defined within the legislation/guidance that is presented, is yet to be known. However, there does appear to be a clear intention from the Labour government to legislate stronger protections for workers who might, under the current law, have unpredictable working hours.

The objective appears to be that in essence, anyone working regular hours for 12 weeks or more will automatically gain the right to a regular contract to reflect those hours normally worked, excluding when the employee wishes to remain on a zero-hour contract.

Delivery of a ‘genuine living wage’

In conjunction with the Low Pay Commission (LPC), Labour have committed to take into account the cost of living when recommending the National Living Wage (NLW). In the King’s Speech 2024, it was outlined that Labour would also be removing the 18-20 bracket of National Minimum Wage, asserting that this was discriminatory; also suggesting that the 18-20 bracket for the NLW is likely to be removed too.

Ending fire and rehire

The Code of Practice on dismissal and re-engagement came into force on 18 July 2024, which sets out how employers should act when seeking to change employment terms and conditions. Labour has, however, proposed to go one step further and end the practice altogether except in circumstances where there is no other alternative.

Additionally, Labour intends to adapt unfair dismissal and redundancy legislation to prevent workers being dismissed for failing to agree to a worse contract.

The other key changes that Labour have proposed are as follows:

• Remove the lower earnings limit and the waiting period for Statutory Sick Pay.

• Make flexible working the default from day one for all workers.

• Strengthen protections for new mothers, making it unlawful to dismiss a woman who has had a baby for six months after her return, other than in exceptional circumstances.

• Establish a Fair Work Agency to strengthen enforcement of workplace rights.

• Update trade union legislation, removing restrictions on trade union activity and simplifying the statutory recognition process.

If you have any queries on any of the above, please do not hesitate to get in touch with our expert Employment team.