What does Labour's manifesto mean for employers?

Tom Clarke, Associate - Employment Law & HR

The Labour Party last week announced their formal manifesto pledges, which included a commitment to their ‘New Deal for Working People’. With Labour widely expected to win the general election on 4th July, we take a look at the key changes that will affect employers:

1. New day-one rights: the major announcement is the removal of qualifying periods for many basic workers’ rights. The manifesto refers to rights relating to sick pay and parental leave but crucially also introduces a day-one right not to be unfairly dismissed, removing the current qualifying period of 2 years continuous employment. Probationary periods are likely to offer some flexibility to employers and will become crucial, but further details are expected for what will be a significant change to existing employment practices.
2. A ban on ‘exploitative’ zero-hour contracts: Rather than a blanket ban on the use of zero-hour contracts, Labour will look to end ‘one-sided flexibility’. This includes giving workers a right to a contract that reflects the number of hours they regularly work (using a 12-week reference period) and an entitlement to proportionate compensation where shifts are cancelled at short notice.
3. Fire and rehire: Labour have long promised to end the practice of fire and rehire. The manifesto doesn’t promise an outright ban but states the practice must only be used following a full process and where there is genuinely no alternative. New remedies to protect against abuse of the practice are likely to be introduced too.
4. Worker status: Labour have pledged to remove the distinction between ‘workers’ and ‘employees’ which currently dictates an individual’s entitlement to certain rights. They intend to create a single ‘worker’ status for all those who are not genuinely self-employed contractors, greatly increasing the minimum rights of many workers.
5. Wages: Labour will remove the existing minimum wage age bands which will increase wages for younger adults. There is also a commitment to strengthening statutory sick pay by removing the lowers earnings limit and scrapping the 3-day waiting period.

Labour have stated their intention to introduce new legislation within their first 100 days in government, though some of these changes may take longer to implement. Regardless, it will be important for employers to begin planning for some significant developments.

Get in touch with Tom with any questions.