Keir's New Deal

Although no date for the next general election has yet been set, it looks increasingly likely that the Labour Party will be in government by the beginning of 2025. Angela Rayner, the party's deputy leader, promised to introduce new legislation to strengthen workers' rights and tackle inequalities in employment within the first 100 days of office.

Labour's "New Deal for Working People" is based on three pillars: (1) pay rise for all; (2) secure and safe work; and (3) tackling discrimination and workplace inequalities.

We look at the highlights of Labour's employment rights green paper and the impact that the proposals may have on workers and businesses.

Pay rise for all

Labour is promising to reform the Low Pay Commission and increase the minimum wage for all workers to ensure it is adequate and addresses the cost of living and inflation since 2019. It is also planning to ban unpaid internships outside of education and training courses and to ensure that travel time (in sectors with multiple sites working) and "sleep over" hours (in sectors such as social care) are paid, reversing previous caselaw on this point. 

Collective bargaining will be expanded to all sectors and Fair Pay Agreements, setting minimum terms and conditions for all employers and workers, will be rolled-out. These agreements will cover a wide range of issues, including pay and pensions, working time and holidays, training, work organisation, diversity and inclusion, health and safety and the deployment of new technologies.

The party also pledges to increase statutory sick pay and make it available to all workers, including the self-employed and those earning low wages, who are currently excluded by the lower earnings limits threshold.

Secure and safe work

According to the green paper, the aspiration to achieve secure and safe work will be achieved (mainly) through:

1. Creating a single status of worker (from the current three different categories) for all but the genuinely self-employed. This will provide more certainty and clarity concerning workers' rights and help clamp down on false self-employment, but will also entail significant changes to business models of employers who rely on, or frequently use, casual workers;
2. Ending the qualifying periods for basic rights (for example, for  protection against unfair dismissal or the right to take parental leave) and scrapping the cap on unfair dismissal compensation, which is currently set at the lower of one year's gross pay and £105,707;
3. Banning zero-hours contracts and contracts without a minimum number of guaranteed hours;
4. Outlawing the practice of "fire and re-hire";
5. Making flexible working a “day one” right, with employers required to accommodate it as far as reasonable (although flexible working will be a day one right from this April in any event);
6. Giving workers the right to disconnect from work outside working hours and not to be contacted by their employer outside of working hours (in line with some EU countries such as France and Ireland) ;
7. Extending protection against dismissal of pregnant women/new mothers in cases other than redundancy and reviewing shared parental leave to make it more accessible; and
8. Committing to repealing anti-trade union legislation implemented since 2010 and giving trade unions the right to operate effectively in the workplace.

Tackling discrimination and workplace inequalities

To address discrimination and inequality in employment, Labour are proposing to tackle workplace sexual harassment and to give workers with caring responsibilities more protection, although both these pledges lack detail at this stage.

The party is also promising to act to close the gender, ethnicity and disability pay gaps. This may be prove more complicated than Labour seems to envisage, due to the technical difficulties around the comparisons across different characteristics (beyond gender).

Conclusions

If implemented, Labour's New Deal for Working People will represent the most significant reform of employment rights in decades.

Understandably, there is some nervousness among businesses about the potential additional cost and regulatory burden.

For example, social care providers have already voiced their fear that the proposed reforms will lead to many of them to collapse, due to the impact on workforce-related costs.

Labour's promise that its package of reforms will not impose additional costs to the tax payer means that additional Government support for businesses may not be available.

At present, the timescale for any of these reforms to be implemented is not known (and of course a Labour victory is not a certainty). Businesses already facing a host of changes this year may not be in a position to focus on long-term changes, but should keep an eye on developments.