Labour's plan to make work pay: key issues for HR and businesses

Unless something pretty drastic happens between now and 4 July, the Labour Party are likely to form the next government. Its manifesto pledges to tackle “outdated” employment laws and to fully implement its plan to make work pay. It has also repeated its commitment to introduce legislation within its first 100 days in office. 

The plan to make work pay runs to 23 pages, sets out a lot of policy but is light on detail. Although most of the policies are already in the public arena, there are a few surprises.

Here are the key proposals:

Trade unions and collective consultation

The biggest section of the plan focusses on, what Labour refers to as “voice at work”. It promises to “bring in a new era of partnership” between employers, unions and government to work together by:

• Repealing the Minimum Service (Strikes) Act which imposes minimum levels of service that some employers have to meet during strike action
• Repealing the Employment Agencies and Employment Business (Amendment) Regulations (although these remain on the Statute book, the High Court quashed them in 2023 and they are not in force) 
• Reversing the changes made under the Trade Union Act 2016 which increased the turnout needed for ballots, added more information for ballot papers, limited mandates for strike action to six months and required two weeks' notice to be give of a ballot for industrial action rather than one
• Allowing unions to ballot members electronically (currently they can only do this via the post)
• Simplifying the process of union recognition by, amongst other things, removing the rule that unions must show that at least 50% of workers are likely to support their claim before the process begins and requiring unions to obtain a simple majority on the final ballot
• Introducing additional rights for trade unions to access workplaces to recruit and organise and for trade union reps to meet, represent, recruit and organise; ensure that they get appropriate facility time; and strengthening protections against unfair dismissal, threats and blacklisting
• Introducing a new duty on employers to inform all new employees of their right to join a union on a regular basis as well as putting this in their contract of employment or s1 statement

New day one rights

Labour believes that imposing qualifying periods before employees can obtain important employment rights disincentivises them from switching jobs even where these offer better terms and conditions. To overcome this, it will give workers day one rights in respect of unfair dismissal, parental leave and sick pay.

Before you break out in a cold sweat regarding day one unfair dismissal rights, this will be subject to “probationary periods with fair and transparent rules and processes”. I suspect that Labour will set out the maximum length a probationary period can be to avoid employers extending these beyond normal limits.

Pay

Labour intends to create a “genuine living wage” by:

• Changing the remit of the Low Pay Commission to take into account the cost of living when setting rates
• Removing age bands so that everyone aged 18 and over will get the same hourly rates of pay
• Ensuring that workers who work across multiple sites receive the NMW for travel time

It will also strengthen statutory sick pay by:

• Removing the lower earnings limit which will mean that all workers will be able to receive it
• Removing the waiting days before SSP becomes payable

There is no mention of increasing the rate of SSP.

It has also committed to strengthening the law around tips to ensure that hospitality workers receive these in full and workers can decide how they are allocated. It's not entirely clear how this differs from legislation on tips introduced by the current government, and the new Code of Practice, neither of which are in force due to the early dissolution of Parliament.

Flexible working and family friendly rights

Labour has said that it will ensure workers can benefit from flexible working by making it the default position (which presumably employers will be able to rebut). This sounds like a right to expect flexible working rather than the existing right to ask for it. Labour also appears to be keen for working parents to be able to limit their work to term-time contracts.

It will also:

• Make it unlawful to dismiss a pregnant woman and for six months after she returns to work. This will be subject to exceptions - one of which will presumably be a genuine redundancy situation
• Consider introducing paid carer's leave
• Expand bereavement leave (currently it's limited to parents whose child dies under the age of 18 years, and to those whose partner dies shortly after childbirth)

Equality

Labour has said that it will “finish the business of ending pay discrimination at work” which is a bold assertion given the glacial pace of change in respect of redressing the gender pay gap. It will:

• Require those businesses who have to publish their gender pay gap data to also publish and implement actions plans to close these and include outsourced workers in their reports
• Introduce mandatory publication of ethnicity and disability pay gaps for employers with more than 250 staff
• Require employers with more than 250 staff to produce menopause action plans setting out how they will support employees going through the menopause
• Require public bodies to comply with the socioeconomic duty under S1 of the Equality Act 
• Encourage employers to sign up to the Dying to Work Charter
• Implement a regulatory and enforcement unit for equal pay with involvement from trade unions

Zero hours contracts

Labour wants to end arrangements which provide “one-sided” flexibility by:

• Banning “exploitative” zero hours contracts (exploitative isn't defined)
• Giving workers the right to have a contract that reflects the number of hours they regularly work, based on a 12-week averaging period

Fire and rehire

Labour says it will ban fire and re-hire (the practice of making an employee redundant and re-engaging them on less generous terms and conditions) and strengthen the statutory code of practice (which comes into force on 18 July) which it describes as “inadequate”.

It's not entirely clear what a ban might look like. In a nod to reassure business, it recognises that they may need to introduce changes to remain viable, where there is no alternative. But they “must follow a proper process based on dialogue and common understanding between employers and workers”.

Worker status

Labour wants to get rid of the two-tiered system of employment rights which distinguishes between workers and employees and move towards a single status of worker for employment law purposes. Presumably this will mean that everyone other than those people who are genuinely self-employed will get the same rights, subject to any qualifying periods that apply in respect of those rights. To achieve this, Labour will consult on a framework that differentiates between workers and the genuinely self-employed within its first year in government.

It also plans to provide accessible information for people which explains their employment status and the rights they have. 

Simplifying the employment status of workers has been debated for years. The Taylor Review suggested this as a way forward but, so far, it has been put on the “too difficult” pile so it will be interesting to see what Labour comes up with. 

Right to switch off

Labour will introduce a right for workers to switch off from work out of hours. It says that it will follow similar models to those already in place in Ireland and Belgium and will give workers and employers the opportunity to agree bespoke workplace policies or contractual terms that benefit both parties.

New enforcement body

Labour will establish a single enforcement body with the power to inspect workplaces and bring civil proceedings against businesses that breach workers' employment rights. It will help employers to understand their legal obligations by providing guidance and best practice examples.

The existing government consulted on this and published its response in 2021 which sets out the detail of how this might work.

Other changes

• Changing the trigger point for collective redundancy purposes so that it is determined by the number of people impacted across the business rather than in one workplace
• Strengthening the protection for whistle-blowing, including increasing protection for women who report sexual harassment at work
• Banning unpaid internships except where they are part of an education or training course
• Making sure that employers who use technology to “spy” on their staff must consult with unions or elected staff rep's before introducing it
• Extending the time limit to bring employment tribunal claims to six months for all types of claims
• Introducing legislation to deal with extreme workplace temperatures
• Introducing legislation to prevent workers from being harassed by third parties

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