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A majority of voters in the United Kingdom voted in favour of change this month, leading to a landslide victory for the Labour party. The new Labour government made promises to voters to ‘make work pay’ and Keir Starmer, the new prime minister, has committed to boosting wages and making work more secure. Key to this pledge is their promise to deliver a genuine living wage, ban exploitative zero-hours contracts and end ‘fire and rehire’, promising workers and employers the biggest upgrade to rights at work for a generation.

Legal and people experts will all be watching which pledges are prioritised and tackled first. But employers and HR departments should not let that stop them from starting to prepare for potential changes. 

Aside from this impact, another significant hike in National Minimum Wage (NMW) will have on some already stretched sectors such as hospitality, the other areas of the proposed New Deal for Working People that pose significant change to all employers revolve around how they manage people. Labour’s pledge to completely remove the current qualifying period for unfair dismissal is likely to be a cause for concern for HR departments, especially those whose practices and procedures around managing probationary periods are not robust enough.

Removal of the two-year qualifying service requirement for ordinary unfair dismissal claims

Currently, the UK enforces a two-year qualifying period for an employee to lodge an ordinary unfair dismissal claim, an increase compared to the previous one-year qualifying period. As part of Labour’s new deal, they are proposing to provide basic individual rights from day one for all workers, which will essentially eliminate the current system that requires someone to wait two years to claim basic rights such as unfair dismissal.

Should this form part of Labour’s 100-day plan to make work pay, HR departments will need to start scrutinising the way they are managing poor performance in their organisations. The new government has clarified that this new legislation will not prevent a fair dismissal taking place, including the fair management of probationary periods. Therefore, it would be good practice for HR teams to review their processes and procedures, making sure managers are well-trained in managing probationary periods fairly.

HR departments will also need to ensure that a fair process for all dismissals is carried out, irrespective of how long an employee has been employed for. It is likely that managers in some companies will require training to ensure they are adequately following the correct procedures.

Creating a single status of worker and banning exploitative zero hours contracts

The UK currently recognises three types of employment status: employees, workers and the self-employed. Presently, only employees are entitled to all statutory rights. Labour is proposing to simplify this system by creating a single status for everyone except for the self-employed. This means that workers could then gain the same statutory rights and protections as employees.

Before these changes are implemented, HR departments should start to analyse their workforce to identify who might be impacted. It’s likely that companies currently using zero-hours or casual worker agreements will need to review the status of those workers and decide what steps they need to take to ensure people are on the right contracts for the work they are doing. Sectors such as the hospitality industry, which employs lots of workers on casual worker agreements, are going to face increased costs because of this change. This situation could create a dual impact for the hospitality sector, which is also facing another significant rise in NMW, probably affecting the same cohort of workers. Organisations may need to carefully review how and who they employ going forwards.

This is clearly a very fast-moving area, so for an up-to-date conversation about how the election could affect your business from an HR perspective, please get in touch with Kerri Constable or your usual 91̽»¨contact.