91探花

In January 2024, the Labour party published its ‘’, which announced some sweeping changes to employment law. Since then, there has been some speculation that some of those proposals will be watered down following consultations with businesses. However, in their election manifesto, they committed to introducing new legislation into parliament within 100 days.

In this article, we take a look at some of the changes employers are likely to see take effect within the next 12 months, and what they should be doing to prepare for them.  

Employment rights from day one

The most discussed proposed change is to grant employees unfair dismissal rights from day one, rather than after two years. This means that an employee dismissed on the first day of their employment could bring an unfair dismissal claim against the employer. In their election manifesto, Labour indicated that probationary periods would be exempt from this rule. However, how that would translate into legislation is hard to predict – will it be a defined period, and must it be clearly stated in the contract? Will it be possible to extend that period in certain circumstances? These questions will need to be resolved, but this change looks likely to happen and so employers should ensure that contracts for new starters are reviewed and updated accordingly to include a clear probationary period. Line managers and people teams must then ensure robust process are in place to make decisions about ongoing employment before the end of the probationary period. 

There are concerns that this change will only serve to increase employment tribunal claims. However, that may not necessarily happen as those who wish to pursue a claim usually find a way around the two-year unfair dismissal rule. Instead, people teams may need to prepare for a significant increase in operational advice for line managers due to the increased need to adhere to the lawful process required to dismiss an employee, thereby mitigating the risk of employment tribunal claims. 

Increasing the National Minimum Wage

The Conservative government stuck to its pledge of increasing the National Minimum Wage (NMW) to two-thirds of median earnings following the recent increases on 1 April 2024. However, the Labour government has pledged to increase the NMW to rates covering the current cost of living and to establish a standard rate for all working adults (aged over 18). The Real Living Wage – a voluntary rate which employers can pay if they wish – is benchmarked against the cost of living and is currently set at £13.15 p/hr in London, with a likely further rise in April 2025.

Assuming the NMW adopts the same benchmark, this will result in a huge 50% pay increase for 18-20 year olds and a 15% pay increase for those aged 21 and over who are currently paid at NMW rates. This would put considerable pressure on employers as they are already grappling with an increasing wage bill. Coupled with the pledge to properly fund a single enforcement body, people and finance teams will need to allocate more time and resources to monitor compliance  in this area too.

Banning zero-hours contracts

The Labour government has been a vocal critic of zero-hours contracts, arguing that they promote insecure work and exploitation. On the other hand, many employers (and workers for that matter) value them for the flexibility they offer. Labour had committed to banning the practice, but it looks like they have stepped back from a total prohibition. Instead, they will give workers the right to demand fixed hours of work, using a 12-week average. This infers that the right will apply after 12 weeks of continuous service (much like agency workers’ equal treatment rights).

If this change occurs, employers will likely look to other solutions for their temporary work requirements, such as increasing the use of agency workers, to avoid the risks associated with employing casual workers. These workers could have unfair dismissal rights from day one and the right to demand fixed working hours.

Strengthening the law to enforce workplace rights

The Labour government has pledged to properly fund a single enforcement body to enforce workers’ rights and it looks likely that a Fair Work Agency will be formed within the next 12 months. This agency would likely bring together existing regulators to enforce basic employment rights such as the NMW, holiday pay and Statutory Sick Pay (SSP). This body would have extensive powers to inspect workplaces, bring prosecutions and civil proceedings against employers on behalf of workers for minimum wage violations, worker exploitation and discriminatory practices. While the establishment of a single enforcement body will take time, employers will need to quickly adapt to any new regime, and people teams will need to properly consider these risks as part of an annual review.

Reforming trade union rights

Labour have committed to reforming trade union rights, including the expansion of union rights to access workplaces, a continuing duty on employers to remind employees of their right to join a trade union, and simplifying the process of union recognition. It is also committed to introducing Fair Pay Agreements in some industries (including the social care sector) in which trade unions will have the power to negotiate fair pay and terms and conditions. These proposals will row back on the changes made by the Conservative government to trade union powers over the last 10 years, meaning that employers may soon see an increase in union activity amongst their workforce, and therefore a greater need to understand their obligations towards union representatives and their members.

These are just a small selection of the changes we are likely to see in employment law over the next 12 months. However, there are others which the Labour government has committed to making which could take more time to implement.

Employers have been promised that proper consultation will be undertaken before any changes are made. There are clear indications though that this could be the biggest shake-up of employment law in over 20 years.

For more information on the issues above, please contact Charlie Barnes or your usual 91探花contact.