91探花

The new Labour government has committed to making the biggest changes in UK worker rights for over 40 years. Some of these changes will be included in an Employment Rights Bill, which it has promised to publish before the end of October 2024. 

The Government has said it will consult with businesses, unions and trade bodies before making any changes. The first of those consultations took place on 14 August, indicating that it is moving ahead quickly with its plans. 

So what are the key changes employers should be planning for and when are they expected?

Within the next 12 months

Minimum pay rates

The Government has asked the Low Pay Commission to factor in the cost of living when setting the National Minimum Wage (NMW) in April 2025, and to gradually phase in the National Living Wage for all workers aged 18 or over. Currently it only applies to workers aged 21 and over. Employers should therefore be forecasting now for another round of above inflation rises in NMW rates in April 2025, with a top rate of potentially over £13 per hour. 

Limitations on zero hours contracts

Instead of an outright ban on such arrangements, workers would have the right to demand a contract with guaranteed hours of work after 12 weeks’ service. Employers will need to consider how this change may impact business models that rely on casual work.

A 'right to switch off' from work

An entitlement meaning workers would not have to take on additional work outside their contractual hours. Plans are currently being drawn up for what this could look like, and current expectations are that it would be set out in a code of practice, with penalties for employers that fail to comply.

Within two years

Unfair dismissal rights

A right to claim unfair dismissal from day one. Such rights currently arise after two years’ service, although there are exceptions. It has been suggested that there would be an exemption if the dismissal takes effect during a probationary period.

Strengthening trade union rights

The government has committed to making it easier for employees to require their employer to recognise a trade union, after the previous Government watered them down. 

More than two years

Employment status

Replacing the current legal definitions of 'employee' and 'worker' with a single worker status. This would be a welcome change as it would better align with the tax position on employment status, thereby reducing the regulatory burden on employers. However, this can only really be achieved if more clarity can be provided on the legal tests for status assessments.

Equal pay

Introducing disability and ethnicity pay gap reporting and extending equal pay rights. Currently, only employers with 250 employees or more are required to publish their gender pay gap statistics. Some employers already report their ethnicity pay gaps and there is non-statutory guidance available. Whilst this change may not take place immediately, employers may find themselves falling behind peers if they don’t start reporting their ethnicity and disability pay gaps.

Basic employment rights

Establishing a Fair Work Agency to enforce basic employment rights, such as NMW, holiday pay, modern slavery and statutory sick pay with a similar penalty regime to that currently used for NMW.

It is important that employers give early consideration to the likely effect of these intended changes on business operating models and financial forecasts, and prepare to take the necessary actions to comply.

For more information, please get in touch with Charlie Barnes or your usual 91探花contact.