This month we welcomed a new Labour Government after 14 years of Conservative rule. Just two weeks after the general election came the King’s Speech, which highlighted many of the employment law reforms which featured in Labour’s manifesto. The new Government claims to be “mission-driven” for “the service of working people” – so it may come as no surprise that their reforms are somewhat more favourable to workers than what we’ve been used to during the Conservative reign. Let’s take a look at what some of the proposed reforms are and what they could mean for businesses.

Unfair Dismissal Claims

The qualifying period for claiming unfair dismissal has fluctuated from the first six months of a new job to the first two years since the concept was first introduced but has been settled at two years since 2012. The Labour Government have proposed scrapping the two-year qualifying period and making it a day-one employment right.

It’s thought that dismissal during the probationary period could still be permissible without reference to the unfair dismissal rules. A possibility for the practicality of this is for failing the probation period to become a new fair reason for dismissal. The introduction of this day-one employment right would mean implementing a wide range of changes to employment contracts and people policies such as probation, performance management and dispute resolution. That’s likely the reason that, when the CIPD asked employers before the recent election at the 2024 Labour Market Outlook survey, 46% of participating employers were in favour of keeping the qualifying period at two years. In addition to this, the reform could deter businesses from hiring employees and instead opting to use agencies and contractors.

Banning Zero-Hours/Casual Worker Contracts

A zero-hours contract doesn’t have a formal legal definition. However, it is understood to be a type of contract under which the worker has no guaranteed hours and agrees to be available for work on a flexible basis but is only paid for the work carried out. Currently, in the UK, over 1 million workers are on zero-hours contracts.

The law would require contracts to reflect hours worked across a 12-week reference period and to give "reasonable notice" of any shift changes to the employed party and detailing arrangements for "proportionate compensation" for any shifts that are cancelled.

The implication of these reform introductions could reduce flexibility for both employees and employers, possibly creating resourcing challenges in sectors where demands fluctuate and increasing employer costs.

Family Leave Rights

The Labour Government intends to strengthen family-friendly rights. Their plans include extending statutory maternity and paternity leave, introducing a right to bereavement leave and urgently reviewing the shared parental leave framework.

Labour also intends to:

·          Make it unlawful to dismiss a woman during pregnancy or within six months of her return to work, except in specified circumstances;

·          Introduce paid family and carer's leave; and

·          Make parental leave a day one right - currently a one-year qualifying period for parental leave, giving parents the right to take up to 18 weeks’ unpaid leave for each child.

Whilst most employees will be hugely in favour of measures aimed at supporting families with a better work-life balance, and their priorities and responsibilities outside of work, this change will have huge and potentially costly consequences for businesses and employers.  Focus will need to shift to continuity and cover plans, probation performance management in cases of family related absence during the probation period, and enhanced pay offerings.

Employment Tribunal Claims

It’s intended that the deadline for filing a claim with the Employment Tribunal would be extended from 3 to 6 months from the occurrence of the event giving rise to the claim. Firstly, this would have a huge impact on an already pressurised Employment Tribunal, especially in conjunction with reformed unfair dismissal claim rights.

Increasing the limitation period for commencing claims in the Employment Tribunal would be beneficial to victims of discrimination (particularly) in the workplace, as it removes the pressure to rush into litigation, and allows more time to process the potentially traumatic experiences they have been through. For this reason, the proposed policy will likely encourage more people to pursue a claim. Bringing a claim within the current 3-month period is seen by some as an unreasonable expectation and is one of the reasons why less than 1% raise a claim through the tribunal system.

Although every People team dread an ET3 landing on their desk, a lengthier limitation period could allow more time for complaints to be resolved prior to the Employment Tribunals judgement.

Statutory Sick Pay (SSP)

The Employment Rights Bill would remove the waiting period so that SSP would be paid from day one of sickness (rather than day four) and remove the lower earnings limit so that very low earners would qualify for sick pay.

This would be of huge benefit to workers, especially those on low incomes. The reforms could, however, be costly for employers who rely on waiting periods or low incomes, and some have raised concerns about productivity as it’s predicted that there’s potential for levels of absenteeism to increase as a result of the waiting period removal.

It’s not yet clear if Labour will also increase the rate of SSP, which remains low compared to other countries.

The Labour Government have set themselves a target to implement as many as their reforms mentioned within the Kings Speech within their first 100 days in power. Parliament has been extended and will remain open later than usual over the summer period, so it’s expected that Labour will likely kickstart its legislative agenda before summer recess and potentially ahead of the October budget. If you need help staying on top of employment rights or implementing inclusive practices, please get in touch!

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