The Election: What this means for Employment law

With labour winning a majority in the General Election, it is highly likely they will be able to proceed with their proposed changes to employment law, as set out in their election manifesto. Following our summary last week, we take a deeper look at the proposed changes, and how they may impact employers over the next 12 months.

Unfair dismissal – a new day one right

Perhaps one of the more discussion inducing proposals is to change the right not to be unfairly dismissed to a day one right. Currently, employees must accrue two years’ continuous service before they obtained the right not to be unfairly dismissed. This change is therefore drastic, and beyond the previous position pre-2012 of a one year qualifying period. Employees will obviously welcome this proposal, but there is concern from employers about the restraints this may place on them for poorly performing individuals, or increased costs in the case of a redundancy situation.

Labour have set out that probation periods will have “special treatment”, but they have not provided any details as to how this will operate in practice. It is possible that the legislation will allow employers to fairly dismiss employees in a probation period, without following the usual performance improvement processes, if they can demonstrate they are not performing to the expected levels.  In other words, probation periods should be properly utilised as a legitimate way to assess new employees, rather than a period in which employees do not need to be fully managed, with no consequence for the employer.

There is currently a huge amount of claims being brought by individuals with less than two years’ service, that rely on discrimination or allegedly having made a protected disclosure, in order to bring claims for dismissal in the first two years’ of service. It is therefore possible that these will be reduced, and replaced with ordinary unfair dismissal claims. However, as individuals are aware that they can claim uncapped losses and injury to feelings payments in discrimination and whistleblowing claims, this may not come to fruition.

Other proposals are to introduce day one rights in relation to sick pay and parental leave.

Banning “exploitative” zero hours contracts

There has been much discussion over what counts as an “exploitative” zero hours contract. Previous action has been taken to ensure these are not exploited by employers, such as banning exclusivity clauses.

The Workers (Predictable Terms and Conditions) Act 2013 is expected to come into force in the autumn. This will create a right for workers and agency workers to request a predictable working pattern after 26 weeks’ service. Labour have promised to ensure the right to a contract that reflects the number of hours regularly worked based on a 12-week reference period. Therefore, once an employee has been regularly engaged under a zero hours contract, they will automatically have the right to a regular contract on those hours – rather than simply reducing a right to request a contract.

This right will also include measures to ensure that these workers receive reasonable notice of any change in their shifts or working time, and a right to compensation if work is cancelled at short notice.

Employers should ensure that they are only using zero hours contracts where there is a genuine need for flexibility in the number of employees or hours worked. The new proposals make it clear – where there is regular work, individuals should be on a permanent contract, not a zero hours contract.

Statutory Sick Pay

The purpose of SSP is to protect individuals from financial hardship during periods of sickness absence, and the cross-party House of Commons Work and Pensions Committee concluded in their March 2024 report, that this purpose was not being met. There is often a choice between health and financial income, which leads to presenteeism and low morale. In addition, this may lead to illnesses being transmitted between the workforce and higher levels of sickness absence. There are several proposed changes to the current SSP:

• The removal of the exclusion to SSP for those earning below the lower earnings limit (currently £124 per week). This will potentially benefit up to 1.3 million people, 70% of which will be women. In addition, those who take several part time roles, each individual salary resulting in being below the lower earnings limit with a particular employer, will receive access to SSP. It is yet to be seen how this will work in practice given the administrative burden this could create to ensure the SSP claimed through each employment is proportionate to their working hours with that organisation.
• The abolition of “waiting days” for SSP eligibility so that it is payable from the first day of absence, rather than from day four. This waiting period often results in individuals not taken sickness absence days as they cannot afford not to be at work. In addition, where individuals are very ill and absolutely cannot work, unless their employer extends discretion to pay company sick pay, they automatically have an impact on their income which leads to higher levels of stress and potentially a slower recovery.

It is yet to be seen whether these changes will improve attendance levels overall, or result in individuals  calling in sick when otherwise they would have considered themselves healthy enough to continue working (particularly given the increase in hybrid working). Employers should therefore ensure they are adequately managing sickness absence, to ensure high levels of short sickness absences are spotted and adequate action taken if sickness absence is abused.

National Minimum Wage

Labour aim to ensure the National Minimum Wage is “a real living wage that people can live on”. They therefore propose to remove age bands so that all workers over the age of 18 are entitled to the full National Living Wage rate. Previously, workers had to be aged 15 and over to be entitled to the full National Living Wage. This will inevitably increase costs to some employers, and it is likely certain industries, such as retail and hospitality, will be affected by this proposal.

Other proposals

Given Labour’s pledge that changes will be introduced in the first 100 days of their government, we will likely see draft legislation and consultation papers containing more details on the proposals, by the end of October. Additional proposed changes that we also hope to receive more detail on in the coming weeks and months include moving to a single status of worker for all other than the genuinely self employed, extending all employment tribunal time limits to three months, and ending “some” fire and rehire practices. We will continue to keep you updated on the detail of these proposals throughout the coming months.