Changes to Employment Law under the new Labour Government

By Courtney Kan, Trainee Solicitor, Employment

Following less than 100 days since the new Labour Government came into office, ministers yesterday (Thursday 10 October 2024) unveiled the new Employment Rights Bill (‘the Bill’), which will grant new rights to millions of workers across England and Wales, helping deliver economic security and growth to workers, businesses and communities.

The Bill will be the most extensive overhaul of worker’s rights in generations. Deputy Prime Minister, Angela Rayner, says the Bill will be: “The biggest upgrade to rights at work for a generation, boosting pay and productivity with employment laws fit for a modern economy. We’re turning the page on an economy riven with insecurity, ravaged by dire productivity and blighted by low pay.”

These changes are essential to increase economic growth in the labour market, with one in five businesses of ten or more employees suffering from staff shortages. These changes aim to bring about employment legislation that is fit for modern life and a modern economy.

The Bill will introduce 28 reforms, of which some key changes are discussed below:

1. Unfair dismissal: The existing requirement that an employee must have worked for their employer for at least two years before being eligible to bring an unfair dismissal claim will be removed, with employees now being entitled to raise unfair dismissal claims from ‘day one’. This change will bring greater protection against unfair dismissal, thus increasing staff retention and reducing recruitment costs.
2. Probation: A new statutory probation period for new hires will be introduced, likely to be up to nine months in length, where employers must carry out proper assessments of an employee’s suitability to a role.
3. Zero-hour contracts and fire and rehire practices: The Government aims to remove these exploitative practices, with workers now having a right to contracts with guaranteed working hours if they work regular hours over a defined period. The flexibility to remain on zero-hour contracts will remain if preferred by the employee. These changes are intended to provide workers with greater security of earnings and security at work.
4. Paternity, parental and bereavement leave: Clear standards for employers will be set by establishing a new right to bereavement leave and greater protection will be afforded to pregnant women and new mothers who are returning to work, including protection from dismissal whilst pregnant, on maternity leave and within six months from returning to the workplace. Fathers or partners to be will also be eligible for paternity leave from day one of employment.
5. Fair Work Agency: This agency will be run by Government enforcement bodies, which will enforce holiday pay and strengthen statutory sick pay and will be an organisation that employers can go to for support.
6. Flexible working: Business Secretary Jonathan Reynolds says: “The best employers know that employees are more productive when they are happy at work. That is why it’s vital to give employers the flexibility they need to grow whilst ending unscrupulous and unfair practices”. The working world has changed, with some working conditions being incompatible with the realities of everyday life and personal circumstances, such as raising children or supporting those with health conditions. The Bill aims to ensure everyone can work, whilst factoring in personal circumstances and responsibilities. Flexible working will become the default unless employers can prove a refusal to allow flexible working is reasonable.
7. Pay: The Bill will remove discriminatory age bands and will consider the cost of living when setting the Minimum Wage. Furthermore, workers will be entitled to statutory sick pay from day one of employment and those earning less than £123 per week will have the same entitlement.
8. Menopause: Large employers will be required to create action plans to support employees through menopause.

Whilst the Bill hopes to bring about greater protection for staff and, ultimately, encourage economic growth, some concerns have been raised. Unite (the UK’s leading union) has expressed concerns that the Bill fails to give workers meaningful rights to access a union for pay bargaining, which would put more money in their pockets and aid growth.

Further criticism is that the reforms will have delayed effects, with the changes not taking effect for two years following a period of consultation. On the other hand, many big businesses have welcomed such changes as for many firms the proposed changes shouldn’t bring about many challenges should these practices already be followed. However, smaller businesses may be left scrabbling to make sense of these changes and may feel the impact more.

Please contact Joseph Oates jmo@cooperburnett.com or Natasha Smith nes@cooperburnett.com (tel 01892 515022) from our Employment team if you would like to discuss this further.

This blog is not intended as legal advice that can be relied upon and CooperBurnett LLP does not accept any responsibility for the accuracy of its contents.