Labour Government Employment Plans

The Employment Rights Bill will not become law until Autumn 2025. The Bill is currently going through the Committee stage. There are likely to be significant changes to the Bill before it actually becomes law.

The new Labour government has already committed to bringing in various employment law changes. The plan is to announce these in the first 100 days of government and then consult with businesses and trade unions regarding implementation. Once the consultation period ends, the legislation will be finalised and become law. The government has widely trailed the proposed changes while still in opposition. We are not expecting any surprises or radical departures.

However, this has not stopped a marketing frenzy by various law firms and professional advisers claiming the sky could potentially fall on employers.

It is important to remember that the previous Labour government introduced the National Minimum Wage, the 48-hour working week, 28 days paid holiday, parental leave and greater unfair dismissal protection.

It is also important to remember that even the previous Conservative government introduced a raft of employee-friendly measures. All governments realise that employee-friendly policies and clear employment laws benefit the economy by encouraging more people into work and encouraging those in work not to leave.

So, here is a basic outline of what is coming up:

 

Zero Hours Contracts
The government proposes banning zero-hours contracts, as the flexibility inherent in these contracts really only benefits employers and not employees. Employees will be entitled to a full employment contract based upon a 12-week reference period. This means contracts will be based on the hours employees usually work. The benefit to employees will be greater certainty and security in employment. The government also intends to put in place anti-avoidance measures to prevent abuse. These include employers providing reasonable notice of any subsequent changes to hours or shifts.

 

Fire & Rehire
The government plans to introduce a code of practice around fire & rehire and fire & replace. This will only be the renegotiating of terms where a business genuinely needs to do this in order to stay in business and protect jobs. This is very different to using it as a tactic in pay negotiations.

 

Basic Day One Rights
This will give all employees basic rights on their first day in a new job. This is to encourage greater movement in the labour market. New employees will avoid losing employment protection, and employers should find it easier to recruit them. Also, data shows that moving jobs is a key way to secure better pay and conditions.

 

Single Status of Worker
The UK's current three-tier employment system, classifying people as employees, self-employed, or 'workers', often causes confusion for both workers and businesses. The complexity of determining employment status has been exacerbated by new technologies and work patterns, leading to exploitation in some cases, such as bogus self-employment. The government proposes transitioning to a simpler two-part framework, distinguishing between workers and the genuinely self-employed. This will include consultations to ensure flexibility, prevent exploitation, and provide clearer information on employment rights to make the system more transparent and accessible. This move is clearly aimed at the so-called "gig economy".

 

Redundancy & TUPE
Redundancy rights are to be strengthened by ensuring redundancy consultation is based on the total number of employees affected across the entire business, not just in one location. Plus, enhanced protections for workers involved in TUPE processes, safeguarding their existing rights during business transfers.

 

Whistleblowers
The current law will be expanded to include protection for women who report sexual harassment at work.

 

Self-Employment
Increasing protections for those self-employed, including the right to a written employment contract (though this seems at odds with attempting to reduce gig-economy jobs). We will need to see if this is simply greater enforcement of existing laws or new laws when handling late payments. Preventing blacklisting of the self-employed, this is particularly relevant to the building trade.

 

Family Friendly Rights
The new Labour government and the previous Conservative government both recognised that many people chose not to work because of the lack of flexibility and childcare costs. Having a significant number of working-aged people outside work has caused a substantial loss to the economy, with employers unable to recruit and posts remaining unfilled for months.

 

Flexible Working
The government intends to embrace technological advancements in a way that benefits both workers and the economy and plans to promote flexible working, including flexi-time contracts and school-term-friendly hours, by making flexible working the default from the first day of employment unless impractical. As part of this, the government is also suggesting a 4-day week. However, this would be achieved by compressing employee work hours into four days instead of five. The government wants to ensure flexibility becomes a genuine default for all workers.

 

Parental Rights
The government intends to review the current parental leave system and make parental leave a day-one right.

 

Maternity Discrimination
Strengthening protections for pregnant women by making it unlawful to dismiss a woman who is pregnant for six months after her return, except in specific circumstances.

 

Carers' Leave
Unpaid carers' leave legislation was introduced in April 2024; the implementation of this will be reviewed, and all the benefits of introducing paid carers' leave will be examined while being mindful of the impact of any changes on small employers.

 

Bereavement Leave
The government plans to clarify the law and entitlement, introducing the right to bereavement leave for all workers.

 

Right to Switch Off
This has received a lot of coverage. Flexible and remote working has created opportunities to better balance work and family life. However, it has also blurred the boundaries between work and home, which can be detrimental to employee well-being. While some employees appreciate flexibility, the government aims to support a healthier work-life balance by introducing a "right to switch off." This policy will prevent home offices from becoming 24/7 workplaces, drawing on successful examples from countries in Europe.

 

Technology & Surveillance
The government plans to collaborate with workers, trade unions, employers, and experts to assess how AI and new technologies will affect jobs, skills, and workplace practices. A key focus will be ensuring best practices to protect against privacy invasions through surveillance technology, spyware, and discriminatory algorithmic decisions. Labour will mandate that any proposals to introduce surveillance technologies undergo consultation and negotiation, aiming for agreement with trade unions or elected staff representatives. Existing collective agreements on surveillance will remain in effect.

 

Living Wage
The National Minimum Wage will become a real living wage. The Low Pay Commission will consider median wages economic conditions (as under the current remit). However, the Commission will also take into account the cost of living. Pay bands according to age will also be removed, as these are discriminatory and result in younger workers being paid less. There will also be a single enforcement body that works with HMRC to ensure employers' compliance.

 

Sick Pay
The pandemic highlighted the vulnerability of low-income workers, forcing many to choose between their health and financial stability. This will be addressed by strengthening statutory sick pay, removing the lower earnings limit to make it accessible to all workers, eliminating the waiting period, and ensuring fair earnings replacement for those earning below the current rate of statutory sick pay.

 

Fair Tips
Workers in pubs, bars, cafes and restaurants are often low paid. The government intends to strengthen the law to ensure hospitality workers receive their tips in full and workers decide how tips are allocated.

 

Unpaid Internships
Unpaid internships will be banned except when they are part of an education or training course. This will be good for social mobility, ensuring that the talent of tomorrow gets the vital skills and experience they need to succeed.

 

Adult Social Care
There is a severe recruitment and retention crisis in adult social care, with high turnover and vacancy rates exacerbating challenges in the NHS. To address this, the government proposes a "New Deal for Social Care Workers," ensuring better conditions, training, and career progression. A key component is establishing Fair Pay Agreements (FPAs) in the sector, allowing workers and unions to negotiate fair pay, conditions, and benefits. These agreements aim to improve care standards and reduce NHS waiting times. Plus, enforcing National Minimum Wage regulations for travel time ensures social care workers are paid fairly and in compliance with the law.

 

Voice at Work
There are plans to strengthen worker representation, collective bargaining, and trade union rights to address economic challenges and improve workplace conditions. The hope is that empowering workers through unions will tackle issues like low pay, insecurity, and inequality. This will include updates to trade union legislation, removing unnecessary restrictions and modernising practices like allowing electronic voting for union ballots. The Labour government wants fair union access to workplaces, introduce new rights for union representatives, and create protections against unfair dismissal and blacklisting. These measures aim to foster cooperation between employers, unions, and the government to build a fairer economy and reduce workplace disputes. (This could also put the government on a collision course with some large companies, particularly those that have blocked union representation, such as Amazon and Starbucks.)

 

Equality at Work
The government is seeking to end pay discrimination and close the gender pay gap, which remains an ongoing issue 50 years after the Equal Pay Act. Employers will be prevented from using outsourcing to evade equal pay obligations, and Equality Impact Assessments for public sector bodies will be strengthened. Recognising the barriers to pay justice, such as long tribunal backlogs, the government will establish a regulatory and enforcement unit for equal pay with union involvement. Plus, rights derived from EU law and the Equality Act 2010 will be protected, ensuring public sector equality duties are fully enforced.

 

Terminal Illness
A "Dying To Work Charter" will promote best practices for treating terminally ill workers. The government will collaborate with trade unions and other organisations to ensure workers diagnosed with terminal illnesses receive the respect, dignity, and workplace support they need.

 

Socio-Economic Duty
The government will enact the socio-economic duty under Section 1 of the Equality Act. The socio-economic duty will apply to public bodies.

 

Pay Gap Reporting
Large companies will be obliged to create, publish, and implement action plans to reduce gender pay gaps, ensuring outsourced workers are also included in these reports. Additionally, it will be mandatory for employers with over 250 staff to report on ethnicity and disability pay gaps, similar to gender pay gap reporting. This move aims to address significant inequalities and promote fairness in the workplace.

 

Menopause in the Workplace
The government will require large employers to implement Menopause Action Plans, which will detail how they will support menopausal employees, similar to gender pay gap action plans. Guidance will also be provided to smaller employers on flexible working, uniform adjustments, and recording menopause-related absences.

 

Enforcement
The government plans to introduce a Single Enforcement Body to protect workers' rights, focusing on issues like exploitation and discrimination, particularly against migrant workers. The body will have powers to inspect workplaces, enforce laws, and initiate civil proceedings. It will also include trade union and TUC representation to ensure better coordination in addressing complex enforcement challenges and will support new laws for workplace rights.

 

Employment Tribunals
Employment Tribunals will be improved, making them more efficient and accessible for resolving contract disputes. Tribunals are less costly and more specialised than civil courts but currently face challenges, such as enforcement restrictions and growing delays. To address this, the proposal includes digitising tribunals, increasing the time limit for claims from three to six months (as recommended by the Law Commission), and easing the burden on civil courts. These changes will particularly benefit pregnancy discrimination claims and may reduce the number of overall claims by allowing internal resolutions.

 

Collective Grievances
Under the current system, workers can only raise individual grievances through ACAS, which may allow bad practices to persist unnoticed. To address this, the government proposes enabling employees to collectively raise grievances about workplace conduct with ACAS, following the same guidelines as for individual grievances. This change aims to improve how workplace issues are addressed and resolved.

 

Safer Workplaces
There are plans to review and modernise health and safety regulations to better reflect the realities of the modern workplace. This includes addressing extreme temperatures in various sectors, supporting the well-being of workers, and ensuring health and safety guidance is adequate for issues like long Covid. The government also intends to strengthen protections against harassment, requiring employers to maintain harassment-free workplaces, including protection from third-party harassment. In particular, there is a commitment to tackling sexual harassment by strengthening the legal duty for employers to take proactive steps to prevent it, recognising that one in two women have experienced sexual harassment at work.

 

Procurement
There are plans to end the privatisation of public services and initiate a major shift towards insourcing. The Freedom of Information Act will be extended to private companies holding public service contracts and publicly funded employer associations. The Labour government aims to review outsourced public services to improve quality, ensure stability, and achieve better value for money. Before outsourcing any service, a public interest test will assess whether it could be better delivered in-house. The government will also reinstate the two-tier code to prevent unfair work conditions and require social value to be a key factor in public contract awards. The approach emphasises fair work standards, strong supply chains, and trade union recognition, with guidance shaped by a new Social Value Council.