Employers have been braced for a number of employment law reforms since the general election. The Labour Party set out the intended reforms in its Plan to Make Work Pay before the election, and these changes were reinforced in the King’s Speech.
The proposed changes are numerous, vary in significance and will affect day-to-day business decisions in the coming months.
The key proposals that employers and HR departments should be aware of are highlighted below.
Unfair dismissal
Employees have been promised protection from unfair dismissal from the first day of their employment. This will be a monumental shift in employment law, as current protection from unfair dismissal only kicks in after two years of continuous employment. Employers can only terminate an employee’s employment lawfully after identifying a fair reason and following a fair process as prescribed by law.
Terminations are likely to be more expensive, leading to an increase in tribunal claims
While this change is seemingly good for employees, it is likely to make businesses recruit with greater scrutiny and require more formal, extended probationary periods. In the longer term, terminations are likely to be more expensive, leading to an increase in tribunal claims.
Flexible working
The right to request flexible working became a day-one right in April. The government has now stated that the right to flexible working will be made the default for all workers, except where it is not reasonably feasible, from the first day of employment.
The aim is for workers to benefit from flexible arrangements, such as term-time options
The aim is for workers to benefit from flexible arrangements, such as term-time options, with a particular emphasis on flexibility for workers with caring responsibilities.
Sick pay
The four-day waiting period will be removed, so statutory sick pay (SSP) must be paid from day one of sickness. This will increase employers’ costs.
The government has not confirmed if it will increase the rate of SSP, which remains relatively low at £116.75 per week, but it does plan to remove the lower earnings limit.
Switching off
A ‘right to disconnect’ to promote healthier working practices has been promised. Looking to more flexible European models for inspiration, the government plans to give workers and employers the opportunity to collaborate on the development of policies or contractual terms that benefit both parties.
Family leave
The parental leave system will be reviewed. Labour will make parental leave another day-one right. It’s unclear if this refers to parental leave only or also to other kinds of right for parents to take family leave. For example, paternity leave currently requires six months’ employment, a requirement likely to be scrapped.
The government wants to prevent the dismissal of those returning from maternity leave
In addition, a new law had already been introduced this year that means pregnant women who are selected for redundancy have the right to suitable alternative employment. The government wants to go further and prevent the dismissal of those returning from maternity leave, except in specific circumstances (to be defined).
The right to one week’s unpaid carer’s leave came into force in April but Labour has signalled its wish to make this a paid entitlement, though it has not yet promised to do so.
Regarding compassionate leave, though many employers have a policy for this, the government wants to make this a statutory entitlement.
Sexual harassment
From October, employers will already come under a new proactive duty to take ‘reasonable steps’ to protect employees from sexual harassment.
The government plans to further extend the protection by requiring employers to take ‘all reasonable steps’ to stop sexual harassment, including harassment by third parties such as customers.
Ethnicity and disability pay gap reporting is likely to mean a bigger burden on data handling
Pay gap reporting
In addition to gender pay gap reporting (which is going to be extended to include outsourced workers), there are now plans to make ethnicity and disability pay gap reporting compulsory for employers with at least 250 employees. This is likely to mean a bigger burden on data handling, diversity and inclusion reporting, and HR compliance management.
Race Equality Act
The right to make equal pay claims to Black, Asian and minority ethnic and disabled workers is also on the agenda, as is a right to claim ‘dual discrimination’, where an individual can claim discrimination because of having two protected characteristics, such as those based on race and gender.
Worker status
Following consultation, the government plans to simplify the current multisystem for employment status. It wants to implement a new system where people are designated as either workers or self-employed, eliminating the current legal distinction between ‘employees’ and ‘workers’.
It’s not clear how rights such as sick pay and family leave rights would be delineated
While most will welcome a simpler system, it’s not clear how rights such as sick pay and family leave rights would be delineated, or how people will be taxed. ‘Workers’ are currently taxed as self-employed, but presumably it wouldn’t work to have two groups of workers with identical employment rights who are taxed differently.
If the new single-status workers are taxed as employees, employer costs, specifically NICs (depending on whether and how those costs are passed on), might mean more individuals will argue that they are self-employed.
Legislation is expected to be put before parliament within the first 100 days of the Labour Party’s entry into government with respect to many of these proposals, so the finer details of these changes should soon become clear.
