Labour’s plans to make work pay: progress so far
The ongoing debate around the proposed changes to UK employment laws, promised as part of Labour’s election campaign has left many employers in a state of uncertainty, preparing for potential shifts that could significantly impact their operations.
The Government’s proposals—while not yet law—signal an increasing emphasis on worker rights and greater regulation of employment practices. For employers, these changes could bring both opportunities and challenges, depending on how they manage the adjustments. Labour’s manifesto included a statement that legislation would be introduced in Parliament within 100 days, although it acknowledged that some of the proposals will take longer, such as the plan to introduce a single workers status and a review of parental leave. If the government sticks to its 100-day time limit, a draft Employment Bill will be presented to Parliament by 12 October 2024. So with the clock ticking, what do we know so far?
Consultation
The Deputy Prime Minister, Angela Rayner MP and Business Secretary, Jonathan Reynolds MP have been meeting with senior business leaders of major employers including John Lewis, Octopus, BT, McDonald’s and Sainsbury’s, as part of the government’s intention to consult on its plans. It has been reported that the atmosphere during these discussions has been constructive and friendly, with the emphasis on Ms Rayner and Mr Reynolds explaining what they have planned, and listening to the concerns of employers. For many it is still the detail of what those reforms will look like that remains a concern.
Protection from unfair dismissal ‘day one’ right
On 19 September 2024, it was reported by the Financial Times that, in connection with Labour’s pledge to provide protection from unfair dismissal as a “day one” right, employers will be able to put new employees on probation for up to six months. But it seems even the government are in disagreement over how far reforms should go, with earlier reports referring to a divergence of view between the Deputy Prime Minister, who wished to see a brief probationary period (at most) and the Business Secretary, who favoured a longer period of up to nine months. Most recent reports are that employers will be able to use six month probationary periods.
In proposing day one unfair dismissal rights, the Government previously stated that it would be possible for employers to fairly dismiss new hires during a probationary period “with fair and transparent rules and processes”. There is currently no detail on what these rules and processes will be or how they will be expected to operate.
Predictable working pattern
As part of its pledge to end ‘one sided flexibility’, the Workers (Predictable Terms and Conditions) Act 2023 (W(PTC)A), which was expected to come into force in September, sought to address this issue by providing a statutory right for workers and agency workers to request a predictable working pattern. However, the Department for Business and Trade (DBT) confirmed that the W(PTC)A has been dropped and will no longer come into force. Instead, the government has said it will introduce a new right to a contract that reflects the number of hours regularly worked as part of their agenda to ensure workplace rights are fit for a modern economy, empower working people and deliver economic growth. The details of this are yet to be confirmed.
Changes to the remit of the Low Pay Commission (LPC)
Previously, when setting national minimum wage (NMW) rates, the LPC would take into account the impact on business, competitiveness, the labour market and the wider economy. On 30 July, the government changed this to also take into account the cost of living and expected inflation up to March 2026. The LPC was also tasked with reducing the difference between the National Living Wage and the NMW for the 18 to 20 age band, with the plan to eventually remove the 18-20 band altogether. These are the first steps on the way to deliver the government’s promise of a “genuine living wage for working people” and eventually, a single rate of pay without age bands.
Draft Equality (Race and Disability) Bill
This Bill, which was announced in the King’s Speech, will introduce mandatory ethnicity pay reporting for employers with 250 or more employees and will make it easier for minorities and disabled people to make equal pay claims. This is likely to mirror existing equal pay and gender pay gap reporting provisions in the Equality Act 2010. Detail of what will be included is yet to be seen as the Bill has yet to be laid before Parliament.
Preparing for the Future
There is much still much detail yet to be confirmed so while the future of these proposed UK employment changes remains uncertain, employers would do well to prepare for a more regulated and worker-centric environment. By adopting a proactive stance and staying informed, businesses can adapt to these potential shifts while still maintaining the flexibility they need to thrive in an ever-evolving economy.
