Labour’s “New Deal” for workers: what could it mean?

This article, written by Setfords’ employment solicitor Nick Hall, explores Labour’s “New Deal” and what it could mean for employment law if they were to win the July General Election.

The Labour Party has published a paper on “Labour’s Plan to Make Work Pay: Delivering a New Deal for Working People.”

Within the Paper, Labour has set out many proposed changes to employment law and practice.  

And what a smorgasbord of proposed changes it is!  

The plan, should Labour win the election in July, is to introduce new employment legislation within 100 days of entering Government.  

The Paper says that the Party’s New Deal will ensure “more people stay in work, make work more family friendly and improve living standards, putting more money in working people’s pockets to spend, boosting economic growth, resilience and conditions for innovation. Stronger trade unions and collective bargaining will be key to tackling problems of insecurity, inequality, discrimination, enforcement and low pay.” 

So what are Labour’s plans for workers’ rights? 

Below is a summary of the main areas. 

• Delivering a “genuine” living wage, including removing the age bands. 
• Banning zero-hour contracts. 
• The right to have a contract that reflects the number of hours employees regularly work, based on a twelve-week reference period. 
• Making flexible working the default from day one for all workers, except where it is not reasonably feasible, and ensuring flexibility is the genuine default position. 
• Ending fire and rehire (where an employer makes an employee redundant and then re-engages them on reduced terms and conditions – think P&O). 
• The creation of a single enforcement body for workers’ rights, including strong powers to inspect workplaces and take action against exploitation, undertake targeted and proactive enforcement work and bring civil proceedings upholding employment rights. Employment Tribunal will still be the forum for employment-related disputes. 
• Ensuring all workers receive reasonable notice of any change in shifts or working time, with compensation that is proportionate to the notice given for any shifts cancelled or curtailed. 
• A move towards a single status of worker. 
• A strengthening of protection for whistleblowers, including the protection for women who report sexual harassment at work. 
• Making it unlawful to dismiss a woman who is pregnant for six months after her return, except in specific circumstances. 
• Bringing in the ‘right to switch off’ in the same way as other European countries. 
• Proposals by employers to introduce surveillance technologies would be subject to consultation and negotiation, with a view to agreement of trade unions (or elected staff representatives where there is no trade union). 
• Changing statutory sick pay, including removing the lower earnings limit to make it available to all workers and remove the waiting period. 
• Ensuring hospitality workers receive their tips in full and workers decide how tips are allocated. 
• A ban on unpaid internships except when they are part of an education or training course. 
• Establishing a new “Fair Pay Agreement” in the adult social care sector, empowering workers and trade unions that represent them to negotiate fair pay and conditions, including staff benefits, terms and training, underpinned by rights for trade unions to access for recruitment and organising purposes. 
• Changing trade union legislation, including removing certain restrictions on trade union activity,  ensuring industrial relations are based around good faith negotiation and bargaining, and simplifying the process of union recognition and the law around statutory recognition thresholds. 
• Large firms will be required to develop, publish and implement action plans to close their gender pay gaps, with outsourced workers included in their gender pay gap and pay ratio reporting.  
• The publication of ethnicity and disability pay gaps will be made mandatory for employers with more than 250 staff, to mirror gender pay gap reporting. 
• Large employers with more than 250 employees will be required to produce Menopause Action Plans, setting out how they will support employees through the menopause, much like gender pay gap action plans. 
• Making it easier for workers to raise grievances about conduct at work, including collectively raised grievances about conduct in their place of work.  
• Requiring employers to create and maintain workplaces and working conditions free from harassment, including by third parties.  
• In the area of Procurement, under a new “National Procurement Plan” Labour will ensure social value is mandatory in contract design. This will include “Mandating consideration of social value will mean a Labour government will value organisations that create local jobs, skills and wealth and treat their workers well and equally, including on matters such as pay, conditions, trade union access, recognition and provision for collective bargaining arrangements, effective equality policies, adherence to high environmental standards and tax compliance.” 

Other areas of proposed change in the New Deal

What of the law of unfair dismissal, where currently employees have the right not to be unfairly dismissed after 2 years’ service (with various exceptions)? 

The Paper says: 

“Our New Deal will include basic individual rights from day one [our emphasis] for all workers, ending the current arbitrary system that leaves workers waiting up to two years to access basic rights of protection against unfair dismissal… This will not prevent fair dismissal, which includes dismissal for reasons of capability, conduct or redundancy, or probationary periods with fair and transparent rules and processes. We will ensure employers can operate probationary periods to assess new hires. However, the changes will help to ensure that newly hired workers are not fired without reason or cause and will help drive up standards in workplaces.” 

Labour also proposes to increase the time limit within which employees are able to make an employment claim from three months to six months, bringing the time limit for all claims in line with the time limit for statutory redundancy and equal pay claims. 

For those business that need to make large-scale redundancies (20+), Labour proposes to ensure the right to collective redundancy consultation is determined by the number of people impacted across the business rather than in one workplace.  

Labour also proposes to change the existing set of rights and protections for workers subject to TUPE processes. 

As said, a real smorgasbord of proposals, some of which will have a huge impact on workers and business in one way or another, and is coupled with a promise to introduce the relevant legislation within 100 days of becoming the Government.  

This is not to say, however, that any new legislation will be in force within 100 days. As the Paper goes on to say: 

“The legislation will then continue the parliamentary process in both Houses, with an implementation period as is standard following Royal Assent.” 

It is common practice that, when new laws are finalised and receive Royal Assent, the dates on which the new provisions are actually in force are delayed by months, sometimes longer. 

Further, Labour will consult with others on these proposals before they become law. As the Paper says, Labour will…”consult fully with businesses, workers trades unions and civil society on how to put its plans into practice before legislation is passed.”. 

Exactly therefore when any new such laws will actually come into force, and to what extent they mirror the current proposals, remains to be seen.