The new Labour government has promised changes to employment law, in their proposed Employment Rights Bill. We break down what can be expected and how businesses can adapt.
When will the Employment Rights Bill be introduced?
It will be introduced within the first 100 days of the new government, Labour promises.
What are its key aims?
Labour have said it will deliver “the biggest upgrade to worker’s rights in a generation.” It aims to ban exploitative practices and enhance worker rights.
What new policies will it introduce for all sectors?
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Ban zero-hour contracts
Labour will ban “exploitative” zero-hour contracts. Zero-hour contracts are employment agreements that do not guarantee a minimum number of hours of work. Around one million UK workers are currently on zero-hour contracts, often young people in the service industry. It is unclear yet whether all zero-hour contacts will be outlawed, or just those deemed “exploitative”. It may be workers can choose if they want to keep the flexibility of zero-hours contacts. However, there will be more legislation in place to provide workers with contracts reflecting regular work hours and ensuring reasonable notice for any shifts cancelled, with proportionate compensation offered. The aim is that workers will be able to rely on their wage to a greater degree, providing a basic level of “security and predictability”.
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Ban ‘fire and rehire’ and ‘fire and replace’
Fire and rehire is when employers fire workers, then rehire them with a different contract, when they want to change the terms and conditions. Fire and replace involves hiring new workers to do the same job, for inferior conditions and pay. Labour will replace the Statutory Code of Practice on Dismissal and Re-Engagement to avoid these tactics and instead provide “effective remedies."
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Parental leave, sick pay and protection from unfair dismissal from day one for all workers
There are currently qualifying periods for these core rights when an employee starts a new job. Labour will end these, meaning the rights apply from day one. However, employers can still operate a probationary period for new hires, affecting how easily they can dismiss them if they are not the right fit.
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Strengthening Statutory Sick Pay
Currently, Statutory Sick Pay is only paid after the employee has been off sick three days in a row, and is only available to workers earning over a certain limit. Labour will remove the three-day waiting period and the lower limit, ensuring all employees are paid when sick.
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Make flexible working the default from day one
Employees have been legally able to request flexible working from day one since 6 April 2024. Labour’s change is in making flexibility not just an option to ask for but the default, where “reasonable”.
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Strengthening protections for new mothers
It will be unlawful to dismiss a woman who has had a baby for six months after her return work, apart from “specific” circumstances.
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Update trade union legislation
Labour will remove some barriers to trade union action. This includes ending the Strikes (Minimum Service Levels) Act that attempts to alleviate disruption caused to the public by prolonged strikes. Labour will simplify the process of ‘statutory recognition’, which allows trade unions to apply for the legal right to be recognised by an employer for collective bargaining. This will make it easier for workers to access a union.
What sector-specific legislation will be introduced?
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Introduce a Fair Pay Agreement in adult social care
Fair Pay Agreements (FPA) are industry-wide collective employment agreements in which representatives from workers and employers negotiate minimum pay rates and conditions that apply across the sector. Labour has promised an FPA for social care that will be a ‘proof of concept’ for other low-paid sectors.
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Reinstate the School Support Staff Negotiating Body
The last Labour government created the School Support Staff Negotiating Body to give support staff a voice in negotiations and pay, which was scrapped by the Coalition government. It will be brought back now Labour are in power.
How will National Living Wage change?
In addition to the Employment Rights Bill, Labour have promised to make changes to National Living Wage, delivering “a genuine living wage that accounts for the cost of living” and removing age bands for adult workers.
What do Labour’s new employment law proposals mean for business leaders?
Banning zero-hour contracts might increase costs for employers. If they are required to devise staff contracts that promise a fixed regular amount of work, employers will need to plan their resourcing and job costing well in advance. This is difficult when demand is unpredictable and fluctuates, like in retail and logistics, and will need to be considered carefully to avoid under or over staffing.
Costs will also be increased by the changes in statutory sick pay. Sick pay will need to be managed via effective payroll processes, as will parental leave from day one.
Employers also need to consider how flexibility can be introduced, though there is uncertainty over what exactly will be mandated. It remains to be seen whether frontline roles, such as those in manufacturing and logistics, will be deemed as ‘feasible’ for flexibility. There are ways that even jobs that seem irrefutably on-site can have elements of flexibility added, like the ability to conduct admin tasks and training at home or choose from multiple shift patterns.
How can software help?
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Predicting new employment outgoings
Forecasting job costs will be key when assessing how these new rules will affect your business’s finances. Time & Attendance software has a job-costing functionality that allows leaders to compare planned tasks and budgets to those already achieved – crucial as leaders consider their outgoings and employment budgets following the alterations to zero-hours contracts and introduction of a new National Living Wage.
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Creating new contracts and integrating with payroll
Businesses are also facing the prospect that, in the next 100 days, they will need to create new contracts and payroll structures in alignment with new regulations. Primed to adapt will be those who already have robust, HMRC-recognised Payroll software where it is quick and easy to adjust contracts and ensure they are compliant.
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Enabling flexible working
Strong Time & Attendance software will also help in making the requisite changes to enable flexible working. It will do so by offering flexibility in how time is tracked, streamlining the creation of new rosters and shift patterns, and ensuring time tracking is accessible both remotely and on-site.
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Ensuring compliance with pay changes
National Living Wage and sick pay changes will need to be incorporated into each business’s Payroll function. Robust, HMRC-recognised Payroll software will be updated in line with any changes, giving employers peace of mind that they are up to date with the new regulations.
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Taking the pressure off operational, payroll and HR teams
As all these changes come into force, the members of your team that deal with employment functions and workforce management will be under high stress. Automate tasks such as creating recurring shift patterns over multiple weeks or the repetitive jobs associated with payslip delivery, freeing up time for your team to concentrate on the strategic implications of new employment law.
OneAdvanced provides a host of host of people and workforce management solutions that can help you adapt. These are:
- Performance and Talent – Continuous performance management software
- Time and Attendance – Workforce management with automated rostering software
- Payroll - HMRC-recognised payroll software