All change in the workplace?

Kathleen Healy at the Employment Lawyers Association argues that businesses need to take action now to prepare for the new UK government’s employment changes

The new Labour government in the UK has described its New Deal for Working People as “the biggest upgrade to workers’ rights in a generation”. In headline terms, the government is proposing:

• a material enhancement of employment rights; 
• that those rights apply to a broader group of the workforce than before; and 
• the introduction of a new enforcement body, the ‘Fair Work Agency’ which will have wide-ranging powers to enforce those rights.

There will now be a period of consultation in respect of these proposals.

Some questions have been raised from businesses as to whether the government’s New Deal is aligned with its stated core aim of focussing on the growth and competitiveness of the UK economy. Sir Keir has responded to this challenge, emphasising that the government wants policies that are “pro-business AND pro-worker”.

What increased rights will individuals have?

Single worker status 

UK employment law recognises three tiers of worker – the employee, the worker and the self-employed individual. 

The legal battleground in the courts in recent years, particularly in the gig economy, has been focussed squarely on the middle category – that of worker. There has been long-running litigation considering the factors that result in a self-employed individual being classified as a worker, and when that working relationship tips into employment. 

The Labour Party manifesto proposed that all three categories would be collapsed into a single worker category, but interestingly, it was not referenced in the King’s Speech. However, given there has been no statement that it has been abandoned, we should expect that this will still happen.

If it does, the stakes will then become much higher for any businesses that wish to keep their workforce within the self-employed band. The worker band, with its more diluted set of rights, may become irrelevant and we will revert to a binary debate between an individual being either an employee or self-employed.

“Day one” rights

The government proposes that employees should receive specific employment rights from day one of their employment, with their proposals specifically referencing protections against unfair dismissal as well as the right to take parental leave and to receive sick pay. 

Wider policies

The government has also committed to banning zero-hour contracts, in order to ensure workers have a right to a contract that reflects the number of hours they regularly work and that all workers get reasonable notice of any changes in shift with proportionate compensation for any shifts cancelled or curtailed.

Alongside this, Labour has said it will end ‘Fire and Rehire’ and ‘Fire and Replace’ practices. However, no further detail has been provided on how this will be achieved, other than an intention to reform the law to provide effective remedies and replace the previous statutory code.

The government also seeks to make flexible working the default from day one for all workers, with employers required to accommodate this, except where it is not ‘reasonably feasible’ to do so.

Finally, Labour has said it will update trade union legislation – including simplifying the process of statutory union recognition, introducing a new duty on employers to inform all new employees of their right to join a union and strengthening trade unions’ right of entry to workplaces for recruitment and organisation purposes.

The impact on businesses

Businesses need to get to grips with the raft of proposed new changes and anticipate any actions that may need to be taken to accommodate those changes. There are likely to be three key areas of impact for businesses. 

The first regards changes to day one unfair dismissal protection. Currently employees need two years’ continuous service to be able to bring an unfair dismissal claim. This change will mean that a significantly larger proportion of employees (and indeed workers, if the single worker status proposal is progressed) will have these rights. It will make effective use of probation periods and having good performance management systems imperative. 

Secondly, if a new single worker status is created, businesses that rely heavily on the current middle category of ‘worker’ will find that those individuals have newly enhanced rights, which will increase costs.

Lastly, for those businesses that are unionised, the changes to trade union legislation may result in a greater proportion of the workforce joining a union and unions having more leverage with businesses. 

Enforcing the proposals

The government is proposing a potential new enforcement agency – the Fair Work Agency.  

Angela Rayner has described this new agency as a watchdog with “real teeth”, with the power to levy fines, inspect workplaces, lodge civil proceedings and bring forward prosecutions. It would enforce rights like holiday pay, sick pay and parental rights. 

The details of the agency and its powers have yet to be published, but there have been reports of a proposed warning system before prosecutions and fines would be levied. Businesses will therefore need to be ready for inspections and challenge from this new body.

Planning for change

Although much of the Fair Deal was trailed before the election, the wide-ranging nature of the proposals has nevertheless made businesses sit up and take notice.

Businesses should be working through the detail of these various proposals now, to understand the impact they will have on the composition and management of their workforce.

Kathleen Healy is Deputy Chair at the Employment Lawyers Association

Main image courtesy of iStockPhoto.com and zimmytws