What employment law changes do SMEs need to know?
Now the Labour Party is in government, it is timely to consider the employment law reforms that Labour proposed in its manifesto and how they may affect businesses. In this blog, we touch on some of Labour’s key employment law changes in 2024 and their implications for SMEs.
Day 1 employment rights
Labour promises to grant workers immediate rights to unfair dismissal protection, from day one of employment. However, this will still be subject to probationary periods, which will continue to hold a special status.
It remains to be seen how this will work in practice, but undoubtedly, businesses should check employment contracts now, to ensure that robust probationary periods are included.
Consultation on a single “Worker” status
Labour will consult on moving towards a single worker status, which would remove the current categories of “employee” and “worker” and instead encompass all such individuals (except the genuinely self-employed) under one umbrella “worker” status, extending full employment law rights to all.
Although only a proposal to consult at this stage, if the single worker status is pushed through it will result in the reclassification of many individuals, providing them with significant additional employment rights, of which businesses will need to be mindful.
Extended Employment Tribunal deadlines
There is a proposal for the time limit for bringing employment tribunal claims to be extended from three months to six months.
Earlier entitlement to unfair dismissal rights, plus more individuals who are entitled to bring such claims, combined with a longer time period in which to bring them, could mean that businesses experience an increase in Tribunal litigation.
Banning exploitative zero hours contracts
Labour plans to target exploitative zero hours contracts. This isn’t an outright ban, but rather a measure to curtail practices where it is perceived that workers are unfairly denied predictable hours.
Businesses will need to review their use of zero hours contracts to ensure compliance with any new regulations, which will likely include providing more predictable and stable working hours.
Right to a contract which reflects actual hours
In addition to the above, employees will have the right to a contract that accurately reflects the hours that they regularly work, based on a twelve-week reference period.
Where businesses employ individuals who work variable hours, they will need to monitor hours more closely and keep records accordingly, so that they can ensure that employment contracts are reflective of the actual hours that are being worked.
National Minimum Wage (NMW) reforms
The criteria for determining the NMW will be altered to reflect the cost of living, and Labour proposes removing the current age bands, meaning that all adults would receive the same NMW rate.
For businesses who currently employ staff on NMW, it will be necessary to budget for potential wage increases, particularly if they employ younger workers, currently paid at lower rates.
Right to switch off
Labour plans to introduce a right for employees to “switch off” outside of their normal working hours (or at least a right for employees to discuss their ability to do this with their employers).
This is a reform which has already taken place in some countries in Europe. If it does transpire in the UK as well, it would require a culture shift in many businesses, to move away from an expectation that employees can always be contacted outside of working hours.
Default right to flexible working
Labour proposes to make flexible working a default right, unless employers have a good reason to refuse it, which would extend the current “right to request” regime.
Flexible working policies will need to be reviewed and likely updated in due course, to reflect these changes.
Statutory right to unpaid bereavement leave
Labour proposes introducing a broader statutory right to unpaid bereavement leave, which is currently only available following the death of a child.
Contracts and relevant policies will need to be updated to include this broader entitlement.
Strengthening trade union rights
Labour have put forward various proposals designed to strengthen trade union rights. The one that is most relevant to SMEs, is the proposal that all employment contracts will need to include a statement which informs staff of their right to join a trade union.
Employment contract templates will therefore need to be reviewed and updated accordingly, to include this information, once the proposal comes into force.
Labour’s employment law changes represent a significant shift towards enhanced workers’ rights and protections. Whilst the full detail behind how and when these proposals will be put into practice still remains to be seen, it is clear that the need to make updates to contracts, policies and procedures will be inevitable, and businesses will need to be proactive with taking these steps, in order to remain legally compliant.
If you have any concerns regarding how Labour’s employment law proposals may affect your business, please do contact our Head of Employment, Nicky Cranfield.
