Labour's New Deal for working people explained

After many months of speculation, we now know the date of the general election: July 4, 2024. The manifestos of the political parties have yet to be published. However, we are aware of the Labor Party's proposals on employment law as they are set out in Labour's Plan to Make Work Pay: Delivering A New Deal for Working People, published on 24 May 2024.

The Conservatives have not yet published their labor legislation proposals, but if they are re-elected we can expect a continuation of their current policies. These include legislation on trade unions and industrial action, return to work reforms and the possible reintroduction of employment tribunal fees.

Labor published its Employment Rights Green Paper in 2021, proposing far-reaching reforms. It is not surprising that many of these proposals were reincorporated into the New Deal.

For starters, Labor says it will deliver “the biggest upgrade to workplace rights for a generation.” If elected, Labor has indicated it will introduce legislation within 100 days, consult fully before passing it, and work extensively with employers and unions. However, she acknowledges that certain aspects of the New Deal will take longer to implement.

Below we highlight some of the most important proposals. For more details, click here.

Zero-hour contracts and one-sided flexibility

Labor will put an end to 'one-sided' flexibility and ensure a 'basic level of security and predictability'. They will ban exploitative zero-hours contracts and ensure that contracts reflect the number of hours regularly worked based on a twelve-week reference period. The intention is not to prevent employers from offering fixed-term contracts.

Fire and rehire

The practice of “fire and rehire” or the technical term, firing and rehiring on new (usually less favorable) terms has become increasingly controversial in recent years. An updated one draft code of practice was published on February 19, 2024.

Before the general election was announced, it was reported that the Code of Practice was expected to be adopted on July 18, 2024. This was confirmed on May 28, 2024, but we don't know what will happen if a new government comes.

In the New Deal, Labor argued that it is important that companies can restructure to remain viable and retain their staff and the business when there is really no alternative. However, this “must follow a proper process, based on dialogue and common understanding between employers and employees.” Labor will ensure effective remedies against abuse and strengthen the Code of Practice.

Basic rights on the first day

The proposal to grant unfair dismissal rights on day one has been widely publicized. However, the New Deal makes clear that this does not prevent fair dismissal, including dismissal for reasons of competence, conduct or dismissal, or “trial periods with fair and transparent rules and processes”. It is important to remember that in many cases there is extensive protection against unfair dismissal from day one – for example dismissals for whistleblowing, health and safety reasons and trade union activity. Likewise, there is no waiting period required to file a discrimination claim.

Another proposed day-one entitlement relates to statutory sick pay, with the current waiting period (and lower income limit) being scrapped.

Single employee status

Identifying an individual's employment status is critical as it determines what employment rights, if any, they have. In Great Britain there is a three-tier system: employees, self-employed and employees. For tax purposes, there are only two levels: employees and self-employed.

Labor believes the three-tier system of employment status has contributed to the rise of bogus self-employment and is proposing a move to a simpler two-tier employment status framework: employed and self-employed.

This will be a difficult task. Identifying employment status has already resulted in many years of complex and high-profile litigation. Labor plans to hold extensive consultations on this

simpler framework. Not surprisingly, this was one of the issues mentioned in the preface to the New Deal that would take longer to review and implement.

Redundancy rights

Labor will strengthen dismissal rights and protections, for example by ensuring that the right to redundancy advice is determined by the number of people affected across the company, rather than in one workplace.

Family-friendly rights

Flexible working will be the standard for all employees from day one, except where this is not reasonably practicable.

Parental leave will become a day-one right. Currently, twelve months of employment are required for parental leave and 26 weeks for shared parental leave.

It will be unlawful to dismiss a woman who is pregnant six months after her return, except in specified circumstances.

The right to unpaid carers leave was introduced in April 2024 and Labor will “examine the benefits of introducing paid carers leave”.

Labor will introduce the right to bereavement leave for all employees. There is currently a right to parental leave.

The proposal to introduce the right to “switch off” has made headlines. The pandemic has led to a change in working practices, such as working from home and hybrid working. It is generally accepted that for many people the boundaries between work and private life are blurring. Labor will introduce the 'right to switch off', giving workers and employers the opportunity to 'have constructive conversations and work together on tailor-made workplace policies or contract terms that benefit both parties.' There are no other details at this time.

Fair wages

The National Minimum Wage (NMW), introduced by a Labor government, came into force in 1999. The New Deal describes it as one of the greatest achievements of the last Labor government.

Labor plans to go further by ensuring the minimum wage is a real living wage that people can live on, and will abolish what they call 'the discriminatory age categories'. It will work with the Single Enforcement Body and HMRC and ensure they have the necessary enforcement powers.

Vote at work

This comprehensive part of the New Deal explores the important issues of strengthening collective bargaining rights, updating trade union law, and safeguarding industrial employment

Relations are based on negotiation and negotiation in good faith. She said this will “end the Conservatives' scorched earth approach to industrial relations”. Labor will also simplify the recognition process for trade unions.

As expected, Labor will repeal the Strikes (Minimum Service Levels) Act 2023.

Equality at work

Labor is committed to tackling the gender pay gap. Although the gap is closing, progress is slow. Large companies must develop, publish and implement action plans to close their gender pay gap. There will also be mandatory reporting of pay differences in the areas of ethnicity and disability for employers with more than 250 employees.

On equal pay, Labor will establish an equal pay regulatory and enforcement unit, with the involvement of trade unions.

Employers and unions will be encouraged to negotiate to sign the Dying To Work Charter – a charter of best practice for employing workers with terminal illnesses.

On the high-profile topic of menopause, employers with more than 250 employees will be required to draw up menopause action plans on how they will support employees through the menopause. Guidance will also be published on issues relating to uniforms and temperature, flexible working and recording leave and absence related to menopause.

Labor will also raise awareness of neurodiversity in the workplace and across society.

Rights at work

Currently, multiple enforcement agencies report to various government departments. It is proposed to establish a single body for the enforcement of workers' rights, with trade unions and the TUC represented. Proposals for such a body were tabled by the Conservatives in 2019.

The time limit for bringing claims before the Employment Tribunal would be extended from three months to six months, which is effectively the current time limit for statutory dismissal claims and equal pay claims.

On safer workplaces, Labor will work with employers, trade unions and other stakeholders to support workers' wellbeing and their long-term physical and mental health.

Labor will require employers to create and maintain workplaces and working conditions that are free from harassment, including by third parties. They will also strengthen the legal duty on employers to take all reasonable steps to stop sexual harassment before it starts. There are no details about what that duty entails. Note that the Worker Protection (Amendment of Equality Act 2010) Act 2023 was expected to come into force in October 2024, and this would have introduced a duty on employers to take reasonable steps to prevent sexual harassment in the workplace.

Following the announcement of the general elections, Parliament was dissolved on May 30, 2024. This means that all business in the House of Commons and House of Lords has ended. Some important changes in labor law were expected for the latter part of the year. After July 4, 2024, it will be known whether or not these will continue and in what form. We will keep you informed.


Paula Kathrens

Paula Kathrens is a partner in the Employment, Pensions, Benefits and Immigration (EPBI) Group at Blake Morgan and advises clients in both the public and private sectors, including financial services, Welsh government, further and higher education, housing, healthcare and social care on all aspects of controversial and non-controversial labor law.

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