With the newly elected Labour government, the UK is set to see a new era of proposed employment law reforms. The government aim to reshape the workplace landscape significantly, addressing various employment issues and challenges whilst giving employers several considerations for procedures and policies.
As general counsel or part of an in-house legal team, the proposed changes could have a substantial impact on your organisation’s operations, risk management, and overall legal strategy – even if employment law isn’t within your direct remit.
That’s why understanding the changes is crucial. That understanding gives you the tools and knowledge needed to provide effective support to your people & culture teams, but it also allows you to anticipate the wider business impacts. And that means your organisation can safely navigate the potential challenges whilst remaining compliant with the evolving legal environment.
Below, we have summarised some of the key changes proposed. At this stage, the details are still to be announced by the government but we hope that our summary gives you a flavour of the steps that you and your organisation may need to consider.
1. Day-one rights for unfair dismissal
The introduction of day-one rights for unfair dismissal is a significant proposal. With current legislation, employees are required to work for a company for two years before they can claim unfair dismissal. This change would allow employees to bring claims against their employer from their very first day of employment, subject to fair and transparent probationary periods.
Potential issues:
- An increased litigation risk: Should the change come to fruition, employers may face a surge in employment tribunal claims. This is due to a much lower barrier to bringing these claims.
- A greater need for robust hiring processes: It’s essential for employers to ensure that their recruitment processes are fair, transparent, and well-documented. This enables organisations to remain well-equipped to defend against potential claims.
Resolution:
- Implement comprehensive training for managers on fair hiring practices.
- Establish clear, documented policies on performance management from the outset of employment.
- Review and possibly tighten probationary processes to identify potential issues early on, and ensure that comprehensive feedback (supported by evidence) is provided on any failed probation to ward off potential disputes.
2. A ban on zero-hours contracts
The government plans to ban what they describe as “exploitative” zero-hours contracts to provide workers with increased predictability and security. This includes ensuring reasonable notice of shift changes and compensating workers for last-minute cancellations.
Potential issues:
- A change in operational flexibility: For businesses that rely on zero-hours contracts for fluctuating demand, which can be a prevalent occurrence in certain sectors, organisations may find it challenging to maintain the same level of operational flexibility.
- An increase in costs: With employers being required to move to more permanent contracts, that could result in an increase in labour costs due to the need to offer guaranteed hours, even during quieter periods.
Resolution:
- Explore alternative staffing models, such as part-time contracts or fixed-term arrangements, that offer some flexibility while providing more security to workers.
- Engage in workforce planning to better predict and manage staffing needs without relying on zero-hours contracts.
- Consider the use of temporary staffing agencies to manage short-term fluctuations in demand.
3. Prioritising work-life balance with flexible working as a default
It is expected that flexible working will become the default from day one for all workers. Employers will be required to accommodate flexible working requests as far as reasonably possible. Additionally, the government have tabled the introduction of the 'right to switch off,' preventing work from encroaching on personal time – a practice inspired by laws in Ireland and Belgium.
Potential Issues:
- Operational strain from managing requests: Should the change of flexible working becoming a day-one right be passed, organisations are highly likely to see an influx of requests. This surge could place a strain on operational capabilities, creating challenges.
- Compressed hours requests: The change could result in a potential risk of requests for four-day working weeks with compressed hours.
- Ensuring fairness: The needs of the business must be carefully balanced with the need to treat all employees fairly. If this isn’t managed correctly, there could be an increase in disputes.
Resolution:
- Develop a clear, fair, and transparent flexible working policy that outlines the process for making requests and the criteria for approving or rejecting them.
- Train managers to handle flexible working requests and manage teams with varied working patterns effectively.
- Monitor the impact of flexible working on productivity and employee engagement to make informed adjustments.
- Ensure that comprehensive and well-considered feedback is provided in respect of any unsuccessful flexible working requests, to minimise the risk of potential claims.
4. The right to disconnect
The government have proposed a “right to disconnect – a right that would protect employees from being required to engage in work-related activities outside of their contracted hours. This proposed change is a further method of reinforcement for the government’s plans to prioritise employees’ work-life balance amid growing concerns about the encroachment of work into personal time, particularly with the rise of remote working.
Potential Issues:
- Challenges with enforcement: It can be quite a complex process to define what constitutes as “work-related activities”, but even more so to enforce it. It becomes even more complicated when roles where out-of-hours communication is common become involved.
- A cultural shift: If this change were to happen, then there would be a need for a significant cultural shift within organisations. Many organisations, particularly those that operate across different time zones, have a culture of constant or frequent connectivity which would need to be considered.
Resolution:
- Clearly define working hours and expectations regarding out-of-hours communication in employment contracts and policies.
- Use technology solutions, such as email scheduling tools, to prevent out-of-hours communication from reaching employees.
- Promote a culture that values work-life balance, with leadership setting an example by respecting the right to disconnect.
5. Strengthening redundancy protections
Redundancy protections are also on the list of priorities for the Labour government, particularly with plans to expand the scope of collective consultation requirements. With current legislation, collective consultation is triggered when 20 or more employees may be at risk of dismissal within a single establishment. A single establishment has historically been used to limit triggers for collective consultation by site or business unit. But with the new law, the current threshold could potentially apply across an entire business meaning that the duty to collectively consult with workforce representatives or trade unions is triggered much more easily and frequently.
Potential issues:
- An increase in complexity: The process when proposing a volume of redundancies or when changing terms and conditions of employment is already one with significant complexity and time intensive. With the change, the complex, time-consuming nature of the process could dramatically increase.
- Higher costs: The change signals a higher potential for the need for consultation – with extended consultations, necessary business restructures and changes to terms and conditions could be delayed (meaning that cost savings might also be delayed in turn).
Resolution:
- Ensure that HR and legal teams are fully briefed on the new requirements and that they have robust processes in place to monitor and manage collective consultations.
- Engage with trade unions and employee representatives early in the process to foster a collaborative approach and minimise conflict.
- Plan redundancies and changes to terms projects carefully, to ensure compliance with the new laws while minimising disruption to the business.
6. Trade union empowerment
The government intends to enhance trade union rights by repealing restrictive legislation, simplifying the process for union recognition, and granting unions access to workplaces for recruitment and organising. Union representatives will also see strengthened protections with the changes.
Potential issues:
- An increase in union activity: Unionisation efforts may increase within the business. This is likely to be a notable risk in sectors where wages are lower, and turnover is higher.
- The potential for more frequent industrial action: Stronger, empowered unions could lead to an increase in strikes and other forms of industrial action. This could prove to disrupt business operations significantly.
Resolution:
- Foster positive relationships with trade unions by engaging with them proactively and addressing worker concerns before they escalate.
- Develop contingency plans to mitigate the impact of potential industrial action on business operations.
- Ensure compliance with all legal requirements related to trade union recognition and collective bargaining.
Conclusion
A vast number of proposed changes are on the horizon. The above are just a few of the key changes that have been outlined as priorities by the government.
Whilst these changes may present several challenges for organisations, HR and legal teams, and general counsel, they also offer businesses an opportunity. It’s one where they can improve their employment practices, leading to greater satisfaction and higher engagement from their workforce – both offer unparalleled advantages to any organisation.
For general counsel and in-house legal teams not directly responsible for employment law, these changes will require a close partnership with your people and culture teams. This collaborative approach will enable you to ensure that the new legal requirements are understood and implemented effectively. Combined with a proactive approach, your organisation can navigate these changes smoothly, reducing legal risks and maintaining a positive workplace culture.
Whilst these changes are still expected to proceed, the details are yet to be announced and the timescales for any changes remain unclear. Therefore, it’s essential to keep the situation under review, remain informed and anticipate the potential impact.
Regardless of whether employment law falls within your immediate purview or not, the proposed changes could have a significant impact on many aspects of your role. It’s important to ensure that you engage with your internal teams early and consider seeking external advice if necessary to prepare your organisation for the future.
If you have any questions about the points raised in this blog, please get in touch with our Employment team.