How can employers prepare for the possibility of a Labour Government?

After the local elections this month, the possibility of a Labour Government after the next General Election is looking more likely. That being the case, employers need to start thinking about and planning for a number of fundamental changes that the Labour Party is indicating that it will implement if returned to power. These, and other changes, are described more fully in the Labour Party’s recent Green Paper ‘A new deal for working people’ and from various political statements.

What are the proposed changes?

These changes include many areas of employment law including working time, zero-hour contracts and other atypical employment relationships, Statutory Sick Pay, union laws and, significantly, the granting of many statutory employment rights from the first day of employment rather than the current service qualifications (of up to two years) for bringing various claims before the Employment Tribunal. The Party is also proposing to implement stronger family-friendly rights, including extending statutory maternity and paternity leave, introducing the right to bereavement leave, and strengthening protections for pregnant women by making it unlawful to dismiss a woman who is pregnant for six months after her return, except in specific circumstances. Additionally, the Party intends to review parental leave within the first year of being in power, including the failed shared parental leave system.

Earlier this year the national minimum hourly wage (NMW) was increased by 10% from £10.42 to £11.44. Labour has indicated its aspiration to increase the NMW to ensure it reflects the cost of living. The TUC in recent years has called for NMW to be increased to £15. Many employers and particularly small and medium-sized businesses are already struggling to meet the growing wage bill caused by the recent increase.

Moreover, with further significant increases in the NMW possible, coupled with fundamental changes to many areas of employment law described above, but particularly a significant increase in Employment Tribunal claims if the service requirements are replaced with day-one rights, employers need to think very carefully about and now plan for the future.

An area of contention for the current government has been the consistent strikes over the past year. The Labour Party plans to repeal anti-trade union legislation which removes workers’ rights, including the Trade Union Act 2016, to remove unnecessary restrictions on trade union activity.

What will be important if such changes occur will be the quality of the recruitment process. This has naturally always been important to any business but, following working from home implemented during the coronavirus pandemic in 2020, many positions now permit work from home or hybrid office/work from home. This has meant that much of the recruitment process, which pre-Covid was conducted face to face, is now done remotely. With enhanced day-one statutory employment rights on the horizon, employers would no longer have the flexibility or luxury of being able to remedy bad hires without potential scrutiny of the Employment Tribunal and the risk of a financial award being made.

If you have questions about any of the points raised in this article, please contact Malcolm Mason.