What Labour’s Employment Law Changes Mean for Your Business

The new Labour Government has big plans for employment law, aiming to introduce major changes within their first 100 days in office.

Their "New Deal for Working People" promises to reshape the landscape for employers and employees alike.

Here’s a breakdown of the key changes and what they mean for your business.

1. Basic rights from day 1

The Government wants to grant workers key rights from their first day at work. These include protections against unfair dismissal, parental leave, and sick pay.

Under the current system, employees need to work for two years to claim unfair dismissal. Labour plans to remove this rule. This would allow all workers to claim compensation of up to £115,115 or one year’s pay right from the start.

Impact on your business:

• You’ll need to be vigilant during the hiring process and probation period. This means careful screening, regular feedback, and proper documentation to support any future dismissals.
• Employees will receive SSP from the first day of sickness, rather than after three waiting days. Prepare for this change, potentially as soon as April 2025.
• The proposal goes further than current laws, aiming to make flexible working a default right. Consider the practicality and business needs when responding to flexible working requests.

2. Probationary periods and hiring

The new Government is pushing for transparent and fair probationary periods. They might set a maximum length for these periods and require formal procedures for dismissals during this time.

Impact on your business:

• Update your recruitment policies to ensure they meet these new rules. Invest in thorough candidate screening, like psychometric tests or other assessments.
• Have regular check-ins during the probation period. Proper documentation of performance and conduct issues will be crucial to justify any dismissal.

3. The right to disconnect

The Government plans to introduce a "right to switch off." This would give workers the right to disconnect from work outside of working hours without being contacted by their employer. This concept, whilst common in some European countries, will be new to the UK.

Impact on your business:

• Create policies that respect employees' right to disconnect while balancing business needs. Train staff on these policies and manage out-of-hours communication.
• Combine this new right with flexible working arrangements to support employee well-being.

4. Zero-hours contracts

Labour aims to regulate zero-hour contracts to prevent exploitation. While not banning them outright, it wants to ensure that these contracts are fair and not abusive.

Impact on your business:

• Check and adjust your use of zero-hour contracts to follow the new standards. Contracts should accurately reflect the hours worked over a 12-week period.
• Consider how changes to zero-hours contracts might affect your business operations. You might need to hire agency staff or offer temporary contracts to ensure flexibility.

5. Fire and re-hire practices

The Government wants to end the practice of "fire and rehire," where employers dismiss employees and then rehire them on less favourable terms. They plan to introduce stronger rules to ensure fair consultation.

Impact on your business:

• Make sure any changes to employment terms are fair and transparent. Take the time to properly consult with employees.
• Keep up to date on the new rules and best practices to prepare for the upcoming changes.

6. Single worker status

Labour proposes a single ‘worker’ status, merging the current categories of employees, workers, and the self-employed. This would give everyone the same rights and protections, including:

• Sick pay
• Parental leave
• Unfair dismissal protections
• Holiday pay

Impact on your business:

• Prepare for increased costs as you comply with statutory entitlements for all workers.
• Employment tribunals might see more claims for delayed or underpaid statutory entitlements, especially with new day-one rights.

7. Extended time limits for claims

The Government plans to extend the time limit for bringing a claim in the employment tribunal from three months to six months. This is to give more time for internal procedures but might increase the number of claims.

Impact on your business:

• Make sure your internal procedures are thorough and can withstand the extended time limit for claims.

Read more about the Government’s “New Deal for Working People”.