Labour Government: the biggest workplace law shake-up in a generation

The results are in, Labour has won the UK general election and change is on the way.

Workers' rights are due a fundamental shift under Labour; experts deem their policies as the biggest shake-up to workplace law in a generation.

Headline changes include a ban on zero-hour contracts, ending 'fire and rehire', offering a 'genuine' living wage and introducing full rights from day one of employment.

While the exact shape and complexity of these changes will emerge in the coming months following consultations, we've examined a few of the key areas proposed to give HR professionals and businesses a head start.

Tackling zero-hour contracts

Currently, there are approximately 1.03 million people on zero-hour contracts in the UK.

Labour initially stated it would ban exploitative zero-hour contracts, aiming to end ‘one-sided’ flexibility and ensure all jobs provide a baseline level of security and predictability.

With the change, everyone has the right to have a contract that reflects the number of hours they regularly work, based on a 12-week reference period.

However, Labour amended its stance and will no longer outright ban zero-hour contracts; the proposed changes and 12-week reference period will still take place, but workers will have the option to ‘opt’ to stay on their zero-hour contract, should they wish.

Shadow Chancellor, Rachel Reeves, stated during a speech to the Association of British Insurers: “After 12 weeks if you’ve been working regular hours, you’ll be able to get that permanent contract. But if you want that flexibility as a worker, you can remain on the contract you’re on.”

Although, experts have warned that the exploitation of workers through precarious contracts could remain due to potential loopholes.

In a PeopleManagement article, it was warned that employers could continue to exploit staff on zero-hour contracts by keeping their shifts irregular and unpredictable.

Ending fire and rehire

The next big Labour change is ending 'fire and rehire' in an attempt to provide remedies against abuse.

Note: the termfire and rehire relates to the practice of making an employee redundant only to rehire them on worse terms and conditions, typically used to force them onto lower pay with bad terms.

Labour stated ending fire and rehire means workers can be safe in the knowledge that terms and conditions negotiated in good faith can't be ripped up under threat of dismissal.

It is expected Labour will replace the current statutory code with a strengthened code of practice, reforming the law.

Minimum Wage increase 

The Minimum Wage was initially introduced by the Labour Government.

They now wish to 'go further' and increase the Minimum Wage to ensure people can truly live on it.

To achieve this, Labour has stated it will change the Low Pay Commission’s remit so that alongside the median wages and economic conditions, the Minimum Wage will for the first time reflect the need for pay to take into account the cost of living.

Additionally, plans have been proposed to remove the age bands, ensuring every adult worker benefits.

We don't think anyone would suggest that the minimum wage and increasing it is anything but a good thing for workers.

However, it does introduce added costs for businesses, which many will most likely struggle to accommodate.

This could translate to them increasing their prices or even internal cuts.

During this change, the key thing for businesses will be to think about productivity and efficiency when tackling a higher resource cost.

Day one rights

A range of day-one rights are to be introduced, including protection against unfair dismissal, parental leave and sick pay.

Under the Labour changes, workers will no longer have to wait two years to access these basic rights and protection.

Honing in on the change to unfair dismissal, while a positive step in protecting employees, it could have adverse implications on recruitment and potentially lead to an increase in employment tribunal claims.

Following the change, businesses may be more cautious when hiring and as such, less likely to take risks on candidates that have potential but not all the experience/skills.

Of course, workers should have confidence they won't be let go on a whim but this might hinder younger workers or those switching professions who might not have a history of experience.

Investing in people and upskilling them should be a key focus of any HR strategy rather than being viewed as a risk.

A unique opportunity?

Our Managing Director of HCM, Stephanie Coward, commented: “Labour’s promise to deliver the biggest shake-up in workplace law for a generation presents a unique opportunity for businesses across the economy.

“The ban on zero-hour contracts, ending fire and rehire, and introducing day-one rights aim to provide greater security, protection and predictability for employees. Improving diversity and equity in the workplace and mandating better pay through a ‘genuine’ living wage are also positive developments that will benefit both employers and workers.

“But we encourage the new Government to consider the financial and cultural impacts its new deal for working people will have on businesses of all sizes, particularly those recovering after a prolonged period of high inflation.

“Companies may need longer than the 100-day legislation period proposed by Labour to implement these changes effectively. But this timeframe allows them to strategically work out how they will manage the increase in costs, whether that’s through passing price hikes on to customers or focusing on boosting productivity through digital transformation.

"By embracing these changes, HR professionals can drive growth and innovation, making their organisations stronger and more resilient in the face of evolving workplace dynamics."

Managing change

Improving worker rights is so important, but can businesses manage such large-scale change?

Suppliers, such as IRIS, have a fundamental requirement to update their products and services in line with any legislative changes, in some cases removing the more logistic burden from businesses.

At the risk of coming across as overly salesy, we can't stress enough the importance of finding the right supplier for your business-critical tech who can ease the burden of change.

Whether you want assurance that your system reflects any major employee changes or you simply want a trusted provider with who you can outsource tasks such as payroll, a good supplier goes a long way in managing uncertainty.

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