Alison Woods: Employers should prepare for reform

Alison Woods: Employers should prepare for reform

Alison Woods

Employment law specialist Alison Woods takes a look at the differences in employment law reform proposals among the main UK parties, and discusses what both employees and employers should expect.

As the July general election approaches, we are seeing key differences between the main Westminster parties on the issue of employment law reform, which will impact on both employees and employers.

The Conservative manifesto contains only a handful of less significant proposals for employment related reform. This is not entirely surprising given the lack of employment law legislation under the current government. The party’s most notable measure is the proposal to protect female-only spaces and competitiveness in sport by making clear that references to sex in the Equality Act mean biological sex. The Minimum Service Levels legislation which gives the government power to set minimum service levels for key public services during strike action would also be pursued under a new Conservative administration.

Labour proposes the most extensive measures in terms of employment-related reform including plans to create a partnership between business and trade unions and implement its New Deal for Working People. While reforming zero hours contracts and ‘fire and rehire’ practices are likely to attract media attention, some of Labour’s less eye-catching proposals would likely prove most significant for employers. This includes moving to a two-tier system of employment status involving workers and self-employed, which would imply that all workers will benefit from rights currently enjoyed only by employees.

Labour also pledges to give workers the right to claim unfair dismissal from day one and extend the time limit for bringing a claim from three to six months come to fruition. It also plans to make flexible working a default right, introduce a right to disconnect, and to lower the trigger for collective redundancy consultation.

Other key Labour employment policies include the banning of zero hours contracts replacing these with a contract that reflects the number of hours regularly worked, based on a twelve-week reference period. The party has also pledged to conduct a review of parental leave with plans to make this a day-one right rather than the current position where it is only available to workers after one year’s service. Labour also promises to remove the living wage age bands, and to change the remit of the Law Pay Commission to ensure that the minimum wage takes into account the cost of living.

The Liberal Democrats manifesto also promises significant reform including changes to the statutory sick pay regime, employment status, family-related leave and the introduction of the right for workers in larger companies to buy shares in their employer as a means of bolstering employee ownership.

The Liberal Democrats also pledge to introduce a new right to flexible working and to give disabled employees greater rights to work from home. The party also says it would replace the apprenticeship levy with a broader and more flexible skills and training levy, and it proposes to scrap the lower national minimum wage rate for apprentices.

Similar to Labour’s proposal, the Lib Dems would also create a new Worker Protection Enforcement Authority unifying responsibilities including enforcing the minimum wage, tackling modern slavery and protecting agency workers which are currently spread across three agencies. The party has also pledged to develop a new ‘dependent contractor’ employment status, in between employment and self-employment, with entitlements to basic rights such as minimum earnings levels, sick pay and holiday entitlement.

Parental pay and leave would be made day-one rights under the Liberal Democrats and extended to adoptive parents, kinship carers and self-employed parents. Statutory maternity pay and shared parental pay would be doubled to £350 a week. The party says it would also establish an independent review to recommend a genuine living wage across all sectors and reform statutory sick pay.

While employment law measures are retained at Westminster, the SNP has also set out its priorities in this field. Its manifesto states that SNP MPs would demand the UK government devolve employment rights and the minimum wage so “we can scrap exploitative zero hours contracts, ban ‘fire and rehire’ practices and take action to close the gender pay gap”.

The SNP also wants to see the scrapping of the sick pay threshold, paid maternity leave increased to one year, and the protection of workers’ rights to strike.

If current polls are correct and Labour form the next UK government, the real question is whether their expansive list of commitments will all end up on the statute books. This would require an ambitious timetable that also allowed time for employers to prepare for this raft of new legislation.

With Labour committed to introducing employment related legislation within 100 days of taking office, victory for Keir Starmer will mean that employers will need to be ready to keep pace with a number of significant reforms.

Alison Woods is partner and employment law specialist at CMS

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