Jonathan Chamberlain
Partner
Article
With workers' rights at the centre of the Labour Party's manifesto, the new Government has laid out a whole host of employment law reforms as part of its plan to 'Make Work Pay' to tackle exploitative practices and enhance employment rights. In July 2024, we were introduced to two new bills on employment law; the Employment Rights Bill and the Draft Equality (Race and Disability) Bill - the first of which is to be introduced within the first 100 days of the new Parliament. Exactly when the 100 days is up, well this is a little blurry but roughly takes us to the week following the return of Parliament from the party conference season which is on 7 October.
On 22 September 2024, the Deputy Prime Minister Angela Rayner at the Labour party's conference in Liverpool promised that the flagship Employment Rights Bill will be brought to Parliament "in October" and stated:
"That means repealing the Tories' anti-worker laws and new rights for union reps too. A genuine living wage and sick pay for the lowest earners. Banning exploitative zero-hour contracts and unpaid internships. Ending fire and rehire and we will bring in basic rights from day one on the job.
"This is our Plan to Make Work Pay, and it's coming to a workplace near you."
In this article, we will explore the new Bills and notable policy changes, keeping a close eye on legislative and political process and provide a continuous update on what is likely to happen and when, and what this will mean for you as an employer. Be sure to bookmark this web page to see our regular updates on the latest developments.
This content is correct and up to date as of 23 September 2024.
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Listen to our Employment Partners as they discuss the latest employment law changes and Labour's 'Plan to Make Work Pay' in this episode of our Employment Essentials podcast.
The statutory Code of Practice on Dismissal and Re-engagement devised under the previous Conservative Government came into force on 18 July 2024. The new Code sets out how employers should act when:
Employers are expected to consult employees and explore alternative options, without raising the prospect of dismissal unreasonably early or using the threat of dismissal as a negotiating tactic to put undue pressure on employees.
Notably, the Code states that "the employer should contact Acas for advice before raising the prospect of dismissal and re-engagement". Failure to follow the Code could result in a 25% uplift to compensation awards in relevant cases including unfair dismissal and discrimination. A notable omission from the list of clams to which a 25% uplift can apply are protective awards for failure to collectively consult on collective redundancies. The pre election proposed addition of protective awards unfortunately failed to gain House of Lords' approval before the general election
As for the Labour Government's plans to further strengthen the Code, we await the detail. However, it has been confirmed that this will fall short of an absolute ban. As a minimum, we expect additional types of tribunal claims to be added to the list of claims to which the 25% uplift may attach – in particular protective awards for failure to collectively consult.
We start with the question all employment law stakeholders want to know – when will the Bill be published?
The Government has repeatedly confirmed that the Bill "will be delivered in the first 100 days" of this Parliament. On 19 August, it was widely reported in the press that "Legislation to enact the changes will start its journey through Parliament before mid-October, ministers have promised". While a September publication cannot be ruled out, the latest reports perhaps indicate that rather than the Bill being introduced in the period between 2 to 11 September (being the return from the summer recess and the start of the conference recess), it will be introduced shortly after the return from the conference recess being 7 October 2024. We wait to see.
Policy
A ban on ‘exploitative’ zero-hour contracts ensuring workers have a right to a contract that reflects the number of hours they regularly work. The policy also includes giving workers "reasonable notice" of any shift changes and compensation for any cancelled or curtailed shifts. This will provide more stability for workers, while maintaining the flexibility that some employees find beneficial.
Comment
On 29 August, it was reported in the press that a Government source has confirmed that the not yet in force Workers (Predictable Terms and Conditions) Act 2023 has been shelved to "pursue a stronger contractual right to the hours usually worked".
The now shelved 2023 Act (which had been expected to come into force in September 2024) would have introduced a new statutory right for workers to request a more predictable working pattern. Instead, the Government now plans to introduce "a new right to a contract that reflects the number of hours regularly worked, as part of [the Government's] significant and ambitious agenda to ensure workplace rights are fit for a modern economy." So instead of a 'right to request' predictable working hours, it will be a 'right to' regular hours based on a 12-week reference period. It is also expected that there will be a right to compensation for late/no notice cancellation or curtailment of shifts.
We await details of the proposed new right. Outstanding questions include:
Policy
This new Bill proposes to implement the full right to equal pay for ethnic minorities and disabled people to enable claimants to bring equal pay claims on the grounds of race and disability (not just sex).
There are also plans to introduce mandatory ethnicity and disability pay gap reporting for those employers with more than 250 employees.
Comment
The detail is awaited. Note, only four of the 40 bills listed in the King's Speech are referred to as "draft" indicating that this Bill is at a more formative stage.
As it regards pay gap reporting, finding a methodology resulting in meaningful data is no easy task. Simply cutting and pasting the methodology used in gender pay gap reporting is unlikely to be suitable due to small statistical group issues and issues around classification of those of differing ethnicities/disabilities.
While many of the key policy proposals under the 'Plan to Make Work Pay' proposals are included in the Employment Rights Bill and the draft Equality (Race and Disability) Bill, there are some parts that are absent.
Their absence does not mean that they have been abandoned. Some of these things may not require primary legislation to progress. Some may be parked momentarily awaiting future parliamentary time.
Policy
The time limits within which employees are able to make an employment claim is to be increased from three to six months. It will also enable employees to collectively raise grievances through ACAS about conduct at work.
In September 2024, it has also been leaked that the Government is intending to:
Comment
1. Time limits
The increase in time limits from three to six months is likely to lead to an increase in tribunal claims.
2. Breach of contract claims
The current compensation limit for Breach of Contract claims in the Employment Tribunal is £25,000. To put the increase to £100,000 into context, the current £25,000 limit has been in place since 1994 and so arguably well overdue for an increase. Breach of contract claims seeking more than £25,000 in compensation can currently be brought in the County or High courts. Nevertheless, enabling higher value contract claims to instead be brought in a tribunal is likely to lead to an increase in breach of contract claims in light of the more informal nature of the employment tribunal process, the differing fees regime, and the significantly lower costs risks regime for claimants.
While the value of claims for breach of contract are likely to be increased, there is no announced/leaked proposal to amend or remove the list of breach of contract claims specifically excluded from employment tribunal jurisdiction. These include contractual claims relating to personal injury, living accommodation provisions, intellectual property, imposing an obligation of confidence or a restraint of trade covenant.
3. 48-hour working week claims
Currently, (broadly) employers’ obligations such as mandatory limits on working time (the 48-hour working week limit) and night working time, health assessments and transfers to day work are enforced by the Health and Safety Executive. Entitlements granted to workers by the Working Time Regulations 1998, such as to paid holiday, rest breaks, rest periods or compensatory rest, are enforceable by workers bringing complaints to employment tribunals. In light of:
this change may be of limited impact. Nevertheless, employers should review opt out arrangements to ensure they are properly documented and monitor the working hours of any workers who have refused to agree to opt out or have opted back into the WTR.
The Employment (Allocation of Tips) Act 2023 together with the statutory Code of Practice on Fair and Transparent Distribution of Tips come into force on 1 October 2024.
Under the new provisions:
As for penalties for non-compliance, businesses found non-compliant with the legislation risk facing claims in the employment tribunal. A compensation payment of up to £5000 may be ordered in respect of each worker;
On 26 October 2024 the Worker Protection (Amendment of Equality Act 2010) Act 2023 will come into force. The Act introduces a new positive legal obligation on employers to take "reasonable steps" to protect their workers from sexual harassment. If an employer breaches the preventative duty, the Equality and Human Rights Commission (EHRC) will have the power to take enforcement action against the employer. In addition, employment tribunals will have the power to increase compensation by up 25% where an employer is found to have breached the new duty.
Under the existing provisions of the Equality Act 2010, where a person commits an act of discrimination (including harassment) in the course of their employment, their employer is ordinarily liable for that act, in the event a claim is brought, unless the employer can show that it took "all reasonable steps" to prevent the discrimination from arising. "All reasonable steps" is a high bar, and many employers find it difficult to demonstrate that they have taken all such steps.
It will remain the case that to establish the existing statutory defence in a sexual harassment claim involving harassment by a colleague, the employer will still need to show that it took "all reasonable steps" to prevent the sexual harassment. But where a claim is upheld and the employer fails to establish the statutory defence, the employer may still potentially be able to avoid a "failure to prevent claim" and the corresponding 25% uplift to compensation if the employer can show it took "reasonable steps" to prevent sexual harassment of employees – a lower threshold. Employers need to think now about what steps they currently have in place and any further measures they can put in place with a good paper trail.
In July, The EHRC's Technical Guidance: Sexual harassment and harassment at work (originally issued in January 2020) was updated to include a new chapter with information on the new preventative duty.
During a difficult passage through Parliament, the originally proposed provisions of the 2023 Act were very significantly diluted:
The Government has indicated that it will seek to amend the new duty to protect employees from sexual harassment to revert to its original drafting, which would make employers responsible for taking "all reasonable steps," not just reasonable steps, to prevent sexual harassment in the workplace, including from third parties. It is therefore in employers’ best interests to ensure that they have robust processes in place in this regard.
Unlike the previous green paper, there is no longer mention in the 'New Deal' or the King's Speech of removing the cap on compensation for unfair dismissal.
This is favourable news for private equity backed businesses who rely on carefully crafted good and bad leaver provisions to adequately incentivise its key employees and discourage them from leaving through the back door. Perhaps an unwelcome reversal for senior executives, though, who've one less string to their bow when it comes negotiating favourable exit packages.
Given that the overwhelming beneficiaries of capless compensation would not be the Labour Government's prime votership, the absence of this policy is not overly surprising.
The Labour Government has not made a time commitment to the draft Equality (Race & Disability Bill), which suggests that it is lower down in its list of legislative priorities.
We expect there to be more changes coming for employment law in the next few months as the new governmental policies and legislation take shape.
Our Employment team is at the forefront of these changes, challenges and opportunities that will affect businesses, employers and employees. We will continue to provide updates on this page when new developments occur.
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