Employment Essentials: Labour's New Deal for Working People

Welcome to the latest episode of Gowling WLG's Employment Essentials podcast where we discuss the latest developments and challenges affecting employment law in the UK.

Jonathan Chamberlain: Hello, and welcome to this Gowling WLG UK Employment Labour and Equality Podcast. My name is Jonathan Chamberlain, I am the head of the team here and I am joined by my friend and fellow partner in the team, Anna Fletcher.

Anna Fletcher: It is good to be with you, Jonathan.

Jonathan: Thank you. And I am afraid I have to tell you that you are living in interesting times, certainly in terms of employment law. We are witnessing probably the biggest changes that I have ever seen in my very long career; I think yours too Anna as well.

Anna: I could not agree more, Jonathan.

Jonathan: And we will explain in a moment they are indeed very long careers. Possibly the biggest changes that we have seen in certainly one maybe two generations. The next 100 days are going to be very important because that is the timetable that Labour has set itself, it is what it promised in opposition and what it's repeated in the King's Speech that it is going to take to bring in some really very far-ranging changes indeed. Some of them will be changes in the law which will come into force later, some of them may well be immediate but it is absolutely clear there is an awful lot going on. Now Anna, you and I between us have what, more than 50 years experience doing this?

Anna: I think it might be 60 Jonathan which is very scary.

Jonathan: It is rather, I mean I started as a specialist employment lawyer in the Thatcher administration, I think I just made it as a trainee but certainly I began practising as a qualified employment lawyer under John Major, so I saw all the changes brought in by the Blair administration and you and I pretty much had parallel careers did we not?

Anna: Yes we did.

Jonathan: So, Anna, obviously I have got my reactions to this package, but I would be really intrigued, what is your sort of first reaction to this and what do you make of it as a whole?

Anna: I think we cannot underestimate the breadth of the changes that we are going to see as outlined in the King's Speech. I think that we are seeing an area of the law which is going to change so radically even bigger than Blair, even bigger than post-1997 changes and there is an awful lot here of what Labour promised under Corbyn and I think we are going to see a dramatic push in the direction of protectionism for employees, greater strength to the unions and all of this will need to be navigated by employers as we see these laws developing.

Jonathan: I think you are so right to think that on the Corbyn point. Most of this is indistinguishable from the Green Paper that came out under Jeremy Corbyn's leadership. It has been reaffirmed by the 'New Deal for Working People' under Angela Rayner. There had been some changes, but this is radical, radical stuff. What do you think is the change that is going to have the single biggest impact do you reckon?

Anna: I think it is the change to unfair dismissal and the unfair dismissal regime, because never in all the time we have practised Jonathan, has there ever been a time when this was a day-one right, whether it has been six months' service, a years' qualifying service, two years' qualifying service as it currently is, it has never been a day-one right and that as a concept, I just find it astonishing and I think that this is going to be a real see change for employers and how they manage recruitment, how they manage induction onboarding, how they manage probationary periods, more detail to come, but a massive change.

Jonathan: Well the probationary period is the thing you pick up on there and this is what I think is extraordinary because they could have said it is going to be a three-month qualifying service period or a six-month qualifying service period which has been in the past. But to say it is a day-one right but there will be provisions for probationary periods. Well, I think the best thing that could be said about that is that means it is going to delay when this is going to come into force because that is going to take some working out as to how you actually do that whereas they could have changed the length of qualifying service period I think by secondary legislation. But if you think of your workforce profile as you are listening to this, there has been a section of that workforce of those who have been with you for less than two years, but whom you needed to worry about in terms of the discrimination protections but they of course are day-one rights but the plain vanilla statutory employment protection, the right not be unfairly dismissed does not apply to them and now it does, so there is a whole level of process that you have to apply if you want to terminate those people's employment and you need the overhead to cope with that process and you will have to bear the risk of getting that process wrong as employers do for the more senior elements of their workforce, so if you have a relatively high staff turnover and most people do not get to two years' service and there are work places which are like that then this is going to have a huge huge impact on you and it is really interesting to reflect on that.

Anna: I think there is an additional issue as well for employers and any employers who have been grappling with the post-pandemic delays in the employment tribunal system and you are suddenly introducing the prospect of a considerable number of additional claims which we had not had to deal with in a system which is already massively under-resourced and we are going to get to a situation where that is incredibly difficult to manage.

Jonathan: Yes and that is of course without even taking into account the possible impact of removing the statutory cap on compensation, which by the way was not trailed in the King's Speech, it was trailed in the Green Paper, it was in the 'New Deal for Working People', it did not make it into the manifesto, it does not have to make it to the manifesto of course because again that can be dealt with in secondary legislation and it will be interesting to see if they go ahead with that. If they do, then the impact I think is going to be enormous.

Anna: So, Jonathan, which employers do you think are likely to be most impacted by this?

Jonathan: Well clearly all employers are going to be impacted by the changes in unfair dismissal rights and the whole host of other changes to individual employment rights which are being proposed and we will come on to some of those in a moment. I think it is this sort of workplace. We know that they are intending to ban zero-hours contracts, except apparently where employees request them, (how that is going to work I do not really know) but they are going to ban zero-hours contracts and they are going to change the unions recognition processes to make it much easier for unions to be recognised.

Now I know that we are focusing on individual rights because frankly as a profession and as the human resources has been focused on individual employment rights for much of the last 30 to 40 years, outside certain industries, outside the public sector, they have not really had to worry all that much about trade unions but these proposals I think point to the recollectivisation of the UK workplace, so I think the employers who are going to be most affected are those who have a high turnover of staff, who rely a lot on zero-hours contracts, who are already partly unionised or fully unionised or vulnerable to unionisation, so I think we are talking about a lot of retail, talking about a lot of logistics, care homes are an obvious one because we are talking about having national pay agreements in care homes and of course that is some way off but that will be a very difficult thing to do so that is not happening in the first 100 days. You can quite see big pushes on union membership in sectors like that. So those are the sorts of employers that are going to be most affected by that.

Now you and I have enough experience of this having worked with trade unions over the years in very different scenarios and I am not sure how many employers realise just how different an environment this can be, it is not necessarily worse I have to say, but it is different, there is no question of that.

Anna: Absolutely. And for people working within HR to get under the skin of the kind of relationships that need to be built up to create successful working relationships within a unionised environment, that is going to be radically different for people who perhaps have just never had that experience in their working lifetimes.

Jonathan: Yes. I hope we have given the listeners something to think about. While perhaps they are still in shock, Anna, do you just want to rattle through with a word or two what the other proposed changes are? See if you can do it without drawing breath.

Anna: [laughs] Thank you, Jonathan. I mean, there are going to be a raft of protections in relation to family rights, so we are going to see extended protection for new mothers returning to the workplace, dismissal will generally not be possible unless there are special circumstances six months after a woman returns to the workplace having had a child. We are going to see flexible working no longer the right to request flexible working, but the right in fact to work flexibly.

Now, it is obvious – seems obvious to me as it has done in all the years that that right to request has been around that there will be some workplaces where inevitably people cannot work in a flexible way. If you work in a bank for example and you are a cashier, you need to be in the bank. You cannot be sitting at home. So, there are inevitably going to be workplaces where it is not going to be possible, but it is a very different mindset, and it needs to be factored into recruitment decisions.

I think there are other changes in relation to sick pay that will need to be factored in to working arrangements. As you have mentioned Jonathan, zero-hours contracts. What is that going to mean? Does it mean that employers are going to need to look at perhaps using agency workers more frequently? But of course, there are then the complexities of the agency worker regulations that need to be complied with.

We may have situations where employers look more closely at using fixed-term contracts but again you need to be thinking very carefully there because they come with their own risks, and we may see the rise in different models.

We know there is some discussion, and this again is some way off, but a lot of discussions around employee status. So going away from this tripartite arrangement we have at the moment where we have employees, we have workers, and we have those who are genuinely self-employed. It will become binary. You are either an employee or you are self-employed, and depending on what that looks like, maybe we will have more self-employed individuals being retained by employers, but all of that detail is out there in the ether.

One of the things I think is particularly interesting working in a practice where we are focusing very much on equality is this proposal for the Equality (Race and Disability) Bill.

So, the Government's intention to extend pay gap reporting to cover those who are Black, Asian or ethnic minority and those with disabilities and I see that as a particular challenge, not in the sense that it is not something that should happen, because there is definitely a pay differential within those groups when compared to other employees, but actually the collation of data. Some organisations, this data is not captured. How do you ask somebody if they are disabled? Do we go back to the definition in the Equality Act? Do we have a different definition? People do not necessarily like that label. How are we going to get people to give us the data from which we can then extrapolate information around pay gap reporting.

There is also the suggestion that what we are going to see if equal pay rights being extended to those groups, and again the Equality Act is really complicated. There are still issues that are being debated today as to how it applies when you are looking at gender and so what we are going to do is to introduce new law that is even more complicated?

And there is a load of other stuff Jonathan, but that is a sort of whistle-stop tour of the key issues that I see affecting employers are we move forward to see what the flesh on the bones makes this all look like.

Jonathan: What I found particularly interesting about that account Anna is, not so much the individual heads of legislation that is bringing in, but you are already identifying issues that are going to have to be addressed through the legislative making process. Now, you yourself I know have been involved in the previous administration, in a strictly political neutral capacity I have to say, of course in helping to draft employment legislation, which we are not allowed to talk about obviously, but you supported the civil service in that.

Tell me a bit about your experience of the process. How does it work? How long do these things take?

Anna: They can take a long time. The particular matters you were talking about, there was a need for a faster reaction for reasons which I cannot talk about, but I think there is a lot here because of the breadth of the changes and the different way in which the legislations can be introduced, whether it is secondary legislation, whether we need full consultation and I think that Labour's commitment to working with business as well as its commitment to protecting employees, to my mind necessitates proper consultation so that we can iron out these issues so that people are listened to.

And we have had a lot of experience I think in the past where you would say, for example, I think it was in relation to employment tribunal fees? The vast majority of respondents said they were not a good idea, but nevertheless they were introduced, and I think we may see a different approach with the new Government. If they truly want to work in collaboration with employers and employees. So, lots of consultation, which we are going to be heavily involved with, on behalf of all of our clients so you will have an opportunity to have your say.

Jonathan: Well, I do hope you are right about that and particularly, for example in relation to lifting the cap on compensation front dismissal because I suspect that that will just clog up an already sclerotic system, despite the best efforts of those who work at it with a lot of very high-value claims for bonuses and things which this is then not just geared up to dealing with and should probably be heard in another forum if at all.

But anyway! We shall watch this space. We are of course doing more than watching this space. We are committed as a team to bringing you the latest and explaining to you what the implications are for you and your business. There is a landing page on our website, the link to which is in the title of this podcast, or with the blurb next to the title of this podcast which you can see wherever you access this podcast from and that will take you to the landing page, which will set out the topic heads and where we are in relation to them. What has been promised and what is being done and when it is going to impact you and what we think is going to be the effect on you and your business.

So, a lot to come. In the meantime, thank you very much for listening.

Anna: Thank you all.

Thanks for joining Gowling WLG for this podcast. If you enjoyed this episode, be sure to check out our website at gowlingwlg.com for more useful insights and resources and do not forget to subscribe to ensure you join us for our next episode.