Business

New Government, New Rules - What Does Labour's Manifesto Mean For Employers In Terms Of Human Resources?

Issue 104

We chat to Kathryn Rodgers from face2faceHR.com who tells us about the changes you're likely to need to make.

Day one right to protection against unfair dismissal – This could significantly impact small businesses, highlighting the need for well-trained managers and fair processes. Ensure that your management are fully familiar with this, as it will undoubtedly have an impact on companies, especially small businesses.

Proposed “right to disconnect” for work/life balance – Similar to Belgium’s existing rights, employees at companies with 20+ workers would have the right not to be contacted outside working hours. The specifics are unclear, but this might involve reducing the discretion employers have to refuse flexible working requests and/or enhancing tribunal powers to review employer decisions. Labour states this would allow workers to benefit from flexi-time and term-time options, indicating a focus on supporting parents.

National Minimum Wage increases and the removal of the 18-20 age band – These changes would affect wage structures across businesses of all kinds. The National Living Wage saw a significant increase in April 2024. Labour has announced plans to secure further improvements by linking the wage explicitly to the cost of living. This would involve changing the Low Pay Commission’s remit to ensure they consider the cost of living when recommending new rates.

Labour has also pledged to eliminate the 18-20 age band, which currently allows employers to pay a lower hourly rate to workers under 21. This change would particularly affect the retail, leisure, and hospitality sectors, where many under 21s are often employed.

Single status of “worker” – individuals will either be employed or self-employed, affecting PAYE and NI contributions, particularly for small businesses where workers currently handle these as self-employed. Labour aims to eventually abolish the UK’s current three-tier system for employment status. The goal is to create a straightforward framework eliminating the current distinction between “employees” and “workers.” Labour acknowledges that this change cannot be implemented quickly and requires further consultation. The concept is that all workers would have the same employment rights. However, it remains unclear how rights such as sick pay and family leave would function within highly flexible work models.

Right to a written contract for self-employed individuals – This would have significant implications for small businesses, which may not currently have Contracts for Service in place.

Labour has proposed several measures to enhance the rights of self-employed individuals:

Right to a Written Contract: Self-employed people would be entitled to a written contract.

Action on Late Payments: Measures will be introduced to tackle late payments to the self-employed.

Extended Protections: Health and safety and blacklisting protections would be extended to self-employed individuals.

It remains unclear whether all self-employed people would be entitled to a written contract and whether the client must provide the contract if the individual does not have one.

Day one right to Statutory Sick Pay and removal of the Lower Earnings Limit for sick pay entitlement.

Labour plans to eliminate the waiting period, ensuring statutory sick pay (SSP) is paid from the first day of sickness rather than the fourth. They will also remove the lower earnings limit, allowing very low earners to qualify for sick pay.

However, it is unclear if Labour intends to increase the SSP rate, which is currently low compared to other countries. These reforms will raise costs for employers who rely on the waiting period for certain employee groups (e.g., those on probation) or who have low earners (such as part-time workers). Nonetheless, the changes will benefit lowincome individuals who become ill.

Labour aims to implement some of these employment law changes within 100 days. Although passing such changes through parliament and obtaining Royal Assent within this timeframe seems unlikely, business owners should stay informed, anticipate financial impacts, and review their documentation for necessary adjustments.

One thing for sure, Labour are going to want to make good on some of their promises, quickly, so if you are unsure how to stay ahead of the law changes and not get into hot water with the legislation as and when it happens, then feel free to contact me: 07946 330 025 or use the Contact Us form at: Kathryn.rodgers@face2faceHR.com

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