The Labour government's new Employment Rights Bill brings echoes of political events of 1906, with numerous employment reforms, and criticisms that the changes will adversely affect business.
Max Winthrop, a partner at law firm Sintons and a specialist in employment law, examines some of the parallels and asks whether the changes will be a boon or a curse to British productivity.
Imagine the scenario: the Conservatives call an election early, only to suffer one of their greatest defeats at the polls. The former opposition then wastes no time at all in legislating to address what they see as the imbalance between capital and labour, despite a media frenzy that the legislation will cripple Britain’s competitiveness
This description is of what happened in 1906, not 2024, but the two elections have striking similarities. The then Liberal administration of Henry Campbell-Bannerman promoted the Trades Disputes Act 1906. Now we have a Labour party with its own new radical legislation: the Employment Rights Bill.
Employment law does not usually feature much in the public consciousness. It did in 1906 because of a notorious case on the liability of trade unions, and it has done in more recent times because of events such as the scandal surrounding the (mis)use of NDAs in sexual harassment cases, or the consequences of “hire and re-fire” tactics as applied by P&O Ferries.
However, the new Labour administration has started the parliament not just with a debate, but with a fully drafted Employment Rights Bill. Although the more dramatic effects will not bed in for at least two years, the new bill promises 28 individual employment reforms ranging from the abolition of the current two year qualifying period for unfair dismissal to creating a new overarching regulatory body – the Fair Work Agency.
Any re-set of existing laws will have its supporters – and its detractors. The Deputy PM, Angela Rayner, has said that the government “
is delivering the biggest upgrade to rights at work for a generation, boosting pay and productivity with employment laws fit for a modern economy. We’re turning the page on an economy riven with insecurity, ravaged by dire productivity, and blighted by low pay.” The opposing view is best summed up by Tina McKenzie, of the Federation of Small Businesses who has called the Bill a “rushed job, clumsy, chaotic and poorly planned.”
There is no doubt that the government has given itself a difficult target: to produce legislation that increases job security but is not seen as a bar to increased productivity – or as the government put it, legislation that is “pro-worker and pro-business”.
Traditionally, flexibility in the labour market – meaning the ease with which businesses can shed employees – has been seen as an adjunct to growth, and there was some empirical evidence for this assertion when Britain was in the EU: there were a number of firms from countries such as France or Belgium who chose London for their head offices, and today one can look at the USA where employment is subject to termination at will, but economic growth has outpaced European rivals.
So what’s next for employers and employees? The short answer is a bit of a wait: it may well be autumn 2026 before the day one right to claim unfair dismissal becomes law. Even then that right will be subject to potentially different rules during what the Bill refers to as “the initial period of employment”.
There is of course more in the Bill’s 157 pages, with the position of employees significantly strengthened when it comes to:
Statutory sick pay: no more qualifying days before the entitlement kicks in, and no lower earnings limit;
Paternity leave: this will become another day one right;
Unpaid parental and bereavement leave: these too become day one rights;
Flexible working: not only a day one right, but the request must be accepted unless the employer can prove the request is unreasonable.
Two years is a very long time in politics and what finally emerges in 2026 may be quite different from this year’s Bill.
Time will tell whether in future years those rights promoted by the Bill that seem radical or at least overly worker friendly prove to be a boon or a curse to a much-needed increase in British productivity.
Max Winthrop is part of Sintons’ team of employment law experts, advising individuals and businesses on matters ranging from training to tribunals.
Find out more at www.sintons.co.uk