On entering government, the Labour Party pledged major reform of workers’ rights within its first 100 days in office. With two weeks left for the government to fulfil this promise, many questions remain over the shape these new employment laws will take.
This uncertainty is causing concern for business leaders. “There’s a lot of frustration among HR professionals at the moment,” says Stephen Simpson, employment law and compliance content manager at HR solutions provider Brightmine. “There’s confusion about exactly what the rights will be because the information we have so far is quite vague.”
HR-related compliance is already considered a burden by 67% of UK HR decision-makers, according to a survey by HR software company Personio, and the multiple measures that have been mooted by Labour are only likely to add to this burden.
Among the more than 60 changes that have been proposed are a right to disconnect, a day-one right to protection from unfair dismissal, an upgrade to flexible working rights and new restrictions on zero-hour contracts and fire-and-rehire practices.
It’s going to create a lot of work for HR
It remains unclear which proposed changes will be included in the Employments Rights Bill and which will be implemented through changes to the codes of practice.
“It’s going to create a lot of work for lawyers and HR people in particular to help keep people up to date with these changes and get their organisations in the best shape possible,” says Kirsty Churm, a legal director in the employment law team at Kingsley Napley.
There are concerns that the amount of change happening simultaneously could leave businesses racing to work out the details at the same time legislation is being rolled out, says HR consultant and founder of People Change Expertise Melanie Steel. “Proper engagement with businesses to ensure any changes don’t cause unintended consequences would be beneficial,” she adds.
What new employment rights has the government proposed?
Reports of these potential new workers rights in the media have also been causing HR teams headaches. Some HR teams are already being asked by staff and directors what their company’s approach will be to these new rights, specifically the right to disconnect and the right to request compressed working hours, which some have suggested would give employees the ability to work a four-day week. But, without sufficient information, they’ve been left unable to give any guidance.
“There’s a lot of change coming at the same time here, perhaps too much,” says Darren Hockaday, an HR consultant and former chief people officer of Birmingham City Council. Speaking at a London HR Connection event, he described Labour’s proposed changes to workers’ rights as a “Christmas list” for trade unions.
“Covid was probably the most seismic event impacting approaches to work in our lifetimes and we still haven’t figured it out,” he adds. “Yet we’ve got all this new legislation coming our way.”
The government says it remains committed to introducing the employments rights bill to parliament in its first 100 days and will “consult fully with businesses on the implementation of these reforms”.
A government spokesperson adds: “The ‘Plan to Make Work Pay’ sets out a significant and ambitious agenda to ensure workplace rights are fit for a modern economy, empower working people and contribute to economic growth.”
Unintended consequences
One of the changes that is likely to have the biggest impact on employers is the introduction of day-one rights for workers to protection from unfair dismissal. Currently, employees have to have two years of continuous service to bring an unfair dismissal claim.
“The reason for a qualifying period is to balance having protections for employees against the risk of making dismissals too hard and discouraging hiring,” Churm explains.
This change will impact the ability of companies to let go of people who underperform during this qualifying period. Some HR professionals fear that this could put extra onus on recruitment and would deter businesses from taking risks on some candidates, in the knowledge that it would be harder to dismiss them if they later prove to be a poor fit for the position.
Employers are really going to have to tighten up their probationary period procedures
Business leaders are already indicating that this change will have an impact on recruitment plans, with 57% of business leaders surveyed by the Institute of Directors saying they will be less likely to hire new workers because of the government’s planned employment rights legislation.
“A number of businesses have told us that they are more reluctant to hire new staff or have even put recruitment on hold entirely in light of what’s been proposed,” says Nicholas Le Riche, partner in the employment law team at BDB Pitmans.
Although the UK’s current two-year qualifying period for protection from unfair dismissal is longer than many other OECD countries, research from the Resolution Foundation also shows that countries with shorter qualifying periods tend to have lower hiring rates.
“This demonstrates the need for this policy to be designed really carefully so that it doesn’t have any unintended detrimental impact,” Churm adds.
One compromise that has been suggested by the government is that probationary periods of up to six months would still be allowed, during which it would be easier to dismiss employees. However, this is not currently a protected period or status that workers have in employment law, despite being commonplace in employment contracts.
“Employers are going to have to look at how they manage, train and adapt new recruits and how they deal with people who aren’t performing during probationary periods,” Simpson says. “Once people can bring an unfair dismissal claim from day one, employers are really going to have to examine and tighten up their probationary period procedures.”
Risk of employment claims
There is also uncertainty over how some of these new rights will work in conjunction with one another. For example, allowing people to work flexible hours may be challenging for businesses to uphold while also respecting employees’ right to disconnect.
The proposal to make flexible working the default arrangement for employees represents “a real shift of the balance of power from the employer to the employee”, according to Churm. Under the current flexible working act, the onus is on the employee to make a request for flexible working and the employer has to respond to the request, although there is no requirement for them to agree to it.
The government’s proposed changes will mean employers will have to accommodate flexible working requests “as far as is reasonable”.
There is less concern around some changes, such as the introduction of ethnicity and disability pay gap reporting. This is likely to follow a similar format to the gender pay gap reporting requirement for large organisations and some businesses are already voluntarily disclosing their ethnic diversity and disability pay gaps.
Drafting new contracts and implementing new policies and procedures will cost HR teams time and resources and, as with any change in employment law, there will be added risk of tribunal claims. “If there is a spike in the number of employment tribunal claims then this could certainly increase costs for businesses, at least in the short term,” Le Riche says.
One reassurance for HR leaders is that a lot of these changes are going to take a while to come into force, according to Simpson. He expects some of the more sizable changes, such as the right to disconnect and the removal of the two-year qualifying period for unfair dismissal could take more than a year to pass through parliament and come into force.
This should at least give HR teams some time to prepare.
