The UK Labour Party's employment rights Green Paper: what might the proposals mean for employers in the UK?

We reported in January 2024 that the Labour Party's then most recent publication 'Let's Get Britain's Future Back' made limited reference to workers' rights, referring only to proposals to ban zero hours contracts and 'fire and rehire' practices.

Since then, the more detailed proposals in Labour's Green Paper 'A New Deal for Working People' have come under increasing scrutiny as business leaders who anticipate a likely change of Government have engaged with what Labour's proposals could mean in practice.

So, what exactly is Labour proposing? We set out below some of the key changes as regards individual employment rights, with initial views from the Withers' employment team. Bear in mind, however, that the road from 'Green Paper' proposal to enforceable rights is often a long and winding one. Any future administration may find that some of these proposals are likely to be counter-productive or unworkable.

Proposals to give unions greater access to workplaces and changing the rules on recognition of unions and strikes would arguably be easier to introduce than changes to individual employment rights. Such measures could bring about a profound alteration in the way that UK workplaces operate and might start to shift the emphasis from individual rights to those bargained for collectively.

Protection against unfair dismissal from the first day of employment

Removing the qualifying period for protection from unfair dismissal altogether is a controversial proposal that could increase the burden of managing new recruits, increase recruitment costs and, in some cases make employers reluctant to hire staff. The Labour Party has commented that the change would not prevent the use of probationary periods "with fair and transparent rules and processes", so employers may look to structure and manage these trial periods more actively.

Previous governments introduced a qualifying period of one year, but it has been two years since 2012. Reducing the qualifying period from two years to one, or even six months, could strike a balance between employers' needs to test employees' suitability and employees' needs to be protected from arbitrary dismissals.

A day-one right to statutory sick pay 

At present statutory sick pay ('SSP') kicks in after three 'waiting days' and arguably the policy reasons for this have dwindled in importance. However, any such change would affect employers' budgets directly as SSP is fully funded by employers.

A day one right to 'parental' leave

It is not clear what the Green Paper means by 'parental leave', but as there is already no qualifying period for maternity leave, it may be that this is a measure that would not be unduly burdensome to employers.

The Green Paper suggestion that the notoriously complex scheme for shared parental leave and pay might be simplified, is one that would be widely welcomed.

Prohibiting the dismissal of women within six months of returning from maternity leave except in specified circumstances

There is clear evidence that women are vulnerable to loss of employment when they take time off to have children, despite the existing statutory protection. This measure would ameliorate that problem, but the exceptions would need to be carefully drawn.

A ban on zero-hour contracts and a right to a contract reflecting 'usual' working hours

An outright ban is widely regarded as being too draconian – there are many circumstances in which zero hours contracts are used in a non-exploitative way that suits both sides.   

A right to contract reflecting 'usual working hours' would potentially capture cases in which they are being used in a one-sided way but also accommodate the cases in which workers are happy with a zero hours arrangement. Drafting a change that would have the desired effect would be difficult.

Ending 'fire and rehire' practices 

Ending 'fire and rehire' practices through improving information and consultation procedures, adapting unfair dismissal and redundancy legislation and ensuring that notice and ballot requirements on trade union activity do not inhibit action to protect terms and conditions where fire and rehire tactics are being implemented.

The Green Paper is putting this forward as part of a package of potential measures that would substantially change the role of unions and their role in protecting workers' rights, redrawing the landscape very significantly. The practicalities of limiting employers' entitlement to end contracts of employment in without unintended consequences may prove difficult to navigate.

The current Government has recently responded to a consultation on a statutory code of practice governing fire and rehire practices. Some say this is too weak to be an effective deterrent. Measures that impose significant sanctions for non-compliance (such as protective awards in collective redundancy cases) might strike a better balance.

Ending 'bogus' self-employment by legislating to give all workers the same rights

Many key rights are already available to those who are 'workers' rather than 'employees', the main exceptions being parental rights, unfair dismissal protection and redundancy pay. There has been extensive litigation around employment status, but previous (Conservative) Government pledges to introduce a single unified status have foundered on the difficulty in drafting a workable definition – so it remains to be seen whether this can be solved.

Extending statutory protection from dismissal to those on very flexible or atypical work arrangements is potentially an attractive alternative to avoiding abuses by 'banning' certain types of contractual arrangement.

A right for home workers to 'switch off' out of hours

In principle this is a sensible measure (depending on the nature of the role) but employers may have concerns about whether legislation is too heavy-handed an approach.

A right to a say when remote surveillance technology is introduced

This is likely to be introduced via a requirement to consult collectively via unions or other workplace representatives. Some employers might prefer to consult over measures of this nature in order to improve employee buy in and overall effectiveness.

Extension of the time limit for bringing claims to employment tribunals 

The existing three-month time limit is very short and that can lead to injustices, but employers would not welcome a development that led to longer periods of uncertainty after employees have left their employment.

An extension to six months might strike the right balance between employer and employee. Any longer would potentially make defending claims harder due to staff turnover and fading recollections.

No cap on compensation in employment tribunals

This is a headline grabbing measure that needs to be understood against the reality that most employment tribunal awards are very modest. There is no cap in discrimination and whistleblowing claims in any event, and the limit on unfair dismissal compensation (currently £105,707 and rising to £115,115 on 6 April 2024) is arguably outdated.

Requirement for employers to prevent staff being sexually harassed by clients

This measure was part of UK law until 2014, when it was repealed as part of a deregulation drive. Many employers already take steps to make it clear that harassment of their staff is not tolerated. The impact may be felt most keenly amongst smaller employers with less HR support available for implementing suitable policies. 

We will keep you updated as more news emerges about the Labour Party's potential programme of reform.