Labour has returned to government in the UK after 14 years, and with this comes a renewed focus on strengthening workers’ rights.  Employers should therefore expect to see a combination of new legal obligations and a strengthening of certain existing rights over the next four years.

Labour had set out its various employment-related proposals in its Plan to Make Work Pay. The measures were then incorporated into its Manifesto. On the July 17, 2024, Labour announced that it will introduce an Employment Rights Bill within 100 days of coming into power – so by the middle of October 2024. It is expected that this Bill will deal with many, but not all, of Labour’s proposals.

This article highlights the top five proposed changes those in compliance roles should be thinking about.

1. Introduction of an employee right to “switch off”

Labour proposes to introduce a right for employees to switch off, similar to that which already exists in Belgium and Ireland. This would likely mean employees being afforded rights not to:

• routinely perform work outside their normal working hours;
• be penalized for refusing to work outside normal working hours;
• be contacted (routinely) outside of normal working hours.

2. Removal of the distinction between “worker” and “employee”

The UK currently has three categories of working status: (i) employee; (ii) worker; and (iii) self-employed. The “worker” category is a blend of the other two. Workers benefit from some – but not all – of the statutory protections that employees enjoy, whilst at the same time (potentially) gaining some of the flexibility afforded to the self-employed. Many of those who work in the gig economy are considered “workers” under the law currently.

Subject to the outcome of a consultation, Labour intends to merge the “employee” and “worker” categories.  This is a significant change and will represent a major overhaul to the UK’s employment law landscape.  As such, implementation is unlikely to be immediate.

3. Mandatory reporting of ethnicity and disability pay gap

Labour plans to make it mandatory for UK employers with more than 250 members of staff to mirror the existing gender pay gap reporting regime for ethnicity and disability. For those companies that do not already report voluntarily, the introduction of ethnicity pay gap reporting will be particularly complex, given that it will involve comparisons between many ethnic groups, as opposed to the binary categories of male and female under the gender pay gay reporting framework. 

In addition, it will become mandatory for large companies to introduce action plans off the back of gender pay audits, which must demonstrate the steps they will take to close their gender pay gaps.  

These specific changes are likely to take longer to implement than some of the others that have been promised but, if relevant, compliance professionals should start considering now how their businesses will go about introducing such reporting mechanisms. 

4. Extension of “Day One” rights

Currently, employees only acquire particular basic employment rights after they have been employed for a certain period of time, and workers may not qualify for those rights at all. For example, employees only gain an entitlement to parental leave once they have been employed for a year, and only gain protection from ordinary unfair dismissal after two years’ of service. Currently, workers have no entitlement to parental leave, nor are they eligible for statutory sick pay or protection from unfair dismissal.  

Labour intends to give all workers (that is workers, in addition to employees) protection from unfair dismissal, as well as an entitlement to parental leave and statutory sick pay, from day one. Policies and practices will need to be adjusted to reflect this broadening of protections.

5. Other changes to family rights

These include strengthened protections for new mothers (by making it unlawful to dismiss a woman who has had a baby for six months after her return to work), a review of the parental leave system (in addition to making it a “Day One” right for all workers, as mentioned above), clarifying and extending the statutory entitlement to bereavement leave, and a review of the recently introduced unpaid carer’s leave (which may, among other things, become paid).

A note on timing

As alluded to above, much of the detail, as well as the timelines, for these proposals are currently unknown. Labour has said that it will consult “fully with businesses, workers and civil society” on how to put its plans into practice before legislation is passed. Further, even once the Bill is introduced, these proposals will undergo periods of consultation, and therefore amendment, in Parliament. 

As such, at the time of writing, we cannot predict when these changes in UK employment law will actually become effective. This will be part of the challenge for both HR and compliance professionals. It is, however, important to be aware of what is in the pipeline, and to plan accordingly. Many employers will need to adapt their working practices and simply amending relevant policies may only go some way to achieving this.

Antonio Michaelides, Of Counsel, advises clients in heavily regulated sectors on a broad range of cross-border regulatory and compliance matters, with a particular focus on Europe and the Middle East. Richard Rowlands is an associate in the Employment and Employee Benefits and Executive Compensation Practice Groups.