Employers are urged to be aware of the impact the new Government’s employment law changes will have on their businesses.
The King’s Speech before Parliament highlighted that Labour means business and will introduce the Employment Rights Bill in the first 100 days of being in power.
Joanne Stronach, head of employment law and HR at Cartmell Shepherd Solicitors, said while Labour’s New Deal is set to improve the rights of thousands of employees, it is also likely to have huge ramifications for companies across the UK.
When Sir Keir Starmer was elected Prime Minister on July 4, the Government committed to implementing its New Deal for Working People mandate which aims to give workers more legal rights, ban ‘exploitative’ zero hour contracts and give new recruits immediate rights from their first day in the job.
Joanne is now recommending businesses review their current policies and contracts to ensure they are aligned with the new measures expected to become law.
She said: “It is clear that Labour’s New Deal is going to benefit a lot of employees and improve their rights, but is it going to be a good deal for employers?
“Businesses really need to think about all their current contract terms, policies and procedures, and keep an eye out for the proposed changes in the Employment Rights Bill to make sure that they will fall in line with new employment legislation.
“If employers are unaware of the new measures introduced they could easily, unwittingly, breach the law and land themselves in trouble.”
Key changes Joanne is highlighting to employers are:
- The move to a two-tier working relationship of employees and self-employed. This means that the differential between ‘workers’ and ‘employees’ will end, with workers having the same legal rights as employees. Currently, workers do not have rights to statutory sick pay, statutory minimum notice period, maternity, paternity or adoption leave and pay, shared parental leave or parental bereavement leave, flexible working requests, rights arising as a fixed term employee, time off for antenatal appointments, time off for dependents, statutory redundancy pay or unfair dismissal;
- Basic individual rights will be provided from day one for all workers, ending the current system of two years of service qualification to access protection against unfair dismissal, parental leave and sick pay. It is unclear whether that means Labour will abolish the two years’ service qualification for unfair dismissal claims or not. Employers will still be able to operate probationary periods to assess new hires, but it is Labour’s plan to introduce fair and transparent rules and processes so that new hires are not fired without reason or cause. This will potentially cause confusion for employers;
- The three-day waiting period for payment of statutory sick pay to be abolished so employees will be paid from their first day of illness – which heightens the real possibility that employers will see an increase in short-term sickness absence rates;
- A ban on firing and rehiring as a practice to negotiate contractual terms, except in certain circumstances.
Businesses specialising in hospitality, tourism and retail need to be particularly aware of proposals that affect the use of zero hour contracts as this may have a huge implication on contract terms for temporary and seasonal staff.
It is envisaged by Labour that an employee on a zero hours contract will have the right to a regular hours contract reflecting how much they regularly work in practice based on a 12-week period.
Joanne said: “It’s understandable that the Government doesn’t want businesses to exploit workers by abusing zero hour contracts with purely one-sided flexibility, but this can lead to problems for certain industries who use zero hour contracts correctly for large fluctuations in work during certain times of the year.
“If you consider a typical hospitality business in the Lake District as an example, a lot of their trade is during the tourist season so they bring in extra staff to cover when they and the surrounding local area and businesses are busier.
“However, it can be very hard for a business to predict how many bookings they will receive from week to week, and they may not know for certain if any spike in visitor numbers will extend beyond 12 weeks.
“The new policies will protect seasonal workers by giving them more regulated contracted hours, but smaller businesses may feel they may not have enough guaranteed hours work for the staff so may choose not to employ these seasonal workers at all.
“This could mean fewer jobs will be created in the local area and some businesses may feel they will have to restrict bookings instead with the resultant impact on their generation of income. This could have a huge impact on the number of visitors to areas such as the Lakes and Northumberland whose economies are largely dependent on tourism.”
Joanne works with businesses and organisations across Cumbria, Northumberland and nationally, as part of Cartmell Shepherd Solicitors’ Business Services team.
Cartmell Shepherd has seven offices at Rosehill Carlisle, Carlisle city centre, Brampton, Haltwhistle, Hexham, Penrith and Cockermouth.
