As you will be aware, the UK employment landscape is on the brink of significant change. The new government, in its ‘Plan to Make Work Pay’, outlined ambitious plans to reshape employment law, impacting businesses of all sizes. The proposals signalled a clear shift towards enhanced worker rights and a closer relationship between businesses, trade unions and the government. Labour committed to introducing legislation to enact these changes ‘within 100 days of entering government,’ and it is widely expected that we will see a draft of the new Employment Rights Bill this week.
Key changes
As a reminder, the key changes proposed are:
Fair Work Agency
To enforce many of the changes below, Labour have confirmed that they plan to create a Fair Work Agency (previously known as the Single Enforcement Body) that will be tasked with ensuring compliance with the new regulations. This body may have the power to conduct investigations, impose fines, and publicly name non-compliant employers.
Day one rights
All workers will be granted statutory employment rights from the first day of employment. This includes rights currently contingent on a two-year tenure, such as protection from unfair dismissal.
Enhanced leave entitlements
Introduction of statutory bereavement leave and paid carer's leave, potentially impacting employers who don't currently offer these benefits. Additionally, the right to disconnect and maintain a healthy work-life balance for employees working from home is under consideration.
Strengthening collective bargaining
The new government is a strong advocate for trade unions and plans to simplify the process for them to gain recognition within businesses. This includes mandatory statements in employment contracts reminding employees of their right to join a union.
Focus on equality
Mandatory ethnicity and disability pay gap reporting, mirroring the existing gender pay gap reporting, is also on the agenda. This highlights the need for robust data collection and a proactive approach to diversity and inclusion.
Unified 'worker' status
In due course, the government also proposes the creation of a single 'worker' status, replacing the current employee and worker categories. However, a consultation will be launched before legislation is put forward. This would most likely mean individuals not classified as self-employed would be entitled to the full suite of employment rights from day one, including unfair dismissal protection and family leave, meaning additional compliance for those engaging these workers.
The remit of the Low Pay Commission has also been extended to explicitly consider the real cost of living when setting the National Minimum Wage (NMW) rates. Earlier in the year, we also saw an update to the complex rules around Holiday Entitlement and Holiday Pay which is likely to be enforced by the Fair Work Agency when it comes into being.
What does this mean for your business?
Whilst we eagerly anticipate the finer details of these reforms within the Bill, one thing is certain: the UK employment landscape is evolving. The combination of a new single worker status and widespread day one rights could reshape traditional employment models and have a significant impact on employers. Employers may see costs relating to National Insurance and family leave increase and will want to review their compliance with the new rules ahead of the Fair Work Agency being established. Those employers which have not previously recognised a trade union will need to review their employee relations strategies and options, and HR talent leaders will need to consider data collection in light of the proposed enhancements to pay gap reporting. In short, there are many changes coming and businesses will need to carefully assess the potential impact on their workforce and operations.
Once the Employment Rights Bill is published, Deloitte will share a more detailed analysis about what this means for employers, helping you understand the changes and prepare for these.
Who to contact
Please reach out to one of our Fair Pay and/or Employment Law specialists if you would like to discuss any of this in more detail.
Helen Kaye, Partner, Deloitte LLP, 01132921316
Kathryn Dooks, Partner, Deloitte Legal, 02073032894
Andrew Lilley, Partner, Deloitte Legal, 02070075381
Christopher Robson, Director, Deloitte LLP, 01216955958
Amy Douthwaite, Director, Deloitte Legal, 02073033486
Ben Baldwin, Associate Director, Deloitte LLP, 01132921447
James Cook, Consultant, Deloitte LLP, 02080713549
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