The 2024 Kings Speech was held on 17 July 2024, and anyone who followed Labour’s manifesto on their proposed changes to employment law would not have been surprised by what was contained in the Speech.
Below briefly sets out the upcoming changes that are expected to be brought within Labour’s first 100 days in power.
Upcoming Changes Expected by the New Labour Government
Unfair Dismissal Protection
The biggest shake up expected is the employee’s protection from unfair dismissal commencing from day one of employment.
Since the right to not be unfairly dismissed was introduced in 1971, this protection was initially only provided to employees with six months of service. This has gradually increased over the years, more recently in 2012, to two years of service.
Labour has promised that they will incorporate exceptions when it comes to a probationary period. However, it currently remains unclear as to what this could look like as it could be the biggest difficulty that companies will face when bringing in new employees. Businesses should therefore deal with disciplinary or performance matters, or ongoing settlement negotiations, bearing this in mind.
‘Fire and Rehire’ and Zero Hour Contracts
A ban on “exploitative” zero hours contracts can be expected, according to Labour’s plans. Whilst Labour has provided assurances that there will not be an ‘out-right ban’, they have said that they intend to “provide effective remedies against abuse”. But it remains unclear what this will look like at this stage.
‘Fire and rehire’ practices have also attracted significant media attention in recent years. Hence, it is no surprise that Labour has decided to address this.
Ultimately, Labour is looking to end the practice of ‘fire and ‘rehire’ entirely and provide effective remedies where a company decides to use this practice.
Parental Leave and Redundancy
Labour intends to bring in parental leave rights from day one of employment. Currently, this entitlement is only offered to employees with one year of service. They also plan on having Statutory Sick Pay be paid on day one of absence and removing the lower earnings limit. This could mean that full pay will need to be paid for any length of absence.
Recently, the law on redundancy protection for women who returned from maternity leave was extended to a further six months after their maternity leave ends. Now, Labour is seeking to extend this to not only redundancy but to all types of dismissal. They have said there will be exceptions in specific circumstances, but it remains to be seen what this will look like.
Wage and Pay
The current National Minimum Wage will also be impacted as Labour intends to scrap the age brackets. They plan to introduce a “genuine living wage” so that everyone aged 18 and above will receive the same salary.
Additionally, a ‘Fair Pay Agreement’ will be established in the adult social care industry. A draft equality (race and disability) bill which aims to tackle unequal pay due to race and disability could also be implemented.
Labour has been supported throughout the election by unions. So, it is no surprise that they will be bringing in changes that will enhance union recognition and rights within the workplace. They have indicated that this could be an introduction of new rights that allow unions access to workplaces.
These are just a few of the significant changes that are expected to come in.
SME Checklist: Preparing for the New Labour Government
Businesses of all shapes and sizes are going to be impacted by these changes. Whilst it will take some time before they come into effect, it is worth acting now to prepare for these changes.
Check Probationary Period Policies and Procedures
A review of employment contracts and policies for recruitment and new employees should be carried out. If an employee has unfair dismissal rights from day one, it could be difficult to dismiss an employee who doesn’t perform well during their probationary period.
Labour has stated that employers can still use probationary periods to assess an employee. However, it is not clear how this will impact a company’s decision to dismiss. There is a real chance that an employer will be expected to follow the ACAS Code of Practice and a ‘fair process’ when dismissing an employee.
Review Recruitment Policies and Employment Contracts
Currently, when dismissing an employee for poor performance, there is a ‘process’ that needs to be followed. However, it is a long process and often, employers choose to dismiss without following this process when an employee is within their probationary period. This will no longer be possible unless a company wants to face an unfair dismissal claim.
Therefore, contracts of employment and policies need to be clear on the length of the probationary period.
A review of recruiting practices could also assist a company to ensure that they are hiring the best possible candidates for the role.
Conduct a Pay Audit
A pay audit across the business is advisable to ensure that all employees are paid equally within their roles. This would help limit any risk of an allegation that the difference in pay is due to race or disability.
Conducting an audit can often be difficult if a company does not collate data on their staff’s disability or race. If this is the case, then a business may wish to carefully review this.
Final Thoughts
Labour promises that “they will work together” in partnership with businesses to deliver these proposed changes. However, it remains to be seen how they intend to limit the effects of these changes on small and medium businesses.
Employment tribunal cases are currently being listed in 2026 and with these changes, it is expected that there will be a significant increase in claims.
Therefore, taking preventative steps and implementing changes to avoid any potential claim would be sensible, including but not limited to making settlement offers to employees (by offering them an ex gratia payment).
Chris Hadrill is Partner in the employment team at Redmans
