How Might A Future Labour Government Change The Employee Relations Environment In The UK?

Published on: 13/09/2023

#Employee relations

If the latest opinion polls are to be believed, it appears that the outcome of a General Election in 2024, is highly likely to be a Labour Government. This is certainly something which prudent employers should be building into their scenario planning.

This article examines what employers might expect from any future Labour Government in the field of Employee Relations. Given the state of the opinion polls, it is unlikely that the governing party in the UK will want to rush towards a General Election, which in reality has to be held by the end of 2024 at the latest. This gives all parties some time before they finalise their manifestos and a lot can change between now and then, but as reported by LabourList, there is a draft policy document in place, which provides some indication as to what any future Labour Government’s policy might look like.

Better jobs and better work

One major theme for future policy is ‘Better Jobs and Better Work’. This demonstrates very clearly the intention of the Labour Party to change the labour market and the nature of work and jobs in the UK.

There are some policy statements underpinning this, which indicate the direction of travel, even if they may be short of detail at this stage.

Labour intends to introduce ‘basic individual rights from day one for all workers’. Presently, an employee has to have two years’ continuous service with their employer before acquiring certain significant employment protections, including the right not to be unfairly dismissed and to claim statutory redundancy pay. This is likely to change. In some ways this should not be an issue for employers, as they may simply have to treat all employees with less than two years’ service the same way as they currently have to treat employees with over two years’ service. However, prudent employers should ensure that their resource planning and recruitment practices are fully effective, as resource planning and hiring mistakes will become more difficult and potentially more expensive to resolve.

The document also states that Labour will ‘move towards a single status of worker and transition towards a simpler two-part framework for employment status’. This refers to an individual’s legal status at work, such as whether the individual is a self-employed contractor, a worker or an employee and affects what employment rights the individual is entitled to under law.

A future Labour Government will also consult on ‘a simpler framework that differentiates between workers and the genuinely self-employed and evaluate the way flexibility of worker status is used and understood across the workforce’. This statement points to the trend over recent years for some employers to insist on employees assuming a self-employed status to avoid some of the employer obligations associated with employee status. Labour appears determined to close this route down.

Of course, there are many individuals in the UK who have employment rights, but are not aware of them and/or, do not exercise them when they could. Labour appears to seek to change this situation when the document says it will, ‘consider measures to provide accessible and authoritative information for people on their employment status and what rights they are owed’.  Additionally, that it will ‘improve and strengthen enforcement via employment tribunals to provide quicker and more effective resolutions’

Flexible working

Flexible working is on the agenda, however, Labour’s view appears to be that presently there is often ‘one-sided’ flexibility which favours the employer at the expense of the employee. It plans to make ‘flexible working the default from day one for all workers, except where it is not reasonably feasible’.  To embed this balanced flexibility further, Labour says in the document, that it will ‘ensure all jobs provide a baseline level of security and predictability, banning exploitative zero hours contracts and ensuring anyone working regular hours for 12 weeks or more has the right to a regular contract.’

As well as having exploitative zero hours contracts in its sights, a future Labour Government would end ‘fire and rehire’ and ‘fire and replace’ practices (known in the legal world as dismissal and re-engagement). Some high-profile examples described as fire and rehire have hit the headlines over the last couple of years such as British Airways, P&O Ferries and British Gas. To combat these and other practices deemed ethically unacceptable from happening under a Labour Government, the intention is to ‘establish a single enforcement body and strengthen the law to enforce workplace rights’.

Equality, Diversity and Inclusion

Equality, Diversity and Inclusion also features at large in the policy document, as described by LabourList.

The Labour Government would ‘tackle the gender pay gap’ and increase the obligations on large firms to take them beyond merely monitoring and reporting the gaps. ’Large firms will be required to develop and publish action plans, as well as plans detailing how they are supporting their female workers experiencing menopausal symptoms.’

The Equal Pay objective will be strengthened further by introducing ‘rules to permit equal pay comparisons across employers’ and expanding pay gap reporting for large firms to cover ethnicity and disability.

Low Pay will also be a target. The document says that Labour will ‘change the Low Pay Commission’s remit so that alongside median wages and economic conditions, the minimum wage will for the first time reflect the need for pay to take into account the cost of living.’ This could have a very considerable impact upon minimum pay levels, which would of course, in turn, then impact differentials with other pay levels in organisations.

In respect of pay, the document also says that Labour plan to establish a new Fair Pay Agreement (FPA) in the adult social care sector and consult widely and think about how FPAs might benefit and can be extended to other sectors. Further, that they will look to ‘support and build on existing arrangements in other sectors where labour markets are operating effectively or where existing collective arrangements at employer or sector level are already working well.’

Industrial relations

As one would expect for a party which is part of the wider Labour Movement, the document has extensive coverage of measures which would support Trade Unions.

Labour will ‘strengthen and update the rights of working people…empowering workers to organise collectively through trade unions’.

The Trade Union Act 2016, the Minimum Service Levels (Strikes) Bill and the Conduct of Employment Agencies and Employment Businesses (Amendment) Regulations 2022 will be repealed.

Further the intention is to ‘update trade union legislation, so it is fit for a modern economy, removing unnecessary restrictions on trade union activity and ensuring industrial relations are based around good faith negotiation and bargaining’. There will be strengthened ‘rights for trade unions to organise, represent and negotiate’

The document highlights the intention to ‘simplify the process for union recognition and ensure reasonable access within workplaces’. It is not clear exactly what form this will take at the moment.

There is clearly concern about how the Gig Economy has evolved and the impact that this has had on employees. Labour seeks to “ensure workers in precarious and gig-economy sectors have a realistic and meaningful right to organise through trade unions”.

In terms of union ballots, it appears that Labour will ‘allow unions to use modern, secure, electronic balloting’. The current Government insists that only paper postal ballots may be used for voting in union elections.

Labour also recognises the importance of workplace trade union representatives. It intends to ‘create new rights and protections for trade union representatives to undertake their work, strengthening protections for trade union representatives against unfair dismissal and union members from intimidation, harassment, threats and blacklisting’. They will also “ensure there is sufficient facilities time for all trade union reps so that they have capacity to represent and defend workers, negotiate with employers and train as well as create fairer workplaces and tackle gender pay gaps.” These are areas that are already catered for by legislation, but perhaps do not quite take place in practice as intended in the legislation. It will therefore be interesting to see what plans Labour have to improve and extend the current rights.

In terms of legislation, apart from repealing Conservative legislation as outlined above, Labour intends to ‘introduce a range of measures to help improve the world of work and tackle job insecurity, stagnant pay and the growth of in-work poverty’. It will ‘bring forward legislation to implement it, including an employment rights bill, within 100 days of entering office’.

Unlocking the UK’s low productivity

Commentators have said for many years that the UK has a low-cost, low skills, low productivity economic model and the Labour Party appears ready to address the skills issue as part of finding a solution to this.

Labour seeks to ‘close the digital skills gap’, upskill the workforce and ‘ensure that workers have new rights, protections and access to training to keep pace with the changing nature of work and technological advancements’.

A Labour Government would seek to ‘deliver a landmark shift in skills provision and give people the tools they need in the workplaces of the future’. How these intentions around upskilling and reskilling will be delivered in the work environment is not clear. However, at a national level, the party intends to “establish an expert body – Skills England – to oversee the English national skills effort” over the coming decade.

With regards to the availability of skills in the wider economy, Labour has ruled out a return to Freedom of Movement arrangements with the European Union. They have said that they do support a points-based immigration system so the economy has access to the skills it needs. There will clearly be room for employers to continue to apply for work visas in respect of occupations experiencing skills shortages, but Labour will ensure all employers able to sponsor visas are meeting decent standards of pay and conditions. This suggests that visa requests will not just be judged in the future on whether skills shortages exist or not, but whether the employers submitting such requests are suitable employers.

The future under a Labour Government

As stated at the beginning, these policy documents will be subject to negotiation and change before a Labour General Election Manifesto is nailed down. The old adage is that elections in the UK are generally won by securing or at least not alienating the centre. Labour recognises this. Responding to reports that Labour is thinking of watering down its commitment to strengthen the rights of gig-economy employees, Stephen Morgan, the Shadow Minister for schools, insisted that the ‘Labour Party can be pro-worker and pro-business’. This is probably true, but it is a narrow path which has to be navigated to allow this balance to be achieved. Over the next months there will be pressure from the unions and others to drive ‘the biggest levelling up of workers’ rights in decades’, as the party’s deputy leader, Angela Rayner, described it recently. However, there will be counter-pressure from election strategists and pragmatists within the party to ensure that business is not alienated as a result.

The precise nature of the future under a Labour Government is still unclear, but the direction of travel is not. There is highly likely to be a significant shake of workers’ rights and union rights and employers should be thinking about whether they are ready for such changes. Prudent employers should also not confine themselves to thinking about any changes purely in terms of worker or union rights.

The Labour Party clearly has an ambition to transform the whole nature of the UK economy. They are intending to run an ‘active industrial strategy for a High-Tech and Green economy, committing to spend £28 billion per year in capital investment to achieve this transformation. The intention is to create 1 million “good jobs’ for “people of all regions, ages, genders and socio-economic groups”.

If this ambition, along with the upskilling agenda is realised, these are highly likely to have a significant impact on the talent landscape in the UK. Employees and potential employees will have greater choices available to them and they will, undoubtedly choose to move into the greener, cleaner, high-tech jobs where they can. Employers need to anticipate this and review and hone their talent strategies now, to ensure that they will be able to continue to attract, recruit, engage, and retain the talent they need for business success.

If you have any questions regarding these policy documents, please don’t hesitate to contact our employment team for assistance.


This information is for guidance purposes only and should not be regarded as a substitute for taking professional and legal advice. Please refer to the full General Notices on our website.