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What does Labour’s New Deal for Working People mean for your business?

Find out more about the government’s plan to ‘Make Work Pay’
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Published 3 Sep 2024
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Updated 21 Dec 2024
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7min read

What is the New Deal for Working People?

Labour’s ‘Plan to Make Work Pay: Delivering A New Deal for Working People’ was a manifesto promise designed to create a fairer and more secure workplace for everyone. In-line with their promise to pass legislation within their first 100 days in office, on 18th October 2024, Labour announced a new Employment Rights Bill – 105 days after the general election win, and 93 days after the State Opening of Parliament officially swore in Keir Starmer and his new government.

The new Employment Rights Bill is the first major example of the New Deal for workers in action, and represents the start of Labour workers’ rights changes that were outlined in the manifesto. To help you find out more, you can read our detailed analysis on the Employment Rights Bill, or read our article on how the proposed changes will affect small and medium sized businesses.

You might be wondering what other changes were announced in Labour’s New Deal and how these changes could impact your business. For SMEs, staying informed and prepared is key to navigating these potential shifts in business operations and workforce strategies. Our platform is packed with tools and resources that make compliance straightforward, and our HR Advisory service means you can speak to HR experts whenever you need to.

With more big changes likely on the horizon, we’re breaking down these proposals and offering some insights to help you think ahead.

Labour’s ‘Plan to Make Work Pay: Delivering A New Deal for Working People’ is designed to create a fairer and more secure workplace for everyone. With promises to pass legislation within their first 100 days in office, it’s likely that we’ll see a Bill introduced to Parliament very soon.

You might be wondering how these changes could impact your business. For SMEs, staying informed and prepared is key to navigating these potential shifts in business operations and workforce strategies. Our platform is packed with tools and resources that make compliance straightforward, and our HR Advisory service means you can speak to HR experts whenever you need to.

But with big changes on the horizon, we’re breaking down these proposals and offering some insights to help you think ahead.

Day-One Right to Claim Unfair Dismissal

What was proposed: Introducing a right for employees to claim unfair dismissal from the first day of employment, moving away from the current requirement of at least two years’ service. However, employees dismissed during their probationary period would not be able to claim unfair dismissal. This protection may also extend to workers, not just employees.

Were changes to day-one right to claim unfair dismissal covered in the October 2024 Employment Rights Bill? – Yes (note: no changes will come into law until 2026).

What this means for SMEs: This change aims to create a fairer workplace environment, but will also create more bureaucracy for employers by making it harder to take quick decisions on letting employees go. Given that it appears that individuals will not be able to claim unfair dismissal if dismissed during a probationary period, it’ll be more important than ever to have robust employment contracts in place for all staff which clearly set out that ongoing employment will be subject to successful completion of a probationary period.

The other top tip is to get smart about your hiring. If it’s going to be harder to move unsuitable employees on, you’ll want to make sure you are making the best possible choices about who you hire in the first place.

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Flexible Working as Default

What was proposed:  The right to request flexible working arrangements has been a day one right since 6 April 2024, so it is not entirely clear what further reforms the Government is proposing in this area. It may be that the permissible reasons for refusing a flexible working request will be narrowed to make it harder for an employer to reject a flexible working request. It’s also proposed to extend the rights for flexible working to workers and not just employees.

Were changes to flexible working proposed in the October 2024 Employment Rights Bill? – Yes (note: no changes will come into law until 2026).

What this means for SMEs:  Flexible working can boost employee satisfaction and productivity. As a business that thrives on remote work, we know a thing or two about it. However, it’s also important that employers set expectations of what is required of employees when working flexibly. For example, where employees are working remotely, a remote working policy is a great place to start. Check out this blog for the lowdown on helping your team maintain team productivity with flexible or remote schedules.

Ban on “Exploitative” Zero-Hours Contracts

What was proposed: Although the Government has said that it will eliminate “exploitative” zero-hours contracts to enhance job security, it isn’t clear how “exploitative” zero-hour contracts will be defined or whether this will be a ban on all zero-hours contracts. One proposal is that employees on zero-hours contracts who work regular hours will have a right to move to a regular contract after 12 weeks, but can opt to remain on a zero-hours contract if they wish

Were changes to zero-hours contracts proposed in the October 2024 Employment Rights Bill? – Yes (note: no changes will come into law until 2026).

What this means for SMEs:  Promoting job security is a positive move, but it could impact businesses relying on flexible, casual work arrangements. If this applies to you, consider offering part-time or fixed-term contracts to maintain workforce flexibility. We’ll keep you updated as more details emerge, so you can adapt smoothly.

Remote working policy and employee agreement template

End Fire and Rehire Practices

What was proposed:  Banning the practice of firing employees only to rehire them on less favourable terms, except when there is genuinely no alternative.

Were changes to fire and rehire practices proposed in the October 2024 Employment Rights Bill? – Yes (note: no changes will come into law until 2026).

What this means for SMEs:  Understanding when you will still have a right to fire and rehire will be crucial, and our HR Advisory team is always on hand to help you navigate tricky questions like this.

If it becomes harder to dismiss and re-engage employees on reduced terms in order to save costs, businesses may need to explore other ways to manage costs effectively. Have you thought about other ways to optimise and automate your workflow? Our HR automation solutions can help streamline operations and reduce costs effectively.

Raise the Minimum Wage

What was proposed:  Adjusting the minimum wage to account for the cost of living, creating a genuine living wage, and removing age bands so all adults are entitled to the same minimum wage.

Were changes to the minimum wage proposed in the October 2024 Employment Rights Bill? – No, however, raises were announced in the October 2024 Budget that will come into effect from April 2025.

What this means for SMEs:  Our Report on the State of Workplace Wellbeing highlighted financial stress as the top concern for employees. This proposed increase in the minimum wage could significantly ease that burden, creating a more supportive work environment, but it’s not clear whether the Government has thought about how businesses will afford this. Keep an eye out for our upcoming Instapay feature, designed to further enhance financial wellbeing and help your team thrive.

Equal Pay Reporting

What was proposed:  Requiring companies with 250 or more employees to publish gender, ethnicity and disability pay gaps, along with action plans to close these gaps.

Were changes to equal pay reporting proposed in the October 2024 Employment Rights Bill? – Yes (note: no changes will come into law until 2026).

What this means for SMEs:  While we already have gender pay gap reporting obligations, these proposals extend equal pay protection to ethnicity and disability. Ensure your payroll system includes features to track and address pay gaps – we provide tools to support equal pay reporting, promoting transparency and fairness in your business. This can help you stay compliant and foster a more inclusive workplace.

Statutory Sick Pay Reforms

What was proposed: Making statutory sick pay available from the first day of sickness and removing the lower earnings limit so that all employees and workers are eligible, even those on low wages. 

Were changes to statutory sick pay proposed in the October 2024 Employment Rights Bill? – Yes (note: no changes will come into law until 2026).

What this means for SMEs: These changes will likely increase costs for employers, so adjustments in budgeting and forecasting will be necessary. Reducing the need for employees to take time off is more important than ever—consider implementing an Employee Assistance Programme (EAP) to support employee wellbeing and reduce absence.

hands holding to a cup of coffee

Mental Health Support in the Workplace

What was proposed:  Enhancing worker support, with a focus on mental health. 

Were changes to mental health support proposed in the October 2024 Employment Rights Bill? – Not directly, but many of the proposed changes aim to positively impact the mental health and work-life balance of workers.

What this means for SMEs:  A proactive approach to mental health is key. We offer resources to help you create a supportive workplace environment. Check out our Report on the State of Workplace Wellbeing for more on our findings.

Family-Friendly Rights

What was proposed:  Protecting recent maternity leave returners from dismissal for six months after they return to work, unless a specified reason applies, and making parental leave a day one right for all workers (not just employees). 

Were changes to family leave and rights proposed in the October 2024 Employment Rights Bill? – Yes (note: no changes will come into law until 2026).

What this means for SMEs:  If these changes are implemented, they could impact your parental leave policies. Now is a good time to review your policies and stay informed about upcoming changes. We’ll update our template policies to reflect any legal changes, ensuring you’re always compliant.

A father in plank position on a yoga mat looking at a tablet with a young girl on his back

 

The wrap up

These proposed changes aim to promote inclusive and fair workplaces, but will also cause challenges for businesses to comply with these new obligations. As new laws get put into place, staying informed and proactive can help ensure a smooth transition when these ambitions get put into action. Our employment law guide is regularly updated with any new changes and is a great place to keep up to date with changes that may affect your business.

Question for our readers: How do you think these potential changes will affect your hiring and employment practices? Share your thoughts in the comments!

Alexandra Turner
People Specialist - Employment Hero
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