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Peter Etherington
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Employment Update for Small Businesses
June 2024

Dear Subscriber

As it seems reasonably likely that Labour will form the next Government, I thought you would be interested to see how that may affect employment. Whilst we don’t yet have their manifesto, they have outlined a plan – “Delivering a new deal for working people”, and that is the subject of this month’s update.
Please contact me if you would like to find out a bit more about any of the subjects raised in this update or if you need any help or advice.

Please forward this email to any of your contacts who might find it of benefit.

Regards
Peter Etherington
Tel: 01664 668164

www.etherington.co.uk

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Peter Etherington
Labour’s Plan
The Key Employment Aspects…
National Minimum Wage (NMW)
Labour’s plan to change the Low Pay Commission’s approach to their annual review of the NMW, which currently focuses on median wages and economic conditions, to include an adjustment relating to increases in the cost of living. The NMW has been rising at a higher rate than inflation in recent years anyway, so it seems quite likely that this approach will result in the NMW rising even more sharply.

Also, they plan to remove the pay bands, so that all adults will be on the same rate. Currently 18-20 year olds are on a lower rate than those aged 21 and over. I assume the 16-17 year old rate will remain, but that is unclear currently.

Clearly that is good for employees, but would employers be happy to fund this increase?

Unfair Dismissal Rights
Currently employees need to acquire two years’ continuous service with their employer before they attain the right not to be unfairly dismissed. Labour intends to make this a right from day one, but there will be some leeway relating to probationary periods as long as they have “transparent rules and processes”.

In our experience of supporting a wide range of employers, this is likely to have a significant impact, as we often support them to exit relatively new employees who are not meeting requirements. At the moment an employer can do that without having to follow a lengthy performance management process, but that may become problematic if this part of the plan is put in place. Clearly, we would need more detail before we would know for sure how much of an impact it is likely to have.

Banning Zero Hours Contracts
Labour plan to ban “…exploitative zero hours contracts ensuring everyone has the right to have a contract that reflects the number of hours they regularly work…” including measures to ensure workers receive compensation for any shifts that are cancelled or cut short.

Again, we really need more detail to know how this might work in practice, but for those sectors that use zero hours contracts quite widely (e.g. hospitality and care), this may have quite an impact and will need careful planning.

Restricting “Fire and Rehire”
Fire and rehire is the process that employers can follow when they want to change the terms and conditions of their employees, and where the employees are not willing to agree to the change. For instance, where an employer wants to move from a two shift to three shift system, to better meet client demand.

It is very much a last resort approach and is not without risk, as it does involve dismissing employees by giving them notice to end the current contract, and offering them the new contract to commence at the end of the notice period. Employees can, therefore, claim they have been unfairly dismissed (if they have 2 years’ service), even if they accept the new contract and remain in employment.

Labour believes it is sometimes used in bad faith by employers and intends to restrict its use by changing the law to include “effective remedies against abuse” and to introduce a code of practice that employers will need to abide by.

In my experience, most employers do not currently abuse the system, and would always try to avoid fire and rehire unless there is no other option, so I don’t think it likely that this change will impact on many businesses.

The Right to Switch Off
Labour intend to introduce this right, so that workers (particularly those working from home), will be able to leave work behind outside working hours and to prevent employers contacting them unless essential.

There is very little detail at the moment, but I suspect most employers would see this as a reasonable approach.

Sick Pay
Labour intend to remove the lower earnings limit attached to Statutory Sick Pay (SSP), so that everyone would be entitled to it. I imagine the amount of SSP would be reduced for very low earners, otherwise some may earn more through SSP then normal wages, but again the detail is not yet there.

Other matters
The plan includes a wide range of other proposed changes covering:

  • Tips
  • Family friendly rights
  • Unpaid internships
  • Trade unions and collective bargaining
  • Equality
  • The tribunal system

You can access the full plan here.

National Minimum and Living Wage
The current National Living Wage and National Minimum Wage rates are:

  • £11.44 per hour for workers aged 21 and over
  • £8.60 per hour for workers aged 18 to 20
  • £6.40 per hour for workers aged 16 and 17; and for apprentices under 19 and those over 19 in their first year*

*N.B. Apprentices over 19 and who have completed at least one year are entitled to the appropriate rate for their age.

www.etherington.co.uk

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