A new document on employment law and workers’ rights, Labour’s Plan to Make Work Pay, goes into more detail about its New Deal proposals and reflects the complexities of making changes in areas such as zero hours, fire and rehire and a single worker status. Adam McCulloch examines the evolved plans.
Labour has updated its New Deal for Working People with a more detailed group of proposals under the Making Work Pay badge. Some of the 2021 green paper’s proposals, such as flexible working request rights, and a new duty on firms to prevent sexual harassment, have been taken up by the Conservative government – most recently a version of its measures to restrict fire and rehire practices. Despite this, the policies are still being treated with weariness by some in business circles while unions, notably Unite, look for signs of backsliding.
So what has changed?
In the context of zero-hours contracts many commentators have picked up on the inclusion of the word “exploitation” – a new addition to the following:
“Labour will end ‘one-sided’ flexibility and ensure all jobs provide a baseline level of security and predictability, banning exploitative zero hours contracts and ensuring everyone has the right to have a contract that reflects the number of hours they regularly work, based on a 12-week reference period”.
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This could be read as meaning that a Labour government would no longer ban all zero-hours contracts – only exploitative ones. It perhaps suggests that workers who are at risk of being exploited will have the opportunity to move onto a contract which reflects their regular hours while those who enjoy the flexibility offered by zero hours can opt to remain on their current terms.
A further change from the original proposals concerns the payments workers would be entitled to for cancelled shifts. Labour had said workers were to be paid in full for shifts cancelled without suitable notice, but now, under Making Work Pay, they need only receive compensation that is “proportionate” to the notice given for any cancelled or curtailed shifts.
The New Deal states unequivocally that fire and rehire practices will be ended. In Making Work Pay, the phrase “ending the scourge of fire and rehire” is retained but the following has been added: “It is important that businesses can restructure to remain viable, preserve their workforce and the company when there is genuinely no alternative, but this must follow a proper process based on dialogue and common understanding between employers and workers.”
For employment lawyer Darren Newman, writing in his blog A Range of Reasonable Responses, “Unless you also make it harder to make employees redundant, I don’t see how you can ban fire and rehire without creating an incentive for employers to go down the redundancy route.”
Newman adds that under the plans it would be difficult for tribunals to rule that business decisions made by employers are unreasonable “with the result that unfair dismissal has effectively become a law about how an employee is dismissed rather than why”. Certainly, it’s likely that it would be left to judges to determine what a “proper process” was.
For many employment lawyers, the most significant area for new policy is employment status. In its New Deal green paper Labour sets out plans to create a single status of worker. Under this, “employees” would be reclassified as “workers” with the new single status being awarded the full suite of employment rights.
However, writes Luke Bowery, partner at Burges Salmon, in a blog post, “this is an area where Labour has been in listening mode”,
Labour’s view is that the three-tier system of employment status (employees, workers, and the self-employed) has contributed to the rise of bogus self-employment with some employers exploiting the complexity of the UK’s framework to deny people their legal rights. This complexity has meant businesses and workers are reliant on lengthy legal processes to resolve issues.
The party promises to “move towards a single status of worker and transition towards a simpler two-part framework for employment status” if elected.
But now, in Make Work Pay, there’s a new emphasis on consultation and in recognising the complexities inherent in making changes. The document states: “We will consult in detail on how a simpler framework that differentiates between workers and the genuinely self-employed could properly capture the breadth of employment relationships in the UK, adapt to changing forms of employment and guard against a minority of employers using novel contractual forms to avoid legal obligations, while ensuring that workers can benefit from flexible working where they choose to do so.”
Labour will also evaluate the way flexibility of “worker” status is used and understood across the workforce and the way it interacts with and is incorporated into collective agreements.
Wherever any revised boundaries between the categories of worker and self-employed might ultimately be drawn, continued litigation on status would seem almost inevitable” – Luke Bowery
Bowery describes the approach as “sensible”. He adds “switching to a two-status model could unintentionally stifle flexibility and innovation.”
But Making Work Pay does not consider tax, Bowery points out, which must play a central role in any discussion of status. He writes: “If employees and workers were to share an employment status (and associated rights) then it seems likely they would need to share a tax status as well (which currently they may not do – many workers are self-employed for tax purposes whereas employees are taxed through PAYE).” He warns this could lead to unforeseen consequences such as companies responding by making more use of self-employed contractors.
He adds: “Wherever any revised boundaries between the categories of worker and self-employed might ultimately be drawn, continued litigation on status would seem almost inevitable.”
Making Work Pay goes on to propose a host of changes in fields including sick pay, family-friendly polices, day-one rights, the right to switch off, the banning of unpaid internships and trade union laws. It recognises the current government’s “welcome shifts on flexible working” and said a Labour administration would build on these changes.
But as the employment law specialists have pointed out, with all plans for change there is a point where reality and the need to balance conflicting interests meet. Labour, as it appears to be on the cusp of government, has reached that point.
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