The Labour Party was founded to defend the rights of people at work, and that has remained a core principle of the party for 125 years. In the 2024 election campaign, the party promised to reverse a generation of Conservative legislation limiting the rights of workers and those who represent them. Work began soon after the election, and Angela Rayner launched the Employment Rights Bill in October. The House of Commons approved it in March, when it progressed to the House of Lords, and this week, after 13 hours of debate, they gave it its, final, third reading. There are a few outstanding amendments to be resolved, but the promise to make the biggest shake up of employment law since the 1970s is about to be honoured. But there remain concerns, among employers about the costs, and among unions about the potential for delay and watering down during implementation.
A Labour promise honoured
This is perhaps the most obviously recognisable ‘Labour’ project of the present government. It aims to restore rights to workers and their unions, with particular benefits to the most vulnerable workers. However, it is complex, technical, and at 300 pages, it is very long. Few of those who stand to benefit will ever read it, and it will take time for people to feel the results. In a febrile political climate, if may not be noticed, while attention turns to much less important issues. But Labour will claim that it is an election project honoured.
Opposition protests
Since the Bill reverses many changes made by successive Conservative governments, it is not surprising that the Opposition takes a different view. In the closing debate, Lord Sharpe described it as “a terrible Bill”, and Lady Noakes said, “it is bad for business, which means it is bad for the economy, and it is just terrible for people who want jobs.” They argue that the Bill will suppress economic growth. Imposing new duties on employers will restrict business activity, and employers will be reluctant to recruit staff when they know that those staff will have employment rights from day one.
Government aims
The government claims that the Bill will:
Address one sided flexibility in employment practices: end ‘zero hours contracts’ and ‘fire and rehire’ practices; give the right to claim unfair dismissal from day one of employment; strengthen collective redundancy rights.
Ensure that workers get fair pay: strengthen statutory sick pay; restore the School Support Staff Negotiating Body; establish fair pay agreements for social care; clarify tipping law; give outsourced workers comparable conditions to their public sector equivalents; protect the conditions of seafarers regularly visiting UK ports.
Support family rights: provide paternity leave and parental leave from day one, and allow parents to share these; create a right to bereavement leave; protect women on maternity leave from dismissal; require refusal of requests for flexible working to be ‘reasonable’.
Prioritise fairness, equality and wellbeing of workers: employers must take reasonable steps to prevent sexual harassment, and harassment by third parties; strengthen protections for whistleblowers; require action plans on gender pay gap and menopause.
Modernise trade union law: repeal the Strikes Act 2023 and most of the Trade Union Act 2016; strengthen union rights of access to workplaces and simplify union recognition procedures; give new rights to trade union representatives; a duty for employers to inform workers of the right to join a union; simplify information requirements for industrial action.
Improve enforcement of employment rights: create a new Fair Work Agency to investigate, inspect and, vitally, take action to enforce the law and bring cases to tribunal; increase the time to bring claims to a tribunal; bring payment intermediaries within the scope of the law.
The Lords’ amendments
Unsurprisingly, the Bill has proved contentious in the House of Lords, where it has received 13 hours of debate. In returning the Bill to the Commons, they have proposed twelve amendments. These include limits on trade union rights: requiring new union members to actively choose to contribute to its political fund, and requiring a 50% turnout in ballots for industrial action. Other amendments affect dismissal processes: introducing a qualifying period for unfair dismissal of six months (the Labour Manifesto committed to introduce ‘day one’ protection), and giving an employee the right to be accompanied by ‘a certified professional; (not necessarily a trade union representative) at disciplinary and grievance hearings.
Costs
Independent experts have assessed the likely cost of implementing the new law as £5 billion, or between 0.1% and 0.5% of the total national wage bill. Ministers argue that most of this represents a transfer to the lowest paid workers, who stand to gain most from the changes. They add that good employment law reduces costs, by reducing conflicts, improving morale, and strengthening good employers.
In response, the Opposition argue that these costs will fall mainly on small employers who are ill- equipped to manage them. They have therefore introduced an amendment to require the government to consult with at least 500 small and medium employers before the Act is implemented.
Next steps
If the Commons rejects the Lords’ amendments, they will go back for further negotiation (known as ‘ping pong’), but it is likely that the Bill will get final Royal Assent and become law in time to begin implementation in 2026. And in July, the government published its Implementation Roadmap, outlining how that is expected to proceed.
Since last summer, under the banner of the ‘Plan to Make Work Pay’, the government has been consulting about the broad issues with employers and unions. These consultations will continue, and the government will be drafting new regulations to implement various parts of the new law.
However, unions are concerned about the implementation timetable, and especially the fact that the abolition of zero hours contracts and introduction of day one rights will not take effect until 2027.
The political dilemma
Yet again, the Labour government faces a paradox. This Bill clearly addresses some long-term difficulties facing working people and their representatives. It embodies the traditional values of the Labour Party. But it is detailed, technical, and will take time to show results. In the present climate, the people most likely to benefit are the least likely to notice. Although it will make a far greater difference to the lives of most working people than the small boats ‘crisis’, the latter will probably continue to dominate public attention.
And, as always, those who face the greatest challenges, especially small employers, will be shouting loudest. Some commentators believe that the Bill will hamper economic growth by making employers less willing to recruit. On the other hand, Labour will argue that good employers have nothing to fear, and that it will usher in a new mood of employer/employee cooperation.
We shall see.
