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Labour’s Manifesto: What Employers Need to Know
The Labour Party’s recently unveiled manifesto ahead of the upcoming general election presents their plan which is aimed at transforming employment law in the UK. The manifesto reinforces the comprehensive proposal titled“Labour’s Plan to Make Work Pay: Delivering a New Deal for Working People,” which outlines significant changes that could reshape the landscape for employers and employees alike.
Whilst it is not yet entirely clear how each of these changes will operate in practice, it is clear that these proposals, if implemented, will require employers to adapt swiftly. Therefore, it is crucial to stay ahead of these proposed changes and understand their potential impact on your business operations and HR practices.
We have summarised the key initiatives set out in Labour’s manifesto and ‘Make Work Pay’ plan below. The following list is not exhaustive but highlights the key areas which employers and HR should consider in preparation of the upcoming election and potential changes to UK employment law.
Key Proposals
Day One Rights
The manifesto proposes to provide basic rights from the first day of employment by abolishing the qualifying period for unfair dismissal, sick pay, and parental leave. These changes could be implemented as early as April 2025 which means businesses will need to consider adapting their current recruitment processes and implementing more robust probationary periods and early performance management strategies.
Unified Worker Status
Labour plans to simplify the complex landscape of employment status by creating a single employment status of “worker” for all except those that are genuinely self-employed. This could extend fundamental rights to a broader spectrum of workers, and employers will be facing reassessment of their workforce classifications, greater administrative burdens and impacts on payroll practices, tax classifications and contractual arrangements. There are currently a number of “workers” who currently fall between employees and the genuinely self-employed.
This includes people like gig economy workers, casual workers, agency workers, freelances and independent contractors who may now find themselves given the same protections as employees.
Enhanced Family Rights
Labour proposes several family friendly initiatives, including mandatory parental leave, additional protections against pregnancy-related dismissal and support for carers. With Labour’s pledge to review parental leave policies within the first year, employers should update their policies and procedures to align with these changes.
Flexible Working & Right To Switch Off
Labour pledges to make flexible working a day one right except where it is not feasible. Employers will need to consider the operational challenges it may face especially for roles which have fixed hours or require on-site presence. These changes aim to support work-life balance and include Labour’s introduction to a right to “switch off” outside of working hours. This initiative combats the blurring of work-life balance and employers will need to establish clear guidelines and expectations regarding out-of-hours communication.
Equal Pay and Anti-Discrimination Measures
Labour aims to extend equal pay protections to cover race and disability. In addition, they also intend to introduce ethnicity pay gap reporting. Employers with 250 or more employees would need to develop menopause action plans and include outsourced workers in gender pay gap reporting. Strengthening protections against maternity and menopause discrimination, as well as sexual harassment, will also be priorities.
Ending Zero Hours Contracts
Labour aims to eliminate what they term “exploitative” zero hours contracts, aiming to provide workers with more predictable working hours and greater job security. In particular, it ensures all workers will have the right to contracts with guaranteed minimum hours which reflect their regular hours over a twelve-week reference period. With its intentions to address “one-sided flexibility”, specific sectors such as hospitality and retail could be facing a significant impact. Employers may need to reassess their workforce strategies and consider alternative flexible working arrangements.
Genuine Living Wage
The Labour Party is aiming to enforce a genuine living wage by removing age-related bands and enduring fair compensation based on the cost of living. In addition, the manifesto includes stricter enforcement of sick pay, fair tips and banning unpaid internships. Employers will need to take into consideration its compliance with fair pay agreements and wage adjustments and compliance checks.
Enforcement & Tribunal Reforms
The manifesto promises a Single Enforcement Body to oversee and enforce workers’ rights more rigorously, potentially leading to increased scrutiny and penalties for non-compliance. Amendments to tribunal procedures could affect how employers handle disputes and legal challenges.
Preparing For The Changes
- Review and Update Contracts and Policies: Ensure that employment contracts, particularly those for zero hours and probationary employees, comply with potential new requirements.
- Strengthen HR Practices: Implement robust procedures for performance management, particularly during probationary periods, to mitigate the risks associated with immediate unfair dismissal rights.
- Prepare for Increased Compliance: Stay informed about the establishment of the Single Enforcement Body and be ready to adapt to increased regulatory scrutiny.
- Training and Development: Invest in training HR teams and senior managers on revised employment laws and best practices in workplace relations.
Conclusion
While the full extent and timing of these reforms remain uncertain pending election outcomes, the proposed changes to employment law represent a significant shift that will affect many aspects of business operations. Whether these reforms ultimately materialise, they signal a shift towards greater employee rights and corporate responsibility in employment practices. We are ready to provide tailored guidance and support to help you remain compliant and maintain a productive and positive workplace amid this evolving landscape.
To discuss any of the points raised in this article, please contact Ramona Bakshi or fill in the form below.
Preparing Your Business For The Employment (Allocation of Tips) Act 2023
The landscape of tipping and service charges in the UK is set to undergo a significant transformation with the introduction of the Employment (Allocation of Tips) Act 2023 later this year.
This legislation aims to eliminate uncertainties surrounding the allocation of service charges and other tips, ensuring that employees receive their due share.
In this article, we delve into the current system and the forthcoming changes that businesses in the leisure and hospitality sectors should be aware of.
Current System: How Does It Work?
At present, “tipping” typically encompasses both tips (whether in cash or card) and service charges, which can be discretionary or mandatory. When customers give cash tips directly to staff, these tips essentially become the property of the employee. While their employment contract may stipulate otherwise, it is generally up to the individual to decide whether to share these tips with colleagues.
On the other hand, when tips and service charges are collected by the employer—whether through a tip jar on the counter or a 12.5% service charge added to the bill—the distribution methods can vary. These range from the employer determining the allocation of tips and service charges to the staff members themselves agreeing on the day’s distribution of cash tips.
Additionally, many businesses put in place a “tronc” system, being a mechanism which allows tips and service charges to be pooled and distributed among staff by a designated “Troncmaster” without direction from the employer. It is worth noting that the chosen method of collection and distribution carries tax and national insurance implications, which will not be covered in this article.
Currently, there are no restrictions on businesses deducting amounts from the collected tips and service charges before distributing them to staff. While there may be valid reasons for such deductions—such as the operational costs of administering a tronc scheme—media attention has increasingly focused on employers making significant deductions from service charges, particularly as around 80% of UK tipping now occurs via card payments.
Five key changes Under the Employment (Allocation of Tips) Act 2023 are as follows:
1. Prohibition of Deductions
Under the new legislation, businesses will no longer be permitted to make deductions from the tips and service charges collected. Every penny collected must be distributed to the staff, with deductions only permissible for tax or as otherwise authorised by law.
2. Obligation To Allocate Tips Fairly
Businesses will be obligated to allocate tips and service charges “fairly” among workers. Although the legislation does not specify what constitutes fair allocation, this is expected to be clarified in due course. Employers will be required to have a written policy outlining the fair, transparent, and consistent distribution of tips.
3. Time Limit For Payment
Tips and service charges must be paid to eligible workers no later than the end of the month following the month in which the tip or service charge was received.
4. Record-Keeping Requirements
Employers must maintain records of the allocation and distribution of tips for a minimum of three years from the date they are received.
5. Right To Claim In Employment Tribunal
Employees will have a separate right to bring a claim in an employment tribunal if there is a breach of these requirements. The tribunal may, among other remedies, order compensation of up to £5,000 to an affected employee to compensate for any losses suffered.
Final Comments
The implications of these changes are significant, particularly for employers in the leisure and hospitality sectors. With businesses already facing financial challenges, the additional administrative burden of distributing tips and service charges could strain resources. One alternative may be to pass these costs back onto customers, but this is unlikely to be popular in the current economic climate.
In light of the forthcoming legislation, it is prudent for businesses to start implementing the necessary policies, structures, and procedures now. By doing so, businesses can be better prepared to comply with the new requirements and ensure compliance from the outset.
To discuss any of the points raised in this article, please contact Adam Convisser or fill in the form below.
The New Duty on Employers to Prevent Sexual Harassment
The Worker Protection (Amendment of Equality Act 2010) Act 2023) is coming into force in October 2024 and places a new duty on employers to take action to prevent sexual harassment in the workplace.
In summary, the new law:
- Introduces a duty on employers to take reasonable steps to prevent sexual harassment of their employees.
- Gives the Employment Tribunal power to uplift compensation by up to 25% where an employer is found to have breached the new duty to prevent sexual harassment.
This duty will apply to employers irrespective of the size of the business or the number of staff (although a tribunal will take the size and resources of an employer into account when assessing what is considered `reasonable’).
What Is Sexual Harassment?
Sexual harassment is defined in section 26(2) of the Equality Act 2010 as:
“unwanted conduct of a sexual nature that creates an intimidating, hostile, or offensive environment for the person on the receiving end and/or violates their dignity.”
There are a variety of incidents and behaviours that might constitute sexual harassment, but some obvious examples include:
- Making sexually suggestive comments.
- Altering a pornographic image by adding a picture of a colleague’s head, then sending it to other co-workers.
- Touching someone in an inappropriate or unwanted manner, e.g., pinching someone’s bottom.
The Employment Appeal Tribunal has held that what constitutes sexual harassment is subjective, and there does not need to be a series or number of incidents – a one-off incident may be enough to constitute harassment:
The law does also not require the potential victim to have made it clear in the past that the sexual conduct was unwanted. In Insitu Cleaning Co v Heads [1995] IRLR 4, the EAT stated that would-be harassers could not be allowed to “test the water” without consequence to see whether their conduct was objectionable to the receiver(s) if their behaviour is serious enough to reasonably constitute harassment.
What Is The New Duty On Employers?
Employers are required to take “reasonable steps” to prevent sexual harassment of workers in the course of their employment.
The current law already provides a defence to a harassment claim if the employer can show they have taken all reasonable steps to prevent sexual harassment from happening. However, the new law places a legal obligation on all employers to take proactive measures to prevent sexual harassment in the workplace.
It is important to note that this law does not only protect women but applies equally to people of all genders.
What Constitutes “Reasonable Steps”
There is no guidance on this in the new law. The employer’s defence in the Equality Act uses similar wording – that the employer took “all reasonable steps” to prevent the discrimination or harassment. The word “all” has been removed from the new legal duty, meaning this may be a lower threshold. However, employers should be aware that it is likely that Employment Tribunals will interpret the duty in a similar way to the employer’s defence under the Equality Act 2010.
Policies Alone Are Unlikely To Be Enough
A recent Employment Tribunal decision in Fischer v London United assessed what would be expected of an employer to make out the “all reasonable steps” defence. The employer in this case had appropriate policies in place, however, they had failed to take other steps such as keeping the policies up to date, making them available to all staff, and implementing regular training.
Compensation
A worker can only claim that the employer has breached this new duty of taking reasonable steps as part of a wider claim for sexual harassment. They cannot bring a free-standing claim.
If an employee succeeds in a claim for sexual harassment and the employer is found to have breached its duty to take reasonable steps to avoid the sexual harassment, the Employment Tribunal has discretion to uplift the compensation payable to the worker by up to 25%. Although this uplift can only be applied in a successful claim for sexual harassment, the uplift will apply to all of the compensation that has been awarded including that for any other type of harassment that has also been added as part of the tribunal claim. A failure to take reasonable steps’ therefore can become very costly for an employer.
What About Harassment Of Staff By Third Parties?
The new duty to take reasonable steps does not extend to taking steps to prevent third-party harassment. However, employers are still at risk of discrimination claims or claims of harassment itself if complaints from workers about harassment by third parties are ignored. Additionally, there is a significant risk of damage to reputation if an employer fails to prevent staff from being harassed at work.
What Next Steps Should Employers Take?
We recommend the following steps be taken over the coming months to comply with upcoming new legal duty to prevent:
- Have a separate sexual harassment policy detailing a non-exhaustive list of behaviour that might amount to sexual harassment and incorporating a speak up policy to ensure staff feel safe to report incidents of sexual harassment.
- Ensure your reporting systems for harassment incidents are fit for purpose and allow you to identify patterns, for example, a particular activity, such as a sales conference, which always results in harassment complaints. When creating the complaints register, make sure it complies with data protection rules.
- Update and roll out harassment training to all staff, ensuring line managers understand how to deal with complaints and employees know what constitutes harassment so they can avoid committing it.
- Place signs in areas where third parties such as customers, contractors, and suppliers encounter employees, stating that threats, violence, and harassment will not be tolerated.
- Conduct targeted risk assessments regarding situations or events where there may be a higher risk of sexual harassment and put in place measures to eliminate risks or mitigate them (if the former cannot be achieved).
To discuss any of the points raised in this article, please contact Dipti Shah or fill out the form below.
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