What does the new Labour government mean for employment law? – London Business News | Londonlovesbusiness.com

Following weeks of frantic electioneering by political parties of all colours, the dust has finally settled on the UK’s general election, with Sir Keir Starmer and his Labour Party having brought an end to the Conservative’s 14-year rule.

While this election was dominated by issues like the cost-of-living crisis, immigration, and housing, the advent of a Labour government also has far-reaching implications for businesses right across the country, particularly when it comes to hiring and training their employees.

As such, companies need to know what they should expect from the new government in terms of employment law and staff development.

Zero-hour contracts

In its election manifesto, the Labour Party pledged to implement the commitments made in its Plan to Make Work Pay, which seeks to support working people by improving their terms and conditions, and to ensure that their protections are fit for purpose in the modern business environment.

The plan includes the proposal of new rules to stop the ‘abuse’ of zero-hour contracts, which Labour considers to be ‘exploitative’ due to their ‘one-sided flexibility’ in favour of employers. The party suggests providing a baseline level of security and predictability for all jobs, which would include the prohibition of zero-hour contracts, and the right for everyone to have a contract that reflects the number of hours they regularly work.

If it does proceed with this plan, it’s crucial that the Government makes a clear distinction between zero-hour gig workers and highly skilled contractors. Indeed, having access to flexible, highly skilled contracting is key to the delivery of a robust and efficient labour market, and firms must therefore be allowed to remain agile regarding their professional staffing decisions. This need, however, must be carefully balanced against the vital right of workers to fair employment.

Unfair dismissal

Another eye-catching pledge from the Plan to Make Work Pay is to protect employees from unfair dismissal from the first day of their employment. This will represent a huge shift in existing employment law, which only provides protection from unfair dismissal after two years of continuous employment. As such, the new proposals would only allow employers to legally terminate a staff member’s employment after identifying a fair reason, and by following a fair process as prescribed by law.

Of course, this would be a positive change for employees, but will require businesses to adopt a far more rigorous and evidence-based hiring process to minimise the risk of an expensive mis-hire. No longer can employers rely on the limited liability protection afforded to them by a ‘probationary period’; now they must consider how they objectively assess the talent they are looking to hire against an organisational strategy. Additionally, they should think about the capability of hiring managers during the interview process, and have a clear development plan in place for when new employees start. The proposed rules have the potential to be devastatingly expensive for companies who get it wrong, with many of those who are let go within the first few months of employment likely to cry foul because they didn’t receive the right training, etc.

As such, companies can expect the cost of terminations, as well as the number of tribunal claims brought against them, to rise significantly as a result. However, businesses can greatly reduce the risk of this happening via Discovery’s unique benchmarking and multi-stage, evidence-based approach to hiring, which helps firms to more accurately identify the skills and behaviours they need for success within the role, and considered in line with the organisation’s long-term strategy. After all, when firms hire, they should really be hiring people with the next two jobs in the company in mind, rather them just the current role.

Addressing the skills gap

Looking elsewhere at Labour’s manifesto, the commitment to addressing the UK’s skills gap is certainly encouraging. For example, the Government has outlined its plans to reform the Apprenticeships Levy via a flexible Growth and Skills Levy, which would allow firms to use up to 50% of their levy contributions for funding staff training through routes other than apprenticeships. This would provide employers with considerably more flexibility in funding training, bringing the UK in line with most other comparable nations, and giving a significant boost to employee productivity.

Meanwhile, Labour has put forward plans to establish Skills England to bring together businesses, training providers, unions, and government bodies to better align training with market needs. This would undoubtedly be a positive step towards plugging the skills gap, but requires a rational approach that avoids making training an overly bureaucratic process, and which accurately meets the needs of businesses when it comes to upskilling their staff.

A change is coming

The ascension of the new Labour government signifies a monumental sea change for British politics, and brings with it a number of significant implications for employers. While the prospect of better opportunities and protections for workers is certainly welcome, it’s important that businesses are able to maintain the level of flexibility towards staffing that will enable them to drive productivity, and ultimately help deliver a stronger economy for the benefit of us all. Of course, people are at the heart of achieving this goal, which is why it’s encouraging to see a commitment to addressing the skills gap, and providing better, more tailored training opportunities to employees.

With change just around the corner, employers should take time now to carry out extensive audits of their staff contracts, recruitment processes and performance procedures, ensuring that they are in line with the legislation that’s coming down the tracks. By providing processes that are robust, clear and fair, bosses can secure a position of strength for their business that helps them to attract top talent and avoid falling foul of costly legal infractions.