Labour's workers' rights change leaves UK businesses on edge

The battle over workers' rights is already raising concerns across UK boardrooms, and will play a central role in the next general election campaign as Labor seeks to strengthen the role of unions in workplaces.

Banning zero-hours contracts, ending “fire and rehire” tactics and providing employees with protections against unfair dismissal from day one are some of the reforms in a package described by the main opposition party as a “new deal for workers”.

These measures form part of a broader campaign to restore union power and the role of collective bargaining, increase wages, and give workers greater security and control over their working hours and working conditions.

But it raises deep concerns among business leaders, who say they are prepared to work with a Labor government, but many of the proposals could backfire and harm workers as well as employers if introduced without consultation.

Sir Keir Starmer, the party's leader, said at a conference this month: “I want to be absolutely clear on this: we are going to scale up workers' rights in a way that we haven't done for decades.” The party's reforms “may not satisfy everyone.” . . In the broader business community.

Meanwhile, Labour's deputy leader, Angela Rayner, said the reforms “will be a key part of our plan to grow the economy, moving from insecure, low-paid jobs to prosperity…”. . . And higher productivity.”

Even as other crucial promises, such as £28bn of annual green investment, have fallen victim to fiscal prudence, the Labor leadership has doubled down on its pledge to deliver an employment bill within 100 days if it wins power at the election, which it expects to do. year.

This represents a clear change in the Conservative government's approach of urging employers to improve the quality of jobs.

Robert Soames, head of the Confederation of British Industry, told the Financial Times this month that the trade lobby group was asking its members to “wake up, smell the coffee – this is a big thing coming”. He added: “It doesn't mean to say it's good, and it doesn't mean to say it's bad, but you have to understand the implications of that.”

One proposal that worries employers is to give workers basic rights – to sick pay, parental leave and, most importantly, protection from unfair dismissal – from the first day of work. At present, employees have to wait up to two years, up from one year under the last Labor government.

The party said the change would not prevent employers using probationary periods “with fair and transparent rules and processes” – part of a settlement it reached last year to try to reassure businesses.

But while this “would be hard to argue against,” it could have a significant impact, forcing employers to be more stringent in their handling of probationary periods, said Darren Newman, an employment law expert.

“A lot of times you hire someone and it's clearly not going to work out,” said Neil Carbery, chief executive of the Recruitment and Employment Confederation, adding that the change threatens to fuel lengthy and complex litigation.

The sharp rise in claims could exacerbate existing pressures on overburdened employment tribunals. “The service will need the resources to handle it,” said Vicky Wickremiratne, a partner at law firm Allen & Overy.

Also controversial is a pledge to ban zero-hours contracts – under which employers do not offer guaranteed minimum working hours. It now covers more than one million employees in the UK.

The Trades Union Congress, the umbrella body for the trade union movement, said these contracts give employers “almost complete control” over workers’ working hours and earning capacity, making it impossible for them to plan their lives. But even some unions may oppose a blanket ban, as contracts are standardized in areas such as the performing arts.

The TUC believes a practical solution is to give workers the right to a contract that reflects their normal working hours. Even this can be circumvented by constantly changing shift patterns by bosses, lawyers say.

At the same time, business groups say zero-hour contracts often suit workers who want flexibility, and allow employers to offer employee rights to people who would otherwise be hired as temporary employees.

“You would want responsible employers to use these things effectively. But how far can you go with legislation, versus encouraging people?” asked Peter Chase, head of the CIPD, an organization for HR professionals.

Companies say harsh regulation in other areas could backfire. Some argue that a ban on “fire and rehire”, where employers use the threat of dismissal to impose worse terms and conditions, could simply push them straight into redundancy.

Legislation to create uniform “worker” status for all but the self-employed – a move aimed at helping those working in the gig economy, such as food couriers – is also fraught with difficulties, and Labor has promised to consult widely before taking any action. The Conservatives made the same pledge but failed to implement it, partly because changing the law would create new gray areas.

“It's really difficult… Show me the definition and I'll show you how to exploit it,” said Newman. In a storm of additional proposals, he chose a pledge to restore sector pay bargaining, initially through a pilot project in social care, as the most important.

But Carberry said that even this first pilot project would take years, and establishing a culture of collective bargaining in the private sector would be much more difficult because “it's not where we are in the UK.”

Labour's pledge to strengthen the hand of unions by repealing anti-strike laws passed after the last wave of public sector strikes, and 2016 legislation that made it harder to take industrial action, is even clearer.

Unions have also been promised greater access to workplaces, a lower barrier to winning legal recognition and the ability to hold strike ballots online – a long-awaited change that could make taking action much easier.

Paul Nowak, general secretary of the TUC, said he wanted employers to “get on board” with the “much needed” changes to create a fair economy. But a poll of CBI members showed that a clear majority opposes first-day employment rights, the abolition of anti-strike laws, and sectoral collective bargaining.

Many business leaders don't want to criticize things publicly. But they are urging Labor, if elected, to work through the details of its partnership proposals.

Companies often share unions' goals of promoting worker well-being, Chase said. “The question is how do we make sure we create an environment of consultation and not conflict.”

Carbery said Labour's “encouragement from the Electoral Commission is to get around the table”, adding: “You have to…” . . “Working with the grain of the labor market.”