A new Labour Government – what next for employers?

Far reaching workforce reforms are proposed under the new Labour Government.  

At the forefront of the election campaign was a promise to deliver “A New Deal for Working People”. The Government is committed to delivering the Plan to Make Work Pay in full as confirmed this week in a written answeropens in a new tab in Parliament, including an Employment Rights Bill that will be introduced to Parliament within 100 days of taking office. Work is already underway to identify and deliver measures through non-legislative and secondary legislative routes. This is more than a long ‘to-do’ list.

We explore what this means from a strategic lens, looking at the challenges for businesses both from an operational and implementation perspective.

Key for employers is being ready for the changes by undertaking an impact assessment now to drive activity specific to your workforce.

• Undertaking an impact assessment to understand the inter- dependencies and cross over between the proposal, your workforce and business;
• Ensuring prioritisation for your business based on key metrics such as impact on your workforce, cost to the business and business change required to implement and run new business as usual (BAU) processes;
• Escalating and raising awareness within your organisation regarding potential cost implications including additional resourcing, policy and systems changes etc;
• Monitoring progress of the proposals as further information becomes available; and
• Being aware of any consultation documents and how they may impact your business and industry/sector. 

The impact of the proposed changes will vary based on factors including:

• Your workforce profile;
• Your remuneration strategy and employee value proposition (EVP);
• Employment terms and conditions;
• Working arrangements and industry practices;
• Operational structure; and
• System capabilities or limitations (particularly HR and payroll).

There is so much proposed change it may be hard to know where to start. Below we suggest some starting points from a strategic perspective:

• Workforce strategy review to determine impact of changing obligations.  For example, do you have change programmes planned which may be impacted by changes to fire and rehire?;
• Workforce structure review to determine impact of changes to employment status, zero hours contracts. For example, will you need to change contracting arrangements?;
• Cost model the impact of the rise in National Minimum Wage where relevant; and
• Develop a communication plan for your workforce and internal stakeholders as questions are likely.

And from an operational perspective:

• How do you oversee compliance with your workforce obligations?;
• Do you need to review your HR processes and practices to cope with the impact of day one rights?;
• Can your HR and payroll systems be updated for statutory calculations including sick pay?;
• How will you access the data required for enhanced pay gap reporting?; and
• How do you currently manage compliance in your labour supply chain? 

We have set out a summary below, divided into likely areas of operational practice and focus:

Employment Rights        

• New day one rights: unfair dismissal protection, parental leave, statutory sick pay, flexible working;
• Reform of ‘fire and rehire’ practices;
• Strengthened redundancy rights and protections including for pregnant women;
• Right to bereavement leave for all;
• Strengthened TUPE (transfer of undertakings) protections; and
• More clarity on working hours for zero hours workers.

National Minimum Wage (NMW) and Statutory Sick Pay

• Ensuring NMW rates/calculations consider cost of living;
• Phased removal of age-related bands for 18 – 21 year olds so all adults are entitled to the same NMW rate;
• A Real Living Wage for those aged 21 and over; and
• Removing lower earnings limit and four day waiting period for Statutory Sick Pay.

Diversity, equity and inclusion (DE&I) Reporting 

• New Race Equality Act introducing equal pay for ethnic minority workers;
• Full right to equal pay for disabled workers;
• Restrictions on outsourcing to avoid equal pay;
• Mandatory ethnicity and disability pay gap reporting;
• Mandatory actions plans to reduce pay gaps;
• Menopause Action Plans; and
• Increased protection in relation to sexual harassment at work.

Trade Unions

• Fair Pay Agreement for the adult social care sector;
• Plan to extend trade union rights to the self-employed;
• Repealing Conservative legislation regarding minimum service levels; and
• New continuing duty on employers to inform employees of their right to join a union.

Enforcement    

• Creation of a Fair Work Agency;
• Anti-avoidance policies regarding exploitative zero-hour contracts;
• Regulatory and enforcement unit for equal pay;
• Increasing time limits for employee claims; and
• Business responsibility for compliance across the labour supply chain.

Immigration

• No tolerance for employers/agencies who abuse the visa system;
• Reform of points-based immigration system; and
• Strengthened Migrant Advisory Committee.

Pensions

• Commitment to retaining the state pension ‘triple lock’ and a review of the current state of the pensions and retirements savings landscape; and
• There was no commentary on further pensions tax proposals.

Growth and Skills Levy

• A new ‘Growth and Skills Levy’ overhauling the current Apprenticeship Levy to provide greater flexibility to businesses; and
• Launch of a national body called ‘Skills England’ to improve training and apprentice opportunities.

Please get in touch with your usual KPMG in the UK contact, or one of the authors to talk through how we can help you and support your legal and tax compliance.