How new legislation may affect employer's businesses

It has become abundantly clear that Sir Keir Starmer and his party colleagues will make radical changes to the governing of the nation, and Labour’s New Deal for Working People mandate is set to improve the rights of employees.

It looks like a great deal for potentially millions of employees across the country, but what impact will the changes have on employers and business owners?

Here, I address some key proposed measures to help businesses better understand what they may mean to their daily operations.

Improved rights for ‘workers’

Currently, there is a three-tier working system consisting of ‘worker’, ‘employee’ and ‘self-employed’. However, there are proposals to revert to two tiers, allowing ‘workers’ the same rights as ‘employees’.

Workers - such as agency workers, freelancers, casual workers etc. - typically have limited employment rights, but the new legislation would mean they would share the comprehensive employment benefits of all those classed as employees who work more structured and contracted hours.

Workers will now have similar entitlements to what is designated as ‘basic employment rights’, such as unfair dismissal claims, parental leave and statutory sick pay, meaning there will be greater responsibilities and more policies in place for employers.

Immediate rights for unfair dismissal claims

Employees are unable to pursue an unfair dismissal claim until they have been with a company for a minimum of two years. Yet under new proposals, people will be able to claim from the first day of their start date.

Employers, though, will still have the right to implement probationary periods to give them a chance to see if the new recruit(s) are the right fit for the business, and these are usually three to six months.

Confusion arises over how businesses will be able to legally and lawfully cease employing somebody during this probationary period without an increased risk of having that departed colleague pursue an unfair dismissal claim.

Changes to statutory sick pay (SSP) allowance

When an employee is ill, the first three days of sickness are what are known as ‘waiting days’, and means they aren’t entitled to any sick pay until this time period has elapsed. There are many instances where employees don’t take time off work when they’re ill because they can’t afford to not get paid for the days they miss.

Again, changes are afoot to benefit the employee and they will be paid for all days they are absent from work from the first day of their sick leave.

Due to this ruling, I predict that short-term absences may significantly increase and employers could potentially face additional stress covering staff shortages.

(Image: Cartmell Shepherd Solicitors)

Clampdowns on firing and rehiring

The Conservatives made it more difficult for employers to fire employees only to rehire them on contracts with different terms which were more in their favour.

Labour has committed to bolstering this legislation and ensuring that bosses can no longer exploit this loophole, making sure the employee has a fairer right to keep the terms of their existing contracts.

This measure can only be a good thing to protect employees’ rights and make sure they are getting a fair deal, and employers need to know that taking this course of action in future will heighten the risks of unfair dismissal claims.

Ban on zero/minimum hour contracts

This proposal has been the one most celebrated nationally as the Government clamps down on businesses exploiting workers by providing no guarantee of work and therefore no wage.

But businesses specialising in hospitality, tourism and retail - a large proportion of the Tyne Valley economy - need to be particularly aware of the potential implications on hiring temporary and seasonal staff, with contracts to come into place reflecting how much they work in practice based on an average 12-week period.

For example, smaller businesses may choose not to employ these season workers if they feel they won’t have enough work for them.

This would mean fewer jobs are created in the local area and some businesses may have to restrict bookings as a result, which could ultimately have a negative impact on the visitor economy.

Joanne Stronach is Head of Employment Law and HR at Cartmell Shepherd Solicitors, and lives and works in the Tyne Valley.

She works with businesses and organisations across Northumberland, Cumbria and nationally, as part of Cartmell Shepherd Solicitors’ Business Services team.

Joanne can be contacted at joanne.stronach@cartmells.co.uk or 01228 516666.