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Labour’s Employment Law Reforms: What will be the impact on Employers?
We know that the proposed changes concerning employment law, as outlined in the lead-up to the general election and the King’s Speech, are wide-ranging. We highlight below the key proposals which many have been speculating on:
- How will the unfair dismissal right be implemented in practice? – Employees will have the right not to be unfairly dismissed from their first day of employment. There is speculation that employers will keep the ability to dismiss where an employee fails to successfully complete their probationary period, provided the employer follows a fair and transparent process;
- What remedies will be introduced to restrict ‘fire and rehire’ practices? – Labour has said it intends to replace the recently introduced code of practice on ‘fire and rehire’ with a stronger version. It is anticipated that, as part of this, employers will be restricted from dismissing and offering to re-engage workers on new terms, or from replacing workers with new workers engaged on new terms, save where this is part of a genuine restructuring process and there are no alternatives;
- Labour’s plans to review the parental leave system – the proposal is to make parental leave a day one right, but details surrounding the parental rights review and whether this will be extended to other forms of family leave, such as paternity leave, remains unclear;
- Will exploitative zero hours contracts will be abolished? – It is unclear whether there will be an outright ban of zero-hours contracts or greater restrictions on employers to prevent exploitation. There is suggestion that a new right that reflects the average hours that are regularly worked will be established; and
- How the right to request flexible working will be changed – Labour has said that it will strength this existing right to ensure flexibility is the ‘default’ from day one, except where it is not reasonably feasible. Currently, an employer’s refusal does not have to be ‘reasonable’ (though an employer must of course act reasonably in considering a request). This proposal could mean that more limitations are placed on employers when exercising their discretion to decline a flexible working request, such that it is harder for employers to refuse a request.
Watch this space.
New Duty – Reasonable Steps to Prevent Sexual Harassment
From 26 October 2024, all employers (irrespective of size) will be under a mandatory duty to take reasonable steps to prevent sexual harassment in the workplace (the Duty under the Worker Protection (Amendment of Equality Act 2010) Act 2023). Failure to do so (or a suspected breach of this duty) will entitle the Equality and Human Rights Commission (“EHRC”) to investigate and take enforcement action against an employer, and may also in some circumstances result in an employment tribunal increasing compensation for successful claims by up to 25%.
The Duty will require employers to anticipate scenarios where sexual misconduct might occur and take reasonable steps to prevent sexual harassment by an employee or a third party (notably, this is despite the fact that under the Equality Act, individuals do not have a standalone claim against their employer for sexual harassment by a third party).
On 26 September 2024, the EHRC finalised its Guidance on the broad parameters of the Duty. We would also refer employers to the equivalent guidance in Australia (where a similar duty has been in place since 2023). This guidance is significantly more detailed and includes several helpful examples and suggestions for employers to consider. Regulated professions should also consider their relevant guidance – the Solicitors Regulation Authority (SRA), for example, has published detailed guidance on their expectations regarding prevention of sexual harassment (see here for more information).
Non-Compete Bans: Will the UK Follow the FTC’s Lead?
In April 2024, the Federal Trade Commission (“FTC”) passed a final rule to ban most non-compete clauses in employment agreements in the United States, saying that such clauses amounted to an unfair method of competition (the “FTC Rule”). The FTC Rule was due to come into effect on 4 September 2024.
Some experts in the UK have said that non-compete clauses will inevitably be banned in the UK too following this development, particularly given the new Labour government’s stance on workers’ rights. This would go further than the previous government’s proposal, announced in May 2023, to limit the duration of non-compete clauses to three months in employment and worker contracts.
After the FTC Rule was passed it was subject to various legal challenges, and on 20 August 2024 a federal judge in Texas found the FTC’s ban to be unlawful and issued a nationwide injunction, preventing the FTC from implementing and enforcing its Rule. This decision is subject to possible appeals, but it means that the FTC Rule can’t be enforced for the foreseeable future.
A complete ban on non-compete restrictions in the UK would be a bold step, and following the latest developments in the US it is perhaps more likely that we will just see a statutory limit on their duration in the future as previously proposed, with the Courts being left to determine whether they are necessary and enforceable on a case by case basis.
Key Takeaways for Employers on Religious Discrimination and Workplace Requirements following Ngole v Touchstone Leeds
In the recent case of Ngole v Touchstone Leeds, the Employment Tribunal found that the respondent (a mental health and wellbeing charity, whose work includes providing services to vulnerable members of the LGBTQI+ community) discriminated against Mr Ngole (a Christian) on the grounds of his religious beliefs when it withdrew its job offer to him. The charity had become concerned at the responses to its reference requests and therefore carried out an internet search for Mr Ngole. It discovered that he had made Facebook posts stating (amongst other things) that “homosexuality is a sin”. The charity withdrew the job offer without giving Mr Ngole an opportunity to provide assurance that his religious views would not have a negative impact on his employment. When Mr Ngole challenged this decision he was given a further interview, which the charity saw as an opportunity for him to give the assurance it was looking for, but the issue couldn’t be resolved and the job offer wasn’t reinstated.
The Tribunal criticised the charity for withdrawing the offer without consulting with Mr Ngole in the first instance, and decided that it in doing so it had directly discriminated against him on grounds of his Christian beliefs. However, the charity’s decision not to reinstate the offer was not unlawful, because that came after Mr Ngole had failed to reassure it that his religious beliefs would not impact its service users or affect the performance of his role.
The charity therefore had a legitimate aim (i.e. protecting its service users), and it was able to show that its decision not to reinstate the offer was proportionate. The key takeaways for employers are:
- Don’t assume that an individual’s religion or beliefs will be incompatible with a particular job role, without giving them the opportunity to address the employer’s concerns;
- While it can be challenging for employers when an individual’s beliefs clash with the requirements of a role, considering the issues carefully and obtaining good evidence of the likely impact of employing the individual in the role can help to justify the employer’s actions.
If you would like to discuss any of the topics covered in this update in more detail, please contact Partners Merrill April or David Fisher, both of whom specialise in employment and partnership law issues for multinational employers, senior executives, partnerships, LLPs, partners and LLP members.
