Labour’s long-promised Employment Rights Bill may not be quite as immediately game-changing as the trade unions hoped or the business lobby feared. There will be implementation delays, with most elements not operative until 2026 – unsurprising given the expected complexity of the legislation. Further consultation will be needed before more detailed regulations are tabled. But that’s not to say that, when Angela Rayner’s new workers’ legislation does kick in, all will be business as usual.
The likely creation of a nine-month probationary period for new employees – which would mitigate the effects of scrapping the two-year wait for unfair dismissal law to kick in – may assuage some of the fears of businesses. But let’s see how this shapes up in practice. The government claims that sacking someone during probation will be a simpler process than normal firing procedure, but the new day one unfair dismissal rights for new employees they are bringing in seems to clash with this.
Employees may come to realise that free lunches disappeared with Covid
The government’s plans to enhance eligibility for sick pay means workers will be able to claim it from their first day of illness. This will result in some extra costs to both the taxpayer and employers, but the amounts involved are fairly small. Further adjustments to parental leave are unlikely to affect large firms or to the rapidly-expanding public sector very much, but could hit some small businesses badly.
Employers will be relieved that there is as yet no planned compulsory ‘right to disconnect’, though this remains on the horizon and is something to which Labour is probably going to return. It does appear that there will be restrictions on ‘exploitative’ zero hours contracts and a supposed end to ‘fire and rehire’. However, in both these areas quite what is planned remains unclear and may be watered down as further consultation proceeds.
The headline issue around Rayner’s new bill, however, has been Labour’s plan to extend of flexible working rights. The right to request your ideal pattern of work from day one, and the tightening of grounds for refusal, will land employers with significant extra costs – which for many businesses will come as a shock. What will businesses do about doubling payroll and HR costs for a job share, or the need for extra staff to cover for term time-only workers and people who won’t work Fridays? It is fairyland thinking to believe that these costs will be offset in some magical fashion by gains in productivity.
Over time, businesses will inevitably attempt to reduce these costs in various ways. They may well choose to invest in automation and AI, take on fewer workers, be much more selective in recruitment, use temporary contracts rather than permanent staff or freelancers rather than in-house people. They may also decide to pass the costs on to employees through smaller pay increases or detriments to other parts of their employment package. Employees – and those looking for work – may come to realise that free lunches disappeared with Covid.
Those benefiting from flexible employment will begin to find that market forces compensate for this. Perpetual workers-from-home may find that their pay gradually slips relative to those who have to go out to jobs – transport employees, people in factories, construction workers and medical staff among them.
The much less discussed element of Labour’s workers’ rights bill is the enhanced powers it plans to give to trade unions in the bill. Again, some of this is pretty trivial stuff. The scrapping of the never-used Tory minimum service level legislation will be lamented by precisely nobody. Obliging employers to tell their staff they’re entitled to join a union will simply add a few more barely-read paragraphs to employment contracts. And, although we must wait to see the small print, the right for union recruiters to enter workplaces is hardly the stuff of revolution.
The details are sketchy here too, but substantially lowering the barriers to union recognition may have some impact on reversing the long decline of union membership in the private sector. Union membership currently runs at just 13 per cent, and is far lower outside ex-public sector fields such as the utilities and Royal Mail. However, the great concentrations of private sector employees in manufacturing and the docks which were associated with trade union power in the 1970s are gone. Smaller-scale businesses, with very diverse workforces and different career patterns are unlikely to be fertile ground for union recruitment.
It is a concern, though, that Labour are planning to dismantle most of the barriers to strike action. It seems that, in future, a simple majority of those voting will be enough to trigger a strike. Organising a vote will be simpler and cheaper as electronic balloting increasingly becomes the norm.
While these measures will not necessarily lead to more strikes, they will increase union bargaining power where it already exists – primarily in government employment. With more powerful unions pressing employers for the most member-favourable interpretation of flexible working, it’s going to be increasingly difficult for governments to implement reforms. Overnight, boosting the appalling productivity record of large chunks of the civil service, tackling the problems of the NHS, the railways and other concentrations of old-fashioned trade unionism will be that much harder.
One less obvious beneficiary from the bill will be the Labour party, supported for decades by the unions’ political levy. Members will now once again have to opt out of the levy, rather than opt in. Unless behavioural economists and ‘nudge’ theorists have got it wrong, this should mean more money raised to support Labour. Don’t Angela Rayner to blush when this aspect of the bill is debated.
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