In the latest of Lindsays’ series of articles on the future of employment rights, Partner Daniel Gorry explains what the proposed changes to worker status could mean for your organisation and the steps you can take to get ready.
If the Labour Party wins the General Election on 4 July, it may lead to your business having a higher employee headcount. Not necessarily because you decide to recruit new staff (which you may do), but because Labour plans a major revamp of worker and employee status.
Among the organisations likely to be affected are charities, and those operating in sectors such as social care, tourism and hospitality.
From three tiers to two
It all comes down to the UK’s different tiers of employment status, with people being classified as employees, workers or self-employed. Sounds simple? It’s not, as many employers already know. The categorisation of who comes within each tier can be labyrinthine, requiring, in Labour’s words, ‘knowledge of complex legal tests and an encyclopaedic knowledge of case law’.
To fix this, the Labour Party’s New Deal for Working People, proposes to move towards a simpler two-tier system with a single status of worker on the one hand and self-employed people on the other. And this is where we get to the nub of the question about whether you, as an employer, should care.
Employment protections extended
At the moment, those people classed as ‘employees’ currently have greater employment rights than those categorised as ‘workers’. These rights can include an entitlement to redundancy pay or the right to claim unfair dismissal.
If the Labour party introduce a new single status of worker, employers may find that many more of their staff become what is currently considered an ‘employee’. With employment protections available to more people, your business costs will likely go up.
Review your bank
Here’s one example of how these employment status proposals could bite you in future.
Many of our social care and hospitality clients currently have multiple bank staff. It can be a great resource for making business run smoothly – someone is off sick at short notice or has a childcare emergency, so the employer sends out a text alert to 100 or so people on their books and who comes back first gets to do the shift.
If you look at how that system operates in practice, it’s likely that a small proportion – 10-20 percent of the people in your bank – will regularly take your short-notice shifts. That leaves another 80-90 bank staff who would currently be classed as workers with limited rights. But if there’s a change to the law on employment status and who gets what in terms of employment protection, then your position will be much more complicated and possibly much more expensive.
It’s obviously early days on this issue. We don’t know the outcome of the election, and even if Labour does win, there’d need to be extensive consultation after Labour has unveiled its initial detailed proposals – which it has pledged to do in its first 100 days.
But even while we wait to see any proposals announced and refined, there’s already preparatory action you can take, which is to review your bank list. Is it really good for your business to have dozens or even hundreds of people in your bank who don’t, or no longer, pick up shifts? Having a more streamlined bank will not only help manage the risk of any employment rights and status change, it could also benefit your business in other areas – from data management and privacy arrangements to internal communications. You don’t need to wait for the election results to start on this.
And prepare more generally
Labour’s proposals on employment status are just one of a wide array of proposals on employment rights that cover pay, rights to parental leave and sick pay, unfair dismissal, zero-hour contracts, strikes and trade unions, menopause, internships, the right to switch off, time limits for employment tribunal cases, among other things.
Even though we don’t yet have certainty about any of the detail or deadlines, there is plenty that employers can do already to start preparing for change and managing risks – as with the bank staff example above.
Our employment law specialists at Lindsays can help you with this – including through prism, our practical fixed-fee employment law solutions for employers. The prism service can help you manage the risk of major changes in employment rights law – for example, through bespoke templates for updating contracts, a virtual HR manager tool to keep you on top of new obligations, access to a 24/7 advice helpline, training, tribunals advice and much more.
Rather than let yourself be surprised or caught out by change – with all the penalties and reputational issues that can bring with it – we’d recommend you get proactive now.
Daniel Gorry
Partner, Employment
Keep checking the Lindsays website for more articles on the proposed changes to employment law in the run-up to the election.
Published 20 June 2024
