The UK lingers far below the OECD average when it comes to employment protection. Research by the Centre for Business Research at the University of Cambridge highlights that UK labour laws are significantly less protective than in most other wealthy nations, and that the gap has got worse since 2010.
This has huge costs for millions of British employees who are forced to suffer the indignity of insecure work with no or very low sick pay, and very limited rights. So the fact that Labour has met its manifesto promise to set out a comprehensive package of legislation to improve worker rights within its first 100 days is welcome indeed.
The proposals expand employee rights in several key areas. Workers would qualify for protections against unfair dismissal from their first day at work, rather than from two years in, although there will be a statutory probation period, most likely for a maximum of nine months, during which employers will now have to identify reasons for dismissal and operate a fair process.
All workers would be entitled to statutory sick pay from the first day they are sick, instead of the fourth day – and this will be extended to low-paid workers currently excluded from SSP. Parental leave rights will be extended to fathers from the first day of employment.
People employed on zero- or low-hours contracts will be entitled to move to a contract that reflects the hours they work, based on their hours over a 12-week reference period. Fire-and-rehire practices – whereby employers dismiss workers and get them to reapply for the same job on poorer terms and conditions – will become unlawful. And the legislation will make it easier for employees to organise to improve their collective rights including reducing the threshold for employees to apply for union recognition to 10% of the workforce
It is a solid package that will bring employee rights into line with international standards. There are remaining questions and gaps: a maximum nine-month probation period is still conservative compared with many OECD countries, for example, but could be kept under review and decreased over time. It is unclear how the zero hours reform will work; that will presumably emerge in the coming months. And the government will need to act on proposals to clarify the status of workers and the self-employed in separate legislation to crack down on bogus self-employment as it is not covered in this bill.
The proposals have had a mixed reception from business organisations; the CBI has been more welcoming than the Federation of Small Businesses. But these proposals relate to the economic model we want: do we want companies to make profit through insecure employment, or do we want to live in a society where there is an understanding that employees deserve much better minimum levels of protection than they have been entitled to date, and where business success is contingent on treating people well?
There are some on the right who argue the latter cannot be achieved except at significant cost, not just to shareholders but to consumers. But the evidence suggests that those trade-offs are far less pronounced than the outdated Chicago school of economics would posit. The OECD today recognises the importance of employment protections in improving job quality in the labour market. There is some evidence that improving employment protections is associated with better employment rates and enhanced productivity. And research suggests that improving statutory sick pay is associated not just with higher productivity but a healthier workforce and better public health outcomes.
Of course, rights need to be effectively implemented for employees to benefit; the way ferry company P&O flouted employment law in 2022 to sack almost 800 workers with no notice serves as a salutary reminder of that. Just as important as the rights established on the face of the bill will be adequate resourcing of the proposed new Fair Work Agency, and of the courts, where there are long delays for employment tribunal hearings. But Labour’s workers’ rights package could end up being one of the most significant measures this government takes to tangibly improve people’s lives.
