RecExpo got told this about Labour’s Employment Rights Bill…

A little something is going on in the House of Commons today that stands to affect contractors.

But it’s possible that the new Labour government’s Employment Rights Bill -- published on October 10th, will impact contractors’ workplaces even more.

In an event billed as a “session you can’t afford to miss,” the head of employment law at JMW Solicitors, Simon Bloch, demystified the bill at RecExpo -- and partial to FOMO, I was in attendance, writes Carla Roberts, director of legal services at WTT Legal.

No direct impact on PSCs (at this stage)

While my own assessment is that the government’s proposals will not directly impact contractors operating through their own limited companies (also known as personal service companies), I want to summarise the key takeaways from Simon’s presentation that will affect employees, employers, agency workers, recruitment agencies and umbrella companies.

Top five takeaways of RecExpo’s Employment Rights Bill session

1. Employment status

The government has committed to consulting on changes to the current three-tiered system for employment status, to create a single status of “worker”, combining both “employee” and “worker”, to apply to those not genuinely self-employed.

The presentation explained that this will mean all “workers” will have the right to sick pay, holiday pay, parental leave and protection from unfair dismissal.

That four-part package will inevitably result in increased costs for employers, recruitment agencies and umbrella companies.

Indeed, the total cost of the bill has been officially estimated at £5billion.

2. Zero-hours contracts

An effective ban on zero-hours contracts was highlighted in the presentation, as the bill gives workers the right to guaranteed hours.

But such a right could be challenging for agencies to implement, as it will grant agency workers the right to demand reasonable notice of shifts and any changes to these, in addition to the right to payment for shifts cancelled, curtailed or moved at short notice.

Again, the inevitable result is increased costs for recruitment agencies and umbrella companies.

3. Fire and Rehire

As part of their plan to tackle the “scourge” of fire and rehire practices, the government plans to ban the dismissing and re-engaging of workers.

Such a ban hopes to promote transparency and remove insecurity for workers. We await further details.

4. Family-friendly rights

Another key takeaway from the presentation was the changes to paternity and parental leave.

These changes will become ‘day one rights,’ and the current qualifying periods will be removed.

A full review of parental leave rights will be conducted.

Similar to the move against ‘fire and rehire,’ further details of these family-friendly rights are to be confirmed at a later date.

5. Right to switch off

All “workers” will have the right to not be contacted by their employers outside their working hours.

Seven other main points covered by the Employment Rights Bill:

1. Unfair dismissal: The government has announced its plan to remove the two-year qualifying period for protection from unfair dismissal. This will become a ‘day one right.’

2. Statutory probation period: A statutory probation period of nine months is likely to be introduced to encourage the proper assessment of the suitability of new hires.

3. Fair Work Agency: A new agency will be established to enforce statutory employment rights.

4. Gender Pay gap: employers with over 250 employees will be required to evidence their plans to address gender pay gaps as well as produce and publish ‘menopause action plans.’

5. Flexible working: This way of working will become the default for all, unless an employer can prove it is “reasonable” to refuse any flexible working request.

6. The Worker Protection (Amendment of Equality Act 2010) Act 2023: Employers will be required to take all reasonable steps to prevent sexual harassment of all workers by third parties.

7. Changes to SSP: The government propose removing the three-day waiting period to qualify for Statutory Sick Pay (SSP), which means that it will be payable from day one of sickness. The current lower earnings limit of £123 per week on average will be removed, and SSP will be calculated as a percentage of the employee’s pay.

What's the timeline for contractors of Labour’s employment law (and other) changes?

As indicated in the introduction, Personal Service Company contractors are unlikely to be affected by these changes (at this stage).

The changes form part of the 28 reforms proposed by the government in its Make Work Pay document.

However, it is unclear when these provisions will take effect. The presentation correctly observed that we may see some changes come into force once the bill has received Royal Assent.

Yet there have been suggestions that many of these provisions are unlikely to take effect until October 2026, given the lengthy consultations that may be carried out.

For everything else potentially affecting contractors, “it’s over to the chancellor Rachel Reeves” -- a phrase that the Commons Speaker will utter in just a few hours to introduce an invariably seismic Autumn Budget 2024.