1. Labour proposes to extend equal pay protection to ethnicity and disability
Earlier this month the Labour Party announced plans to introduce new race relations legislation if it wins the next election.
Full details are yet to be published, but the reported proposals would involve the following two key legal developments:
- Equal pay protection to be extended to BAME workers and disabled workers; and
- Compulsory ethnicity and disability pay gap reporting.
Current equal pay law & reporting obligations
Under the sex equality provisions of the Equality Act 2010 (which were previously specified in the Equal Pay Act 1970) if an employee’s contractual terms (including those relating to pay) are less favourable than a colleague of a different gender doing equivalent work, such terms are automatically modified to be no less favourable. Where an employer is in breach of the sex equality provisions, an employee can bring an equal pay claim to the employment tribunal.
However, there are currently no equivalent provisions requiring equal pay based on ethnicity or disability status. Instead, an employee must bring a successful race or disability discrimination claim to be compensated for the difference in pay.
Regulations made under the Equality Act also require large employers (those with 250 or more employees) to assess and report annually on their gender pay gap statistics. Similarly, no such obligation currently exists with respect to ethnicity or disability. The current government published the results of a consultation on whether to make ethnicity pay gap reporting mandatory in July 2023, concluding that guidance to support voluntary reporting is preferable to a new mandatory reporting obligation.
Labour’s equal pay proposals
Labour’s proposed approach is to harmonise ethnicity and disability pay protection with existing sex equality protection, enabling workers to bring an equal pay claim based on those protected characteristics (rather than just a discrimination claim).
The proposals also include mandatory pay reporting on ethnicity and disability, a considerable extension of the current reporting requirements regarding the gender pay gap. It is likely that the exact obligations would mirror those currently in place. The commitment to extending reporting requirements is connected with Labour’s New Deal for Working People, which includes an intention to require businesses with unacceptable ethnicity pay gaps to implement an improvement plan to eradicate inequalities. In a bid to improve enforcement in this area, there is also a commitment to implementing a regulatory enforcement unit for equal pay claims.
A further proposal includes implementing the ability for workers to bring dual discrimination claims under the Act, based on two protected characteristics in combination. This cause of action is currently included in the Equality Act, but has never been brought into force. The ability to amalgamate protected characteristics would simplify the tribunal claim process for claimants where the facts support a dual discrimination claim. An example might be a menopausal woman who believes she has suffered discrimination on the grounds of sex, age and/or disability.
2. Labour’s New Deal for Working People
It is increasingly apparent that employers should prepare for significant change to employment law should Labour win the next general election.
Labour’s New Deal for Working People policy paper confirms the intention to introduce a new Employment Rights Bill within 100 days. In addition to a proposed overhaul of trade union laws, the party has made a number of key employment policy commitments, which we analyse below:
Fire and rehire
A ban on fire and rehire practices by employers so that employers would be prevented from dismissing workers for failing to agree to less favourable changes to their employment contract. This would be achieved through enhancing employers’ information and consultation obligations and amending unfair dismissal protection.
Businesses are unlikely to support an outright ban on the ability to dismiss and rehire employees where they are unwilling to agree to contractual changes, particularly where the future of the business may depend on effective cost reductions.
The current Government has favoured a more restrictive approach to “fire and rehire” rather than an outright ban. The response to the consultation on the draft Code of Practice on Dismissal and Re-engagement was published earlier this week and an updated Code is now awaiting Parliamentary approval.
Unfair dismissal
Introducing the “Day 1” right to bring an unfair dismissal claim (by removing the two years’ prior service qualifying period). Further, the Times has reported that the current cap of one year’s gross pay for an unfair dismissal compensation award will be removed and directors would face personal liability if the employer failed to pay a tribunal compensation award.
This will inevitably increase the financial and administrative burden on employers in relation to employee dismissals and potentially increase the current pressures on the employment tribunal system, given the likelihood of increased unfair dismissal claims.
Right to switch off
Introducing a new “right to switch off” from emails, calls and messages received from employers outside of working hours, to reflect similar practices that already exist in certain EU countries.
It is not clear how employees would be able to enforce any such right or indeed whether they would be willing to do so, particularly in a climate where redundancies are increasingly common and perceived “under-performers” could be vulnerable to redundancy selection.
Flexible working
Enhancing the current right to request flexible working by putting the onus on employers to prove why employees should not be able to work flexibly and compelling employers to agree to requests “as far as is reasonable”.
It is unclear whether the current statutory grounds on which flexible working requests can be rejected would be removed as part of the proposals, but employers will be concerned about their ability to sustain working patterns that best suit the requirements of the business.
Sick pay
An increased statutory sick pay entitlement, making it available to all workers irrespective of status and including the lowest earners. Small employers will feel understandably nervous about this potentially expensive proposal. There is currently no suggestion that a rebate scheme would be put in place to allow employers to recoup some of the associated cost.
Zero-hour contracts
A ban on zero-hour contracts which do not specify a minimum number of hours, which the Labour Party views as exploitative. While the proposal is aimed at protecting the most vulnerable, both employers and employees can currently benefit from the flexibility offered by such contracts, and it is common practice across a variety of industries, It has been reported that the Labour party accepts the need to consult on proposed legislative changes to avoid unintended consequences from a ban.
Comment
As ever the devil will be in the detail with Labour’s proposals. There is the obvious hurdle of a general election before Labour would have the opportunity to progress its policies, but in the meantime employers should keep one eye on the horizon so that they can plan for necessary changes in the event of a new Labour government.
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