The New Deal gets one step closer

The new Labour government has taken the first step in reversing the country’s failed 14-year experiment with ultra-flexible labour markets by announcing plans for a law to boost workers’ rights.

In his speech to Parliament, the King said that: 

The legislation includes a large range of measures including on zero-hours contracts, fire-and-rehire and trade union rights.

The government has said that it will deliver its New Deal for Working People “in full”. The details are set out in Labour’s Plan to Make Work Pay.

That the plans are designed to boost wages and kickstart the economy is demonstrated by the government’s billing of the changes as “fundamental” to its growth mission.

The Employment Rights Bill, which to be introduced within 100 days, will contain those measures that need to fulfilled through a new law. The government bills it as “biggest upgrade to workers’ rights in a generation.

Other measures are likely to implemented through fast-track changes to regulations.

There is also a strong signal that years of anti-union attitudes in government are over with ministers highlighting a “new partnership between business, trade unions and working people”.

Ban on zero hours contracts

Among the measures in the bill will be a ban on exploitative zero-hour contracts. The government has said that workers will have a right to a contract that reflects the number of hours they regularly work and will get “reasonable notice” of shift changes and compensation when shifts are cancelled or cut short.

This is desperately needed because the number of people in insecure work has reached a record high of 4.1 million, according to recent TUC analysis. There was an increase of more than one million in the number of people in precarious employment – such as zero-hours-contracts, low-paid self-employment and casual/seasonal work – between 2011 and 2023. Black and minority ethnic workers have been particularly hard hit.

Some employers are keeping workers on insecure contracts for years on end with two in three workers on zero hours contracts having been with their employer for more than a year.

Swift action is needed: a Resolution Foundation report found that without regulation, employers plan to increase their use of insecure contracts in the coming years.

End to fire and rehire

The government has said that it will bring an end to ‘fire and rehire’ and ‘fire and replace’ by providing effective remedies.

It has said it will also replace the inadequate statutory code introduced by the last government.

Currently, exploitative employers are taking advantage of gaps in the law and ineffective enforcement. 

In 2022 P&O Ferries sacked 800 seafarers while deliberately ignoring its legal obligations. But its bosses suffered no consequences.

Some firms have used fire and rehire to cut wages, a particular concern during the Covid pandemic.

Reforms to union recognition

The GMB’s narrow failure to secure union recognition at Amazon’s Coventry warehouse this week shows the barriers that unions face in trying to organise in new workplaces to help workers improve their pay and conditions.

The union first had to prove it was likely to have over 50 per cent support to even get a ballot – and that was without even being allowed on site.

Amazon then pulled out all the stops to prevent the union succeeding in the vote, including pressuring workers into cancelling their GMB membership, bombarding them with anti-union seminars and threats to terms and conditions.

Labour has said that the Bill will simplify the process of statutory recognition and introduce a regulated route to ensure workers and union members have a reasonable right to access a union within workplaces.

Other measures

Other measures in the Bill will include: 

• extension of parental leave, sick pay and protection from unfair dismissal from day one on the job “for all workers”
• the right of all workers, no matter their earnings, to sick pay from the first day off
• making flexible working the default from day-one for all workers, with employers required to accommodate this as far as is reasonable
• a prohibition on dismissing any woman who has had a baby for six months after her return to work, except in specific circumstances
• a new Fair Work Agency to enforce workplace rights 
• a fair pay agreement in social care, so that workers and employers agree minimum pay and conditions for the sector. This could be extended to other sectors
• reinstatement of the School Support Staff Negotiating Body
• the removal of unnecessary restrictions on trade union activity – including the previous government’s oppressive minimum service levels law.

A separate Equality (Race and Disability) Bill will tackle pay gaps and pay discrimination at work.

The government also said it will deliver a genuine living wage that accounts for the cost of living and remove the discriminatory age bands that cost young workers age 18 to 20 up to £2,400 a year. 

A New Deal is desperately needed

The UK desperately needs a new deal for working people.

Allowing the spread of insecure work has led to lacklustre growth, flatlining pay and millions of families have suffered the indignity of precarious work, not knowing how they will pay their next bill.

There is overwhelming support for labour market reform from voters of all stripes. For example, in a poll of 3,000 voters carried out by Opinium on the day after the general election, almost two-thirds of respondents (64 per cent) supported giving workers’ protection against unfair dismissal from day one of a job.

Bosses increasingly support change, too. Decent employers no longer want to be undercut by bad ones. They know that treating their staff fairly brings productivity gains. And as a recent Cambridge University study showed, using data from 1970 onwards, improved labour protections, on average, increase employment and reduce unemployment.

In April a Chartered Management Institute poll found that more than four in five (82 per cent) managers said granting workers fundamental day one rights was important. And that three in four (74 per cent) managers said a ban on zero-hours contracts was important.