What the general election may mean for SME employers

May 31, 2024

So, the starting pistol has been fired for the six-week sprint to a general election which will be held on 4th July. Issues like small boats, the NHS and the economy may dominate much of the headlines, but the outcome of the election will be of huge significance to employment law too, and therefore SME employers.

We already know the trajectory of Conservative policy on employment law: a restriction on trade union activity; extension of the right to request flexible working; a ticking upwards of the National Minimum Wage and Living wage in line with Low Pay Commission recommendations; and the introduction of a week’s unpaid Carer’s Leave per year have been some of the recent initiatives. The most radical thing has probably been the post-Brexit shake up of who has a right to work in the UK.

The polls suggest a win for Labour, though (although the polls have been wrong before!).

Be prepared.
On reading the Labour Green Paper on Employment Rights, one phrase that was spoken in our office was that employers should “Be prepared”. This is because if Labour wins and presses ahead with its “Plan to make work pay”, there is going to be a tsunami of employment law change in favour of employees; and, quite frankly, it could come at huge cost to employers.

It is crucial that employers get ahead of this. Labour state that they will be introducing legislation within the first 100 days of entering government, so time is of the essence.

Whether it’s implementing structural changes before any legal amendments come in. Or futureproofing your businesses policies and processes. Preparation is key.

What are we expecting?
Though it’s early days, the Green Paper gives us an idea of the direction Labour is likely to take, should it come to power.

One thing we would welcome, and indeed we have campaigned for at Westminster on behalf of SMEs, is the removal of the little understood worker status, whilst keeping self-employed and employed status. We think this will simplify employment status, helping everyone understand what employment rights they have. However, it does mean all employees would have access to full employment protection from day one, rather than the current two years.

But beyond this, some of the ideas Labour talk of include…

Employees will access unfair dismissal rights from day one, rather than after two years’ continuous service. Employers will still be allowed to dismiss for reasons of capability, conduct or redundancy, though there will be a requirement of increased transparency in rules and processes during probationary periods.
The time limit for making an employment claim will be increased from three months to six months, likely leading to an even bigger backlog in tribunals.
Increases in the National Minimum Wage and reforming the Low Pay Commission to be more active in driving up wages further.
The right to switch off – requiring policies to be put in place around contacting employees out of hours, only being able to do so when legitimately required.
Increases to statutory pay including maternity pay, sick pay and bereavement pay and making statutory sick pay and parental leave a day one right.
Banning ‘exploitative’ zero-hour contracts, using a twelve-week reference period to ensure workers have a right to a contract that reflects the hours they regularly work.
A new Single Enforcement Body (SEB) which can carry out unannounced inspections checking for all worker rights such as NMW and discrimination.

More balance is required.
While there are sure to be some worthy ambitions in this tidal wave of change, our fear is the cost to employers that it will entail. It may entail a huge amount of indirect and direct expense at a time when we know that SMEs are already struggling with rising costs, and recruitment and retention challenges.

As with a lot in politics, the devil will be in the detail – and there is not much detail in this Green Paper. So, it is wait and see what happens at the election, and then wait and see what happens afterwards.

But you can rest assured that The HR Dept will be by your side, providing pragmatic support to help you lead your team and navigate any challenges that arise – whatever happens.