Labour’s New Deal for Working People is billed by the party as the biggest upgrade to rights at work for a generation, but what changes are proposed and what do they mean for small business owners? Nicola Cockerill, a solicitor specialising in employment law at Buckles Solicitors, considers some of the key proposals
The new Labour government has proposed some big changes, how relevant are these to fish and chip shop owners?
Some of the changes are quite big, and fish and chip shop owners will definitely want to be aware of them and start thinking about how they could impact their businesses as there will be cost implications as well as the need for some operators to maybe change their business models.
What’s the biggest change in your opinion?
I think it will be in relation to unfair dismissal claims. Generally speaking, at the moment, employees must have a minimum of two years’ service to bring a claim for unfair dismissal. The Labour government is proposing making this a day one right. This is a significant change to the current Law and will potentially have a huge impact on businesses. It is likely there will be an increase in the number of employment tribunal claims which will then result in more time and cost being spent by businesses in defending them. The government has indicated that it will be possible to dismiss new recruits during their probationary period but details as to how this will apply in practice, are unclear.
What about banning zero-hour contracts?
Labour have committed to banning these and ensuring workers have the right to a contract reflecting the hours they regularly work. The fairness of zero-hours contracts have been a topic of discussion by governments for a number of years now as they do not provide workers with guaranteed work. For some businesses, zero hours contracts have been heavily relied on. However, if zero-hours contracts are banned, then some businesses will need to ask themselves how they are going to employ their staff in the future. It may be the case that in the future, businesses have to consider fixed-term contracts and more overtime and there may be an increase in the use of temporary agency staff. This is likely to result in an increased cost to businesses.
How will fire and rehire be affected?
Fire and rehire is when an employer dismisses an employee and then offers to re-engage them on new terms, usually for less pay and benefits. The Labour government have committed to end this practice, although they have recognised that where there is genuinely no alternative a business must be able restructure. In July a new Statutory Code of Practice came into effect which provides guidance to employers when considering making changes to an employee’s contract. Whilst it is not legally binding on employers, it will be taken into account by Employment Tribunals and failure to follow it could give rise to an uplift by up to 25% of any compensation awarded.
What other changes are on the cards?
Another change that potentially could have a big impact on small businesses is the proposed change to Statutory Sick Pay (SSP). Currently, an employee has a three-day waiting period before they are entitled to SSP, but the government is talking about removing that so it becomes a day one right. They are also talking about removing the lower earnings limit for qualifying for SSP. Currently an employee needs to earn £123 a week to qualify for SSP, but in the future they may be entitled to SSP regardless of the level of their earnings. All of this is a potential cost.
How do you see these changes affecting fish and chip shop owners?
All these changes are going to have an impact. It will be riskier to dismiss staff and more expensive to employ them. The government is also proposing to allow employees more time in which to bring claims. Currently an employee must usually bring a claim within 3 months of their employment ending that may be extended to 6 months.
Do you have any advice for business owners worried about the proposals?
The important thing to remember is we don’t know if these changes will in fact be made and if they are, when they will happen. It is not going to change overnight.
So, for example, I wouldn’t say stop issuing zero-hours contracts if businesses use these contracts, because they’re still perfectly lawful. But do just be mindful that these changes might come in so it is best to try and plan for that eventuality.
As with all things, be prepared and keep yourself up to date. Buckles publishes a number of free updates that you can get through our website. We also run training seminars that readers can sign up to.
Any parting words?
Take your obligations as an employer seriously. Keep yourself up to date, most of the time your employees are sensible, and you won’t have problems, but on the odd occasion things can go badly wrong very quickly. You can help protect your business by having proper contracts of employment and staff handbooks in place and by taking advice from an expert as soon as you think that you might have an issue.
