What will the empoyment reforms mean for workers?

What will Labour’s employment law changes mean and could they create unforeseen consequences, including greater insecurity? As a poll over the weekend showed a majority of employers backing many of the main proposed reforms, a recent Resolution Foundation event heard analysis from the think tank about possible scenarios. 

Nye Cominetti showed an international comparison of people’s perceptions of their job security vs the policies in place to prevent that. The USA came out at the bottom with very few regulations to prevent dismissal and few benefits to cushion the blow. European countries were in the middle with some further up the scale. The UK was near the bottom, with an overall insecure labour market and lots of self employment. While insecurity was falling in the UK, employment policy was not helping much, said Cominetti, calling the UK ‘an abnormal country’ and Labour’s reforms an attempt to push it back towards normality.

From unfair dismissal to the minimum wage

He added that the lowest paid bore the brunt of job insecurity. All of this seemed to justify Labour’s proposed reforms. He looked at four of the proposals. On unfair dismissal Cominetti said the UK was unusual with its long qualifying period – two years – but added that introducing a day one right had to be balanced against the potential impact on hiring. There are also concerns about the possible impact of any reform on probationary periods. Cominetti said there needed to be greater clarity about this. The Resolution Foundation is proposing a six-month probation period to protect hiring.

Another area is around insecurity of hours, including zero hours contracts. Cominetti said any solution granting workers the right to regular hours had to encompass everyone affected by irregular hours and not just zero hours workers. Regular hours had to be offered weekly, he added, so that workers did not get penalised for things like maternity pay which is calculated on the basis of a specific qualifying period. Moreover, any reform has to take account of seasonal work, he said.

On sick pay, the UK is an outlier when it comes to the low rate of pay and the fact that people have to wait three days to get it. In addition, the lowest paid don’t qualify for it. The Resolution Foundation backs plans to get rid of the delay in accessing pay and the easing of eligibility criteria. It said those reforms alone, however, would not be sufficient. It would like to see a higher rate of sick pay.

On the minimum wage, the Resolution Foundation doesn’t think Labour’s suggested reforms will make much difference, although changes to the youth minimum wage are welcome, said Cominetti.

He added that overall the risk was that raising terms and conditions of employment could affect hiring, for instance, employers could use more temporary workers to get around the unfair dismissal reforms. Others said increased use of agency workers or personal service companies were another possible way that employers could get around the reforms.

Enforcement

In the debate that ensued experts raised issues about the lack of details about what Labour intended to do, the lack of an overarching vision and the need to address systemic issues to avoid the reforms plugging a gap in one part only to open up another in a different area.

They said Labour needs to address the issue of worker status which underlies the whole edifice of employment law as well as to ensure its plans on enforcement have the teeth they need. Moreover, they said the reforms need to address how the labour market is now, including the growth of the gig economy, and why it is this way – for instance, because people need greater flexibility, as well as to stimulate economic development generally.

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