Labour has outlined significant employment law reforms, including the introduction of a single worker category, extending day-one rights, banning the practice of fire and rehire, and limiting the use of zero-hour contracts. These proposals could reshape employer-employee relationships across the UK.
Fire and rehire: What employers need to know
The controversial practice of “fire and rehire” made headlines in March 2022 when P&O Ferries dismissed around 800 workers. This tactic involves terminating employees and rehiring them on different, often less favorable, terms.
While fire and rehire is currently legal under UK employment law, employers must follow strict guidelines. Dismissals may be deemed fair if employers:
- Engage in meaningful consultation: Employers should first consult employees and seek agreement on contract changes.
- Demonstrate a sound business reason: Employers must have clear, evidence-backed justifications for the change.
Labour’s stance on fire and rehire
Labour has committed to banning fire and rehire practices. However, before this ban takes effect, employers should be aware of the government’s Statutory Code of Practice on Dismissal and Re-engagement, coming into force in July 2024. While the Code won’t prohibit fire and rehire, it will emphasize that it should be used as a last resort.
Risks of fire and rehire
Employers relying on fire and rehire practices face several risks, including:
- Unfair dismissal claims: Employees may bring claims under the Employment Rights Act 1996.
- Reputational damage: Poor handling of dismissals can harm brand reputation and employee morale.
- Legal costs and disputes: Tribunal claims are costly, time-consuming, and disruptive.
To mitigate these risks, employers should prioritize transparent communication and consultation with employees to build understanding and reduce the likelihood of legal challenges.
Zero-hour contracts: Labour’s proposals
Labour has also promised to restrict the use of zero-hour contracts, which have faced criticism for their potential misuse by employers. Despite their flexibility, zero-hour contracts can leave workers without guaranteed hours or stable income.
What Labour plans to change
- Curtailed use: While zero-hour contracts will not be completely banned, stricter regulations will apply.
- Standard contracts: Workers with regular hours for 12 weeks or more must be offered a standard contract.
- Worker choice: Labour claims workers can choose to remain on zero-hour contracts, but concerns remain that employers may pressure workers to do so.
Upcoming legislation on predictable work patterns
Regardless of Labour’s plans, employers should prepare for the Predictable Work Pattern Rights legislation, expected to take effect in September 2024. This will allow employees and agency workers to:
- Request a predictable work pattern after 26 weeks of service.
- Submit two applications within a 12-month period.
Best practices for employers
Employers are encouraged to consider alternatives to zero-hour contracts, such as:
- Part-time contracts: Provide guaranteed hours for greater stability.
- Annualised hours contracts: Offer flexible working patterns based on yearly commitments.
- Fixed-term contracts: Suitable for seasonal work with clear end dates.
- Overtime and training: Upskill existing staff to cover temporary or additional workloads.
By adopting fair and transparent employment practices, businesses can improve employee satisfaction, enhance their reputation, and reduce legal risks.
For further advice on how these changes may impact your business, contact our employment law team today.
