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Labour Party Manifesto – implications of the pledges on the workplace

  • Legal Development 02 December 2019 02 December 2019
  • UK & Europe

  • Employment, Pensions & Immigration

The forthcoming General Election is like no other and with little certainty who will be handed the keys to 10 Downing Street on 13 December. With all party manifestos now published, it is clear the Labour Party Manifesto contains the most eye-catching pledges relating to employment – in fact, some of them would extensively re-shape the workplace. Below, we cover some of the pledges more likely to catch the eye of HR professionals, in-house legal counsel, and business owners.

Labour Party Manifesto – implications of the pledges on the workplace

Working time - Four day working week

This Manifesto pledge is not just an extension of flexible working; rather it is explicitly less work for the same pay.  The commitment to reduce to 32 the average weekly working hours over a ten year period will inevitably have a significant disruptive effect on employers from the off. A modest 2% reduction in the first year rapidly increases to 20% over time. While some of this may be offset by productivity gains, what of jobs that are reliant on providing a service for a specific period e.g. IT helpdesk or security guard?

Businesses would face an immediate hard cost of having to make up the lost time and the very real practical problems in covering pockets of hours lost. We suspect the reality is that the missing capacity will in many cases be covered by existing employees working overtime (probably at a higher rate) and so acting to increase the overall salary bill. On this analysis it is not so much less work for the same pay but the same work for more pay. 

Allied to this the Manifesto includes a commitment to remove the 48 hours opt out from the Working Time Regulations, the additional of four extra bank holidays and the creation of a Working Time Commission to advise on increasing holiday entitlement further. 

Inclusive Ownership Funds

This will require large companies (the definition of which is not stated) to set up Inclusive Ownership Funds (IOFs) and transfer to the IOF 10% of the company's ownership interest to be collectively owned by employees. Dividend payments from the ownership interest will be limited to £500 per employee per year with any excess going to government funds. With little detail as to how this would operate and its precise parameters it is difficult to meaningfully comment, but suffice to say many larger corporates and larger owner managed businesses may be very concerned at what may be seen as expropriation of their property rights.  Given other recent legislation defines a "large company" as one with a turnover of £10.2m p.a., 50 employees or £5.1m in balance sheet assets, "large" needs to be considered in that context and is not just limited to the Amazons or Googles of the world.

Ministry of Employment Rights

The "Ministry" may have sinister overtones but its function and remit are clear: to advance and enforce the rights of workers and trade unions through, amongst other matters:

  • A Real Living Wage of £10 per hour at age 16;
  • To roll out sectoral trade union collective bargaining to all employers across the economy;
  • Implementing full employment rights from day one of employment;
  • Creating only two work status: "worker" and "self-employed";
  • Mandating collective consultation on the implementation of "new technology" in the workplace;
  • Banning zero-hours contracts and measures to provide regular work hours and compensation for shift cancellation and notice for shift changes;
  • Changes to family  friendly rights, including extended maternity pay from 9 to 12 months and longer and better paid paternity leave;
  • Harassment laws to be revamped to include liability for third party harassment;
  • Majorly enhanced trade union rights and protections, including the removal of "unnecessary" restrictions on industrial action; and
  • "Extensive" powers to inspect workplaces and bring prosecutions and civil claims on behalf of workers. 

There is little doubt that if elected Labour will have a mandate for a sea change in workplace rights, many of which could be implemented rapidly requiring only minor changes to existing legislation. The dividends from the Inclusive Ownership Funds would provide a ready source of raising revenue and with such extensive spending commitments elsewhere in the Manifesto it may come on to the statute book sooner rather than later.  As for the other measures, as with all manifestos a good pinch of salt is needed, and whether a Labour administration would have the ability to implement such a significant set of legislative changes in the face of the ongoing all-consuming Brexit issues only time will tell.

Whatever your view on the politics, make no mistake this would be a complete re-boot of workplace rights.


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