Workers may soon have the right to demand a four-day week made up of “compressed” working hours, and employers are getting antsy
The government is considering giving workers the right to demand a four-day week made up of “compressed” working hours. They’re also set to receive the biggest upgrade to employee rights in a generation, which could enshrine in law new duties for companies in relation to dismissals, sick pay, zero-hours contracts and flexible working.
So what? Employers are getting antsy. Countless breakfasts with Labour frontbenchers have failed to allay concerns in the business community that enforced worker protections, if implemented too hastily, could interfere with the wider aim of growing the economy. Critics say the proposals could
- cause a wave of litigation from workers with “day one” rights launching unfair dismissal claims that would steer companies away from full time hiring, and towards longer probation periods and automation.
- penalise smaller businesses reliant on zero-hour contracts and seasonal work.
- drive up the UK’s low unemployment and damage productivity.
Clocking in. Labour’s argument is that greater security will help workers switch jobs more readily, boosting wages and growth. The UK is an international outlier when it comes to the length of time workers must be employed before they can claim unfair dismissal: out of 38 OECD countries, 36 have a shorter qualifying period than the UK’s two years (extended under the Conservatives). The average in Europe is between five and nine months.
Labour now wants to make that a “day one” right, but says employers can still make “fair” dismissals during probationary periods (although it’s not yet clear how this will work legally). Employers aren’t reassured. Defending a fair dismissal case at an employment tribunal can cost a company up to £40,000.
Angie angst. Notably, political responsibility for the rights package is now being shared between Angela Rayner, who is overseeing a cross-Whitehall committee on “the future of work”, and Jonathan Reynolds, who causes less anxiety in business circles. Tortoise understands that one of the most contentious proposals – a plan to redefine workers’ status that would carry tax implications for companies – will not appear in the government’s Employment Bill, slated for the first half of October, but that the party is still committed to it.
Pay or perks? Research by the IFS finds that Labour’s reforms “are not a free lunch”. Evidence suggests the cost of mandated benefits are often passed on to workers in lower wages. That said, some proposed reforms will come at a modest cost to the employer while delivering sizable gain for employees, such as
- Expanding sick pay. Currently 1.1 million workers in the UK are ineligible for statutory sick pay when they get ill because they don’t earn enough.
- Paternity leave available to fathers from day one of a job, rather than after nine months of employment.
- Menopause action plans for companies with over 250 employees.
- A Fair Pay Agreement for 1.7 million workers in the social care sector, where poor pay and conditions have fed a recruitment and retention crisis.
Woe is SME. Firms that fail to uphold worker protections will be at risk of fines from a newly established Fair Work Agency, but smaller businesses are arguing for an exemption.
“Small employers are already strong on flexibility – 89 per cent offered it even before the pandemic,” says Tina McKenzie, policy chair at the FSB. “There is a risk that adding additional costs and risks to employing people would undermine the government’s ambition of reaching 80 per cent employment.”
What’s more… the number of economically inactive people in Britain is at a near-record high of 9.2 million. Labour’s New Deal for Working People could cut that figure – or inflate it.
