What could a Labour win mean for individual employment law rights?

The announcement of a General Election on 4 July has got employment lawyers studying the Labour Party's Green Paper, A New Deal For Working People, with renewed vigour. Since the Green Paper was published, there have been newspaper reports (in May) of a 'watered down' pledge to strengthen workers' rights, followed by a reported meeting between Sir Keir Starmer and trade unions to ensure 'no further watering down' takes place. 

So where are we now? We will have to wait until Labour publishes its Manifesto, most likely in the next couple of weeks, to get a more concrete sense of how the stated policies in the New Deal for Working People will play out. Nevertheless, Labour has pledged to significantly reform employment rights in its first 100 days in office. Employers will want to start making contingency plans for the likely direction of travel. With this in mind, we have picked out two key commitments made by Labour at this stage which pertain to individual employment law rights which employers should prepare for.

Unfair dismissal – remove qualifying period

Labour intends to remove the 2-year qualifying period for unfair dismissal and make the right to claim unfair dismissal a right from day one of employment. This seems unthinkable in the UK (although it should be noted that some countries provide protection from dismissal without a qualifying period). It has been reported that Labour plans to make an exception to the extent that employers will be allowed to dismiss employees who do not pass their probationary periods without falling foul of unfair dismissal law.

This raises the question, what if you don't currently use probationary periods and if you do, will there be limits placed on how long a probationary period can last? We will have to wait and see.

Unfair dismissal – removal of cap on compensation 

The Green Paper states that, "Caps which limit the amount of compensation that workers can receive are unfair and discourage companies from following the law. Labour will ensure that workers will receive full compensation, without statutory limits, if they suffer loss because of employers' breaches of the law." 

This statement suggests an intention to remove the current limit on a week's pay (£700) for the purposes of calculating a basic award, as well as the cap on the compensatory award (currently £115,115). But what will take its place, an assessment of damages based on loss suffered by the claimant, having regard to just and equitable principles, or something else?

Without more detail, it is difficult to believe this proposal will come to pass but if it does, it will take what we currently regard as easy to quantify losses associated with ordinary unfair dismissal into the 'high risk, high value' territory we currently associate with discrimination or whistleblowing claims.

What employers should be doing now 

The proposed removal of a qualifying period and compensation limits for unfair dismissal mean that the stakes for unfair dismissal are likely to increase. Now would be a good time for employers to take stock of their recruitment practices and to not only introduce probationary periods in offer letters for new hires but to actively make use of them. 

Too often a probationary period is forgotten about as a genuine opportunity to assess if someone is right for the job, to communicate where improvement may be required if the person is to stay on, or to dismiss on reduced notice if things have not worked out. 

Employers should also be considering whether, with regard to anyone who currently has less than two years' service and is no longer wanted in the business, there is a case for dismissing on a fair ground or entering into a settlement agreement before qualifying periods get abolished.