Hello and welcome back to The Pinsent Masons Podcast, where we try to keep you abreast of the most important developments in global business law, every two weeks.
I’m Matthew Magee and I’m a journalist here at Pinsent Masons, and this week we look at the sweeping changes to employment law made by the new Labour government in the UK. We investigate what it is that employers are thinking hardest about and how they can start to prepare now for the changes ahead.
But first, here is some business law news from around the world:
Reddit wins right to appeal against Irish regulatory activity
New laws come into force to protect Australian energy workers’ and
EU council gives final approval to designs protection package
Online platform Reddit has been granted leave to appeal a ruling by the Irish High Court to uphold the decision by the media regulator to bring the platform’s services within the scope of a new online safety code. The High Court ruled in June against Reddit and fellow online platform Tumblr when they challenged the regulator after it designated both platforms part of a group of ‘video-sharing platform services’ that would be subject to Ireland’s new online safety code expected to take effect by the end of this month. The judge granted leave to appeal on two grounds unopposed by the regulator on the basis that there was a “dearth” of case law involving this subject matter both in Ireland and in Europe, and that the case was therefore of exceptional public importance.
New legislation supporting workers in industries directly impacted by the energy transition will soon take effect in Australia. The Net Zero Economy Authority Bill was created in anticipation of the significant changes to Australia’s power generation industry as the country moves away from fossil fuel-fired infrastructure. Aiming to support workers in the coal and gas industry with training and access to new employment opportunities, the legislation – which is expected to come into effect later this year or early next year – will establish a Net Zero Economy Authority (NZEA) to oversee compliance with coal and gas plant operators’ new obligations as employers. One of the most significant provisions in the new legislation is the implementation of the Energy Industry Jobs Plan (EIJP). The plan will be administered by the NZEA to support employees in emissions-intensive industries that are impacted by closures of coal and gas-fired power stations. The authority will assist affected workers with accessing new employment or other opportunities and acquiring skills to improve their employment prospects.
The EU’s design reform package has received final approval from the Council of the EU. Two new legislative acts have been adopted that the EU says will make design rights fit for the digital age and the registration procedure cheaper and easier. The package seeks to improve the protection of industrial designs in the era of digital designs and 3D printing, to set new amounts for the fees to be paid to register and renew an EU design, to prevent cultural heritage from being registered as design, and also to liberalise the spare parts market to help drive sustainability. Under the new regime, designs created through 3D printing can be visualised and registered. The reforms facilitate the protection of industrial designs, which could include digital representations of designs, such as 3D models or digital renderings. One of the biggest changes will be the introduction of an EU-wide ‘repair clause’. Under this, spare parts may not enjoy design protection if these are ‘must-match’ parts used for the repair of complex products, such as cars, and whose appearance is dependent on the appearance of original parts The repair clause will put an end to the decade-long dispute on the scope of protection especially in the automotive aftermarket and create a level playing field in the EU.
After 14 years of Conservative rule the UK got a new government in June as the Labour party swept to power with a sizeable majority. One of its early priorities was a reform of employment law to strengthen the rights of workers – I mean, the party is literally called Labour, so that shouldn’t be a surprise.
It has now published its plans Glasgow-based employment law expert, Stuart Neilson, told me how big a change this is going to be for employers and workers.
Stuart Neilson: It's probably the most significant change in employment law, certainly for a generation, and you probably have to go back to the ideas of the Blair government in 97 to see changes to employment law that are as significant as those that are being proposed just now. The key things are that they provide for a number of what might be called day one rights. Currently the position is if you want to claim unfair dismissal, you have to be employed for two years and the government are proposing that that will become a day one right, that you could claim unfair dismissal from the first day in your job. However, that is qualified by having a probationary period and during that probationary period, they say they will have a simplified procedure for being able to dismiss people if you have a good reason for dismissing them.
Other day one rights that they are bringing in include the right to sick pay and parental leave from day one. We also have proposals in relation to banning of what they call exploitive 0 hours contracts. So particularly for those who are working in what one might call the gig economy, there are a lot of proposals around giving them much more secure work footing, guaranteed hours, that type of thing. Flexible working has been a lot in the news, but flexible working, so this bill brings in increased rights in relation to the right to seek flexible working. We have had the right to request flexible working from day one of employment since April this year in any event, but the onus is now shifting much more on the employer to have to justify why someone shouldn't be given flexible working rights. There are provisions in relation to trade unions and essentially some of the laws that have come in the last 10 years around restricting trade unions rights or as trade unions would see it restricting their rights to strike, those changes are going to be removed so we'll go back in time to the positions it probably was at the end of the Blair Brown governments in relation to trade union rights around striking. And then they're also going to make it easier for trade unions to get recognition in the workplace.
One other material change which I should mention is the response the government have had to what they call the scourge of fire and rehire. And what they are proposing is that employees will have a right to be treated as automatically, unfairly dismissed if the reason or principal reason they are dismissed is because they've refused to accept a change in their terms and conditions of employment. So that effectively gives employees a veto over changes to terms and conditions of employment.
Matthew Magee: The changes are broad and deep so I asked Stuart to highlight the parts of the new law that employers should be most focused on.
Stuart: I think the one certainly that clients are speaking to us about and are concerned about the day one right to unfair dismissal. I think there's certainly a perception at the moment that employers have a bit of flexibility around hiring people on the basis that they've got two years to see whether or not that works out and that's a right from an employer's perspective that's going to go. And if you're an employee, you would obviously say, well, that's a good thing. I've then got protections from day one or some element of protection from day one. That's certainly a big one. I think for businesses who are dealing with trade unions, the changes to the trade union rights is going to be a material issue and I think, certainly the issue around the fire and rehire proposals is also going to be quite material for companies, particularly for companies who want to ensure they have an element of flexibility around how they go about dealing with their terms and conditions where there might be changes in the workforce the lack of having that flexibility could be an issue for them in the future.
Matthew: And, you think that's not necessarily companies who are actually doing fire and rehire, it’s companies that are actually making maybe less substantial changes in terms and conditions?
Stuart: Yes
Matthew: But now we won’t have that.
Stuart: I think the danger is that the government obviously identified what they say is a scourge, that in some sense there are bad employers out there who are running around firing everybody and trying to engage them on poorer terms and conditions. Our experience would be that if that happens, it's very much a minority of situations. The reality for most employers is there will be situations that they need to address where they need to change terms and conditions to reflect changes in society, changes in the workforce, changes in technology. For a raft of reasons one might need to change terms and conditions. One needs to have flexibility to be able to do that and a kind of one-size-fits-all tool that removes any ability to be flexible is I think, going to be unhelpful for employers.
Matthew: Commentators have said that the plans restore some rights to back what they were in 2010, when Labour was last in power. But the world of work is a very different place to what it was back then – an explosion of zero hours contracts; app-based casual work; pandemic-accelerated remote working and a separation from the European Union’s employment laws have changed the landscape for organisations and workers alike. So how will the UK fit into the international picture when this new law takes effect in terms of worker protections?
Stuart: I think historically the UK has always been seen as a bit of a middle ground between two different extremes that you've got. On the one hand the US example where they have very lax or unregulated employment protections and the ability to fire and hire is very much part of their culture with limited rights for employees. And then the other extreme, you've had certain European countries, France, Germany, they spring to mind as part of the European Union, where they have a much more regulated labour market and I think what is probably happening here is that we are moving a little bit from that where we sat in the middle. We had a regulated and do have a regulated labour market, there's no doubt about that, there are a lot of protections in there, but we sit somewhere between the US example and the kind of continental European example and I think we are moving slightly more towards the Continental European example.
Matthew: So what do you think the likely changes are going to be? Through Parliament, the new government has a very big majority, but it also has lots of political pressures that it needs to balance. So how much of this do you think will make it through, and what changes might we see?
Stuart: If I were a betting man, I would say I would expect the majority of it to make it through. But I think there will be some tweaks to the legislation on the way through. So to go back to the fire and rehire point, I would expect that there might be some tweaks around that because I think as always, when you introduce legislation, one of the difficulties is you don't necessarily think through all the unintended consequences and when they go through consultation, they will become aware of the knock on impacts of a lot of this stuff. So I expect there will be perhaps some watering down in relation to, you know, the ability of the employer to make changes to terms and conditions in certain sets of circumstances, and particularly where those changes might even be to the benefit of employees overall. So yeah, I think there may be some watering down in relation to that. I think will be really interesting will be the day one rates on unfair dismissal. To what extent does that get watered down? The government are suggesting a nine month what they call initial employment period, which is effective probationary period. Could that get pushed out to 12 months? Don't know and we don't know at the moment what is the detail of what does an employer actually have to do within that first initial period to have a fair dismissal? Detail around that. I wouldn't be surprised to see a slightly friendlier approach to employers if you like becoming adopted as we go through consultation on that.
Matthew: What has been the reaction from employers, from businesses and organisations overall?
Stuart: There are certain rights which are coming in which I think most employers would say, fair enough, we can absolutely see the sense of that, that makes sense. There are other things which are coming in and I think there's a bit of a thinking that thought of, well, not really sure why we needed to do that, don't see what the mischief is to cure that. I guess a slight nervousness is what I would describe among our clients in relation to right what is this ultimately going to mean particularly around the day one rights around the fire and rehire about the impact of the trade union changes. Our clients at the end of the day want to have a fair level playing field, they want to have good employment rights for their employees, but equally they want to be in a position where they've got some flexibility and the ability to grow their businesses and make decisions. And I think there would be concern that some of this might cut across the ability of businesses to be flexible and grow their businesses.
Matthew: The day one rights won’t come into force for two years, other provisions might be implemented in 2025. So how should employers prepare for the changes ahead?
Stuart: I think the things that you really need to be thinking about particularly are around, kind of, probationary periods. What are our systems and processes for engaging with people and our systems and processes for making sure that we are, you know, when we are engaging with people that we're properly training them, that we're getting the best out of them, that if we do identify people who aren't a good fit for our business, we've got a process in place to deal with that. How do we ensure maximum flexibility within our business while being compliant with the law? And so do we need to look at building in some more flexibility into our contracts and employment at the moment?
Matthew: So making changes now before the law takes effect?
Stuart: Yeah, I think the government have said there's quite a big lead in period for a lot of this stuff. So I think it's definitely worth businesses having a look at that now to see whether or not there are changes they could be making that could build in that flexibility now and build and start thinking about some of the processes that might have to have in place.
Matthew: Thank you for listening to the Pinsent Mason's podcast. We appreciate your time and attention. We know lots of people are clamouring for yours. Remember, you can keep up with news and analysis everyday at pinsentmasons.com from our team of international journalists or you can sign up for tailored updates to your interests and needs at pinsentmasons.com/newsletter. Until next time, goodbye.
The Pinsent Mason's podcast was produced and presented by Matthew Magee for International professional services firm Pinsent Masons.
