As the UK navigates political changes following the Labour Party's rise to power after 14 years of Conservative leadership, attention is now on how its policies are shaping the staffing sector.
Labour’s employment law reforms, now being implemented, focus on strengthening workers' rights, improving job security, and ensuring fair wages. Here’s an updated breakdown of key changes and their impact on staffing agencies.
Employment Law Reform: 'Plan to Make Work Pay (MWP)'
Labour's Plan to Make Work Pay was a key pillar of their 2024 manifesto.
The bill is currently awaiting the report stage in the House of Commons and must pass through both houses of Parliament before becoming law. Given the legislative timeline, the reforms are unlikely to take effect before 2026.
1. New rights for workers
Workers to be given rights from day one of employment
Workers will be granted several rights from the first day of employment, including:
- Unfair dismissal claims – Workers can bring forward unfair dismissal claims from day one.
Impact: Employers must ensure fair and transparent practices, keep detailed performance documentation, and follow thorough dismissal processes.
Staffing agencies may encounter heightened administrative responsibilities to comply with these new rules.
- The right to access sick pay without a waiting period or earnings threshold - Sick pay will be a right from day one, removing the three-day waiting period and earnings threshold of £123 per week.
Update: Recent developments have further expanded statutory sick pay to 1.3 million of the lowest-income workers, who were previously ineligible. All employees now receive 80% of their usual pay from the first day of sickness, replacing the former flat rate (Financial Times).
Impact: Staffing agencies may see higher operational and administrative costs and challenges in managing workforce availability. However, improved worker satisfaction and retention could offer long-term benefits for agencies that successfully adapt to the new regulations.
- Strengthened family-friendly rights – The Labour party proposes to make all forms of family leave, such as maternity, paternity, shared parental, adoption, carers, and bereavement leave, available as a day-one right.
With certain exceptions, employers will be restricted from dismissing employees returning from family leave for six months.
Update: In March 2025, legislation was introduced granting parents the right to two weeks of bereavement leave after a miscarriage before 24 weeks of gestation. This extends existing bereavement leave rights and reflects Labour's commitment to improving worker protections (The Guardian).
Impact: These changes will require staffing agencies to offer comprehensive, family-friendly benefits from the start of employment, increasing administrative complexity and costs.
2. Reform of Employment Status
Labour’s employment proposals aim to simplify employment status by merging the statuses of employee and worker into a single category with full employment rights.
They also propose stronger rights for self-employed contractors, including written contracts, protections against late payments, and extended health and safety protections.
Impact: More individuals will be entitled to employment rights, leading to significant cost implications and administrative burdens for staffing agencies. Agencies will need to ensure all placed workers receive full employment rights, complicating contract management and potentially increasing costs.
3. Ban of Zero Hour Contracts and fire and rehire
Zero hour contracts ban
The Labour Party has revised its stance on zero-hours contracts. Instead of a total ban, they now propose giving workers the right to opt for guaranteed hours after 12 weeks of regular employment. This would enable workers who prefer flexibility to remain on zero-hours contracts, while those seeking stability can transition to permanent contracts.
Impact: Staffing agencies will experience an increased administrative burden as they will need to track employment durations and manage transitions to permanent contracts. This will require adjustments in their operational models and client negotiations to ensure compliance with the new regulations.
However, these changes could improve worker retention and satisfaction by offering additional stability and flexibility. Not only this, but agencies that adapt swiftly to these changes may gain a competitive advantage by attracting both workers seeking job security, and clients desiring a more committed workforce.
Ban on Fire and Rehire Practices
Labour plans to ban firing employees only to rehire them on less favourable terms, proposing an enhanced code of practice for fair and transparent consultations.
Update: As of January 20, 2025, a new code of practice has been implemented, allowing protective awards to be increased by up to 25% for unreasonable non-compliance, effectively discouraging such practices. Employers could be ordered to pay a protective award of up to 112.5 days (uncapped) pay per affected employee (Clydeco).
Impact: Staffing agencies will need to adopt stricter consultation and negotiation processes, ensuring any contractual changes for temporary workers are fair and transparent. This could slow down staffing adjustments and reduce operational flexibility.
4. Stronger Protections and Enforcement
The Labour party proposes establishing a Single Enforcement Body to enforce workers' rights, undertake targeted enforcement, and bring civil proceedings against non-compliant employers.
Impact: Staffing agencies will be under greater scrutiny, requiring full compliance with employment laws, potentially increasing regulatory costs and requiring more rigorous internal compliance checks.
Labour’s ambitious proposals and actions aim to transform the employment landscape, providing better security, rights, and pay for workers. While these changes will significantly benefit employees, the staffing sector will face increased administrative, legal, and operational challenges. Staffing agencies will need to adapt to a more regulated and less flexible market, which could lead to higher costs and more complex compliance requirements. However, with careful planning and adaptation, staffing agencies can navigate these changes and continue to provide valuable services in a fairer and more rightful employment environment.