General election: employment watch – what might a Labour government mean for employment law?

In light of the announcement that the UK’s next general election will take place on 4 July 2024, we’re taking a look at some of the key promises relating to employment law made by the leading political parties. Over the coming weeks, we will focus on a number of the proposed changes the parties will make (if elected) and discuss how these could impact employers.

The first proposal we will look at is Labour’s plan to extend equal pay protection to include disability and ethnicity. This is just one of many proposals Labour has pledged to make if elected – other proposed changes include:

• Simplifying employment status by creating a single status of “worker” for all but the “genuinely self-employed” and extending certain employment law protection to workers.
• Making unfair dismissal a day one right (i.e. removing the current two-year continuous service qualifying period).
• Introducing the “right to switch off” (see our article here for further comments).

In terms of extending equal pay protection, currently, the Equality Act 2010 requires men and women to receive equal pay for equal work or work of equal value. A ‘sex equality clause’ is implied into a woman’s contract of employment to replace any less favourable terms with the more favourable terms of a man’s contract. Equal pay protection only currently covers sex. However, an employee could still bring discrimination claims relating to pay or less favourable terms on the basis of race or disability, this would just be via the usual direct or indirect discrimination claims. In addition to individual claims, we have seen a proliferation of class action equal pay claims, including those issued against local Councils resulting in vast compensation awards that councils are struggling to meet.

Labour’s plan would see the equal pay regime extended to include claims based on race and disability. While the proposal is well-intended, equal pay claims are very complicated and often become drawn-out and expensive. The issue of identifying an appropriate ‘comparator’ in ethnicity, and particularly disability, equal pay cases is likely to be a complex and difficult task – even more in so class action claims. Unrepresented claimants may struggle to bring such claims successfully (unless backed by a Union), but if claims are brought, it’s likely that employers will become embroiled in lengthy, complex and costly litigation. Given the Employment Tribunal service is already overburdened, with a significant backlog of cases, extending the equal pay regime is likely to increase this backlog significantly. It’s also worth bearing in mind that as part of its commitment to protecting ethnic minority workers and disabled workers, Labour will also extend the current gender pay gap annual reporting obligations in the UK to include ethnicity and disability reporting.

If implemented, employers may need to put in place additional resources and processes to ensure they meet any additional annual reporting obligations, and also consider whether they might be exposed to additional equal pay claims.

Should you wish to discuss any of the issues raised in this article, please contact Robert Forsyth.