In October 2023, Labour set out its policy programme following its ‘National Policy Forum’ (NPF) process, with proposals on skills, immigration and employment law reform confirmed as official party policy ahead of the General Election.
Over the past year the CBI has undertaken considerable member engagement on Labour’s proposals. This process has identified eight areas of particular interest to business.
Labour has responded to the CBI’s calls for skills and immigration system reform
1. Labour has committed to turning the Apprenticeship Levy into a Skills and Growth Levy.
This will allow businesses to spend up to half of their Levy contributions on a broader range of training. Labour also intends to introduce a national body, Skills England, to oversee skills policy and to devolve adult education and skills budgets to Metro Mayors and combined authorities.
Businesses have welcomed this proposal, although many have suggested that Labour should go further by allowing businesses full flexibility in how they spend their Levy to address their skills needs.
2. Labour will reform the Migration Advisory Committee (MAC) and the Points Based System.
Labour wants to ensure "the economy has the skills it needs and that prolonged vacancies do not hold back growth”. This includes a promise of more coordination between the immigration system and other labour market policies. It wants the MAC to review shortages more often and take account of those specific to the nations and regions.
Labour’s proposals come with a warning that any movement in immigration will come alongside “new conditions to boost skills and more training, provide better pay and conditions and invest in new technology to reduce the physical demands of work”, with sectors reliant on immigration required to work with trade unions to draw up plans that can achieve those aims.
Labour’s focus on the need to reform the MAC echoes businesses’ view that the MAC’s review of the Shortage Occupation List currently isn’t working. The CBI’s Autumn Statement Submission calls for reform, including turning the MAC into a tripartite organisation with greater business representation.
Labour is proposing a major shake-up of the employment law framework.
3. Labour will remove qualifying periods for “basic rights” at work.
Some statutory employment rights are gained after working continuously for a given period of time, including protection from unfair dismissal (after two years). Labour will make these day-one rights.
Businesses have concerns that a day-one right to claim for unfair dismissal will make it difficult to apply a probationary period for new-hires. That in turn will limit their willingness to take on staff or to take risks through the hiring process that would drive innovation. A more intensive approach to onboarding new staff may be necessary in order for businesses to confidently protect themselves from a potential unfair dismissal claim, with disciplinary procedures more likely to be used as a first response to signs of underperformance.
4. Labour will introduce a single status of worker for all but the “genuinely self-employed”.
The UK currently has a three-tier labour market, where a different balance of rights and flexibilities are afforded to employees, workers and the self-employed. Labour plans to merge the employee and worker classifications.
Engagement with businesses has suggested that a single status would prejudice some workers’ ability to access the balance of rights and flexibilities they want, particularly those who typically seek flexible arrangements such as those with caring responsibilities. At the same time, businesses would have fewer options available to them to structure their workforces flexibly to meet demands on output.
CBI member evidence has suggested that although the current three-tier framework for status is occasionally unclear for both staff and employers, further clarity is developing via the growing body of case law on status, particularly regarding its application to the gig economy.
5. Labour will ban zero-hour-contracts.
Under Labour’s plans, anyone working regular hours for 12 weeks or more will gain a right to have a regular contract reflective of the hours they have worked.
Although some businesses are sympathetic to the reasoning underpinning this policy, many are worried about the detail in Labour’s proposal. There are concerns that a 12-week period will severally impact businesses’ ability to respond to seasonal variable demand. Some have said that it may mean they are less willing to offer overtime – one of the most wanted work benefits by staff – due to the potential liability they will incur as a result.
6. Labour will introduce a suite of expanded powers for trade unions.
Labour is proposing repeal of the Trade Union Act 2016; the introduction of sectoral collective bargaining - starting in social care - through ‘Fair Pay Agreements’ (FPAs); simplifying the process for statutory recognition of trade unions; and enhanced rights for unions to enter workplaces to recruit members and organise.
CBI members have expressed scepticism that a more insitutionalised role for trade unions will result in either increased workforce productivity or better employee engagement. Businesses have also noted that some of Labour proposals would weaken trade unions’ accountability to their members. For instance, repeal of the Trade Union Act would remove the requirements that, a) 50% of staff vote in strike ballots, and b) 40% vote in favour in ‘important public services’, for strikes to be legal. Removing these requirements would permit strikes where the majority of staff have not been effectively engaged in the process endorsing them.
7. Labour will extend the Employment Tribunal (ET) application window from three- to six months.
Businesses have raised concerns that this proposal will make the already substantial backlog at the ET worse and will require that they hold more reserves back to cover a potential claim that could otherwise have been devoted to growth. This would be true whether or not there is a chance the business would lose, as much of the cost of the ET system is borne in going and not necessarily in the outcome of the case. There is also already a process for bringing out of time claims where exceptional circumstances justify it.
8. Labour will introduce disability pay reporting.
Building an inclusive economy and a healthier nation makes moral and business sense and its why business has supported the introduction of mandatory disability workforce reporting. Rather than reporting data on pay, businesses believe that collecting and reporting the proportion of staff who identify as disabled should be the first step towards greater inclusivity of employees with disabilities in the workplace.
To engage Labour policymakers on their proposals, the CBI needs more member insight.
CBI member feedback has already proved vitally important in engagement with Labour. It has been particularly helpful where it has illustrated how businesses will respond to Labour’s policy reforms in practice. The Labour Party is keen to understand how businesses have reacted to similar reform elsewhere, as well as how UK business practice and culture may lead to different outcomes here.
Please email feedback to Laurence at: [email protected].
To better understand the direction policymakers and parties are taking on key economic issues ahead of the General Election so that your businesses can prepare, join us at our General Election Countdown conference in Westminster on 20 November.
