Labour's New Deal for Working People-plans for workers and trade unions

Labour has made a series of policy commitments in its New Deal for Working People and committed to introduce an Employment Rights Bill within its first 100 days. Employment law is one of the biggest areas of divergence between Labour and the Conservatives. It is unlikely Labour will implement all these measures in the form or at the speed it has pledged. But rebalancing worker and trade union rights is an indispensable part of Labour’s programme. Business should identify which proposals have commercial implications and how they can be mitigated. 

Pro-business and pro-worker  

Labour’s charm offensive with business has been well-documented. But Keir Starmer and his Shadow Cabinet have been clear that a future Labour government will be both pro-business and pro-worker. Underpinning the second limb of this ambition is Labour’s New Deal for Working People. It includes a range of measures to strengthen worker and trade union rights, some of which are controversial with business.  

Deputy Leader Angela Rayner reaffirmed the package at the Trades Union Congress last autumn, with a ‘cast iron commitment’ that Labour would introduce an Employment Rights Bill within its first 100 days. Delivering on this commitment will be a matter of personal credibility for Rayner and important for Labour’s relations with the trade unions.  

Priorities for the Employment Rights Bill

Labour will need to follow through on its commitments with a Bill in the first King’s Speech. Beyond this, Labour has more flexibility. Decisions about which measures are prioritised for the Bill will reflect both deliverability and political pressure. Priority reforms, which are both politically salient and achievable through early legislation, are likely to include: 

• Establishing a Single Enforcement Body (SEB), with powers to inspect workplaces and bring prosecutions and civil proceedings relating to minimum wage violations, worker exploitation, and discriminatory practices. The current government has already consulted on a SEB, so it could be delivered by end-2025, although Labour is likely to broaden its scope and strengthen its powers. 
• Restricting zero-hours contracts and limiting their use is more likely than an outright ban. The TUC has proposed introducing a right to a normal contract after 12 weeks of regular work, a minimum period of advance notice on shifts, and the right to compensation if shifts are cancelled without sufficient notice. 
• Curbing ‘fire and rehire’ is also unlikely to involve an outright ban. Labour is more likely to increase consultation and information-sharing obligations, stop workers being dismissed for failing to agree a worse contract, and limit requirements for balloting on industrial action in response to fire and rehire threats. 
• Providing worker’s rights from day one. The right to request flexible working from day one was implemented through last year’s Employment Relations Act. Day one rights for sick pay, parental leave and unfair dismissal, as Labour has proposed, would be straightforward legislative additions – although Labour will not preclude probationary periods.  
• Updating trade union legislation. It would be straightforward for Labour to repeal the Strikes Act 2023 and the Trade Union Act 2016. Labour may also add other measures – such as enabling electronic ballots and requiring consultation on the introduction of surveillance technologies.

Longer-term reform  

Other proposals in Labour’s New Deal for Working People will require consultation before legislation. Alongside prioritising quick wins in a narrower Bill, Labour will likely test other measures through consultation. Some of these could find their way into the Employment Rights Bill as it progresses through Parliament. Others may need to find alternative legislative vehicles. Proposals likely to need consideration before legislation include:  

• Banning unpaid internships except in relation to training or education: Labour will need to consult on exceptions and ensure the ban does not unintentionally prevent volunteering or work experience.  
• Creating a ‘right to disconnect’ outside of working hours which has not been consulted on and Labour will want to consider the experience in other countries. 
• Simplifying trade union recognition thresholds, which the New Deal makes clear that further consultation would be required. 

Rowing back?  

While Labour remains committed to strengthening worker and union rights, there are indications that elements of the original package are being softened, in part because of business feedback. These include:   

• Moving to a single worker status, which was conspicuous by its absence from Rayner’s TUC speech. While Labour wants to tackle bogus self-employment, its National Policy Forum document, approved at its Party Conference, only committed to consulting on how a simpler framework could differentiate between workers and the genuinely self-employed.    
• Rolling out Fair Pay Agreements, which Labour now accepts will not be appropriate for all sectors. It plans to start with an agreement in the adult social care sector, before reviewing whether a similar model could be applied elsewhere.  
• “Strengthening Statutory Sick Pay” now looks more likely than Labour’s previous commitment to “raise” it. Labour has also pulled back from suggesting it should be extended to the self-employed. 
• A review of the parental leave system is no longer expected to consider plans to incentivise the sharing of leave due to the likely costs. 

Conclusion and action  

A rebalancing of employment and trade union rights is inevitable under Labour, but the precise shape of those reforms is not. Labour remains determined to present a pro-business platform and strike a conciliatory tone with business. 

Labour has already adapted some proposals, following business feedback. There will be further opportunities for engagement. Some businesses will be more commercially exposed than others, but all will be affected. Given the pace with which Labour wants to act on this agenda, businesses should now prioritise constructive engagement, demonstrating they have understood Labour’s motivations and can offer credible, well-evidenced improvements or alternatives where they have concerns about current proposals. 

Tom Doherty is a Director based in London. He previously served as the Business and Economy advisor in 10 Downing Street, leading on regulatory reform.  James Kilmartin is a Partner also based in London. He is a former adviser to Labour’s Shadow Cabinet and has worked on several election campaigns having also participated in previous pre-election access talks between Labour and the civil service. Siôn Simon is a Specialist Partner and was a Labour MEP, MP, Metro Mayor candidate and a Minister in the last Labour government. You can contact the authors to find out more about our analysis and how Labour’s employment and trade union reforms may affect you.