The UK Labour Party’s Plan to Make Work Pay (MWP) program, which is intended to improve working conditions and ensure fair treatment for workers across the UK, could have significant implications for buyers of staffing services as well as the wider staffing industry.

Legislation would come under Labour’s commitment to introduce legislation in parliament within its first 100 days in office.

While the full effects of the program remain to be seen, contingent workforce programs must prepare for potential disruptions and increased compliance burdens. Revising strategies now and staying adaptable while focusing on contract management and workforce protections will help mitigate risks.

The key policies include Labour’s plan to create a single status of worker; provide “basic individual rights” from day one for all workers, including protection against unfair dismissal; end “fire and rehire” practices; repeal anti-strike legislation; and ban zero-hours contracts.

“Good businesses rightly do not want to be associated with practices like fire and re-hire,” Labour said in its plan.

“It is important that businesses can restructure to remain viable, to preserve their workforce and the company when there is genuinely no alternative, but this must follow a proper process based on dialogue and common understanding between employers and workers,” according to the MWP.

Labour also said it will simplify the process of union recognition and the law around statutory recognition thresholds.

Neil Carberry, chief executive of the Recruitment and Employment Confederation, said the repeal of the ballot threshold — which currently requires at least 50% of the electorate to vote in favor of a strike — may make industrial actions more frequent, affecting transportation and other critical sectors. This, in turn, would reduce staffing demand across the wider economy.

Meanwhile, research from BrightHR found the majority of business owners, 88%, have concerns about implementing Labour’s reforms.

With growing concern from businesses over employment protections, buyers of staffing services may need to rethink their strategies to manage risks effectively. They must also prepare for potential disruptions and increased compliance burdens.

“The commitments themselves in the Labour Manifesto are not necessarily problematic if they’re introduced in the right way in the right growth framework,” Carberry said. “But we fear that there are real challenges in the practical tools that’s being taken.”

Three Key Impacts of Labour’s Plan

Three things in the plan are of most concern to contingent workforce programs, according to Carberry.

Ban on zero-hours contracts. The Labour party has pledged to “end ‘one sided’ flexibility and ensure all jobs provide a baseline level of security and predictability, banning exploitative zero hours contracts and ensuring everyone has the right to have a contract that reflects the number of hours they regularly work, based on a twelve-week reference period.”

While the ban could offer workers more security, it poses a potential compliance risk and could increase operational costs for businesses reliant on flexible, short-term contracts, Carberry notes.

The question of unfair dismissal. In its plan, the Labour party states, “Our New Deal will include basic individual rights from day one for all workers, ending the current arbitrary system that leaves workers waiting up to two years to access basic rights of protection against unfair dismissal, parental leave and sick pay.”

Carberry said this would make it significantly more difficult to dismiss a short-tenure, underperforming employee.

According to a post by law firm Burges Salmon, co-authored by Kate Redshaw, head of practice development, “The proposals to award day one rights would not only remove the qualifying periods for employees but would also extend these basic employment rights to the wider category of ‘workers’ which would be a seismic change.”

However, the post noted that Labour has confirmed this change would not prevent the dismissal of employees for reasons of “capability, conduct or redundancy, or probationary periods” with “fair and transparent rules and processes.”

A unified employment status. Currently, the UK has three employment classifications: employee, self-employed or “workers.”

In MWP, Labour states it will move toward a single worker status and transition toward a “simpler two-part framework for employment status. We will consult in detail on a simpler framework that differentiates between workers and the genuinely self-employed.”

Carberry noted that the proposal to merge statuses is incredibly complex, may take years to finalize and could complicate employment structures. He added that one potential turn of this is that contingent workforce programs may move to use more agency workers.

Switching to a two-status model could unintentionally stifle flexibility and innovation, Burges Salmon’s Redshaw wrote. Sharing an employment status would likely mean sharing a tax status as well.

“This would not be popular with either workers or employers, as it would potentially leave employers, who use workers, with a very significant additional NICs (National Insurance Contribution) bills to pay,” Redshaw stated. “This in turn could lead to workers and employers looking to reorganize their ways of working and could result in employers and workers transitioning to the use of more self-employed contractors – which one might assume would not be Labour’s intention – not least as this could leave vulnerable workers in a weaker position.”

Overall, Carberry said it’s too early to tell yet whether these changes are a net positive or negative for the staffing market, adding that more broadly, “I think businesses are looking for greater clarity on the government investment and growth plan.”

Looking Ahead

There’s a strong sense in the buyer market that the prime minister’s recent speech on the fiscal position was overly negative and the government could do with talking up the potential of the British economy more, Carberry said. This could be seen in the upcoming autumn budget in October.

Buyers of staffing services may need to adjust their strategies to ensure they maintain their service levels while navigating the evolving legal landscape.