Labour’s fudge on workers’ rights pledge

Almost all of the people reading this newspaper will work, will have worked, or will aspire to work. As such they will expect to be paid well and be treated fairly by the undertaking – public, private, or charitable – which engages them. But many will be disappointed and soon discover that while the principle that ‘labour is not a commodity’ is grounded in international law, it fails increasingly to be recognised by national practice.

This is because British employment law is now structured in such a way as to permit abuse and exploitation, whether it be bogus or false self employment; zero hours’ contracts (where individuals are at the beck and call of the employer, with no guaranteed working hours, and consequently no guaranteed weekly income); or fire and rehire (where individuals are bullied into accepting pay cuts by the threat of dismissal).

The controversy currently besieging Labour is concerned with the first of these practices but with implications for the others. British law is unnecessarily complex, with effectively three categories of employment: employees, workers, and the self-employed. Only those categorised as employees are eligible for the full suite of employment rights, including the statutory minimum wage, paid holidays, unfair dismissal and redundancy protection.

Those who are categorised as workers but not employees are entitled to some (statutory minimum wage and paid holidays) but not other (unfair dismissal and redundancy) employment rights. Individuals who are categorised as self-employed are entitled to none of the above, though the employer may retain some responsibility for their occupational health and safety.

Such arrangements are obviously a gift for employers who thus have the opportunity to adapt their employment contracts to minimise liabilities to the people they engage. This can be done by hiring people as workers (but not employees), or if possible as self employed contractors, as in some parts of the gig economy. The effect is not only to deny access to basic employment protection, but also in some cases to core trade union rights.

These are just some of the issues the Labour Party grappled with in its 14-page policy paper A New Deal for Working People, which was launched with some fanfare at its Annual Conference in 2021. On the question of employment status specifically, the document was clear: the entire range of employment protection rights would apply equally to everyone ‘by creating a single status of worker for all but the genuinely self-employed’.

For the avoidance of doubt, Labour was proposing that ‘all workers, regardless of sector, wage, or contract type’, would be afforded the same basic rights and protections. This would include ‘rights to sick pay, holiday pay, parental leave, protection against unfair dismissal and others’. The purpose was to ensure that ‘unscrupulous employers’ will ‘no longer be able to treat their staff like regular employees whilst falsely claiming they are not’.

It is this commitment that Labour is now reported as being ready to abandon, proposing instead to consult on a ‘simpler framework’. This is widely understood to mean that the existing three categories of employment status are to be retained and that the law is to be revised to make it easier for people to work out into which category they fall. If so, this will not address the problem of abuse and exploitation.

What Labour is now proposing is a fudge not a solution. The Party must surely be aware that its ‘simpler framework’ risks permitting employers continuing to avoid existing employment protection liabilities. And aware too that its ‘simpler framework’ risks creating a huge loophole to avoid new safeguards on zero hours’ contracts and fire and rehire which the Party itself proposes to introduce. Or at least currently proposes to introduce.

Labour would be better advised to have a look at an important private member’s bill first introduced at Westminster in 2017 by the Chris Stephens MP, the SNP’s impressive spokesperson on employment rights. Similar to a Bill introduced subsequently in the Lords by Labour peer, Lord Hendy KC, the SNP bill provides a lesson for Labour on how to give statutory effect to the single status proposal which it too once embraced.

The Labour Party’s apparent retreat on who gets covered by employment law will no doubt strengthen the case for the devolution of employment rights, as the only way to ensure the better protection of Scottish workers. That said, devolved powers would not be enough were Scottish Labour ever to be returned to Holyrood on the fragile platform of worker’s rights which it is being reported the British Labour Party now stands.

This article was first published in The Scotsman