Labour leader seeks to reassure business leaders over employment rights shake up

Starmer sends out senior colleagues to urge engagement over intended reforms, the Financial Times reports

15 Mar 2024| News

Photo: UK Labour / Angela Rayner

The Financial Times reports that Labour leader Keir Starmer has moved to allay fears in the business community over the party’s New Deal for Working People, promising consultation with business leaders before implementation.

Many leading business figures had expressed concerns about commitments to implement far-ranging reforms to employment rights in the first 100 days of a new Labour government.

The Financial Times reports:

“The Labour leader has dispatched senior colleagues, including shadow chancellor Rachel Reeves and deputy leader Angela Rayner, to allay business fears that the party would rush headlong into delivering radical labour market reforms within 100 days of taking office.”


“Lobbyists at business groups said they planned to raise their concerns with Labour officials in the coming weeks.

Although senior Labour figures insisted they were not “watering down” their plans, they told the FT business would have a say in the implementation of policies in a series of post-election consultations.

Rayner, the shadow cabinet minister leading on the workers’ rights package, said on Thursday that business should not fear the reforms: “They should not be worried about it — they should engage with us.”

One Labour party official added: “We haven’t done a very good job of communicating what we want to do. There is a bit of a reassurance job going on.”

The Conservatives have latched on to Labour’s “New Deal for Working People” announced in 2021 as evidence that a Starmer government would damage business and hinder job creation, a view shared by some top executives.”

While it’s not clear that there has been a direct shift in policy, certainly the language has softened from senior Labour figures, especially around a single status for workers, zero hours contracts and fair pay agreements. The FT reports:

“One official said a plan to create a “single status” for workers so that people in the gig economy would benefit from some employment rights would be “complex and can’t be done overnight”. The party is committed to a detailed consultation with employers, unions and other experts on creating a framework to cover all employment types in the UK.

A “fair pay agreement” in the social care sector would also be the subject of a wide consultation. “There are some things you can’t do when you’re in opposition,” said another Labour official. Labour remains committed to basic workers’ rights from day one of employment, but shadow ministers are telling companies that workers will still need to meet probationary periods and staff can still be dismissed for “fair reasons”.

Deputy leader Angela Rayner told a Westminster press lunch on Thursday:

“I’ve explained that you can dismiss someone but you just can’t dismiss someone unfairly.”

The FT revealed the initial dilution of Labour’s plans last August.

The change in language extends to more recently announced policies, such as the ‘right to switch off’, where the possibility of a code of practice replacing legislation is now mooted:

“Meanwhile, Labour’s plan for a “right to switch off” outside of working hours might not be the subject of legislation, party officials said, but could be a “code of practice”, as adopted by Ireland in 2021, giving workers the right not to immediately respond to messages.

Party officials also clarified that Labour’s promised ban on zero-hour contracts would take the form of a new right to request a contract reflecting workers’ regular work pattern over a 12-week period.

This is likely to anger some unions, who have argued it would be easy for employers to circumvent — but would be in line with proposals put forward by the Trades Union Congress, and would be more acceptable to business.”

After recent warnings from business about the cumulative effect of the reforms, Rayner said:

“I’ve started to hopefully calm some of their fears. It’s about making sure we have minimum standards for employment.”

Business groups are preparing to push Labour to reconsider some of its plans, including day-one protection against unfair dismissal and changes that would increase costs for small businesses. The FT adds:

“While business lobby groups have expressed concerns about Labour’s workers’ rights proposals, recent polling of managers by the Chartered Management Institute showed 83 per cent said that improving worker’s rights could positively impact workplace productivity.

Kate Bell, assistant general secretary at the TUC, said she was “pretty confident” Labour would deliver on its promises on workers’ rights, adding: “It’s right they talk to business regularly.” Sharon Graham, general secretary of Unite, warned Labour against bowing to business concerns. “There have been too many concessions made to the ultimatums of the business lobby already — that would be a step too far.””