Yesterday’s Financial Times reports that the Labour Party is preparing a major rollback on workers’ rights. This is significant news – after years of abandoned pledges under Keir Starmer’s leadership, employment rights was the last bastion of transformative policy in the party programme. Now it appears that too might be sacrificed.
I was a political adviser to Andy McDonald MP when he held the Employment Rights and Protections brief in the early days of Keir Starmer’s shadow cabinet. During that time, working together with Labour’s affiliate trade unions, we drafted A New Deal for Working People – a policy paper setting out in detail how the party would strengthen workers’ rights.
The New Deal document was endorsed by party conference and Keir Starmer repeatedly stated his determination to bring it into law within the first 100 days of a Labour government. Although Andy McDonald resigned from his front-bench role in 2021 following a row over the minimum wage and statutory sick pay – and despite his name later being scrubbed from the document – its commitments remained largely intact. At least until now.
At the National Policy Forum (NPF) earlier this month, Labour and its affiliated trade unions met to thrash out the policies which would be included in the party’s election manifesto. For the leadership, this presented an opportunity to water down commitments that had been set in stone since A New Deal for Working People was agreed in 2021.
Following the Forum, a number of key pro-worker policies were weakened: the pledge to ‘create a single status of “worker” for all but the genuinely self-employed’ was replaced with a vague undertaking to hold a ‘consultation’ on ‘a simpler framework’, which in turn undermined the pledge to ‘give all workers day one rights on the job… by ending the qualifying periods for basic rights’.
While single status for workers might seem like a niche policy, it’s hard to emphasise just how transformative it would be. In fact, I would say that this commitment was loadbearing for the Labour Party’s entire workers’ rights programme. To understand the importance of this U-turn on single status, it’s worth briefly explaining the system as it operates today.
Broken Status Quo
At present, there are three separate employment statuses entitling workers to differing levels of rights and protections.
First, there are ‘employees’, who have the most rights. They are entitled to (amongst other things): parental, maternity, paternity and adoption leave and pay; parental bereavement leave and pay; redundancy pay and the right to claim unfair dismissal after two years’ continuous employment; and the right to request flexible working after twenty-six weeks. Employees have a traditional working relationship, with a contract, regular hours or shifts, and a guaranteed wage.
Second, there are ‘limb (b) workers.’ People in this category are entitled to basic rights, such as rest breaks, holiday pay and the National Minimum Wage, as well as a few more limited versions of the rights employees enjoy. They exist in the space of the modern economy that’s often described as ‘casualised,’ which is common across the retail and service sectors and includes zero-hours contract workers, in which there is no guarantee of regular hours or pay.
Third, there are the self-employed, who have no workers’ rights. Pro-business lobbyists will argue that this makes sense – after all, isn’t a lack of guarantees one of the trade-offs for the freedom of self-employment? They will point to tradies in the construction sector who can earn good money working for themselves by selling services to different companies.
However, in recent decades, this status has been abused by unscrupulous gig economy employers such as Amazon and Uber – and even those in the construction sector itself – through a process known as bogus self-employment. Under these conditions, people who should be classified as employees or limb (b) workers are instead classed as self-employed in order to strip them of their entitlements to statutory sick pay (SSP), the National Minimum Wage, holiday pay and other rights. These are the most exploited, insecure and poorly-paid workers in the country – and it turns entire sectors of the economy into a Wild West for workers’ rights.
Dignity at Work
Labour had pledged to replace this tiered system with a single legal status that would encompass employees, limb (b) workers and those in bogus self-employment (those who are genuinely self-employed would be excluded). This would provide all workers with the full rights enjoyed by employees and scrap the qualifying periods that currently exist – and would be the most significant strengthening of workplace rights in more than a generation.
However, in ditching the commitment to a single status, Labour has undermined the principle of universality that underpins its entire programme for employment rights. This means a tiered system of rights and entitlements will remain in place and makes the pledge to give all workers the same rights from day one impossible.
When the New Deal was originally developed, the Labour leader, his cabinet and the party’s affiliated trade unions shared a vision. They sought to build a dignified workplace in which workers – from the moment they took up employment – would have the ability to take time away after the birth of a child or a bereavement, to enjoy a decent work-life balance and not to be arbitrarily dismissed.
The document was a recognition of the fact that the tiered system is one of the key drivers of low pay and insecurity, responsible for 3.7 million being trapped in ‘insecure work’ who do not know when their next shift will be or if they will be able to pay their bills. Ending these practices was also seen as a necessary step in addressing structural racism in Britain, with the number of ethnic minority workers in insecure jobs increasing by a shocking 132 percent since 2011.
The New Deal was designed to end the most exploitative practices in the gig economy – where workers are often paid below the minimum wage, made to work in dangerous conditions and denied rest breaks. One such example is Amazon delivery drivers, who have been forced to drive through exhaustion and urinate in bottles or face having their pay docked for missing targets – all while being technically self-employed.
If the rise in gig economy abuses during the recent pandemic fostered a determination to fight for justice in the workplace, Labour’s increasing flirtation with big business and its lobbyists seems to have weakened that resolve.
The current system makes workers insecure by design. Workers who have yet to qualify for, or are not entitled to, redundancy pay or protection against unfair dismissal are in a state of precarity – and therefore much less likely to organise and demand improved conditions.
This means that the lack of rights and protections is not just a problem for those in insecure forms of work. It is a problem for workers and the economy as a whole. These practices put a downward pressure on wages and terms across the board, making us all poorer and facilitating a race to the bottom that is partly responsible for Britain’s poor growth and productivity.
The expansion of the gig economy in particular demonstrates how exploitative employment practices threaten once-secure jobs. The assault by Royal Mail against the terms and conditions of posties, for example, is a response to gig economy parcel delivery companies undercutting the postal service.
Labour Party officials behind the jettisoning of New Deal policies reportedly want to defuse Tory attacks on the party’s ‘anti-business’ policies. But this is a paper-thin excuse: the public overwhelmingly supports improving workplace rights – including two-thirds of Conservative voters. This is a mandate for change that the party looks set to spurn.
Party insiders describe a ‘smoked salmon and scrambled egg offensive’ to woo big business ahead of the next election. This is compounded by the Labour front bench reportedly meeting with lobbyists for Amazon, one of the world’s most anti-worker employers, in recent weeks. It all paints a picture of a party that is intensely relaxed about injustice in the workplace.
Labour has consistently enjoyed twenty-point-plus leads in the opinion polls. The Conservative Party is utterly exhausted and despised after thirteen years of austerity, a botched pandemic response, repeated scandals, and the worst cost-of-living crisis in living memory.
In this context, ditching workers’ rights policies would be, at best, a staggering act of political cowardice. At worst, it would demonstrate that Labour has sided with exploitative employers and will do little to address the poverty, insecurity and inequality that blight the nation. We await confirmation that this is the trajectory – but the latest evidence is bleak indeed.