As Labour hangs its hat on new employment legislation to show it means business in its first 100 days in government, it could be setting itself up for a run-in with the retail industry in future
After the honeymoon, the work now begins for the new Labour government. A week on from the King’s speech setting out the legislative agenda, Sir Keir Starmer faced his first PMQs today in the top job.
While the retail industry has welcomed promised reforms to the apprenticeship levy and action on enshrining a standalone offence for assaulting shop workers, potential battle lines could be drawn over one of Labour’s flagship policies.
As part of its Employment Rights Bill, Starmer and his party have promised to deliver a “New Deal for Working People” in their first 100 days in office.
What could this mean for retailers?
From zero hours to workplace flexibility
Labour has called the new bill the “biggest upgrade to workers’ rights in a generation”. It will ban “exploitative” zero-hour contracts; end fire-and-rehire or fire-and-replace; provide day-one parental leave, sick pay and unfair dismissal protection from day one in employment; and put flexible working practices into law.
The legislation will also set up the Fair Work Agency – a single enforcement body for workplace rights.
Labour has promised employees will have the right to disconnect and not be contacted by their employers outside working hours but that won’t be made law.
“None of those things are bad on paper,” says one retail policy insider. “It’s all good in principle. But the devil will be in the detail and at the moment there isn’t much of that.”
Another source agrees: “Take banning zero-hour contracts. It’s a good example of really clever phrasing. That means whatever you want it to mean. It’s worded in such a way as it keeps the unions happy but they’re also telling businesses that they’re not banning zero-hour contracts, per se, more they’re banning exploitative zero-hour contracts.
“The onus will be put more on employees. If you as the employee want a normal contract, then the business has to offer it. But if you want a zero-hour contract because you’re looking for flexibility, you should be able to have that too.”
While flexibility for employees sounds good, the source says squaring that circle will likely be burdensome for retailers and could be politically fraught for the government.
“The day-one stuff is potentially problematic for retailers, too,” says the policy insider. “How much is that going to cost? What if you hire somebody and they’re rubbish? Can you get rid of them? Or are you going to be stuck with them for six months or 12 months? There need to be safeguards in place for retailers and businesses more generally.”
A fair earn?
Another area of contention in the proposed New Deal is around staff pay.
The King’s speech promised workers a “genuine” living wage that accounts for the cost-of-living crisis and the removal of “discriminatory age bands” that mean younger employees can be paid less.
The proposals have raised some hackles in some retail circles. Many retailers feel that during the last few years of upheaval, they have taken the lead as an industry in supporting staff and already offer competitive and fair salaries.
“We don’t need the government to tell us how much we should be paying our staff,” one retailer thunders by text. “We’ve looked after them through Covid, through the cost-of-living crisis, and we’ll continue looking after them whatever comes next.”
“You can’t be driving up wages if the economy is in the doldrums,” one source warns. “That drives inflation and likely costs jobs and drives up unemployment.
“If Labour can get the economy booming, then you can start pushing wages. I just hope that they’re alive to the broader economic indicators.”
Elusive rates reform
Retailers are also sharpening their knives over Labour’s proposals on business rates. Or, in this case, the lack of any concrete plans.
In its election manifesto, Labour promised not just to reform the hated business rates system but to replace it. It was music to the ears of an industry that has long said the current system is not fit for purpose.
Despite the big promises, now that it’s in power, Labour may already be regretting its rhetoric on the topic, sources say.
“Scrapping business rates – it was like promising they would scrap income tax and come up with something entirely new,” says the policy source. “Where do you get that money from? The promise is much easier to make than it is to deliver.”
The previous government was revenue-neutral when it came to business rates, effectively telling the retail sector that any reform to the current system would require a solution that generated the same amount of tax.
While Labour hasn’t yet shown itself to be quite so intransigent, retailers are disappointed about the lack of any clear progress quickly.
“I just hope they don’t kick it into the long grass,” says one retailer. “That’s all the sector really wants. We can’t afford for this to just endlessly drag on again”.
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