Graham Millar

The new government is already beginning to shift the dial on a number of key issues facing the economy. Among its election pledges, Labour promised to “make work pay” and new legislation to protect fundamental workers’ rights was introduced as part of King’s Speech at the State Opening of Parliament in July.

It should mean some of the biggest upgrades for employee protection in recent history – however, the proposed changes to the law could also have a knock-on impact for employers all over the country.

For Scotland’s SMEs, it will be important to keep an eye on how the new Employment Rights Bill progresses through Parliament in the coming months.

Zero-hours contracts, trade union activity, unfair dismissal, maternity leave, and sick pay are just some of the areas covered by the new legislation and, for the most part, the changes will be a very welcome boost for people employed across a range of sectors. But, at the same time, it is also going to be important to ensure that the new rules do not get in the way of businesses’ ability to provide goods and services and employ people in their local communities.

While we may not know all the details yet, there are factors business owners and HR teams can begin to consider. The first is an inevitable housekeeping exercise, with all employment contracts likely to need upgrading in addition to employee handbooks.

One of the most significant changes could be the proposed differences to the rules around unfair dismissal rights – meaning employees can take claims to a tribunal from day one, rather than the current requirement for two years’ continuous service. This may take several months to come into force, but now is an opportune time to review recruitment practices.

Regardless of probationary periods, employers will need to work harder to ensure new starts are the right fit for the business before contracts are exchanged. It may also improve the experience for job candidates, with in-depth interviews and assessments supporting their decision-making.

Financial forecasting may also be required. In sectors such as hospitality, retail and care, companies may see an unavoidable increase in staffing costs. On the one hand, a change to zero-hours contracts will mean employees can rely on a regular income. On the other, it may also impact a business’s bottom line.

The last thing that anyone wants from this legislation is to introduce a risk of restructuring or redundancy, so consultation will be an essential next step for the Labour government.

By speaking to businesses, employees and other trade organisations we can hope that the resulting law will strike the right balance for the people on both sides.

Employees are undoubtedly the lifeblood of businesses and, because of a few bad eggs, these changes to ensure employees receive better treatment are both necessary and overdue. Building a skilled and talented workforce, who are rewarded and fairly remunerated for the jobs they do is an essential part of keeping our economy thriving.

Graham Millar is an employment law partner at Gilson Gray.