What’s next for the government’s ‘Make Work Pay’ proposals

What next for the government’s ‘Make Work Pay’ proposals

Earlier this year, the Labour Party published their proposals for changes to UK employment law dubbed ‘Labour’s Plan to Make Work Pay – Delivering a New Deal for Working People’.  Their promise on election was to introduce an employment rights bill within their first 100 days of government.  This ambition was reinforced in the King’s Speech, and the date is fast approaching.  

The ‘Make Work Pay’ document is light on detail and much will rest on the contents of the legislation when it is introduced to Parliament.  There are at least 30 proposals for ‘upgrading’ employment rights in the UK ranging from changes to Day One Rights through to improvements to Parental Leave.  Whilst almost all of these proposals will have some knock on effect on health and social care employers, there are three key themes that we believe will have the biggest impact on the sector. 

These three topics include:

Beyond these three headline changes, there are multiple other proposals covering enforcement, family friendly policies, equality at work, trade union representation and rights at work. 

For leaders across health and social care, it is hard to make concrete plans in the absence of firm details.  At Florence, we are working with multiple expert voices across the industry to help bring clarity to the issues as they emerge. If you would like to be included in future communications on the topic, please leave your email address here.

Banning ‘exploitative’ zero hour contracts

Zero hours contracts are common within health and social care.  The most recent data from the ONS shows that 14.7% of workers within health and social care are employed via zero hours contracts.  This has been decreasing over the last fours years from a peak of 21% in 2020.  

Research has demonstrated that zero hours contracts can lead to reduced security of employment and increased staff turnover. However, when operated correctly, there are some clear benefits for both employees and employers, granting two way flexibility that helps employees manage their personal commitments outside of work.

Our current understanding of the Government’s approach is not that zero hours contracts will be banned in their entirety, but that ‘exploitative’ zero hours contract will be banned (which could include contracts that require workers to accept work when it is offered or to be available for work) and that workers will have the right after 12 weeks of regular hours to request a permanent contract based on the average hours worked in the preceding 12 week period. 

It is also expected that zero hours workers would have to be given reasonable notice of any change in shifts or working time, with compensation for any shifts cancelled or curtailed. 

What would the impact be on health and social care providers?

A large proportion of the healthcare workforce operates under zero hours contracts most notably in domiciliary care, on staff banks (both in the NHS and social care) and amongst agency staff.  These proposals could have potentially seismic implications on workforce provision particularly affecting these three groups. Workforce budgets are already considerably constrained in both the public and private sector – without an uplift in central or local government funding, service provision will suffer.

Domiciliary care providers

Data from the Health Foundation shows that more than 50% of the domiciliary care workforce currently operate under a zero hours contract.  These working arrangements are commonplace in the sector as it allows providers to flex their workforce up and down to meet client demand.  

Today, domiciliary care providers are already struggling to operate sustainably in the face of real terms constriction in the fees provided by Local Authorities.  This proposed change to employment legislation could make many providers non-viable – it would be small, local care agencies that would be the first to buckle.  

NHS and social care staff banks

Roughly 20 million shifts were completed by NHS staff banks over the last financial year with the vast majority of these shifts completed by staff working under a zero hours contract.  

Building an efficient staff bank is a critical component of a resilient workforce strategy in health and social care.  There are many recent success stories of providers reducing their agency spend through the use of an effective staff bank.  

The proposed right to request regular hours after a 12 week qualifying period will have two main impacts on staff bank managers:

These two impacts could make staff banks an unviable model for workforce management with the largest impact felt by smaller providers who operate local staff banks. 

Agency staff

Following the recent changes to IR35 legislation, almost all agency workers now operate under a zero hours contract.  If agencies were forced to remove this employment model and offer guaranteed hours to their workforce after a qualifying period, it would substantially increase their administrative load and increase the end cost to the client.  It is likely that only larger staffing agencies would be able to handle this transition with small or medium sized providers no longer being economically viable.  

What should health and care providers do?

There are some key actions that health and social care providers can take now to ensure that they are ready for changes when they do come.  They include:

Increasing employees’ ‘Day One Rights’

One of the most significant proposals in the package of reforms is the extension of protections for workers by removing the two year qualification period for basic rights.  It is expected that this will include rights to parental leave, sick pay and unfair dismissal protection.  Currently, an employee must usually have been in position for two years before they can bring an unfair dismissal claim against an employer, although there are a number of exceptions for example where the dismissal is discriminatory.   

The Government has indicated that employers will be able to operate probationary periods to assess new hires; however, few specific details have been provided on how this would work in practice. It may be that a more formal process will be required for probationary periods.  

It is striking that these protections are stated to be available from day one “for all workers”. Currently only employees, not casual workers, are eligible to claim unfair dismissal, so this would be a significant extension of the rights of casual workers.   

These changes will have a sizeable impact on employers who will need to ensure they beef up their probationary review processes and ensure that they have a fair reason and follow a fair process for any dismissals after the probationary period. They will also need to be mindful of the increased risk of constructive unfair claims (where an employee resigns in response to a fundamental breach of contract), in the first two years of employment. 

A new deal for social care workers

A key pillar of Labour’s Make Work Pay proposals is to bring forward a ‘New Deal for Social Care Workers’.  The recruitment and retention challenges facing the social care sector are well understood.  Pay and conditions sit at the core of these recruitment challenges.  Care workers across the UK earn an average of £4.88 less per hour than the median wage.  Pay progression is severely lacking – care workers with 5 years’ experience will receive 8p per hour more than new starters.  

How could the Government solve this?

The government plans to consult on the design of a new Fair Pay Agreement for social care workers with the aim to empower workers and trade unions to negotiate fair pay and conditions.   They recognise that union representation in social care remains patchy with low levels of representation of care workers versus other comparable sectors like the NHS.  

The proposal talks about increasing collective bargaining efforts in social care and to increase the ability of Unions to access places of work across social care to encourage greater union representation of the workforce.  

There are a few options on the table for directly improving pay within social care and are well summarised by research done by the Health Foundation.  Potential options include:

One specific goal for the government is to improve compliance for the payment of travel time for home care workers.  Their conclusion is that in the vast majority of cases, care workers travelling between multiple sites should be paid for their travel time.  This is often not the case today, with employers paying an enhanced rate (above the National Minimum Wage) for contact time with clients to cover the time spent travelling.  This policy will be put into action by the reinvigorated efforts of the Single Enforcement Body. 

The response from industry is very clear.  In general, social care employers recognise the need to improve pay and benefits for the workforce but are constrained by restricted funding from Local Authorities.  In the last 10 years, there has been a 24% real terms increase in the sector’s total wage bill driven largely by increases to the National Living Wage.  Over the same period, government spending on social care only increased by 17%.

Any proposals to improve the pay and benefits of the social care workforce would need to be accompanied by upgraded funding settlements for social care employers.  

In summary

The Labour Party’s proposals for upgrading employment rights across the UK are well intentioned.  The Health and Social Care workforce suffers from longstanding challenges around recruitment, retention and workforce engagement.  Much of this is driven by substandard pay and conditions for frontline staff due to insufficient government funding.  The vast majority of providers want to build a sustainable workforce and create positive working conditions for their team.  

The proposed employment legislation changes are significant and will create a lot of change within the sector.  Employers will have to respond quickly to legislative changes and may have to make wholesale adaptations to how they manage their workforce.  An increased role for trade unions will also create new ways of working for many employers. Our ask from central government is to listen to employers’ concerns, ensure that legislation is well considered and recognise that any consequent increases in employment cost are reflected with appropriate improvements to funding settlements.  

We are partnering with the specialist HR and employment lawyers in RWK Goodman’s Health and Social Care team to bring you practical updates on how to prepare for an implement  legal changes as they are introduced.

Authored in parntership with James Sage

James is an HR and employment law specialist with niche expertise in the health and social care sector. He advises clients on strategic decisions relating to recruitment, retention and reorganisation as well as complex employment law cases involving whistleblowing, discrimination, TUPE, and the employment aspects of business sales, acquisitions and mergers.

He is a frequent commentator in the press with thought leading articles on the challenges that HR professionals are facing. He is a regular guest speaker at regional and national conferences and runs popular HR and employment law training and seminars. He also founded the Social Care HR Leaders Network, a peer network for HR leaders in care.

He is known for his pragmatic and straightforward approach together with a wider understanding of the business context, Clients refer to James as “calm and relaxed in his approach”, “with extensive knowledge” and “solution-focused”. For more details, please view James’s profile on RWK Goodman’s website.