The regulatory horizon. What does a Labour government have planned for compliance?

Consistent polls are showing that the Labour Party will be in for a 1997-style landslide come the next British general election, expected sometime in 2024. In the run up to the election, the Labour Party have been setting out their agenda for government. In this blog, we examine the likely regulatory priorities for government, and what this could mean for compliance.

Whistleblowing reform

Labour have pledged to give financial rewards to whistleblowers who expose stolen assets, sanctions breaches and recover misappropriated funds. The policy widely used in the US can see whistleblowers rewarded with 10-30% of fines if they provide evidence that leads to an enforcement action. Nearly 70% of the $72bn recovered by the US Department of Justice came from whistleblower tip offs.

Clamping down on corruption and fraud

Shadow chancellor Rachel Reeves said she will “wage a war against fraud, waste and inefficiency.” A new Covid Corruption Commissioner will be appointed, alongside investigators, to track down the missing £7.2bn handed out during the pandemic. The law will be changed to make it easier to convict corporate fraudsters. 

Failure to prevent sexual harassment

Despite being pledged for years, Labour have committed to amending the Equality Act to introduce a legal duty for employers to take all reasonable steps to prevent sexual harassment, likely backed up by a failure to prevent offence if appropriate policies, training and reporting mechanisms are not in place. Deputy Leader Angela Raynor also committed to making misogyny a hate crime. 

Dual discrimination rights

Labour have committed to expanding the Equality Act 2010 to enact protections against dual discrimination. This is where a person faces discrimination because of a combination of protected characteristics, such as a Muslim woman abused for wearing a headscarf, a person who is gay and disabled, or a woman experiencing discrimination during menopause. The new rules would allow a person to bring one discrimination claim for multiple instances of discrimination, and potentially free up more tribunal resources.

Menopause leave

Angela Rayner also committed Labour to introducing a statutory right for menopause leave for women who are suffering from symptoms of menopause. Some firms have already started offering such a thing, with 60% of women in the UK having to take time off work due to symptoms, and up to 900,000 women having left work because of menopause. Menopause leave is a simple, cost-neutral change employers can implement today. Trial our menopause at work training course here.

Labour will require large employers with more than 250 employees to produce menopause action plans. They will publish guidance for employers on uniform and workplace temperature issues, as well as flexible working and menopause leave and absence.

Expanded equal pay claims

Labour have pledged to expand the rights that women have to make equal pay claims to Black, Asian and Minority Ethnic workers, alongside disabled workers. This will mean equal pay claims on the basis of ethnicity and disability will be treated the same as those made by women. Equal pay claims have seen Birmingham City Council go bankrupt trying to pay back compensation, with Trade Unions taking cases against a number of public and private sector employers, including Asda and Glasgow City Council.

Tax evasion and money laundering

Although not announced at Conference, senior Labour MP Dame Margaret Hodge and chair of the All-Party Parliamentary Group for Anti-Corruption has demanded more action against legal tax avoidance and loopholes. She wants criminal prosecutions of aggressive tax avoidance, and is likely to push for more corporate criminal sanctions against tax avoiders.

Public sector equality and diversity tracking requirements

Labour would require public service employers, including the NHS, schools, councils and the police, to collect equality and diversity data and report on staffing, pay, as well as different outcomes by ethnicity. Given the commitment to enabling equal pay claims based on ethnicity, it will be important for public sector employers to understand their pay gaps based on ethnicity and disability, as well as gender. Labour are hoping the reforms result in an extra £26bn for ethnic minority workers.

Employment Rights Bill

This is pledged for the first 100 days of a Labour government, which will introduce rights for day one for all workers, implement work-life balance rules, increase and strengthen statutory sick pay and remove the waiting limit and lower earnings threshold, move towards a single status for workers and employees, and crack down on the gig economy, Self-employed people and contractors will have new rights to a written contract, late payments and be covered by health and safety protections. Zero hours contracts will be banned, more notice for changes to shifts or rotas, more action on the gender, ethnicity and disability pay gaps, including a requirement for larger firms to develop, publish and implement action plans. There will be more rights to collective bargaining and redundancy rights, and the time limit for an employment claim will be increased from three to six months. Employment tribunals will be reformed to provide quicker and more effective resolutions.

More health and safety protections workers

Labour have discussed increased statutory protections for workers at high risk of breathing in polluted air, and plan to pass a Clean Air Act and write standards for safer air developed by the WHO. Labour have also pledged to bring in new rights for workers, protections and access to training, alongside going after wage theft. Employees will have legal health and safety protections against extreme temperatures, and there will be a single enforcement body for workers.

Data protection

Labour have said it is a priority to maintain Britain’s data adequacy status to ensure the UK’s GDPR is deemed equivalent to the EU. This likely means little to no change in GDPR rules.

AI protections

The party plans to legislate a framework to ensure AI can be used to deliver better public services and improve quality of life, but also to ensure public trust and that AI will be used to uphold the privacy and security rights of people, especially in the workplace. Labour has pledged to build the world’s most competent regulatory environment for AI and automation, while ensuring that the regulatory environment appropriately and proportionally mitigates the potential harms that AI could cause by taking a principles-based approach to tech and AI.

Tax and business rates

Labour have committed to implementing the OECD global minimum rate of corporate taxation and back an international agreement on the fairer taxation of large multinationals. They also plan to Scrap and replace the current system of business rates in England and Wales with a fully costed and funded system of business property taxation, end private equity taxes, and end non-domiciled tax loophole.

Mergers and acquisitions

Labour wants to review the regulatory structure around foreign investment and acquisition, and strengthen the public interest test on takeovers.

Procurement and late payments

Labour have committed to legislating to tighten the rules on late payments, particularly for small business and ensuring that firms have equal access to public procurement. This will likely include a statutory time limit for payments.

Changes to corporate governance

The details are not yet clear, but Labour have pledged to review the competition regime to promote innovation and protect consumers. ESG is set to be embedded into corporate governance, along with a commitment to greater transparency and ensure businesses work in the interests of their workers, customers, communities and the environment. 

Financial services reform

More consumer protection and regulation in the payday loan and buy now, pay later consumer credit market. Private finance will be required to align investments with the goals of the Paris agreement on climate change, more backing for credit unions, and a pledge to maintain high international financial standards.

Freedom of Information Act reforms

Labour will extend the Freedom of Information Act to private companies that hold contracts to provide public services, and extend FOI rules to publicly funded bodies and public services which have been outsourced. 

Expand the Equality Act 2010

Labour will implement the socioeconomic protected characteristic of the Equality Act, also the socioeconomic duty under Section 1 of the Equality Act and ensure equality impact assessments of government policy are conducted. 

Labour will also introduce a new Race Equality Act which will introduce ethnicity pay gap reporting for large employers, including requiring comprehensive action plans to tackle structural inequalities faced by Black, Asian and ethnic minority people at work.

Modern slavery and supply chains 

Labour will commit to embedding modern slavery protections and tackling human rights and labour abuses in both public and private supply chains with CSRD-style due diligence rules. They will mandate the use of human rights protection clauses to tackle modern slavery in supply chains.

What should your business do now?

These are the proposals from the UK Labour Party, which consistent polling has shown will likely form a majority government after the next UK general election which is due to take place at some time in the next year. Regulatory changes are often easier for businesses to manage if they are planned for in advance, so it can be worth getting a plan in place in the medium term for longer term compliance developments.

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