Introduction
On 17 July 2024, the King’s Speech outlined the legislative priorities of the UK’s newly instated Labour government, prominently featuring the “New Deal for Working People.”
This initiative highlights a transformative agenda in employment law, reflecting the government’s commitment to enhancing worker rights and ensuring fair employment practices.
The speech, coupled with detailed briefing notes from the Prime Minister, shed light on the introduction of significant legislative measures, including the Employment Rights Bill and a draft Equality (Race and Disability) Bill.
The Employment Rights Bill aims to strengthen the legal framework surrounding work conditions, banning exploitative practices and setting a new standard for workers’ rights in what the government describes as “the biggest upgrade to workers’ rights in a generation.”
The draft Equality Bill addresses longstanding issues of race and disability discrimination in the workplace, aiming to create a more inclusive and equitable employment environment.
Employment Rights Bill
Scheduled for introduction by 12 October 2024, this Bill marks a significant step forward in the UK government’s commitment to enhancing labour laws under the Labour Party’s “New Deal for Working People.” This legislation is designed to address several critical areas in employment law, aligning with Labour’s manifesto and reflecting detailed commitments set out in the government’s briefing notes.
Major Provisions
1. Enhanced Rights from Day One: The Bill establishes parental leave, sick pay, and protection from unfair dismissal as rights available from the first day of employment, subject to certain probationary conditions. This measure aims to provide immediate security for new employees, ensuring a stable transition into their roles.
2. Ban on Zero-Hour Contracts: In a move to eradicate ‘exploitative’ employment conditions, the Bill will prohibit zero-hour contracts. Workers will instead be entitled to contracts that accurately reflect their regular working hours, along with reasonable notice of any shift changes, and compensation for any alterations.
3. Flexible Working as a Standard: The legislation intends to make flexible working arrangements the default from the start of employment, requiring employers to justify any deviations if they deem flexible arrangements not reasonably feasible.
4. Regulations against ‘Fire and Rehire’ Practices: The Bill will introduce restrictions on the controversial ‘fire and rehire’ tactics, replacing the current Statutory Code with more robust legal remedies to protect employees from such exploitative practices.
5. Strengthening Statutory Sick Pay: The new law aims to enhance statutory sick pay by removing the lower earnings limit and the initial waiting period, making it accessible to a broader range of workers from the outset of their employment.
6. Creation of a Fair Work Agency: To ensure the effective enforcement of these expanded rights, the Bill will establish a Single Enforcement Body or Fair Work Agency. This body will be tasked with overseeing and ensuring compliance with workplace rights.
7. Trade Union Reforms: Updates to trade union legislation will include the removal of restrictions on union activities and simplifying the process for unions to gain statutory recognition. Additionally, unions will gain more access to workplaces, facilitating easier communication with members.
8. Protection for New Mothers: Extending protections for new mothers, the Bill will make it unlawful to dismiss a woman within six months of returning from maternity leave, except under exceptional circumstances.
Draft Equality (Race and Disability) Bill
The Draft Equality (Race and Disability) Bill, as highlighted in the King’s Speech, represents a significant legislative move aimed at addressing pay inequities for ethnic minorities and disabled individuals within the UK. This proposed legislation builds on existing frameworks but introduces specific measures to target disparities that particularly affect these groups.
1. Statutory Right to Equal Pay: The bill intends to “enshrine the right to equal pay” for ethnic minorities and disabled people explicitly in law. This legal provision is designed to empower individuals from these groups to pursue claims for equal pay, particularly when they believe they have been underpaid due to racial or disability-related discrimination.
2. Mandatory Reporting Requirements: Employers with more than 250 employees will be required to report on ethnicity and disability pay gaps. This measure aims to increase transparency and accountability, forcing organisations to confront and address disparities in pay that may have previously gone unexamined.
Mandatory ethnicity pay reporting was previously considered in 2019 but not adopted due to data privacy issues, complexity in data collection, and administrative burdens on businesses. With the bill still in draft form, it is expected to undergo consultations and may see adjustments based on stakeholder feedback, particularly from businesses that will be impacted by the new regulations.
What Are the Implications for Employers and What Steps (if Any) Can They Take to Prepare?
No More Two Year Delay in Protection
The introduction of the day-one protection against unfair dismissal is a key change emerging from the King’s Speech. Previously, employees required up to two years of service to challenge unfair dismissals. With this new provision in mind, we advise employers to strictly adhere to fair and documented dismissal processes from the beginning of employment.
Employers may find it prudent to utilise probationary periods more frequently or use fixed-term contracts to assess new hires.
Enhanced Probation Period Protection for Employees
The government is expected to introduce a Code of Practice to guide employers through probationary periods, likely limiting the reasons for termination during this phase.
Flexible Working Will Be the Default
This will likely increase the number of requests for flexible working arrangements and restrict employers’ ability to refuse them unless doing so is reasonably impractical. With the promise of quick enactment for some provisions, employers should consider reviewing their current workforce, especially those within the initial two-year service period, to determine if any adjustments are necessary before the new rules come into effect.
Mandatory Ethnicity and Disability Pay Reporting
The upcoming mandatory ethnicity and disability pay reporting for companies with more than 250 employees will also require employers to enhance their data management systems to comply with these new requirements. It’s advisable for employers to start organising their equality data now to smooth the transition to mandatory reporting.
Steps to Prepare
- Review Employment Contracts: Ensure all contracts reflect the new rights and standards, especially regarding zero-hour contracts and flexible working.
- Audit HR Policies: Regularly audit and update HR policies to align with the new legal requirements.
- Training and Communication: Train HR teams and managers on the new laws and how to implement them. Clearly communicate changes to employees.
- Engage with Unions: Develop strategies for engaging with unions and addressing their increased presence and activities.
- Data Collection and Reporting: Enhance data management systems to prepare for mandatory pay reporting requirements.
More on Future Changes
Beyond the main employment bills, the King’s Speech introduced several initiatives relevant to employers:
National Living Wage Adjustments
The government plans to link the National Living Wage to the cost of living and remove the lower wage rate for 18 to 20-year-olds. These changes are set to be implemented quickly, potentially by April 2025, without requiring primary legislation. The phase-out of the age band may be delayed to give businesses time to adjust.
Skills Development and Apprenticeship Reforms
Reforms to the apprenticeship levy and the creation of Skills England aim to better align workforce training with industry needs.
AI Legislation
Despite earlier speculation, a comprehensive AI Bill was not announced. Instead, the government will introduce targeted regulations for developing powerful AI models, focusing on safety and ethical concerns. This approach suggests a gradual implementation of AI regulations, with the current legal framework remaining in place for now.
Conclusion
These reforms are significant, and while the finer details and timelines are yet to be solidified, being proactive and prepared will be crucial for employers to navigate the changes effectively and ensure compliance.
