Employment law changes in the King’s Speech – How they will affect your business

The King’s Speech, which set out the new Labour government’s legislative agenda for the next parliament, included reference to the heavily anticipated Employment Rights Bill, as well as other proposed changes that will have enormous implications for employers. Katy Parkinson, senior associate solicitor in our employment law team, looks at what employers can do now to prepare for these major changes to workers’ rights.

The employment law changes announced in the King’s Speech today (July 17, 2024) will come as little surprise to those who followed the general election campaign, as Labour’s proposals on workers’ rights were published in the party’s manifesto and grabbed headlines during the election campaign.

What will be in the Employment Rights Bill?

While we await the publication of the Employment Rights Bill in full, promised within 100 days of Labour gaining power, here’s a summary of Labour’s key proposed changes which will have a significant impact on employers’ day-to-day HR practices and their ability to ensure legal compliance.

Day one rights for all workers: This will include protection from unfair dismissal (albeit employers will be able to operate probationary periods to assess new hires), the right to work flexibly (as far as is reasonable), the right to take parental leave, and the right to be paid statutory sick pay (from day 1 of absence and with no lower earnings limit).

Creating a single enforcement body: This will be known as the Fair Work Agency, and it will strengthen the enforcement of workplace rights.

Banning ‘exploitative’ zero-hour contracts: The Bill will introduce a right to have a contract that reflects the number of hours regularly worked, based on a 12-week reference period, and the right to reasonable notice of any change in shifts and proportionate compensation being payable for any curtailed or cancelled shifts.

Ending ‘fire and rehire’ and ‘fire and replace’: The law will be reformed to provide effective remedies for workers and the “inadequate” statutory code of practice introduced by the Conservative government earlier this year will be replaced.

Strengthening protections for new mothers: The Bill will make it unlawful to dismiss a mother who has had a baby for six months after they return to work, except in specific circumstances.

A Fair Pay Agreement in the adult social care sector: This will be introduced together with a subsequent review process to assess how such agreements could benefit other sectors.

Making changes to trade union legislation: This will include removing ‘unnecessary’ restrictions on trade union activity (such as the minimum service levels introduced by the Conservative government) and ensuring industrial relations are based around negotiation and bargaining in good faith.

Simplifying the process of statutory trade union recognition: The Bill will introduce a regulated route to ensure workers have a reasonable right to access a union in their workplace and engage in collective bargaining of key terms and conditions.

Delivering a genuine living wage

In addition to the Employment Rights Bill, the government will implement changes to the national minimum wage regime by:

Removing age banding in respect of the National Living Wage: This will mean that all workers aged 18 plus will receive it. The Low Pay Commission will also consider the cost of living when calculating the national living wage rate in future.

Focusing on enforcement: This will fall within the remit of the Fair Work Agency. They will issue penalties for non-compliance, particularly in sectors where there is travel time between multiple working sites.

Draft Equality (Race and Disability) Bill

Another proposed Bill within the King’s Speech was the Draft Equality (Race and Disability) Bill which the government intends to use to tackle inequality for ethnic minority and disabled workers. It will do this by:

Legislating for equal pay for ethnic minority and disabled workers: This will create a more equal society and make it easier for these workers to bring equal pay claims.

Mandating the publication of ethnicity and disability pay gaps: This will apply to employers with 250 or more employees and it is anticipated that the requirements will mirror those under the current gender pay gap reporting regime.

What other changes do employers need to the think about following the King’s Speech?

Further reforms were contained in the Labour manifesto and, while they weren’t referenced in the briefing note which accompanied the King’s speech, it is unlikely these have gone away.

Increasing the time limit on Employment Tribunal claims: The time limit to make an Employment Tribunal claim will go from the current three months (for most claims) to six months.

Creating a single worker status: The introduction of a simpler, two-tier framework for employment status that differentiates workers and the genuinely self-employed, and by virtue of this a significant extension of the statutory rights applicable to workers.

Preventing sexual harassment: An enhanced legal duty (due to take effect from October 2024) on employers to take all reasonable steps to prevent sexual harassment in the course of employment, including harassment from third parties.

Gender Pay Gap Reporting: There will be a requirement to publish and implement action plans to tackle gender pay gaps for employers that the gender pay gap reporting regime applies to.

Strengthening Redundancy and TUPE protections: This is likely to include a change to the calculation of the number of employees affected by redundancy proposals by determining the number of people affected across a business, rather than in one particular workplace of that business.

Mandating the development of menopause action plans: The introduction of a requirement for employers with 250 or more employees to produce a Menopause Action Plan which details how they will support employees going through the menopause.

Introducing a right to switch off: This is anticipated to be in line with what has been introduced in other european countries such as Belgium and Ireland.

How might some of the other proposed legislation affect businesses?

Other measures in the King’s Speech that could impact the world of work include the introduction of the Terrorism (Protection of Premises) Bill, which will impose training and record keeping obligations on venues where the public can gather.

There is also to be the establishment of a Growth and Skills Levy which will perhaps operate in a similar way to the current Apprenticeship Levy, and a new enforcement and co-ordinating body called Skills England.

In addition, a Hillsborough Law is set to introduce a legal duty of candour for those in the public sector, again something that will have implications for employers and their employees.

What happens next?

The employment-related legislation within the King’s Speech will now be subject to a proper parliamentary process, which will include consultation with business leaders and trade unions. Before it becomes law, Bills will need to be read by both houses of parliament before gaining Royal Assent and becoming an Act of Parliament.

This means we’re likely to be looking at a timeframe of one to two years before many of these changes would come into force. That said, there is action you can take now to ensure your organisation is well placed to ensure future legal compliance and reduce exposure to risk.

What can I do now to prepare for the employment measures in the King’s Speech becoming law?

Here’s eight actions you can take now to protect your organisation and be better prepared for new employment legislation coming in.

1. In light of the incoming duty to take reasonable steps to prevent sexual harassment in the workplace from October 2024 (which Labour are likely to strengthen), audit your current anti-harassment and equality and diversity policies and reporting mechanisms, implement any changes required and train your workforce.
2. Review your current contractual probationary clauses and ensure you have a clear probationary period with the contractual right to extend it. Also consider introducing a right to appeal any extension and dismissal.
3. Ensure your performance management and disciplinary policies enable you to effectively deal with unsuitable recruits, and train your managers so they have the skills and knowledge required to implement them.
4. Explore your recruitment practices to see if there are opportunities for improvement.
5. Check whether you have insurance protection against the legal costs of defending Employment Tribunal claims and the cost of any compensatory awards/settlements. If you don’t have this insurance protection, consider whether it would be prudent to put protection in place.
6. Consider how you would approach any changes to T&Cs or policies, and what the associated costs / time needed to implement changes would be.
7. If you are planning any changes which might be affected by reform to ‘fire and re-hire’ or ‘fire and replace’ practices, consider whether they can be accelerated.
8. If you have more than 250 employees, start thinking about your ethnicity and disability pay gaps and gather preliminary data. Take the opportunity to audit your reward mechanisms and consider whether any changes to remuneration structures are needed.

If you have any questions about the Employment Rights Bill and the other measures in the King’s Speech, or any other employment law or HR matter, please e-mail Katy Parkinson or David Carmichael or call 01772 258321.