Businesses need to be aware of how the government’s new Employment Rights Bill may affect them and their employees

The King’s Speech before Parliament on the 17th of July highlighted that the UK’s new Labour government will deliver on their promise to make major changes to employment law and, more specifically, employee’s rights in England and Wales. The primary aim is to bring in legislation that will “ban exploitative practices and enhance employment rights” in what the government claims will be “the biggest upgrade to workers’ rights in a generation”. 

The government’s plan is to introduce legislation in Parliament during their first 100 days in power (by 13 October 2024).

The King’s Speech itself provided little information on the proposals but a briefing note, which sets out the legislative agenda, was released shortly after. Many of the proposed measures were outlined in the Labour Party’s manifesto on the run up to the election. It is likely that the pledges that were mentioned within the manifesto, but not in the briefing note, are still on the government’s agenda, but, will probably be considered in due course – this is not a surprise given that some of the issues within the manifesto are unlikely to be planned within the first 100 days!

Two of the proposed draft bills are going to impact the employment law arena:

1. Employment Rights Bill
2. Equality (Race and Disability) Bill

Employment Rights Bill

The proposed Employment Rights Bill will:

• Expand the rights available to employees from DAY ONE of employment, including the right to:
• the protection from unfair dismissal;

The government has commented that it will ensure that probationary periods remain, to assess new hires. How this will work in practice is yet to be determined, not least because, at present, “probationary periods” do not have a legal definition.

• parental leave; and
• statutory sick pay.

The government also intends to remove the lower earnings limit, and the current three-day waiting period. This will increase the number of employees who are entitled to statutory sick pay.

• Ban exploitative zero-hour contracts by ensuring workers have a right to receive a contract that reflects the number of hours they regularly work and that they receive reasonable notice of any change in shift patterns. The government has also proposed that workers should get proportionate compensation for any shifts that are cancelled or curtailed.
  
  
• End ‘fire and rehire’ and ‘fire and replace’ practices.
  
• Make flexible working the default from day one for all workers. Employers will be required to accommodate this as far as is reasonable. This represents a significant change as the expectation will be that the employer will grant the request, unless there is a compelling business reason not to do so.
  
  
• Make it unlawful to dismiss a woman within six months of returning to work, after having a baby, except in specific circumstances.
  
  
• Introduce a new Single Enforcement Body (to be known as the Fair Work Agency). The purpose of the Single Enforcement Body will be to enforce all statutory employment rights. The body will have strong powers to inspect workplaces, carry out proactive enforcement work (which could be targeted) and could bring civil proceedings upholding employment rights. It is our expectation that the Single Enforcement Body is highly likely to be given significant authority to enforce workplace rights breaches.
  
  
• Set up a fair pay agreement for the adult social care sector. This could well be extended into other sectors, if it proves successful.
  
  
• Reinstate the School Support Staff Negotiating Body to establish national terms and conditions, career progression routes and fair pay rates.
  
  
• Remove “unnecessary restrictions” on trade union activity so that discussions involving industrial relations can be based on “good faith negotiation and bargaining”.
  
  
• Simplify the process of statutory recognition and introduce a regulated route to ensure workers have a reasonable right to access a union in their place of work.
  
  
• Remove the national minimum age bands for adults. It is not clear whether this will allow businesses to retain a lower wait for apprentices aged 16 – 18. The government’s plan is to “deliver a genuine living wage that accounts for the cost of living”. We can reasonably expect that there will, at some point (possibly before April 2025) be an increase in the national minimum wage.

Labour’s manifesto also referred to a move towards a two-tier working relationship - employees and self-employed (this would end the distinction between employees and workers). The King’s Speech, and the briefing note, did not mention this, however, this is not surprising given that it is unlikely that such a change could be implemented before 13 October 2025. Simplifying employment status remains on the government’s agenda.

Equality (Race and Disability) Bill

The King’s Speech also set out that new equality legislation will be published, in draft. The purpose being to provide equal pay, and close the pay gap, for ethnic minorities and disabled people. Employers with more than 250 employees will also need to comply with mandatory ethnicity and disability pay reporting.

The draft Equality Bill might reflect the provisions already within The Equality Act 2010, which provides for equal pay (based on sex) and gender pay reporting. However, designing legislation, and implementing such, which will compare different ethnicities is going to be a difficult task. We expect that this is an area of law which is going to be complicated.

What can you do to prepare your business?

Whilst the government has promised to introduce legislation within 100 days, the changes are vast in nature. Coupled with the government’s pledge to consult with businesses and unions, before passing any legislation, it is likely that the majority of the measures will be brought in following primary legislation so we expect that there will be some time before the law changes. However, we cannot guarantee when (or how) the law will change.

Suggested considerations / preparations for businesses:

1. Employers should give some thought to how the prospect of day-one rights for unfair dismissal could affect their business. It may require employers to rethink how they utilise probationary periods.  New legislation could lead to an increase in both short-term sickness and, more worryingly, employment tribunal claims against employers. 
   
   
2. Carry out a review to identify employees (or workers) who are paid national minimum wage (or close). You should consider the impacts (including the technical steps that you will have to take) that a raise in the national minimum wage is likely to have.
   
   
3. The government has expressed that the purpose of extending the protections available on “day one” is to encourage workers to change jobs. The rationale provided is that changing changes is associated with higher wages and productivity growth. Employers should consider how they plan to retain staff, and, ultimately, consider their recruitment strategies. This might include additional stages within the recruitment process to try to increase the chances of recruiting the right person for the role.

At this stage, we have little substantive information, and, as always, the devil will be in the detail. It is not clear how the proposed bills will take shape, and if/when other changes proposed by the government (but have not been mentioned in the King’s Speech) will be considered.

Employers will have a great deal to consider to ensure that the adoption of the proposed bills is as smooth as possible, and has the least impact on their operations.

Until the government releases more information, it is difficult for employers to prepare. We expect that the government will be releasing further information imminently as they work towards their promise of introducing legislation within their first 100 days (before 13 October 2024). What we do know is that the proposed changes are likely to result in an increase in the number of tribunal claims, trade unions having more involvement and employment law will, inevitably, become even more complex.

We will continue to provide legal updates in writing, and will release details for a webinar setting out the proposed changes, in due course.   

To sign up to our mailing list to receive Employment Law updates and invites to future events or webinars, click here. 

If you would like to discuss how best to prepare for the new Employment Rights Bill to minimise its effect on your business, please contact or Employment & HR team.