The King's Speech

As set out in our previous client briefing, one of the Labour Party’s key pledges before the election was to kickstart a large-scale reform of UK employment law within the first 100 days of gaining power.

The King has now delivered his “Speech from the Throne” at the State Opening of Parliament, which sets out the new government’s key aims for the year ahead, including proposed legislation. It seems that Labour is keeping its promise to bring about employment law reform as a priority, as the King’s Speech referred to two new employment Bills.

Although the King’s Speech itself didn’t give much information on Labour’s proposals, the background briefing notes produced by the government (Briefing Notes) set out some further details. In this article, we look at: (i) the key reforms highlighted in the King’s Speech and the Briefing Notes, (ii) when those reforms are likely to take effect, and (iii) what steps (if any) employers can take to start preparing for them.

Key employment law reforms

The new government has proposed two new employment Bills, which will now have to be drafted and considered by both Houses of Parliament in the usual way, before being passed into law:

1. Employment Rights Bill

   The Briefing Notes state that this Bill will apply to Great Britain and will be introduced within the first 100 days of government. It is referred to as representing “the biggest upgrade to workers’ rights in a generation”.

   The Briefing Notes confirm that the Bill will deliver on Labour’s proposals in its “Plan to Make Work Pay” (the Plan) (see our previous client briefing). The Briefing Notes then set out the following points from the Plan, but it is not entirely clear if all of these will feature in the Employment Rights Bill or even if other proposals in the Plan (e.g. the right to switch off) will be included:

   • banning ‘exploitative’ zero hours contracts, ensuring workers have a right to a contract that reflects the number of hours they regularly work and that all workers get reasonable notice of any changes in shift with proportionate compensation for any shifts cancelled or curtailed;

   • ending the practice of ‘fire and re-hire’ by reforming the law to provide effective remedies and replacing the statutory code of conduct that only came into force on 18 July 2024;

   • making parental leave, sick pay and protection from unfair dismissal available from day-one on the job for all workers (while ensuring employers can operate probationary periods to assess new hires). It is unclear to what extent the previously stated proposal to create a single status of ‘worker’ might affect these entitlements, so we assume that for now, these rights will be retained and extended for employees only;

   • strengthening Statutory Sick Pay by removing the lower earnings limit and the waiting period;

   • making flexible working the default from day-one for all workers, with employers required to accommodate this as far as reasonable;

   • making it unlawful to dismiss a woman who has had a baby for six months after her return to work, except in specific circumstances;

   • establishing a new Single Enforcement Body, also known as a Fair Work Agency, to strengthen enforcement of workplace rights;

   • establishing a Fair Pay Agreement in the adult social care sector and, following review, assess how and to what extent such agreements could benefit other sectors;

   • reinstating the School Support Staff Negotiating Body, to establish national terms and conditions, career progression routes, and fair pay rates;

   • updating trade union legislation, removing “unnecessary” restrictions on trade union activity (including the previous government’s approach to minimum service levels) – and ensuring industrial relations are based around “good faith negotiation” and bargaining; and

   • simplifying the process of statutory recognition and introducing a regulated route to ensure workers and union members have a reasonable right to access a union within workplaces.

2. A Draft Equality (Race and Disability) Bill

It is intended that this draft Bill will extend and apply to Great Britain, mirroring measures in the Equality Act 2010 relating to equal pay and gender pay reporting.

The Briefing Notes explain that the draft bill will tackle inequality for ethnic minority and disabled people by:

• enshrining in law the full right to equal pay for ethnic minorities and disabled people; and

• introducing mandatory ethnicity and disability pay reporting for larger employers (those with 250+ employees) to help close the ethnicity and disability pay gaps.

In addition to the two Bills outlined above, Labour also commit in the King’s Speech to delivering a “genuine living wage” and removing the existing age categories for the minimum wage, which will not require separate legislation. Labour also proposes to reform the apprenticeship levy and the establishment of Skills England.

When are the reforms likely to become law?

No legislative changes will be required to change the remit of the Low Pay Commission in relation to the national minimum wage. Normally, the Low Pay Commission recommends a new rate in October based on government proposals and the new rate takes effect on the following 1 April, so we may well see this change in force as early as April 2025.

Both Bills mentioned above will need to be drafted and published, before being passed through and approved as primary legislation by the Houses of Parliament. As Labour won the election by a significant majority, it is likely that they will be passed into law relatively smoothly. However, several measures are unlikely to come into force straight away, as they will require secondary legislation or new or updated codes of practice first. For example, the introduction of day one unfair dismissal rights will also require changes to the Acas Code of Practice, which in turn will require advance consultation.

Indeed, it seems likely that consultation will be undertaken in relation to many, if not all, of Labour’s proposals which may cause a further delay in legislation being passed. The Briefing Notes state that the new government will work in close partnership with trade unions and business to deliver its ‘New Deal’ and will invite their views on how best its plans can be put into practice. This reflects the commitment given in Labour’s pre-election pledges to consult with businesses before legislation is passed. 

In addition, the Draft Equality (Race and Disability) Bill is explicitly referred to as a ‘draft’ which suggests that it is possibly less of a priority and might take longer to pass through Parliament. Any legislation under this Bill is likely to be very complicated and it is currently unclear how the equal pay regime will be extended to race and disability, or indeed, how “ethnicity” and “disability” will be categorised for the purpose of pay gap reporting. As such, we expect lengthy consultation on the content of any new law in this regard.

Generally speaking, we expect that employers will have plenty of time both to input into the majority of the proposals and to prepare for them.

What steps (if any) can employers take to prepare?

There is no action for employers to take immediately, but we recommend keeping a watching brief on many of the key proposals. Of course, the devil will be in the detail. Timeframes are uncertain so there remains an element of crystal ball gazing. For example, we are currently unclear what ‘exploitative’ zero hours contracts are and what exactly will be banned, so more detail will be required before employers can meaningfully prepare for any changes.

Equally, detailed planning for compulsory ethnicity and disability pay gap reporting will be difficult until the exact requirements have been published. However, employers could start collating their equality data for the purposes of reviewing and considering it in advance of mandatory obligations coming into force.

In due course, employers may need to review HR systems, policies and procedures, and make plans to ensure managers are trained appropriately on employment law impacted by the reforms. For example, day one unfair dismissal rights may require employers to look at their policy on probationary periods and ensure managers are updated about changes required to fair dismissal procedures.

Some changes may require employers to go further, necessitating an entire cultural shift. For example, plans to simplify the process of statutory recognition combined with ending ‘fire and rehire’ and removing ‘unnecessary’ restrictions on trade union activity may well increase trade union representation at work. Employers may wish to consider the possibility of this in advance and how it may impact their organisation.

We will keep you updated about further key developments. In the meantime, please do contact us if you have any questions or queries about how the proposals in the King’s Speech might impact you as an employer.

Co-authors: Victoria Wenn and Catherine Roylance

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at 22 July 2024. Specific advice should be sought for specific cases. For more information see our terms & conditions.

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