The Labour Government has set out an ambitious agenda that will reshape the employment landscape in the UK, following the King’s Speech delivered on 17 July 2024. Two new employment bills are expected to dominate discussions and have far-reaching implications for employers: the Employment Rights Bill and the draft Equality (Race and Disability) Bill.

For employers, the announcement of these changes signals a time to reassess policies, update practices and ensure readiness for the forthcoming transformations. Below, we outline the anticipated developments and their potential impact.

The King’s Speech and legislative priorities

The King’s Speech highlighted the Government’s focus on reforming employment practices to create a fairer and more inclusive workplace environment. In particular, two bills were announced:

• The Employment Rights Bill is part of a broader initiative to ‘make work pay’, strengthen the rights of workers, and address exploitative employment practices.
• The draft Equality (Race and Disability) Bill aims to tackle inequality, particularly focusing on ensuring ethnic minority and disabled workers have the ‘full right to equal pay in law.’

These proposed legislative changes mark a significant shift in the Government’s approach to employment law. They promise stronger protections for employees and increased obligations for employers to comply with.

Employment Rights Bill – what to expect

The Employment Rights Bill is the centrepiece of the Labour Government’s agenda for workers’ rights. It is expected to bring substantial changes that will enhance protections for workers from their first day of employment. The Government has committed to presenting the Bill to Parliament within its first 100 days. The legislative process may take longer, so employers should anticipate hearing further debate and detail throughout the autumn.

The proposed changes include:

• Employment rights from day one: employees will be entitled to claim unfair dismissal, take parental leave, and receive statutory sick pay from the moment they start a new job. This shift will demand that employers rethink how they manage new starters, as current waiting periods for these rights will be abolished.
• Flexible working as the default: flexible working will no longer be a privilege granted after a set period of employment. Instead, it will become the default expectation, with employers needing to accommodate requests from day one, as far as is reasonable. Employers will need to evaluate their ability to offer flexible arrangements upfront and make appropriate changes to recruitment strategies.
• Ban on exploitative zero-hours contracts: zero-hours contracts, often criticised for offering little job security, will be restricted to prevent them being exploited. Employers who rely on these contracts must now seek alternatives and deliver a more predictable schedule for workers.
• Reform of Statutory Sick Pay (SSP): both the waiting period and the lower earnings limit for SSP will be removed, meaning that employees will be eligible for sick pay sooner and with fewer restrictions based on earnings. This change will require employers to review their sick pay policies and budgets.
• Ending fire and rehire practices: the Bill will prohibit ‘fire and rehire’ strategies, where employers dismiss staff only to re-engage them on less favourable terms. This practice has been the subject of significant controversy, and banning it will mean employers must find more collaborative approaches when changing terms and conditions.
• Protection for new mothers: dismissing a woman within six months of her return to work after maternity leave will be prohibited, with only exceptional circumstances providing a defence. Employers will need to carefully manage maternity returners and ensure that decisions around redundancies or dismissals are lawful and justified.
• Creation of a fair work agency: a new regulatory body will be established to help enforce workplace rights, adding an additional layer of oversight to ensure employers comply with their obligations.
• Trade union reforms: The Government plans to update trade union laws, including removing the requirement for minimum service levels during strikes. This will provide trade unions with greater flexibility to organise industrial action and may lead to more frequent strikes in sectors traditionally affected by such measures.

These changes will require employers to take a proactive approach. Contracts, policies and practices will need updating once the Bill becomes law, and businesses will need to navigate the shifting employment landscape with care.

Draft Equality (Race and Disability) Bill

The draft Equality (Race and Disability) Bill represents a landmark step towards addressing pay inequality for ethnic minorities and disabled workers. Historically, equal pay claims have focused on gender discrimination; this Bill aims to expand those protections and make it easier for affected groups to bring claims based on race or disability.

In addition to expanding the grounds for equal pay claims, the Bill will introduce mandatory ethnicity and disability pay gap reporting for employers with more than 250 employees. This follows the trend of gender pay gap reporting and places a clear onus on larger employers to be transparent about pay disparities and take meaningful action to close them.

For employers, this means collecting and reporting data in new ways, analysing pay practices and addressing any pay gaps. Non-compliance will likely attract scrutiny, and the reputational risk for businesses that fail to act should not be underestimated.

Other changes in the pipeline

While the Employment Rights Bill and Equality (Race and Disability) Bill are dominating headlines, other legislative changes are also set to impact employers:

• Illegal working sanctions: the Home Secretary has announced harsher penalties for employers who hire illegal workers. Financial penalties, business closure orders and prosecutions are on the table, making right-to-work checks an absolute priority for employers during recruitment.
• Introduction of a ‘genuine living wage’: the Government plans to roll out a living wage that applies to all workers, regardless of age. This change will phase out the current age bands and will likely increase wage costs for younger employees.

Employer duty to prevent sexual harassment

As covered in a previous article, the duty of employers to prevent sexual harassment comes into force on 26 October 2024. This places a new obligation on employers to take ‘reasonable steps’ to prevent harassment, and failure to do so could result in a 25% uplift in compensation if a successful claim is made.

Employers must act now to prepare for these changes. Regular training, updated harassment policies and clear reporting mechanisms are essential to avoid breaching this new duty.