In the run up to the general election on 4 July 2024, one of Labour’s key campaign promises was to deliver “a new deal for working people”. If successful at the ballot box, it pledged to bring forward primary legislation to reshape the UK employment law landscape within the first 100 days of assuming power.
The King’s Speech on 17 July 2024 and its accompanying background briefing notes shed further light on what these changes might look like. In this month’s Need to Know series, we summarise the currently planned changes to UK employment law, exploring some of the key changes in further detail.
Employment Rights Bill
The key piece of legislation that the new Labour Government intends to use to effect widespread change to the current employment legal framework is a new Employment Rights Bill. This is an ambitious programme which could have a substantial impact on employers if implemented. The background briefing notes explain that the Bill will, if passed, introduce the following changes:
- A ban on ‘exploitative’ zero-hour contracts – this is to ensure that workers have a right to a contract reflecting the number of hours they currently work, reasonable notice of any changes in shift and proportionate compensation for curtailed or cancelled shifts. Read Aleksandra Davidson’s in-depth analysis of this particular proposal.
- A ban on ‘fire and rehire’ practices – this will be effected by reforming the law to provide effective remedies in a ‘fire and rehire’ scenario (where employees are dismissed and then offered re-employment on different terms and conditions) and replacing the existing Code of Practice on Dismissal and Re-engagement (which only came into force on 18 July 2024).
- Day one employment rights – Parental leave, sick pay, unfair dismissal protections and a right to flexible working (so far as is reasonable) will be available from day one on the job for all workers, but the ability for employers to operate probationary periods will remain in place to allow employers to assess new hires. It remains to be seen how this will operate in practice. Some commentators have noted that announcing in advance a plan to make unfair dismissal protection a ‘day one’ right might have the unintended short-term consequence of a spike in dismissals of employees with less than two years’ service.
- Statutory sick pay – The lower earnings limit and the waiting period for statutory sick pay will be removed, making this available to all workers.
- Additional protections for new mothers – it will become unlawful to dismiss a woman who has had a baby for six months after her return to work, except in ‘specific circumstances’ which have not yet been explained.
- A new ‘Fair Work Agency’ – this is the Labour Government’s proposal for a ‘Single Enforcement Body’ for employment rights, a concept which has been consulted on as far back as 2019.
- A Fair Pay Agreement for the adult social care sector – this will likely increase pay standards in the adult social care sector and, following review, may also lead to further Fair Pay Agreements for other sectors.
- Reinstating the School Support Staff Negotiating Body – This will establish national terms and conditions, career progression routes and fair pay rates for teaching assistants, caretakers, office staff, technicians, catering staff, cleaners and other support staff working in schools.
- Legislative changes for trade unions – these include removing minimum service levels imposed by the Conservative Government and simplifying the process of statutory recognition of trade unions.
Draft Equality (Race and Disability) Bill
Another piece of legislation relevant to the Labour Government’s reform of employment law that was announced in the King’s Speech was the draft Equality (Race and Disability) Bill. The background briefing notes highlight that this bill proposes to tackle inequality for ethnic minority and disabled people in two ways:
- By enshrining in law the full right to equal pay for ethnic minorities and disabled people – this will change the law to make it much easier for people falling into either category (or both) to bring unequal pay claims.
- By introducing mandatory ethnicity and disability pay reporting – this will be introduced for larger employers (those with 250+ employees) to help close the ethnicity and disability pay gaps, and help larger employers consider why they exist and come up with solutions.
Comment
It is clear from the above that following the election the Labour Government intends to make good on its promise to reshape the existing employment law regime in the UK. Employers should take note of the key proposals outlined in the Employment Rights Bill, which will significantly shift the balance in favour of employees, as further details on these changes are likely to be announced in due course.
Of particular note is the Government’s proposal to grant employees unfair dismissal rights from “day one” of their employment. Currently, employees acquire unfair dismissal rights after two years, which gives employers a good deal of time to decide whether an individual is suitable for a role, before the risks associated with ending their employment increase significantly. If this change is introduced, employers would be well advised to refresh their managers’ training in following disciplinary and performance management procedures, which may need to be used much more frequently.
A possible silver lining for employers is that previous announcements suggested that the acquisition of unfair dismissal rights on “day one” may be subject to the employee passing their probationary period. This, of course, would mean that probationary periods (which typically now last from 3-6 months) may be extended to last for much longer periods. That may be a viable option for more junior staff, but senior hires may baulk at the prospect of a lengthy probationary period. We look forward to seeing how employers respond to this aspect of the draft bill at the consultation phase.
Although equally far-reaching, since the Draft Equality (Race and Disability) Bill is explicitly referred to as a ‘draft’ Bill, it is possible that the Government considers it to be less of a priority and one that could take longer to pass through parliament. It will likely require significant consultation before its proposals are enacted.