The King’s Speech : Employment Law Key Changes

The King’s Speech on 17 July 2024 announced some significant changes to employment law. This includes the introduction of two new pieces of employment law legislation which have been described as representing “the biggest upgrade to workers’ rights in a generation”.

Employment Rights Bill

The first piece of legislation is the proposed Employment Rights Bill 2024. The relevant employment section of the briefing notes starts on page 20.

We have set out a summary of the main key changes that are anticipated:

Unfair Dismissal

As set out in the Labour manifesto, a key change for employers is that the Employment Rights Bill will address the new Government’s commitment to introduce protection from unfair dismissal from day 1 on the job for all workers. This is a significant change, as currently protection is limited to employees with over 2 years’ service only. The proposal is intended to encourage more workers to switch jobs, which is associated with higher wages and growth in productivity. It is currently unclear whether, in referring to “workers”, Labour is intending to extend the remit of unfair dismissal protection to also cover workers (as well as employees) and if this would be covered under the Employment Rights Bill 2024. This was not discussed during the King’s Speech and we await further clarification on this.

It is anticipated that exceptions will be provided to enable employers to still utilise probationary periods, but we await confirmation as to how this will apply in practice. For instance, whether it will be easier to dismiss an individual within a probationary period and whether there will be a limit on the length of probationary periods.

The result of this is that employers will need to think very carefully about dismissing individuals and this may, in turn, lead to a more cautious recruitment approach. It is also likely that this change will see a rise in tribunal claims being brought and more grievances arising.

Zero Hour Contracts

Another key change is the banning of “exploitative” zero-hour contracts, thereby ensuring that workers have a right to a contract that reflects the number of hours that they regularly work. An employer must also provide them with reasonable notice of any changes, with proportionate compensation for any shifts that are cancelled or curtailed.

Fire and Re Fire

The proposals will also restrict the use of  “fire and rehire” approaches, by reforming the law to provide effective remedies and replacing the current statutory code in this area (which only recently came into force on 18 July 2024).

Flexible Working and Family Friendly Rights

A number of changes are also being proposed to enhance flexible working and family friendly rights. The Government has committed to making flexible working the default for all workers from day one and requiring employers to accommodate this as far as is reasonable.

The legislation will also make unpaid parental leave available from day 1 for all workers and strengthen protection for new mothers by making it unlawful to dismiss a woman who has had a baby for six months after her return to work, except in specific circumstances. It is unclear what these specific circumstances would be, and it appears that this protection will be limited to maternity leave (rather than adoption/shared parental leave as well).

Sick Pay

Labour has also promised under the Employment Rights Bill to strengthen sick pay to make sick leave available from day 1 for all workers by removing the current 3 day waiting period and the lower earnings limited for statutory sick pay.

Trade Union Recognition

The Government also plans to simplify the trade union recognition process and repeal recent changes in relation to industrial action. This is intended to ensure industrial relations are based around good faith negotiation and bargaining.

Equality (Race and Disability) Bill

In addition to the above changes, the Government is also proposing to introduce an Equality (Race and Disability) Bill. This legislation aims to deliver on the Government’s intention to introduce mandatory disability pay gap reporting for large employers with more than 250 employees. The Government has said that this will create a more equal society and support a growing economy.

The bill will also expand the equal pay regime to cover the protected characteristics of race and disability. At the moment this legislation only applies as between men and women.

Minimum Wage Rates

The briefing notes also set out the new Government’s commitments to introduce a “genuine living wage” by:

• linking the National Living Wage to the cost of living, taking into account economic conditions and
• removing the lower rates that apply 18 to 20 year-olds, so that everyone benefits from the same rates.

When do the changes take effect?

The King’s Speech confirms that the Employment Rights Bill is set to be introduced with in the first 100 days of this new Government, suggesting that the draft legislation will be laid before parliament by mid-October 2024. However, whilst the Government wishes to move swiftly, it will take some time for the legislation to be considered by both Houses of Parliament. Some of the changes will also require changes to secondary legislation, and related codes of practice, which will also require consultation. As such, the changes may take some time to come into effect.

What can employers do to prepare?

As noted above, we await further clarification and guidance on how this new legislation will apply which is likely to follow later this year.

However, employers can start to think about their current policies, contractual terms and recruitment processes. This would be a good time for employers to reflect upon and become familiar with how they operate their policies in practice.

Given the changes to unfair dismissal protection, it is likely that probationary periods will become an important area. As such, organisations may wish to review their existing approach to probationary review meetings, and how they work in practice across different teams and managers. Understanding the current approach being taken will make any adjustments easier as and when the legislation does come into effect.

If you have any questions about this blog, or any other employment matters, please do not hesitate to contact a member of the Employment team.

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