The King's Speech - what employers need to know

His Majesty the King has set out the government’s legislative priorities for the new parliamentary period, including an Employment Rights Bill and an Equality (Race and Disability) Bill.

The government has described the Employment Rights Bill as “the biggest upgrade to workers’ rights in a generation”, intended to level up workers’ rights, so that “every person has security, respect and dignity at work”. The Equality (Race and Disability) Bill aims “to root out the structural injustices that make it harder for people of colour to thrive”.

In keeping with election promises, the Employment Rights Bill is set to be introduced within 100 days, with the aim of enhancing workers’ rights in a number of ways, including:

• banning what the government considers to be “exploitative zero-hours contracts”, giving workers a right to a contract which reflects their average working hours, reasonable notice of shift changes, and adequate compensation for cancelled or curtailed shifts. These reforms go much further than those set out in the Workers (Predictable Terms and Conditions) Act 2023, which was expected to come into force in September but will now likely be dispensed;
   
• providing “effective remedies” for workers subjected to the practice known as “fire and re-hire”, and strengthening the previous government’s new statutory code on dismissal and reengagement (which came into force on Thursday 18 July 2024);
   
• protecting all workers from unfair dismissal from their first day of work. The government considers that extending protection from unfair dismissal will encourage more workers to switch jobs, which is associated with higher wages and productivity growth; it may, however, inhibit recruitment and reduce moves towards greater diversity. Labour has confirmed that it will not prevent employers from operating probationary periods “with fair and transparent rules and processes”, but we await further details as to how this will apply in practice. Extending protection from unfair dismissal, combined with other changes set out in this Bill, will likely place the employment tribunals under even greater pressure;
   
• making parental leave available from the first day of work. It is unclear whether the government is referring to the statutory right to take parental leave, entitlement to which currently requires at least one year’s service; or whether the government is referring to parental leave more generally, including paternity leave and shared parental leave, which both require 26 weeks’ service before the relevant qualifying week;
   
• giving workers entitlement to statutory sick pay from the first day of absence and removing the lower earnings limit. The government recognises that, at present, 1.5 million people earn below the lower earnings limit and the three-day waiting period disproportionately affects the lowest paid workers working part time or in low paid multiple jobs;
   
• making flexible working the default position from the first day of employment, “with employers required to accommodate this as far as is reasonable”. There is no indication as to how this will be implemented in practice, and we expect that employers will still need some form of request and consultation procedure to identify and resolve pragmatic issues around working arrangements. Currently, employers may only refuse a request to work flexibly for a limited number of reasons; it remains to be seen the extent to which the requirement to accommodate flexible working “as far as reasonable” extends employers’ existing obligations;
   
• making it unlawful to dismiss a woman within six months of returning from maternity leave “except in specific circumstances”. The law already protects such women (including recently granting them priority in relation to suitable alternative employment in a redundancy situation), so it will be interesting to see how the government intends to implement greater protections in this area;
   
• establishing a new Single Enforcement Body, known as a Fair Work Agency, to strengthen enforcement of workplace rights through a coordinated approach across agencies; and
   
• removing restrictions on trade union activity, ensuring industrial relations are based around good faith negotiation and bargaining, as well as simplifying the process of statutory recognition and granting a reasonable right to access a union within workplaces.

Although the King’s Speech and background briefing notes do not make express reference to removing the intermediary “worker” status (and instead creating a single status for all working people other than the genuinely self-employed), a number of the extended rights referenced in the briefing notes (including the right to take parental leave and to protection from unfair dismissal) are currently only available to those with employee status, yet the notes refer to such rights applying to “all workers”. It seems that we can, therefore, expect a re-classification of employment status.

The Employment Rights Bill seeks to introduce substantial changes to existing employment law. Given the complexity of some of the reforms and the level of detail that will need to be considered, together with the government’s commitment to carry out “full and detailed consultation” on some of their plans, the 100-day timeframe for introducing the Bill is ambitious.

The government also intends to introduce a Draft Equality (Race and Disability) Bill giving the full right to equal pay for ethnic minorities and disabled people and introducing mandatory ethnicity and disability pay reporting. The government recognises that ethnic minority groups earn less than the White British group, and disabled people have, on average, lower incomes than non-disabled people. There is currently no standalone claim to equal pay based on anything other than gender and, although other such claims may be fashioned through existing anti-discrimination legislation, bringing such claims is difficult. The proposal to introduce mandatory ethnicity and disability pay gap reporting is not new; voluntary reporting is already encouraged, but previous governments have decided not to implement mandatory reporting due to lack of adequate data collection and the challenge of categorising different ethnic groups and disabilities. These are still issues that the new government will need to address.