What the King’s speech will mean for employers and employees

The King’s Speech on 17 July 2024 announced that the new government was “committed to making work pay and will legislate to introduce a new deal for working people to ban exploitative practices and enhance employment rights”.

In the briefing notes that accompany the King’s Speech, Labour has promised to bring in changes to several areas of employment law.

Firstly, the calculation of National Minimum Wage (NMW) rates will be revised so that the Low Pay Commission takes account of the cost of living when making its recommendations for the minimum wage rates, alongside median wages and economic conditions. It will also remove the age bands to ensure every adult worker over the age of 18 will benefit from the same NMW rate.

Secondly, a draft Equality (Race and Disability) Bill will make it easier for discrimination claims to be brought in respect of differences in pay on these grounds. Mandatory pay gap reporting obligations will also be extended to include disability and ethnicity.

Thirdly, an Employment Bill will introduce the following measures:

• Banning exploitative zero-hour 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 ‘fire and rehire’ and ‘fire and replace’ by reforming the law to provide effective remedies and replacing the previous government’s statutory code. However, Labour acknowledged in the ‘New Deal for Working People Plan’ prior to the election that “it is important that businesses can restructure to remain viable, to preserve their workforce and the company when there is genuinely no alternative, but this must follow a proper process based on dialogue and common understanding between employers and workers” so whether we will see a complete ban on the practice or a limitation remains to be seen.
• Making flexible working the default from day-one for all workers, with employers required to accommodate this as far as is reasonable, to reflect the modern workplace. In other words, “a right to…” flexible working rather than “a right to request” it.
• Strengthening protections 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.
• Establishing a new single enforcement body, to be known as the Fair Work Agency, to strengthen enforcement of workplace rights. This is potentially seen as an answer to the delays encountered in the Employment Tribunal system.
• Updating trade union legislation by 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.
• 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.
• Making parental leave, sick pay and protection from unfair dismissal a ‘day one’ right (in the latter case, subject to probationary periods to assess new hires).
• Extending entitlement to Statutory Sick Pay, by removing the Lower Earnings Limit as well as the three-day waiting period.

The background notes to the Kings Speech state that “…the Government is committed to delivering its New Deal for Working People in full. The (Employment) Bill will deliver on policies as set out in the Plan to Make Work Pay that require primary legislation to implement.”

The reference to ‘require primary legislation’ highlights that some of the changes proposed will not need primary legislation to implement and could be put in place through an order or statutory instrument which will take much less time to process.

A plan to extend time limits for commencing Employment Tribunal claims from three to six months may be brought in through amending legislation. It is also possible that this might apply to the widely announced proposal to change the qualification period for unfair dismissal rights, although that may be more complicated if specific provision is being made allowing for dismissal during a probationary period. The last time that the qualifying period of service for unfair dismissal protection was reduced by a Labour government (from two to one year in 1999) the change was introduced with little more than a week’s notice. The same tactic may be applied this time in order to avoid a rush to dismiss.

Other changes that are included in Labour’s ‘Delivering a New Deal for Working People’ are likely to take longer, which has been acknowledged by Labour’s commitment to carry out full and detailed consultation. This will specifically be in relation to plans to move towards a single status of worker and to make changes to the parental leave regime.

One notable proposal that it appears is not being implemented (or not yet) is the removal of the 12-month limit on compensation for unfair dismissal.

If you need any advice or support around what the above changes may mean for your business, then please contact our employment team who will be able to help with any questions you may have.