The summer holidays are coming to an end and Autumn is in sight, which means back to school and work for many of us, including the new Labour Government when Parliament reconvenes on 2 September 2024.
Labour has made it clear there will be seismic changes affecting employers during its office and it is intending to make big steps towards that in its first 100 days of office, which takes us up to 12 October 2024. We reported in our article on the new Labour Government’s plans immediately following the election results and Sir Keir Starmer’s appointment as Prime Minister on 5 July.
Since then further meat has been put on the bone with the King’s Speech on 17 July, which set out the New Labour government’s priorities for the months ahead. Two employment law bills were announced, which are the Employment Rights Bill and Draft Equality (Race and Disability) Bill (outlined below).
What do the two Employment bills cover?
- Employment Rights Bill
The Employment Rights Bill will lead to the primary legislation required to deliver Labour’s Plan to Make Work Pay: Delivering A New Deal for Working and is anticipated to be laid before Parliament by 12 October 2024.
According to the King’s Speech the Employment Rights Bill will cover the following policies:
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- Labour’s plan to outlaw “exploitative” zero hours contracts. (Individuals will be entitled to have an average hours contract of employment that reflects their working pattern based on a reference period).
- Clamping down on fire and re-hire procedures as they have been occurring. The intention is to replace and strengthen the statutory code that recently came into force on 18 July 2024 as intended by the previous Conservative Government. See our article on these changes.
- Key employment rights being applicable from day one for all workers, including sick pay, parental leave and unfair dismissal rights (subject to probationary periods for new staff).
- Overhaul of trade union legislation, including removal of restrictions on trade union activity, simplifying the statutory recognition procedure, allowing trade unions to access workplaces to recruit and organise.
- Remove the lower earnings limit and waiting period from the SSP eligibility framework.
- Making flexible working the default position from day one of employment with employers required to accommodate this as far as is feasible.
- Unlawful to dismiss mothers for six months after return to work, save for in specified circumstances.
- Establishing a single enforcement body to strengthen the enforcement of workplace rights.
- Setting up a fair pay agreement in the adult social care sector with a view to assessing whether such an agreement could also benefit other sectors.
- Reinstating a school support staff negotiating body for national terms and conditions, career progression routes and fair pay rates.
The Employment Rights Bill may well include other policies announced by the government before it came into power. See our articles on Labour’s manifesto pledges and proposals for details of this.
- Draft Equality (Race and Disability) Bill
The King’s Speech included the announcement of a second bill of employment legislation, which is intended to:
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- Broaden out statutory rights to equal pay on the basis of gender to also include equal pay rights for ethnic minorities and people with disabilities, making it easier for them to bring equal pay claims.
- Introduce mandatory ethnicity and disability pay reporting for employers with at least 250 people with the aim to close ethnicity and disability pay gaps.
To put this into context, the background briefing notes to this draft Bill from the King’s Speech 2024 state that the majority of ethnic minority groups earn less than the White British group and on average disabled people have lower incomes than non-disabled people (in 2021 there was a 13.8% disability pay gap).
When are these changes likely to take effect?
Labour has promised to have a full consultation on its New Deal before implementing it, which may entail a consultation on a draft Employment Rights Bill, but this is unclear currently. Its promise to “introduce” the bill within the first 100 days indicates it will be laid before Parliament by 12 October this year. The Bill would need to progress in the usual way through the two houses of Parliament. There would undoubtedly need to be secondary legislation and codes of practice to flesh out the detail of some of the new proposed employment policies.
In addition, it has been the convention for new employment legislation to be introduced twice a year in April and October and this could cause a delay. However, that is not to say a Labour Government would have to follow this pattern. In short, it could take some time for proposals in an Employment Rights Bill to become law, several months up to possibly a couple of years or more.
When it comes to Draft Equality (Race and Disability) Bill this may not be achieved as statutory law until at least towards the end of a first term as government. Labour’s proposals to put in place disability and ethnicity pay gap reporting may take some time to implement in practice.
Are any changes in employment law planned soon?
There is certainly low hanging fruit in terms of employment law changes that Labour could potentially achieve as quick wins from this Autumn 2024 until April 2025 as follows.
- National Living Wage
The Labour Government has announced the introduction of a genuine living wage that takes into account the cost of living and to removes the age bands for the national minimum wage (NMW) for adult workers, which it considers to be discriminatory. It is understood that this will be achieved outside of the Employment Rights Bill, as the changes do not require primary legislation. So, it is quite possible that a new cost of living sensitive minimum wage could take effect as soon as April 2025.
- Statutory sick pay
As another day one right Labour intends to strengthen rights to Statutory Sick Pay (SSP), which entails removing the lower earnings limit to make it available to workers and remove the three-day waiting period before SSP is payable. These changes are anticipated to be included in the Employment Rights Bill and could be implemented relatively easily as soon as April 2025.
- Tips Act
New legislation is already timetabled to come into effect in October 2024 requiring employers to ensure all tips, gratuities and service charges are allocated fairly and transparently between their workers. Labour has confirmed its proposal to strengthen the law for hospitality workers to receive their tips. It seems likely Labour is planning to proceed to implement the current legislation in the pipeline and this would be a quick win. See our article for the details.
- Predictable Terms Act
This draft legislation seeks to provide workers with the right to request (note not to have) a more predictable pattern, if theirs lacks predictability. Although this Act has already received Royal Assent it requires regulations to come into force. It is currently due to come into force in September 2024 and Labour could use it as a means towards progressing what it wants to achieve for zero hours workers. But, it seems to date Labour has been silent about its intentions here.
This article was written by Laura McFadyen, partner in our Employment team, and Tom Laws, paralegal in the Employment team.