Government confirms plans to make work pay

September 2, 2024

The King’s Speech on 17 July 2024, during which the new Labour government set out its priorities for the months ahead, outlined 35 draft laws which included two bills relating to employment rights: the Employment Rights Bill and the Draft Equality (Race and Disability) Bill.

The Employment Rights Bill

The Government has confirmed that it is committed to delivering its New Deal for Working People in full. The Employment Rights Bill (the Bill) is to be introduced within the first 100 days.

Whilst the content of the Bill has not been confirmed, the King’s Speech indicated that the new Labour Government will focus on:

Making parental leave, sick pay, and protection from unfair dismissal available from day one on the job for all workers. Employers will be able to operate probationary periods to assess new hires. This is a key change in employment law and employers are advised to monitor this situation carefully. Currently, employees must be employed for 2 years’ before they have the right to bring an ordinary unfair dismissal claim.
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. Zero hours contracts are common in the health and social care sector and this change would have a significant impact on employers in this industry.
Ending ‘Fire and Rehire’ and ‘Fire and replace’ by reframing the law to provide effective remedies and replacing the previous statutory code. Unexpectedly, a new Statutory Code on Dismissal and Re-engagement (Code of Practice) came into force on 18 July 2024, which had been prepared by the previous government. In a Ministerial Statement, Jonathan Reynolds, Secretary of State for Business and Trade, confirmed that ‘we have decided not to prevent the previous government’s Code of Practice from coming into force today’. While the Code is an inadequate measure to deal with fire and rehire, it will at least provide a small additional level of protection for workers while we bring forward legislation to implement our commitments on fire and rehire in our Plan to Make Work Pay’.
Strengthening Statutory Sick Pay by removing the lower earnings limit and the waiting period.
Making flexible working the default from day one for all workers, with employers required to accommodate this as far as is reasonable.
Strengthening 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.
Establishing a new Single Enforcement Body, also known as a Fair Work Agency, to strengthen enforcement of workplace rights.
Establishing a Fair Pay Agreement in the adult social care sector and assess how such agreements could benefit other sectors.
Updating trade union legislation so it is fit for a modern economy.
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 workplace.

The Government will also deliver a genuine living wage that accounts for the cost of living and remove the minimum wage age bands.

The Draft Equality (Race and Disability) Bill

Under a separate Equality (Race and Disability) Bill (the Equality Bill), Labour intends to ‘tackle inequality for ethnic minority and disabled people’ by:

Enshrining in law the full right to equal pay for ethnic minorities and disabled people, making it easier for them to bring forward equal pay claims where they have been underpaid.
Introducing mandatory ethnicity and disability pay reporting for employers with 250+ employees to help close the ethnicity and disability pay gaps.

Comment

Labour has confirmed that it will work in partnership with trade unions and businesses to deliver its New Deal for Working People and is therefore expected to consult on the draft Bill. It is unclear whether consultation will take place in relation to the Equality Bill.

This is a situation that is evolving quickly. Employers are best advised to consider their current practices in line with the proposals that have been announced and be prepared for change.