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Following the election of the new Labour government, significant changes to employment law are on the horizon. The first King’s Speech on 17 July 2024 outlined two major pieces of new legislation—the Employment Rights Bill and the Draft Equality (Race and Disability) Bill. These Bills, if passed, will reshape the workplace landscape, impacting the employment relationship from recruitment through to termination.
The new legislation will deliver the policies set out in Labour’s “Plan to Make Work Pay” which was published in May 2024 in advance of the General Election. On 12 August 2024, it was confirmed by a Labour peer that the government is committed to implementing the plan in full.
So what changes are likely to be on the horizon? And what should employers do now?
1. Day One Employment Rights
Labour’s Employment Rights Bill is set to introduce basic employment rights from day one of employment, including parental leave, sick pay, and protection from unfair dismissal. While probationary periods will be allowed, employers will still need to ensure that dismissals are fair and transparent. This means employers will need to be careful to follow appropriate procedures where disciplinary or performance issues arise early in the employment relationship and ensure their policies have been reviewed and updated appropriately. It may also be helpful to provide refresher training to managers on fair dismissal practices.
2. Flexible Working
The Employment Rights Bill also aims to make flexible working the default option from day one, except where it is not reasonably practicable. This shift could go beyond the changes introduced in April 2024 which gave an employee the right to request a flexible working pattern from day one of their employment, and could potentially limit the statutory grounds on which flexible working requests can be refused. In anticipation of these changes, employers may wish to assess their current flexible working policies and practices and take a fresh look at the types of patterns that they may be able to accommodate.
3. Zero Hours Contracts
Labour has long been critical of what they consider to be “exploitative” zero hours contracts. In its “Plan to Make Work Pay”, Labour has committed to ensuring workers have contracts reflecting the number of hours they regularly work based on a 12-week reference period, and receive compensation for cancelled shifts. On this basis, it is expected that the Employment Rights Bill will contain a ban on “exploitative” contracts. We are yet to see whether the government will define this term, but it would be sensible for employers that are heavily reliant on zero hours workers to reflect on their arrangements.
4. Fire and Rehire
The Employment Rights Bill will also end fire and rehire practices, replacing the current statutory code of practice with more robust protections. Whilst the government has accepted that there may be cases where there is no genuine alternative, employers will likely still be required to follow an appropriate process which involves meaningful consultation. Employers who have had to use fire and rehire practices should be advised to reflect on any learnings in anticipation of more robust requirements.
5. Protection for New Mothers
Labour’s proposed legislation will make it unlawful to dismiss a woman who has recently returned to work after having a baby for six months, except in specified circumstances. This reinforces the need for fair and transparent maternity policies and careful handling of any employment decisions involving new mothers. Employers may wish to reflect on the content of their policies and ensure that managers are trained appropriately on supportive return to work practices.
6. Workplace Equality
The Draft Equality (Race and Disability) Bill is intended to enshrine in law the full right to equal pay for individuals who are from ethnic minorities or are disabled, and introduce mandatory ethnicity and disability pay gap reporting for large employers. Whilst this Bill is described as a draft and will likely be subject to consultation, it is expected that the proposed changes will mirror the existing measures relating to equal pay and gender pay gap reporting. Whilst some large employers are already going beyond the core requirements in relation to pay gap reporting, the changes may be an extension to the current practices of others. Employers who have gathered data on their ethnicity and disability pay gaps would be sensible to review the trends and consider the need for specific action plans.
7. Living Wage
The government has also committed to delivering a “genuine” living wage that accounts for the cost of living and removing the current age bands for National Minimum Wage. The government has already updated the remit of the Low Pay Commission to be able to implement these changes. Whilst the timescales are not yet clear, it would be advisable for employers paying National Minimum Wage to budget for an increase to their salary bill.
The upcoming changes represent a significant shift in employment law, but with proactive planning, employers can navigate this new landscape effectively and ensure they are well-prepared for Labour’s new legislative framework.
If you would benefit from employment advice or training in your organisation, please contact Alice Kinder: alicekinder@bexleybeaumont.com | 07526 372580
