The King’s Speech – roadmap for employment law reform

Practitioners have been waiting for the King’s Speech with interest to see which proposals previously made by the Labour Party would be mentioned and form the basis of legislation to be passed in the near future.
 

Key employment-related headlines from the speech itself are:

• a commitment to “make work pay” by legislating to introduce “a new deal for working people to ban exploitative practices and enhance employment rights” (via an Employment Rights Bill); and
• legislation on race equality being “published in draft to enshrine the full right to equal pay in law” (Draft Equality (Race and Disability) Bill).

Although the speech provides little detail on these proposals, its background briefing notes reveal more.

Employment Rights Bill

The Government has reiterated its commitment to introduce this particular piece of legislation within its first 100 days in office and states that it represents “the biggest upgrade to workers’ rights in a generation”. 

Although it has emphasised its commitment to delivering its New Deal for Working People “in full”, the Government has also stated that it will work with trade unions and business and invite their views on how best these plans can be put into practice.  This suggests that there is still room for movement on these proposals depending on the views of interested parties and employers/businesses would be well advised to engage in any consultation process around them. 

It is also interesting to note that not all of the proposals in the New Deal are referred to in the description of the Bill.  Elements of the New Deal specifically referred to as forming part of the Bill include:

• banning “exploitative zero-hours contracts” so that workers have a contract reflecting the hours they regularly work and get reasonable notice of any changes in shifts and “proportionate compensation” for any shifts cancelled or curtailed.  Inclusion of the word “exploitative” (mirroring the wording in Labour’s manifesto and New Deal) suggests reform in the way zero-hours contracts operate, as opposed to an outright ban;
   
• “ending the scourges of ‘Fire and Rehire’” by reforming the law and replacing the previous Government’s statutory code on this.  Again, the language suggests that the existing rules and statutory code will be replaced by something else, as opposed to the practice being banned completely;
   
• making parental leave, sick pay and protection from unfair dismissal a “day one” right (subject to employers being able to operate probationary periods to assess new hires).  The most significant change here is no doubt that in relation to unfair dismissal which, if enacted, would represent a seismic shift from the current position.  However, the devil will be in the detail once the draft legislation is published.  One can envisage a system where more formal rules around how probationary periods work could effectively replace the existing qualifying period of service for unfair dismissal claims.  Whilst this is likely to be an area of concern for many employers, such a change could also reduce the number of discrimination and whistleblowing claims in that, currently, those without protection from unfair dismissal (because they do not have the requisite period of service), seek to allege claims under those heads if they can in order to resolve disputes about the termination of their employment.  The abolition of the “waiting period” for statutory sick pay is also likely to have significant implications for smaller employers in particular;
   
• making flexible working “the default from day-one for all workers”, with employers required to accommodate this as far as reasonable to reflect the modern workplace.  Query here what is actually meant by “flexible working” but, whatever the precise meaning may be, it represents a significant shift from the current position which allows workers to make a request for flexible working with no obligation on the employer to agree (though the grounds for refusal are limited).  This change would mean workers will automatically have the ability to work flexibly from the beginning of employment and it would be more difficult for employers to refuse this.  Although employers operating flexible or hybrid working practices already are less likely to be impacted, those increasing the emphasis on office-based working following the pandemic and those without sufficient resource/staffing to cover all their operating hours if significant numbers of people work flexible hours are likely to be more concerned.  One would expect, however, that the new measures would also include mechanisms for employers to resist particular working practices requested if they would have a negative impact on their business and operations;
       
• 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 single enforcement body called the “Fair Work Agency” to strengthen enforcement of workplace rights; and
   
• updating trade union legislation to abolish the “minimum service levels” rules introduced by the previous Government and simplify the process of statutory recognition for trade unions.

Draft Equality (Race and Disability) Bill

In a nutshell, this draft Bill will introduce two significant measures aimed at tackling inequality for ethnic minority and disabled people:

1. Introducing mandatory ethnicity and disability pay gap reporting for large employers (those with at least 250 employees).  It is intended that the rules around this will mirror those currently in place for gender pay gap reporting.  Some employers are already voluntarily reporting on their ethnicity and disability pay gaps (there is government guidance in place on the former).  However, there has been – and continues to be – much debate on the practicalities of this and, in particular, on obtaining the data necessary to report on and explain any gaps in pay.  Ethnicity and disability are, for example, more nuanced concepts than gender and having definitions/categories that “work” for all employers and sectors across the board would be a significant challenge.
    
2. Enshrining in law the full right to equal pay for ethnic minorities and disabled people, “making it much easier for them to bring unequal pay claims”.  This is based on the Government’s view that it is currently difficult for claimants to bring pay discrimination claims on the grounds of ethnicity or disability. The Government is intending to achieve this by introducing measures which mirror those currently in place relating to equal pay (between men and women).  Although the Government’s stated aims are admirable, it is unclear how such measures would make the challenging of unequal pay on the grounds of race or disability “much easier” given the great complexity of equal pay claims and the difficulties faced by those seeking redress under the existing provisions.

These proposals no doubt represent a significant shift in workplace relations and the Government’s assertion in this regard is no exaggeration if they are passed as currently outlined.  However, the detail around these reforms will be key and we will not have that until the wording of the draft legislation is published.  Further, the Government’s commitment to consult and work with interested parties could result in a number of these measures being amended. 

Employers should therefore continue to monitor developments and actively engage in consultations launched on any proposals that they are particularly concerned about in order to have their voice heard.

If you are interested in reading more legal commentary about the impact of the new Labour Government, please see our new Hub.

Further Information

If you have any questions or concerns about the topics raised in this blog, please contact Niki Southern, Özlem Mehmet or any member of the Employment team.

About the Authors

Niki Southern is a partner in the employment team. She combines technical rigour with commercial nous and a pragmatic, strategic approach to place clients in the best possible position to avoid litigation, initiate claims or, for employers, provide a strong defence to any claims and reach favourable resolutions.

Özlem Mehmet is a Senior Professional Support Lawyer in our Employment Team. Before joining Kingsley Napley, Özlem was a Tutor and Team Leader at BPP University’s Law School, teaching on the Legal Practice Course. She taught the Employment Law, Business Law & Practice, Corporate Finance and Equity Finance modules of the course, as well as the skills modules of Interviewing & Advising and Professional Conduct & Regulation.