Key Employment Law Takeaways from the King’s Speech

The King’s Speech confirmed that the Government would introduce the Employment Rights Bill (‘the Bill’) to provide new laws to aid in implementing the ‘New Deal for Working People’.

In the background briefing notes to the King’s Speech, published by the Prime Minister’s Office, the Government have committed to introduce the Bill within the first 100 days of office.

The Bill will include provisions to:

1. Ban ‘exploitative’ zero-hour contracts

Zero-hour contracts (also known as casual contracts) offer no guarantee of work; individuals are only paid for the hours they work.
Such contracts are used to call staff to work as and when required, with neither the employer nor the employee being obligated to provide regular work or to do the work when asked.

The Government has pledged to ban ‘exploitative zero-hour contracts’, ensure workers have a right to a contract that reflects the number of hours they regularly work, and provide all workers with reasonable notice of any shift changes as well as proportionate compensation for any cancelled or curtailed shifts.

According to the Office for National Statistics, in the first quarter of 2024, just over one million people were engaged in zero-hours contracts.

Given the extensive practice of such contracts and the use of the word ‘exploitative’, it may be that we don’t see a total ban on zero-hour contracts but only on those that meet the (yet undefined) threshold of being exploitative.

Further clarity will likely be provided once the draft Bill is published.

2. Ending the practice of ‘Fire and Rehire’

The practice of ‘fire and rehire’ refers to an employer dismissing employees and rehiring them on new terms.

We are not provided with a great amount of detail on how the Labour government intends to bring an end to these practices, but they have indicated that effective remedies will be provided for, and the statutory Code of Practice will be replaced.

The current Code of Practice (implemented by the Conservative Government) came into force on 18 July 2024.

The code requires employers to consult employees and explore alternative options without raising the prospect of dismissal unreasonably early or using the threat of dismissal as a negotiating tactic to put undue pressure on employees in circumstances where the employer is not envisaging dismissal.

It seeks to ensure that dismissal and re-engagement are used only as a last resort.

Employment Tribunals hearing relevant claims must consider this, and compensation for some claims can be increased (or decreased) by up to 25% if there has been an unreasonable failure to follow the code.

However, the ability to increase (or decrease) compensation does not apply to the compensation available for a breach of collective consultation rules (known as a protective award).

This is because the draft legislation to permit this did not receive approval from the House of Commons and the House of Lords before the General Election.

This may be resolved as part of the Labour government’s proposal for ‘effective remedies’.

When in opposition, Labour criticised the code for not going far enough. The new Government intends to replace the code with a ‘strengthened version’ as soon as it has brought forward legislation on fire and rehire. 

3. Providing Day-One Rights

The Government have indicated that they will make parental leave, sick pay and protection from unfair dismissal a ‘day one’ right.

The hope is that enhancing protections for workers from day one would ‘encourage more workers to switch jobs, which is associated with higher wages and productivity growth’.

However, it is not yet clear whether ‘parental leave’ refers to family leave provisions generally rather than the statutory right to take parental leave or how the new law in relation to unfair dismissal will govern probationary periods, which the background briefing notes to the King’s Speech state will still be available to employers to ‘assess new hires’.

4. Strengthening Statutory Sick Pay

Statutory Sick Pay (SSP) is currently unavailable for the first three days of absence.

As above, the Government has proposed to remove this three-day waiting period and the lower earnings limit.

Currently, SSP cannot be claimed by employees earning less than £123 per week, and, as detailed in the background briefing notes to the King’s Speech, 1.5 million people currently earn less than this.

The intention is to make it available to all workers.

5. Making flexible working the default

The law regarding flexible working changed in April 2024, allowing all employees with a ‘day one’ right to make a flexible working request.

The change also required employers to specifically consult with the employee if it was considering not wholly accepting the employee’s request before being able to refuse the same.

The new Government proposes to require all employers to accommodate flexible working as far as it is reasonable to ‘reflect the modern workplace’.

Given the law already requires an employer to reasonably deal with a flexible working request, it will be interesting to see how the new law can enhance this obligation.

It may be that the eight business reasons under which an employer can reasonably refuse a request are considered, and more stringent guidelines are established.

6. Strengthening protections for new mothers

The proposal is to make it unlawful to dismiss a woman who has had a baby for six months after her return to work, except in specific circumstances.

Whilst this is a step in the right direction for many pregnancy and maternity discrimination lobbyists, there is currently no clarification as to what ‘specific circumstances’ mean.

We expect to see more detail in the proposed Employment Rights Bill.

7. Establishing a Fair Work Agency, a Fair Pay Agreement and reinstating the School Support Staff Negotiating Body

Although further details have not been provided, the Government has pledged to establish a new ‘Single Enforcement Body’, otherwise known as a ‘Fair Work Agency’, to strengthen workplace rights enforcement.

The proposal is to establish a fair pay agreement in the adult social care sector and, after review, assess how and to what extent agreements could benefit other sectors.

Additionally, the Government has proposed reinstating the School Support Staff Negotiating Body.

The Body was initially set up under Labour to devise a national scheme of pay and conditions for support staff (including caretakers, office workers, and teaching assistants), but this was abolished in 2010.

The reinstatement aims to establish national terms and conditions, career progression routes, and fair pay rates.

8. Updating trade union legislation

Another sweeping proposal by the new Government is that of ‘updating trade union legislation so it is fit for a modern economy’.

This would include disposing of ‘unnecessary restrictions on trade union activity’, including the Conservative Government’s attitude towards minimum service levels, and ensuring that industrial relations are centred around ‘good faith negotiation and bargaining’.

9. Simplifying the process of statutory recognition

Statutory recognition is the process whereby a trade union may apply (if the employer does not voluntarily recognise it) for the legal right to be recognised by an employer for collective bargaining over various terms, including pay, hours and holidays, concerning a group of workers.

The process consists of a number of steps and relevant deadlines, and the Government’s intention is to simplify the process and introduce a regulated route to ensure workers and trade union members have a reasonable right to access a union within workplaces.

In addition to the Employment Rights Bill, the Government has committed to introduce an Equality (Race and Disability) Bill.
This sets out reforms to the world of work to tackle inequality towards disabled and ethnic minorities.

It proposes to:

• Enshrine the full right to equal pay for disabled and ethnic minority people, making it easier for them to bring unequal pay claims against employers
• To combat disability and ethnicity pay gaps, implement mandatory disability and ethnicity pay reporting for employers with 250 or more employees
• This has not been promised as quickly as the Employment Rights Bill, but it is certainly something that is on the horizon
• Employers will need to ensure that they keep up to date with developments related to this to actively respond to any change in practices regarding pay reporting