Two bills on employment law were just announced in the King's Speech – an Employment Rights Bill and a draft Equality (Race and Disability) Bill. Here's our initial take.
You know what they say: you wait ages for an employment bill, and then two come along at once. But with workers' rights at the centre of the Labour party's manifesto it's no surprise that, among the 40 bills and draft bills just announced in the King's Speech, there are two separate bills on employment law. This article explains what we know so far about what to expect and when.
Employment Rights Bill
The Employment Rights Bill is going to be "introduced" by 12 October 2024 (we'll come back to what's meant by that) and will include new laws needed to implement Labour's New Deal for Working People, including:
- day 1 employment rights, including rights not to be unfairly dismissed (though employers will be able to operate probationary periods);
- ban on 'exploitative' zero-hours contracts, ensuring workers have rights to a contract reflecting average hours worked and more security over shift scheduling;
- restrictions on 'fire and re-hire' and 'fire and replace';
- making flexible working the default from day 1;
- establishing a new state enforcement agency, called the Fair Work Agency; and
- new rights for unions to access workplaces and other union-friendly reforms.
In addition to these headline points, the Employment Rights Bill is likely to include other measures to introduce Labour's New Deal plans. We won't know the final contents until we see the text but we still expect Labour to press ahead with the whole package of reforms it has previously announced.
For a full break down of Labour's plans for employment law, see our employment law policy dashboard and other guidance on our Labour Policy Impact Hub.
Draft Equality (Race and Disability) Bill
Alongside the Employment Rights Bill, Labour also plans a draft bill to:
- extend the equal pay regime so that it covers race and disability as well as sex; and
- introduce mandatory ethnicity and disability pay reporting for employers with at least 250 people.
We think Labour's plans to change discrimination law to extend the complex equal pay regime to race and disability are flawed. It's still possible that this plan will be dropped before the bill is finalised.
How quickly will all of this happen?
This is the key question that employers are asking. We wrote about how quickly Labour could implement these changes earlier this month. It's still not clear if Labour will table the Employment Rights Bill immediately or consult on a draft first, but the promise to "introduce" this bill within the first 100 days suggests that final text will be laid before parliament by 12 October 2024.
Before being signed into the law, however, the Bill would need to go through both houses of parliament (and could be amended along the way). This will take several months. Even after the Bill becomes law, many measures still won't take effect immediately because they may need substantial secondary legislation or codes of practice – or both – to put them into practice.
So our view remains that significant change is not going to happen this year. The introduction of day 1 unfair dismissal rights is probably the biggest change on the horizon but this is going to require an updated (or new) Acas Code of Practice, which will need to be consulted on. We still think it's unlikely that this change will be implemented until October 2025 or April 2026.
The Equality (Race and Disability) Bill is described as a "draft" Bill, so looks to be less of a priority than the Employment Rights Bill and is likely to take longer to become law. We can expect more extensive consultation on the content and measures to be included in this.
What else did we learn from the King's Speech?
The notes to the King's Speech repeat the government's commitments on the National Living Wage. Those commitments are to:
- link the National Living Wage to the cost of living, and
- remove the lower rate for 18- to 20-year-olds.
The government could achieve both changes relatively quickly outside of the Employment Rights Bill because neither change requires primary legislation. It seems likely that a new cost-of-living-sensitive minimum wage will take effect in April 2025 but it's unclear if Labour will delay or phase in the abolition of the 18-20 age band to give businesses more time to adjust.
The King's Speech also promised reforms to the apprenticeship levy and the establishment of Skills England (as promised, and as we wrote about here).
Finally, although there had been recent reports that the King's Speech would announce an AI Bill, that did not materialise. The King's Speech did commit to introducing new rules for developers of the most powerful AI models, confirming that Labour favours a tougher stance on AI regulation than the previous government. But for now, regulation looks to be targeted at specific safety concerns rather than wide ranging legislation.
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