Labour’s employment reform unveiled: Insights for City of London employers from the King’s Speech
In today’s King’s Speech [17th July 2024], King Charles III outlined the UK government’s legislative agenda for the new parliamentary season, highlighting Labour’s ambitious plans for employment reform, particularly on race equality and workers’ rights. Sir Keir Starmer, in his inaugural King’s Speech, reiterated his commitment to enhancing workers’ rights and empowering trade unions. The new Government has introduced 40 bills aimed at “accelerating Britain forward,” focusing on stimulating growth and implementing crucial reforms to workers’ rights. The forthcoming Employment Bill, launching within 100 days, marks the beginning of the “new deal for working people,” promising important changes aimed at elevating employment standards nationwide. As Labour’s ‘Make Work Pay’ initiative gains momentum, businesses in the City of London must prepare for a transformative legislative landscape promising enhanced worker compensation and benefits. With key changes looming, organisations of all sizes must adapt swiftly.
Recently, Starmer has moderated discussions on a crucial employment rights bill that sparked significant debate between the Labour leader and unions prior to the election. Despite the diluted nature of the workers’ rights proposals, they remain poised to be a focal point of contention between Starmer’s administration and the business community as the legislation progresses through Parliament. The King’s Speech also underscored the Government’s mission-led approach grounded in principles of “security, fairness, and opportunity for all,” prioritising economic growth.
Here, Sarah Jo Loveday FCIPD FRSA delves into the key proposals related to the employment reform initiative and their implications for employers.
Under plans to ban ‘exploitative’ working practices, the King emphasised the Government’s commitment to making work pay and eliminating exploitative practices as part of the Labour Party’s reform agenda. This aims to bolster employment rights and establish equitable working conditions.
The Employment Rights Bill introduces sweeping changes, including:
Parental leave, sick pay, and protection from unfair dismissal: These benefits will be available from day one of employment for all workers, while probationary periods will continue for assessing new hires.
Strengthening Statutory Sick Pay: Removing the lower earnings limit to ensure availability to all workers, alongside the waiting period.
Enhancing protections for new mothers: Making it unlawful to dismiss a woman who has recently returned to work after having a baby, with exceptions under specific circumstances.
Ending the issues of ‘Fire and Rehire’ and ‘Fire and Replace’: Reforming laws to provide effective remedies and replacing outdated statutory codes.
Establishing a Fair Pay Agreement in the adult social care sector: Following review, the Government will assess how and to what extent such agreements could benefit other sectors.
Reinstating the School Support Staff Negotiating Body: Aiming to establish national terms and conditions, career progression routes, and fair pay rates.
Banning exploitative zero-hours contracts: Workers will have the right to a contract that reflects the number of hours they regularly work, and all workers will receive reasonable notice of any changes in shift, with proportionate compensation for any shifts cancelled or curtailed. This does not mean that zero-hours contracts will be entirely banned.
Flexible Working: Making flexible working the default from day one, requiring employers to reasonably accommodate these requests.
Enforcement and Trade Union Reforms: Launching a new Single Enforcement Body, the Fair Work Agency, to enforce workplace rights. Updates to trade union legislation will facilitate easier union access and fair negotiation.
Other legislative measures of interest to employers include:
- Race Equality: Introducing legislation to enshrine equal pay rights in law, requiring pay gap reporting for firms with 250+ employees, and extending protections to ethnic minorities and disabled individuals.
- Mental Health Reforms: Overhauling the Mental Health Act to enhance patient rights and support, impacting workplace mental health strategies nationwide.
Recommendations for employers:
- Review and update policies regularly: Given the breadth of upcoming changes, it’s crucial to review and update policies on parental leave, sick pay, and dismissal procedures to ensure compliance with the new Employment Rights Bill. Consider integrating these changes into your employee handbooks and contracts.
- Enhance support for new parents: Prepare to accommodate the extended protections for new mothers, ensuring policies and practices align with the new legislation. Provide training for managers on handling maternity-related issues sensitively and legally.
- Continue to adapt to flexible working requirements: As flexible working becomes the default from day one, evaluate your current operational models and develop guidelines for managing flexible arrangements while maintaining productivity and team cohesion. Foster a culture that values work-life balance.
- Prepare for zero-hours contract reforms: Although zero-hours contracts won’t be entirely banned, ensure contracts accurately reflect hours worked and provide reasonable notice of shift changes. Review scheduling practices to minimise disruption for affected employees.
- Compliance with equality reporting: Prepare for mandatory ethnicity and disability pay reporting if applicable to your organisation. Conduct pay audits to identify and address any disparities proactively. Update diversity and inclusion strategies to foster a fair and equitable workplace culture.
- Address mental health in the workplace: Anticipate the impact of mental health reforms by reviewing current support systems and policies. Consider implementing mental health training for managers, promoting open dialogue, and providing access to professional support services for employees.
- Engage with trade unions: With reforms aimed at facilitating easier union access and fair negotiation, proactively engage with trade unions to build constructive relationships. Prepare for potential changes in collective bargaining processes and ensure your organisation’s stance on union rights aligns with legal requirements.
- Stay informed and communicate changes: Keep abreast of legislative updates and communicate changes transparently with employees. Provide clear guidance on how new policies and rights affect them, emphasising your commitment to compliance and employee welfare.
- Update employment contracts: Where applicable, ensure that employment contracts reflect the new legislation.
- Prepare for increased disputes: Strengthen your dispute resolution mechanisms (including workplace mediation) to handle a potential increase in claims of unfair dismissal.
Sarah Jo Loveday FCIPD FRSA emphasises the importance of Government consultation with all stakeholders, including businesses of all sizes and HR professionals to ensure the effective implementation of these reforms. Employers must adapt proactively to these changes to maintain compliance and foster a positive workplace culture. For tailored guidance on navigating these employment reforms, contact Sarah Jo at sarahjo@peopleknd.co.uk.
Sarah Jo Loveday FCIPD FRSA is a dynamic female entrepreneur and the founder of peopleknd., an HR consultancy. She works in the City of London and is a Non-Executive Director, Chairperson, Trustee, and HR leader and speaker dedicated to helping organisations achieve their visions through transformative changes in leadership, culture, and employee experience.
Sarah Jo is also a Council member of the London Chamber of Commerce and Industry (LCCI) and sits on the Board of the Women in Business group (LCCI), where she spearheads the Inclusive Entrepreneurship initiative. This initiative focuses on increasing the representation of women in under-represented sectors and promoting inclusive entrepreneurship. She is also a proud member (liveryman) of the Worshipful Company of Management Consultants.
She is a keen researcher and the founder of City Allies, an ethnographic project designed to explore the heartbeat of the City of London, discover the unique stories that make up its fabric—the stories of its people—and celebrate belonging. City Allies aims to spotlight incredible City individuals—both workers and residents— by gathering and sharing their life and career stories, exploring their sense of belonging to the City, their opportunities, and challenges, and, ultimately, building a sense of community and belonging in the City of London.
Sarah Jo Loveday on LinkedIn – www.linkedin.com/in/sarahjo-loveday-chartered-fcipd-frsa