The King's speech last week heralded a new era for employment law in the UK, presenting a comprehensive agenda aimed at enhancing workers' rights and reshaping workplace practices. Delivered by the Labour government, this speech outlined several significant legislative changes with profound implications for employers across the country. Below is an analysis of the key points and their potential impact on businesses.

1. Employment Rights Bill

Zero-hour contracts
One of the central reforms is the banning of exploitative zero-hour contracts. Workers will now be entitled to contracts that reflect their actual working hours and receive compensation for any shifts that are cancelled at short notice. This move aims to provide greater job security and predictability for employees, but it will also require employers to manage their workforce scheduling more carefully and potentially bear higher costs associated with shift cancellations.

Fire and rehire practices
The practice of 'fire and rehire,' where employees are dismissed and then rehired on less favourable terms, will be significantly curtailed. This change aims to protect workers from unfair treatment during restructuring processes. Employers will need to ensure any necessary contractual changes are handled more transparently and fairly, adhering to the new legal framework​.

Day one rights
Employees will gain immediate rights to parental leave, sick pay, and protection from unfair dismissal from the first day of their employment. This reform removes the current two-year qualifying period for unfair dismissal claims, necessitating that employers implement robust HR policies to manage performance and conduct issues fairly from the outset.

Statutory Sick Pay
The reform includes the removal of the lower earnings limit and the waiting period for statutory sick pay​​. This will provide greater financial security for workers who fall ill but may increase costs for employers who will need to provide sick pay from the first day of illness.

Flexible working
Flexible working will become the default option from day one of employment, except where it is not reasonably feasible. Employers must be prepared to accommodate flexible working requests and adapt their operations to support various working arrangements.

New mothers' protections
It will become unlawful to dismiss a woman within six months of her return from maternity leave, except under specific circumstances. This measure strengthens job security for new mothers and requires employers to carefully consider any dismissal decisions involving employees returning from maternity leave.

2. Single enforcement body
The establishment of a "Fair Work Agency" will consolidate the enforcement of workplace rights under a single entity, aimed at ensuring compliance and addressing violations effectively​. Employers must be vigilant in adhering to employment laws and regulations, as enforcement is likely to become more stringent and coordinated.

3. Equality (Race and Disability) Bill

Mandatory Pay Gap Reporting
Employers with more than 250 employees will be required to report on ethnicity and disability pay gaps​​. This extends existing gender pay gap reporting requirements and aims to tackle pay disparities. Employers will need to collect and analyse pay data, ensuring transparency and addressing any identified inequalities.

Equal pay extensions
The Bill extends the equal pay regime to cover race and disability, in addition to gender. This means employers must ensure pay equity across these additional dimensions and be prepared for potential legal challenges if disparities are found.

4. Living wage and minimum wage reforms
The government plans to establish a genuine living wage and remove age bands from the national minimum wage. This reform aims to provide additional financial security for workers but may lead to increased payroll costs for employers, especially those employing younger workers previously subject to lower minimum wage rates.

5. Skills and training
The introduction of the Skills England Bill aims to create partnerships between employers, unions, and local authorities to develop a highly-trained workforce. Employers will be encouraged to invest in training and upskilling their employees, particularly in emerging fields such as artificial intelligence.

Conclusion
The legislative changes outlined in the King's speech represent the most significant shift in UK employment law in recent years. Employers must proactively adapt to these reforms by updating their policies, procedures, and HR practices. Communication with employees and stakeholders will be crucial to navigate this transition smoothly and ensure compliance with the new legal requirements.

In response to the measures announced, Ruth Wilkinson, Head of Policy and Public Affairs at IOSH, said:

“The government’s move to strengthen workers’ rights is music to my ears, as it will provide hope and reassurance for many millions of people.

“A ban on zero-hours contracts is long overdue. Such contracts make workers increasingly vulnerable in terms of their physical and mental health, as they add a huge degree of uncertainty around the duration of employment and unpredictable working hours.

“Meanwhile, improvements to statutory sick pay will go a long way to preventing people from returning to work too soon, which can also contribute to long-term impacts on their health.

“We are keen to see a greater focus more generally on looking after people at work, making organisations accountable on their human rights obligations, tackling insecure work, advancing flexible working, strengthening safety standards and improving health and wellbeing in the workplace. This is the best recipe for boosting productivity and sustained economic growth.”

Jake Shepherd, Senior Researcher at Social Market Foundation said:

“The Employment Rights Bill sets out to ban exploitative practices and enhance job security, and [these] announcements underscore the new government’s commitment to those goals. Measures such as the ending of fire and rehire, strengthening parental leave and sick pay, encouraging trade union activity, and flexible working were all expected, but are no less welcome. Its commitment to change is supported by the urgency with which it aims to implement these changes, pledging to introduce all legislature within its first 100 days in office.

“The eye-catching part is the ban of exploitative zero-hour contracts. This is a strong demonstration of Keir Starmer’s commitment to workers’ rights and to trade unions, which have long opposed low-rights, low-pay work. Some may label this move extreme: some gig jobs work well, and there are no doubt many workers who are happy with this kind of arrangement. A consequence of this may be reduced flexibility in the labour market, which would come at the detriment of some workers. The government has compensated for this by introducing mandatory flexibility in all forms of work – only time will tell if this approach strikes the right balance.”