An Employment Law Bill was confirmed on Wednesday 17th July in the UK following its inclusion in the King’s Speech during the State Opening of Parliament. The bill, which is expected to be voted on in the House of Commons within the next year, aims to stop ‘exploitative’ working practices.
Whenever there is a state opening of parliament, it’s the head of state’s job to read out a statement which is prepared for them by the governing party at the time. That means the speech given by King Charles III on 17th July 2024 was written by the Labour Party following Keir Starmer’s appointment as the UK’s Prime Minister earlier in the month. The point of the speech is so that the governing party can set out a legislative plan for the next year or so. It essentially tells everybody what the government’s immediate priorities will be after forming a government.
The Labour Party set forth a variety of different legislative aims (which will all need to be voted on in the House of Commons once the legislative details have been put together and made available to all members of the House) for the coming year. Some of their key topics revolve around terrorism, the economy, security, the NHS, a House of Lords reform, the implementation of publicly owned energy company (GB Energy), and more.
But perhaps the single most important for business owners, SMEs, and UK companies is the Employment Law Bill that was mentioned.
Since the King’s speech covered a range of topics in a relatively short amount of time, the detail surrounding the bill will almost certainly leave some business owners scratching their heads, as very little detail was actually given. However, prior to the General Election on the 4th July 2024, the Labour Party did set forth a plan to ‘make work pay’ with a New Deal For Working People. The Employment Law Bill mentioned at the state opening of parliament will almost certainly follow this structure, covering much of the same aims, which we’ll explore in greater depth below.
Real Business, will, of course, cover the topic again when the actual details of the bill are released, but the general consensus amongst employment law experts and political commentators is that the Employment Law Bill will largely focus on the following topics:
One of the chief principles that the government are hoping to bring in is day one rights for unfair dismissal. This protects employees from being dismissed without due cause in the first weeks of their employment.
This is good for workers but also businesses, as it might force some business owners to think that bit more carefully about who they hire for a new position. Of course, you’ll still be protected as an employer by being able to hire new employees under a probation period, so if they don’t perform as well as you had hoped, there are still ways you can terminate their contract of employment – the new bill will simply mean you’ll need good reason for that dismissal.
Recently flexible working became commonplace following the COVID-19 pandemic, but now the government are aiming to make flexible working a right from day one of any employment, not just a benefit after years of service.
This gives workers the right to request a flexible working pattern or location based on their needs from the first day of their employment. As their employer, it’s your job to review each request. You can only reject their request with good cause, meaning their flexible working pattern or location would have a negative impact on business operations. If you do reject them, you’ll need to explain the reasoning in full, both in person and in writing.
The government will also look to revise minimum and statutory sick pay entitlements to better reflect the cost of living in the UK and protect minimum wage workers and workers who fall sick during their employment.
It isn’t yet clear what those revisions will be, but raising the minimum wage will almost certainly have an impact on overheads for business owners, who will need to think carefully about how they can adjust to higher pay for minimum wage workers to ensure they are fully compliant, whilst controlling their business costs.
One exploitative practice the government wants to end is a growing trend by some employers who fire and rehire their employees, but under worse conditions. A business owner may choose to do this when their business falls on harder times, meaning they cut some benefits for their employees by firing them and rehiring them under a new contract.
By banning firing and rehiring, the government will protect workers from this, but there are some concerns from political commentators and business analysts that this could simply lead to more unemployment and the reduction of benefits being offered in initial contracts to protect the business in the future.
Another of the exploitative practices the government wants to ban with the new Employment Law Bill is zero hour contracts. There’s been talk of this for quite a while, but it seems this government are determined to finally pass this into law.
Whilst this does protect employees and affords them more reliability in terms of their working hours, there are concerns again about industries that rely on zero hour contracts to control business costs. These industries tend to be hospitality-based, where zero hour contracts allow employers to change working hours to reflect the needs of the business during quieter periods. It is feared that by removing zero hour contracts, some businesses may face rising business costs due to them needing to give employees work, even where there is none available, and may therefore need to close down as a result.
It’s worth noting as a business owner that none of the above policies are yet in place, or even guaranteed to be included in any final Employment Law Bill. The King’s speech simply sets out the government’s main aims in the opening days of their tenure. The actual details will need to be pored over by business experts and members of parliament and then voted on before anything will come into law.
With that said, it’s worth considering how any one of the government aims discussed may impact your business, so you may start to prepare for them should they pass into law in the coming year(s).
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