King's Speech heralds major changes for UK employers

The newly elected Labour government has outlined its ambitious agenda for the first 100 days in office, with the landmark Workers’ Rights Bill taking centre stage.

Key provisions of the bill include:

• Banning zero-hours contracts and fire-and-rehire practices
• Enhancing collective bargaining
• Ensuring flexible working rights
• Reinforcing equal pay protections for minority ethnic and disabled workers

Legal experts have weighed in on the potential impacts of these reforms. Robert Forsyth, a partner at Michelmores’ employment practice, noted that while the changes aim to safeguard employee rights, their practical implementation remains unclear. Forsyth warns that employers may face new challenges, particularly when responding to economic downturns without the flexibility of zero-hours contracts or fire-and-rehire strategies.

"Employers in financial difficulties are likely to be faced with having to make more redundancies as the option of reducing or removing benefits to avoid potential job losses looks set to be banned," Forsyth explained.

RSM UK’s head of employment legal, Charlie Barnes, echoed these concerns, stating that the banning of casual worker contracts could result in significant structural changes for employers. He suggested that the source of temporary labour may increasingly come from employment agencies, potentially pushing up labour costs.

The introduction of employment rights from day one could also lead to more cautious recruitment decisions, potentially impacting business growth. Barnes emphasised the need for employer consultation, noting that while Labour had promised to consult with businesses before implementing changes, the Prime Minister’s office has already indicated its intent to proceed with the bill.

On the wage front, Susan Ball, RSM’s employment tax partner, highlighted the substantial increase in the National Minimum Wage (NMW) for those aged 18 and over. The proposed hike from £8.60 to £11.44 per hour represents a nearly 50% increase, which Ball warned could deter some employers from hiring young people.

The King’s Speech also introduced an Equality, Race and Disability Bill, which will extend the right to equal pay claims to ethnic minority and disabled workers. It will also introduce pay reporting requirements for larger employers, similar to current gender pay gap rules.

While these changes promise to reshape the UK’s employment landscape, experts stress that businesses must act swiftly to adapt. As Forsyth advised, “ failure to do so could result in substantial financial consequences."

As the bills move through Parliament, all eyes will be on how these sweeping reforms will be implemented and their long-term impact on the UK job market and economy.