Pomp and pageantry aside, the King’s Speech on 17 July 2024 marked the opening of the UK Parliamentary session for the UK Labour government. It included four bills to highlight, though only two impact workers and employers.
Budget Responsibility Bill
The Office for Budget Responsibility (OBR) produces ‘fiscal and economic forecasts’ twice annually, one alongside the budget. This assesses whether the measures will achieve the fiscal mandate. This bill requires the OBR to produce a report for every ‘fiscally significant measure’ announced in the House of Commons, though not ones seeking to address tax avoidance. A greater obligation on the OBR and a bill designed to ensure market stability and announcements have public trust. Although important, it won’t affect employers operationally.
Pension Schemes Bill
Amongst other measures, the pensions schemes bill requires the consolidation of small defined contribution (DC) pension pots and consolidates the defined benefit (DB) market through commercial ‘superfunds’ in Great Britain. It’s important for trustees and pension scheme administrators. It will not bring into force auto-enrolment changes outlined in The Pensions (Extension of Automatic Enrolment) Act 2023. Here, we are waiting for the DWP Secretary of State (Liz Kendall) to announce when the age limit will be reduced (from 22 to 18) and the reduction or removal of the lower qualifying earnings band.
Equality (Race and Disability) Bill
This changes the Great British Equality Act 2010, clarifying that workers from ethnic minorities or with a disability have equal pay rights. Whilst disability is already a ‘protected characteristic’ in the Act (and should have protections), ethnicity is not. The bill extends mandatory ethnicity and disability pay gap reporting for larger employers. This information is not recorded in payroll systems (because it is not needed when making a payment). If payroll systems do produce such reports, UK GDPR covers this additional personal data gathering and recording as it will be for a lawful reason.
Take Care!
Labour’s ‘Make Work Pay’ document says gender pay gap and ratio reports will be extended to include outsourced workers. Look out for this extension of reporting, too.
Employment Rights Bill
The employment rights bill is a massive enhancement of worker and employee rights. The King’s Speech ‘Background briefing notes’ state the bill will implement the trade union and employment rights outlined in the ‘Make Work Pay’ document.
Trade Union Reforms
These reforms will remove ‘unnecessary red tape’ by repealing Great British legislation:
- The Trade Union Act 2016;
- The Minimum Service Levels (Strikes) Act 2023; and
- The Conduct of Employment Agencies and Employment Businesses (Amendment) Regulations 2022.
On 6 August 2024, a press release from the Department for Business and Trade advised the provisions in the 2023 legislation should not be used. Also, a policy paper on the same day correctly stated the 2022 legislation was ruled unlawful anyway and there was no need for repeal.
National Minimum Wage
The Low Pay Commission’s remit has changed so they consider cost of living factors when making their annual recommendations. Plus, age bands will be removed, all enforced by a new Single Enforcement Body. The changes will apply UK-wide.
Employment Rights
The bill will make the following changes:
- Banning ‘exploitative’ zero-hour contracts and ensuring workers can request a contract reflecting the number of hours they work over a 12-week reference period;
- Ending ‘fire and rehire’ practices, replacing July 2024’s statutory Code of Practice;
- Making entitlement to parental pay and unfair dismissal day-one rights, recognising employers use probationary periods;
- Removing the three statutory sick pay (SSP) waiting days and the requirement for earnings at the lower earnings limit;
- Making flexible working the default from day one for all workers;
- Strengthening dismissal protection for women returning to work after childbirth; and
- Establishing a ‘Fair Pay Agreement’ in the adult social care sector.
The bill will update Great British legislation. Payroll operates as a UK-wide profession, so also note the Northern Ireland Employment Rights Bill consultation that seeks to mirror many changes that have happened and will happen because of this Bill.
Practical Tip
The employment rights bill makes huge changes, requiring process, procedure and software reviews. A ‘full and comprehensive consultation’ has been promised and we must respond to this and the one in Northern Ireland. A phased implementation is the only way changes can be implemented – preferably UK-wide