New UK Government Proposes Employment Legislation

At a Glance

• Two pieces of employment legislation were announced in the King’s Speech: the Employment Rights Bill and the Draft Equality (Race and Disability) Bill.
• The new Worker Protection Act 2023 introduces a positive legal obligation on employers to take reasonable steps to protect workers from sexual harassment.
• The Code of Practice on Dismissal and Re-engagement aims to ensure that, when looking to change employees’ terms and conditions, employers take reasonable steps to explore alternatives to ‘fire and rehire’ practices.

After winning the general election last month, the new UK government has started to focus on the implementation of its manifesto pledges, as discussed in our previous alert. The King’s Speech, which took place on 17 July 2024, sets out the legislative agenda for the new government. The two pieces of proposed employment legislation that were announced in the speech are detailed below. 

Employment Rights Bill  

The key features of this proposed bill include:

• Making protection from unfair dismissal a day-one right (subject to probationary periods)
• Making the right to parental leave, sick pay and flexible working a day-one right 
• A ban on ‘fire and rehire’ practices and ‘exploitative’ zero hours contracts 
• Strengthening statutory sick pay by removing the lower earnings limit and waiting period 
• Making it unlawful to dismiss a woman who has had a baby for six months after her return for work, except in specific circumstances
• Updating trade union legislation and simplifying access to trade unions in the workplace. 

The government has said that it intends to introduce the Employment Rights Bill within its first 100 days of government. 

Draft Equality (Race and Disability) Bill

The key features of this proposed bill include:

• A legal right to equal pay for ethnic minorities and disabled people
• Mandatory ethnicity and disability pay gap reporting for employers with over 250 employees

Many of the proposals in these two bills are likely to be subject to consultation which may delay their progress. The new government is also yet to provide any further specific detail beyond the headline changes detailed above. Regardless of these factors, the bills will take some time to complete the legislative process and will likely not be implemented until next year at the earliest. 

EHRC Launches Consultation on Harassment in the Workplace  

On 9 July 2024, the Equality and Human Rights Commission (EHRC) launched a consultation in relation to the new Worker Protection (amendment of Equality Act 2020) Act 2023 which will come into force on 26 October 2024. The amended legislation introduces a positive legal obligation on employers to take reasonable steps to protect workers from sexual harassment. The EHRC consultation will focus on their updated guidance on sexual harassment and harassment at work (Guidance).

The Guidance sets out that this preventative duty is an anticipatory duty; employers should take action before an incident occurs, rather than in response to one. Employers are also required to take reasonable steps to prevent sexual harassment of workers by third parties, such as clients and customers. What is considered to be reasonable will vary between employers depending on their size, sector, working environment and resources.

The EHRC will have new enforcement powers in relation to this preventative duty, which include issuing an unlawful act notice and asking the court for an injunction to restrain an employer from committing an unlawful act. In addition, where an individual has succeeded in a claim for sexual harassment in an employment tribunal and the employer is found to have breached this preventative duty, any award of compensation can be increased by up to 25%. A breach of the preventative duty would not, however, form the basis of a standalone claim.  

The Guidance indicates that employers should update their training, policies and procedures in relation to sexual harassment in order to clarify expected behaviours and complaints mechanisms for workers. 

Code of Practice on ‘Fire and Rehire’ Comes Into Force 

The Code of Practice on Dismissal and Re-engagement (Code) came into force last month, on 18 July 2024. 

The Code aims to ensure that, when looking to change employees’ terms and conditions, employers take reasonable steps to explore alternatives to ‘fire and rehire’ practices (i.e., where employees are dismissed and offered re-engagement on varied terms and conditions) and engage in meaningful consultation with the affected employees. The Code provides that the practice of ‘fire and rehire’ should be treated as a last resort and that the threat of dismissal should not be used as a negotiating tactic to put undue pressure on employees to agree to changes to their terms and conditions, unless it is genuinely something the employer is envisaging. No minimum time period applies to the consultation, but the Code sets out that it should take place for as long as reasonably possible in good faith with a view to reaching an agreed outcome. 

As with the duty to take reasonable steps to prevent sexual harassment discussed above, a breach of the Code cannot form the basis of a standalone claim. However, where a relevant claim has been successful before the employment tribunal and compensation has been awarded, such compensation can be increased by up to 25% where an employer has unreasonably failed to follow the Code. 

Although this Code has just come into force, it was established by the previous government and is likely to be reviewed by the new Labour government as it starts to take action on its manifesto pledge to ban the practice of ‘fire and rehire’ (see above).