U.K. Compliance Officers to Note Proposed Laws on Employee Rights and Minimum Wage

Compliance officers should pay attention to proposed laws in the U.K., as the newly elected Labour government outlined its legislative agenda in the King’s Speech last week, promising consultations on enhanced employee rights and a higher minimum wage.

One significant change introduced is the Employment Rights Bill, which promises full employment rights to all workers from their first day. “The devil will be in the detail, but this proposal will create challenges for employers who will have to consider how they onboard staff and their induction processes,” said Lorraine Laryea, chief standards officer at the Recruitment & Employment Confederation (REC). “This will make it more important than ever that they hire the right people.”

The bill also promises to ban zero-hours contracts, which are generally seen as disadvantageous for employees but provide flexibility for others. “We need to ensure that this doesn’t have a negative effect on the people who benefit from temporary work on flexible contracts,” Laryea added.

Concerns about how the consultation will affect the bill weigh heavily for Charlie Barnes, head of employment legal services at consultancy RSM. “The banning of casual worker contracts could result in significant structural changes for employers, with the source of temporary labor increasingly coming from employment agencies, pushing up labor costs,” he warned. “Employment rights from day one could also potentially lead to a pause in recruitment decisions, as employers tread more cautiously in their expansion plans.”

Anne Sammon, an employment law expert at legal firm Pinsent Masons, advised in a blog post, “Employers should start auditing how their policies and procedures currently operate so that they are in a state of readiness to make change when we have more detail. Probationary periods will become a key area of focus, so understanding now how well these work within a business, how managers and systems actually manage them day-to-day, will be extremely helpful when planning for change.”

The bill will also extend protections for women returning to work after maternity leave, strengthen statutory sick pay, and make flexible working a default provision that employers must consider from a worker’s first day in a job.

Further legislation will raise the national minimum wage to the living wage and abolish the lower rate for younger workers, meaning those aged 18-20 will earn £11.44 per hour instead of £8.80 per hour.

The Equality, Race, and Disability Bill extends equal pay legislation to cover ethnicity and disabilities as well as gender, which could expose organizations to legal challenges and will require larger employers to collect relevant data and report pay gaps. Laryea warned, “There needs to be dialogue between business and government about how these changes are implemented to ensure they do not reduce growth. More companies will need to start gathering ethnicity and disability data and they must do this sensitively.”

Amy Hextell, an employment law expert at Pinsent Masons, wrote in a blog post that employers will particularly need to improve engagement with disabled employees, “which is likely to require more than simply updating policies and delivering diversity and inclusion training, and instead focus on ensuring a proper cultural shift to a place where those with disabilities are genuinely included and always considered.”

However, reforming Apprenticeship Levy rules to meet broader training needs is likely to be welcomed by both employers and workers. “We’ve long lobbied for changes to the Apprenticeship Levy, which was too rigid. These reforms are needed to address skills shortages,” Laryea said.

By fLEXI tEAM