What to know about workers' rights and pension bills after the King's speech

King Charles’ speech marking the state opening of parliament this week laid out the work-focused legislative agenda of the new Labour government, which aims to make “work pay” and boost sustainable economic growth.

In the King's speech, the government promised several employment-related bills, including the Employment Rights Bill, a draft Equality (Race and Disability) Bill and a pension schemes bill.

The first of the new pieces of legislation – the Employment Rights Bill – will be introduced within the first 100 days of Labour taking power and is described by the party as “the biggest upgrade to workers’ rights in a generation”.

So what do these new bills mean for workers and employers?

Employment Rights Bill

The new bill will deliver on pledges outlined in Labour’s New Deal for Working People. It includes the following:

A ban on exploitative zero-hours contracts, while ensuring workers have a right to a contract that reflects the number of hours they regularly work. Changes will be made to the Low Pay Commission and the minimum wage will be increased to reflect a genuine living wage. The Government will also remove what it describes as “discriminatory age bands” on earnings.

“Cracking down on zero-hour contracts was among the top job-related concerns highlighted by almost a quarter (23%) of people in the UK in Indeed research which ran in the lead-up to the general election, so plans to reform them could signal a move in the right direction for many workers,” says Jack Kennedy, a senior economist at the UK job platform Indeed.

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“Bringing wages in line with the cost of living was another key concern for more than a third (39%) of workers, among whom almost one in five had seen no change in their salary since the start of the cost of living crisis.”

It will end “fire and rehire” practices, where employers dismiss workers and rehire them on less favourable terms.

The bill will make parental leave, sick pay and protection from unfair dismissal a day one right for all workers. However, employers will still be able to operate probationary periods.

The lower earnings limit and waiting period will be removed for statutory sick pay.

Flexible working will also be made the default from day one for all workers.

The new legislation will strengthen protections for new mothers, making it unlawful to dismiss a woman who has had a baby for six months after her return, other than in exceptional circumstances.

A Fair Work Agency will be set up to strengthen enforcement of workplace rights. This new body will have the power to prosecute and fine companies that breach employment law.

Trade union legislation will be updated, removing restrictions on trade union activity and simplifying the statutory recognition process. Workers and union members will have a reasonable right to access a union within the workplace.

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The speech also included a pledge to get people back in employment following the impact of the Covid-19 pandemic, in light of the 2.8 million people who are currently out of work because of long-term sickness.

The briefing notes also include references to gender pay gap action plans, rights for workers going through menopause and better protection against sexual harassment at work.

However, it is not yet clear how these measures will be included in the Employment Rights Bill. Additionally, the government will seek to establish appropriate legislation to place requirements on those developing the new AI models.

Equality (Race and Disability) Bill

The second new bill is the draft Equality (Race and Disability) Bill, which will give minority workers and those with disabilities "the full right to equal pay" – making it easier for them to bring equal pay claims.

The bill will also introduce mandatory ethnicity and disability pay reporting for employers with 250 or more employees.

Pension schemes bill

There are also plans to strengthen pension investment through the introduction of a pension schemes bill.

This will introduce new rules and requirements for private-sector pension schemes, which is expected to help the average earner save more than £11,000 more for their pension pots.

It includes the introduction of a “value for money test” for pension providers. People who move between jobs and end up with lots of small pension pots will have them all brought together, a move which should help them keep track of their money.

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