By alisonbarlow|Jul 30, 2024|3:23 pm BST

Backbench rebellion aside, the new government enjoyed a steady start in its first few weeks. The King’s Speech gave us an initial peek at its priorities and confirmed many of Labour’s manifesto pledges, including updates to the Apprentice Levy.

The 40 Bills proposed run the gamut from employment to housebuilding, growth to devolution. Workers’ rights factored highly, with reforms around job security cited as part of sweeping measures to boost growth. The government anticipates that increased job security will encourage workers to move to roles that benefit them more, promoting competition and boosting wages and productivity in the process.

Despite years of being battered by labour shortages and sky-high wage costs, the hospitality sector’s reception of the new proposals has been cautiously hopeful. The hospitality industry could benefit significantly if Labour’s growth plans are successful, although worries about potential increased labour and compliance costs are weighing on many.

The Employment Rights Bill

For hospitality employers, the Employment Rights Bill was the most significant new legislation announced in the King’s Speech. Promised in the first 100 days of this government, it is being billed as the ‘biggest upgrade to workers’ rights in a generation.’

Despite its accelerated delivery, many operators will be pleased to hear it’s unlikely to become a day-to-day reality in the near term and won’t be ‘sprung’ on the sector. Significant legislative changes impacting employment rights are still subject to the standard parliamentary approval process, which can take years. Although Labour’s sizeable majority in the Commons could help to expedite the process.

Unfair dismissal

The core changes proposed include the right to claim unfair dismissal from the first day of employment, as opposed to today’s two years. Probationary periods are still allowed, although they will require careful management from employers.

There is currently no guidance on exactly what this looks like or how it will be enforced, which has attracted criticism from the business community. Business leaders flagged to the FT that giving workers rights from day one will likely lead to more claims and will put even more pressure on a tribunal system that is already overwhelmed. The FT cites the average cost of each unfair dismissal case at £40,000 for employers, so any mistakes if this legislation comes into force could be costly.

Zero-hours contracts

The ban on exploitative zero-hour contracts captured the majority of the headlines since the announcement and was well-received by workers, particularly those under 25 who are five times as likely to be on them. It is worth noting that this isn’t a blanket ban, and zero-hour contracts will still be allowed, provided they don’t exploit workers.

Currently, zero-hour contracts are used to retain staff if needed but don’t always include minimum guaranteed or predicted hours. The legislation intends to ensure employees have a predictable number of hours. Employers will also need to give any staff on zero-hour contracts ‘reasonable notice’ of changes to working patterns and compensate them for cancelled or shortened shifts. This will likely impact scheduling practices, forcing operators to create schedules further in advance and giving businesses less flexibility in managing labour costs.

Parental leave and sick pay

If passed, the new Bill will allow all employees to claim sick pay from the first day of leave. Currently, sick pay is only payable to those over the lower earnings limit from the fourth day of sickness.

The King’s Speech also highlighted changes to parental pay, although at the time of writing, it is unclear exactly what this refers to. There is old legislation with the same name that allows parents to take 18 weeks of leave to care for a child up to adulthood, but it is not widely used. The Bill may update this or the statutory leave currently known as maternity/paternity/shared parental leave.

I’m expecting the latter, as Labour has been critical of the shared parental leave legislation and its underutilisation, but time will tell. Exactly what these changes will include remains a mystery for now.

Flexible working

The new Bill will give all workers the right to request flexible working arrangements from their first day of employment. Employers will need to accommodate reasonable requests and will have new obligations to justify any requests they refuse.

Banning fire and re-hire practices

The legacy of P&O Ferries’s 2022 fire and rehire scheme is alive and well. The day after the opening of this parliamentary session, a new code of practice was put in place to prevent employers from firing staff and rehiring them at a reduced pay rate. It sets out employers’ responsibilities when changing employee contracts or the Terms and Conditions of their employment.

Protecting new mothers

The new Bill will make it unlawful to dismiss returning mothers within the first six months of their return to work following maternity leave, apart from in exceptional circumstances. There’s no further information available on this provision yet, including how the government will define ‘exceptional circumstances’.

Newly announced legislation

While the Employment Rights Bill is extensive, the package includes several other Bills with potential implications for hospitality employers.

• The Skills England Bill will deliver on manifesto pledges to reform the apprenticeship levy, giving businesses more flexibility in how they run apprenticeships and deploy levy funds. The Bill includes provisions to establish a new body called Skills England, which will bring together a range of stakeholders to develop skills needed by the workforce now and in the future.

• The Equality (Race and Diversity) Bill introduces equal rights to pay for ethnic minorities and people with disabilities. It requires employers to report on ethnicity and disability pay gaps. This will likely be mandatory for employers with over 250 staff, in line with current gender pay gap reporting requirements.

• Terrorism (Protection of Premise) Bill, if passed, will require retail and hospitality operators to implement policies and security measures to protect customers in the case of a terrorist attack.

What to watch out for

The Employment (Allocation of Tips) Act was due to come into force in October, having already been delayed from July. However, there is no official statutory guidance yet, so it may not come into force as planned. That said, the government can rush through statutory guidance since the Act has passed through Royal Assent, and Labour has stated that tips are part of its plan to ‘make work pay.’

The National Minimum Wage could be due another update. Labour has promised to introduce a ‘genuine living wage’ reflective of current living costs. It has also hinted at removing the age bands on the minimum wage, which would see under-21s pay rate increase to £11.44 per hour, in line with older workers.

A plan for change

The new government has made a strong initial impression in its first two weeks with a King’s Speech and a 100-day plan prioritising growth, fiscal responsibility and workers’ rights. Key growth initiatives such as the Employment Rights Bill have been met with cautious optimism, though many employers are concerned about the impact the Employment Rights Bill could have on the agility and costs associated with managing their workforce.

However, there is no guarantee these initiatives will become law, and many questions remain about their specifics and enforcement. For now, the hospitality industry, like much of the business community, is poised to see if the government can maintain this momentum and deliver on its growth agenda, which would be welcomed by a sector that has faced significant challenges in recent years.