Enhanced employment rights, investment in jobs and skills, and, to the surprise of many, the Pensions Bill, were included in the King’s speech today, which sets out the government’s legislative agenda for the coming months.
King Charles said: “My government will seek a new partnership with both business and working people and help the country move on from the recent cost of living challenges by prioritising wealth creation for all communities.”
He continued: “My government is committed to making work pay and will legislate to introduce a new deal for working people to ban exploitative practices and enhance employment rights [Employment Rights Bill]. It will seek to establish the appropriate legislation to place requirements on those working to develop the most powerful artificial intelligence models.”
Rights that work
Ben Willmott, head of public policy for the CIPD, said: “Plans to introduce day one employment rights and other employment law changes will need thorough consultation with employers, and potentially compromise in places, to ensure any changes have a positive impact on workplace practices and employment opportunities.
“It’s crucial that changes to employment legislation don’t discourage employers from taking on permanent staff or providing flexible employment opportunities that can benefit people who need to fit work around care, study or health needs for example.”
Ed Bowyer, partner at law firm Hogan Lovells, said the full impact of the Employment Rights Bill and a draft Equality (Race and Disability) Bill will not become clear until more detail is unveiled.
“We are still missing much of the detail about how the reforms will work. For example, we know that the Employment Rights Bill will ban ‘exploitative’ zero-hours contracts but it doesn’t seem that there will be a complete ban,” he said.
“Similarly, unfair dismissal will become a day one right – as expected – but it appears that there will be some flexibility allowing employers to use probationary periods to assess new hires. Until the bill is actually published – expected within 100 days – it’s very difficult to say how big the impact for employers will be. But it’s clear that there are some significant changes ahead.”
Challenges for HR
Stephen Simpson, acting content manager – Employment Law and Compliance at Brightmine, said: “The King’s speech has highlighted the new government’s commitment to workplace fairness and equity. Several bills have been put forward, which, if passed, will have a significant effect on HR teams, creating more pressure on an industry that is already stretched.”
He added that a recent poll from Brightmine found that one of the top three proposed changes HR leaders were worried about is the removal of the two-year qualifying service requirement to bring an ordinary unfair dismissal claim.
Simpson said Labour’s Equality (Race and Disability) Bill marked a serious and positive step towards promoting workplace equity, however, he said that it presents challenges for HR.
He explained: “This is mainly around how they will broach data gathering and tackle the sensitive and possibly challenging conversations around ethnicity and disability to ensure they get the right data. For example, people may not feel comfortable discussing their disability, which may not always be immediately apparent to others, and which may change over time.
“Reviewing and updating employment contracts, policies, procedures, and training for line managers on the legislative changes will be crucial to prevent non-compliance. Ahead of any mandatory pay gap reporting, HR teams along with senior leaders, should carry out a thorough audit of pay within their organisation and look at ways in which to address any gaps which the audit may uncover. This will give employers a head start in creating a competitive and attractive organisation to employees.”
Majority in favour
Anthony Painter, director of policy at the Chartered Management Institute (CMI), said: “Despite the ire of some in the business community, the Labour government’s plans to strengthen workers’ rights by implementing the new deal for working people reflects what many employers are already doing to make work more flexible and secure.”
Painter said CMI research has found widespread support for the proposals in Labour’s bill.
A CMI survey of more than 1,000 UK managers showed that 83 percent said they believed improving workers’ rights can positively impact workplace productivity, with solid support for flexible working, enhanced family-friendly policies, and action plans to eliminate gender, ethnicity, and disability inequalities.
He added: “This doesn’t have to be about lecturing business. It is about a future government and the business community partnering to enhance productivity by raising standards and improving employee wellbeing.”
Justin Newman, director of strategy and partnerships at the Centre for Ageing Better, commented: “Many people in their 50s, 60s and beyond struggle to access the flexible work they need: which partially explains why workers over 65 are the second-most likely to be on a zero hours contract. Making those contracts less exploitative, and making flexible work a genuine default for all, will open up more opportunities for people to keep working – and in turn will boost UK productivity.
End of VAT exemption
The value added tax exemption for private school fees will be removed and the money generated will be used to help fund six and a half thousand new teachers, the King said.
He continued: “My government will establish Skills England, which will have a new partnership with employers at its heart [Skills England Bill], and my ministers will reform the apprenticeship levy.
CIPD’s Willmott welcomed the reform of the apprenticeship levy into a more flexible growth and skills levy.
“The CIPD have been calling for change in this area, on behalf of our members and businesses, for several years to help reverse the decline in apprenticeships for young people and make it easier for employers to use their levy funds to upskill their existing workforce.
“The establishment of Skills England can provide a further boost to business skills investment, bringing together the key players needed to ensure that reform of the levy is a success, and training and development is more aligned with business and learner needs.”
‘Mass upskilling’
CMI’s Painter called the announcement of the new skills body “very encouraging”, saying it would address skills gaps at all ages, in all communities and sectors of the economy at its core.
“Ultimately, our mission as a country has to be one of mass upskilling. Without this, at every age and level, growth will be held back and our public services will struggle.”
Newman also welcomed the development of the existing apprenticeship levy into a broader growth and skills levy.
He said: “We need a much greater variety of training and upskilling opportunities to support the UK workforce in developing through their 50 year career. Someone turning 50 currently has 16 years left, potentially at least a third of their working lives, until they reach state pension age – but the skills system has not woken up to this reality.
“Older learners have seen the largest fall in participation in adult learning since 2010-11, a trend we need to see moving in the opposite direction. While working on the detail of this policy change, the new government needs to transparently investigate how and why the skills system is not working for people in their 50s and 60s, and design the new levy with the 50-year-career in mind.”
Pensions surprise
The Pensions Bill was a surprise inclusion in the King’s speech, according to Simon Kew, head of market engagement at consultancy Broadstone. He said that the bill largely continues the direction of travel from the previous government in areas such as the consolidation of small pots and a Value for Money framework.
“The problem of small pots is likely to take years to solve so it is good to see that there is an urgent desire to fix this issue. While there is a mention of commercial superfunds, which have already completed their inaugural deals, the public sector consolidator idea is conspicuous by its absence.”
Kew said the bill also contains measures for the trustees of pension schemes to offer savers retirement products so they have a pension and not just a savings pot when they stop work which can help drive up engagement.
“The challenge of retirement income from defined contribution funds is massive and adding some paternalism back into the system seems to be the only way forward.”
Increase pot size
Kew continued: “The government’s analysis suggests that it will increase pot size at retirement by as much as 9 percent for the average earner contributing to a pension over the course of their career which will be a major boost for savers.
“There is a strong focus, as expected, on the productive investment of pension capital but that may be a tougher nut to crack in the short term.”
He also said that the bill “may clear the way” for the wide-ranging pensions review.
More people in auto-enrolment
Nigel Peaple, director of policy and advocacy at the Pensions and Lifetime Savings Association, was pleased to see a Pensions Bill in the King’s Speech.
He said: “No time has been wasted in bringing forward existing regulatory initiatives that already have the backing of industry and will improve the retirement outcomes of savers.
“Particularly welcome are the measures to require schemes to offer decumulation solutions, and the creation of DB Superfunds – both key recommendations of the PLSA. It’s good to see a way forward for small pots and the value for money framework being prioritised too.
“The National Wealth Fund Bill should also provide pension schemes with a viable vehicle to invest in exciting growth areas.
“The announced Employment Bill should also bring more people into automatic enrolment and ensure better pension provision for lower earners.”
‘Health policy is economic policy’
The King said the government would take action to get people back in employment following the impact of the pandemic and ongoing health and wellbeing challenges.
CIPD’s Willmott said: “Long-term health issues have a significant impact on people’s ability to work so it’s vital that the government takes steps to help people get into and stay in work where they are able. Health policy is economic policy, they can’t be treated in silos.”
He urged the government to work with employers to prioritise employee health and wellbeing to tackle the dual challenge of a tight labour market and an ageing workforce with more complex health needs.
Newman, from the Centre for Ageing Better, said that at the moment, there is far too much variance in how employers approach supporting absent workers.
“The majority of companies pay just statutory levels or below, some restrict levels of sick pay according to service, while others recognise the broader parameters of wellness to work with mental health days. We need clearer guidance on what employees should expect in terms of support from their employers.
“If Labour is to succeed in putting economic growth at the heart of this legislative agenda, the party needs to specifically focus on the 50 plus workforce who have powered employment growth since the turn of the century until the pandemic.
“Getting this right and achieving our recommended employment targets for the 50-64 and 65+ age groups could increase GDP by at least £9 billion a year and boost income tax and national insurance contribution revenues by £1.6 billion a year.”
