No space for Employment Bill in Queen’s Speech

The 2021 Queen’s Speech contained no mention of an Employment Bill, confirming that it is no longer a key priority for the government despite having been promised in the last Queen’s Speech in December 2019. A Downing Street source was reported as saying that an Employment Bill would be introduced "when the time is right", citing the pandemic as the reason for the ongoing delay. This suggests that we are unlikely to see the Employment Bill until 2022 at the earliest. What does this mean for the many employment law reform proposals that have been building up in the last few years?

Key employment law reforms stalled, but remain on the cards

The government previously said it would include the following key reforms in the Employment Bill, all of which are still likely to go ahead at some point:

• The creation of a new single state enforcement body with responsibility for enforcing minimum wage requirements, anti-slavery law and holiday pay for vulnerable workers, and for the regulation of employment agencies and use of umbrella companies. The new body is likely to take some time to be fully operational following its establishment, so the Employment Bill’s delay probably means its impact will not be experienced for several years. In the meantime, serious concerns remain about the effectiveness of the current regime in enforcing compliance and tackling exploitative practices.

• Extension of the right to available suitable alternative employment on redundancy to cover pregnant employees and those within six months of returning from maternity leave, with similar rights for those returning from adoption and shared parental leave. This is a planned reform of the existing right, which applies if made redundant while on family leave. Plans to legislate to protect pregnant women and maternity returners were first published in July 2019 and the current government has repeated its commitment to those plans. The ongoing delay means, however, that the extended right will have no impact on restructuring exercises taking place now or imminently as a result of the pandemic. 

• Introduction of a new right to paid neonatal leave of up to 12 weeks, to support parents whose babies need neonatal care. This was not expected to be implemented in practice until 2023 at the earliest, so it is conceivable that the timescale will not change as a result of the delay in bringing forward the Employment Bill.

• The creation of a new right to a week’s unpaid leave for carers each year. This was a 2019 Conservative party manifesto pledge and consultation on how it might work closed in August 2020. The EU Work Life Balance Directive will introduce a similar right on EU-wide basis in August 2022. The government would need to act quickly if it wants to avoid lagging too far behind Europe on this issue.

• A new requirement for employers to pass on all tips, and for a statutory Code of Practice on how tips should be distributed. This longstanding commitment was originally going to be enshrined in a dedicated Bill, before the government announced it would form part of the Employment Bill. An important issue is whether administrative fees charged by banks on tips paid by card will need to be covered by the business and, if so, whether some businesses will look for alternative solutions such as not allowing tips by card (which could result in fewer tips as people carry less cash). The detail of the new requirements will be crucial and, as the hospitality sector tries to recover from the pandemic, a delay may be welcomed by some.

• Introduction of a new right for workers who work variable hours to request a more predictable and stable contract after 26 weeks. This is part of the government’s Good Work Plan, published in response to the Taylor Review, and responds to the ongoing pressure on businesses to minimise use of zero-hours contracts and allow workers the opportunity to plan with knowledge of their likely income. The EU Transparent and Predictable Working Conditions Directive will introduce a similar right on an EU-wide basis in August 2022 so, as with carers’ leave, the government would need to act quickly if it wants to avoid lagging too far behind on this issue.

The government has repeatedly committed to all the above reforms and has fully consulted on them. While nothing is certain, they remain likely to proceed at some point albeit that their implementation may be delayed.

Flexible working remains the future, whether mandated or not

The government also intended to use the Employment Bill to bring forward plans to “make flexible working the default”. This was also a 2019 Conservative manifesto commitment, although the Covid-19 pandemic has given these plans a fresh significance by fuelling workforce desire for more long-term hybrid and flexible working.

The government has already promised a full consultation on default flexible working, which it could choose to launch ahead of the delayed Employment Bill. This would give us greater insight into the government’s plans. We may also see more government guidance on flexible working or homeworking.

In any case, businesses are likely to see significant increase in flexible working requests well before any legislation is implemented. Interestingly, a recent CIPD report into the impact of the Covid-19 pandemic on flexible working arrangements found that there was a drop in all forms of flexible working arrangements other than homeworking during the pandemic, and a significant unmet desire for greater flexibility over working hours and arrangements.

Employers will therefore need to forge ahead with creating their own policies, with government action now looking set to follow market practice rather than lead it.

Mixed outlook for other employment law reforms

The current government and previous administrations have proposed various other employment reforms, which were not necessarily going to form part of the Employment Bill:

• Possible reform of post-termination non-compete clauses in employment contracts. The government recently consulted on an outright ban on non-competes or a requirement to pay for them. It was unclear if the government was going to use the Employment Bill to drive forward any reform of non-compete clauses, but the timing would have tight if the Bill had been announced in this Queen’s Speech. The Bill’s delay allows the government more time to consider and potentially refine this proposal.

• Earlier this year, the government also consulted on extending the ban on exclusivity clauses in zero-hours contracts to cover those earning under £120 per week. The government believes this could help drive the post-Covid economic recovery by maximising opportunities for low-income workers to find new work. This proposal does not require an Act of Parliament to be implemented and the government could easily take it forward by using existing powers, notwithstanding the delay to the Employment Bill.

• In 2019, Theresa May’s government consulted on a new right to reasonable notice of work schedules and compensation for shift cancellation as part of the Good Work Plan. It remains unclear if the current government intends to take these proposals forward and, if so, whether they would be included in the Employment Bill as part of a wider package of measures to address “one-sided flexibility”, alongside the (weaker) planned right to request a more stable and predictable contract mentioned above. This is another issue on which the UK will fall behind the EU if it fails to legislate.

• Theresa May’s government also promised new legislation to regulate non-disclosure agreements and consulted on various reforms to discrimination and harassment law. These included a revival of the duty to protect employees from third-party harassment (abolished in 2014), an extension of the protection against harassment to explicitly cover all volunteers and interns, and an extension of the three-month time limit for bringing claims in Equality Act cases.

• There was also a consultation while Theresa May was prime minister seeking views about family law reform, including reforms to parental leave and pay. Also, campaign groups have recently been urging the government to build on this work by overhauling the system of shared parental leave. Theresa May’s administration also proposed reforms to statutory sick pay and the potential introduction of a new right to request workplace modifications for employees who do not meet the definition of disability for the purposes of the Equality Act. These reforms all have an uncertain future and we are unlikely to see legislation anytime soon, albeit they are not yet on the scrapheap.

• Closer to the scrapheap, perhaps, is the long-awaited plan to clarify employment status tests and better align them with tax tests. This is an extremely difficult issue and it seems highly unlikely that the current government is going to legislate to tackle it. We may see the publication of more guidance, but not significant change.

• Finally, in recent weeks we have seen mounting calls for the government to address the scope for employers to change employment terms by re-engaging employees on fresh contracts (often dubbed “firing and rehiring”). It was always unlikely that this would have been proactively included in an Employment Bill in this parliamentary session, but it could have been the subject of various proposed amendments. This may become a growing concern during the interval between now and the eventual publication of the Employment Bill.

These reforms therefore have a more mixed outlook. It will be interesting to see whether any of them become the focus of Private Members Bills, although those have a slim chance of becoming law without government support.

What else was in the Queen’s Speech?

The government has announced that employers operating in one of the new freeports will be able to claim relief from National Insurance contributions for eligible new employees for three years, up to earnings of £25,000 per year. Freeport employers will be able to claim this relief on all new hires from April 2022. The TUC has voiced concerns about what other “reliefs” from employment law could be enjoyed by freeport employers in the longer run – this will be one to watch.

The backlog of claims in the Employment Tribunals is a big concern at present and - especially combined with the delay in establishing a single enforcement body - raises issues about the effectiveness of the current enforcement regime. The government has announced that it will bring the Employment Tribunals into the Unified Tribunals structure alongside other types of tribunals to help with the backlog, although it is unclear how much impact this will have in practice.

Finally, the government announced that it would bring forward measures to address racial and ethnic disparities. The briefing notes for the Queen’s Speech suggest that the focus will be on considering the recent recommendations of the Commission on Race and Ethnic Disparities. The Commission’s report did not recommend the introduction of mandatory ethnicity pay reporting, but did recommend detailed guidance for the many employers who are choosing to publish on a voluntary basis. This would be a welcome step.

Conclusion – some reforms still coming but not anytime soon

The lack of an Employment Bill in this Queen’s Speech is a major omission following the government’s repeated commitments to improve workers’ rights after Brexit. Employers nonetheless still need to keep an eye on the Bill’s proposed content. For example, if a business is overhauling its family leave policies, it is clearly sensible to be mindful of the likely eventual introduction of neonatal leave and carers’ leave.

The ongoing pressure on one-sided flexibility has also not gone away, although tighter regulation of flexible resourcing models is no longer imminent. More pressing for many employers is the need to develop their own approach to hybrid and flexible working, as offices look set to reopen from 21 June 2021.