The history of employment law and two newly proposed bills

July 17 2024 marked the day when under the new Labour Government, not one, but two bills on employment law were announced by King Charles III during his speech aimed at supporting working people to ‘ban exploitative practices and enhance employment rights’.

The government has said that changes will be ‘mission led’ and ‘based upon the principles of security, fairness and opportunity for all’. They are as follows: the Employment Rights Bill and the Equality (Race and Disability) Bill.

Integral to the Labour Party’s manifesto was a commitment to create stronger workers’ rights. So how will the proposed changes shake-up employment law as we currently know it? How far have we come from the 19th century, when the first labour laws appeared to cement the socioeconomic divide further by virtue of the master/servant led framework, which has been somewhat fractured by the Modern Slavery Act of 2015?

Where did it all start

Going back to the medieval period, there was a reliance on local customs and practices and ‘manorial’ laws. One of the earliest regulations was the Statute of Labourers 1351, aimed at addressing the decline in the labour market caused by the Black Death, by fixing wages and restricting the movement of workers.

Just shy of 500 years later, the Master and Servant Act 1823 came into effect and unequivocally favoured employers. If ‘servants/workers’ breached their employment contract this could lead to imprisonment, such was the imbalance of power and status. Any challenge/revolt by workers would inevitably be a criminal offence.

For those who aren’t historians, trade unions came about some 150 years later and this was a distinct marker for change. There was now a group advocating for workers rights. The Trade Union Act 1871 made unions legal and supported workers to collectively bargain and reach agreements with their employers.

Less than a handful of years later saw the introduction of a key piece of legislation, the Employers and Workmen Act 1875, which provided that any disputes between employers and workers would no longer be considered criminal, but rather more logically as civil disputes.

The foundations of modern employment law, as we know it, were laid in the early 20th century.

The Workmen’s Compensation Act 1906 provided for compensating workers if they sustained injuries at work and also set down health and safety regulations, recognising minimum acceptable standards that workers were entitled to. The same year, in a progressive change which stands true in principle today, the Trade Disputes Act gave immunity from civil law enforcement to trade unions. This gave them the ability to take collective action (demonstrations) and strike without fear of reprisal and punitive action.

It was not until post-World War II, pursuant to the National Insurance Act 1946, that the welfare state that we know today was established. Social security provisions for workers were established, providing access to benefits in the event of unemployment and sickness, as well as pensions.

It wasn’t until relatively recently, in 1975, less than 50 years ago, that one of the most fundamental rights that we know in employment law today was introduced, the right not to be unfairly dismissed. The Employment Protection Act 1975 introduced unfair dismissal protections, redundancy pay and maternity leave.

The late 20th century was most definitely a significant progressive milestone in the development of worker friendly rights with the Equal Pay Act 1970 and the Sex Discrimination Act 1975, which finally addressed the need for gender equality in the workplace and made discrimination on grounds of sex unlawful.

With a myriad of changes to navigate and be mindful of in what was now becoming a whole new world when it came to workers rights, becoming a member of the EU in 1973 saw a further spate of progressive changes that stand firm today, including the Working Time Regulations, the Agency Workers Regulations and Part-Time Workers Regulations.

A whole 20 years later, saw the introduction of the Disability Discrimination Act 1995 in the legislative suite that governs employment rights, which protects individuals with disabilities from being discriminated against in areas that extend beyond employment.

The 21st century brought about the next reform after a hiatus. The Employment Rights Act 1996 added rights, for example, on collective bargaining and the right to be accompanied at disciplinary hearings.

Our current go to, the Equality Act 2010, consolidated previous laws, covering protected characteristics and provides protected status on the grounds of age, disability, gender reassignment, race, religion or belief, sex and sexual orientation.

The new bills

As explained, the Employment Rights Bill will be introduced in October 2024, including legislation which will deal with the following aspects from the ‘New Deal for Working People’. This development will mark a further progressive change, pro-employee. Although more changes are expected, the key changes to note are as follows:

• day one employment rights, including rights not to be unfairly dismissed (though employers will be able to operate probationary periods);
• a ban on ‘exploitative’ zero-hours contracts, ensuring workers have rights to a contract reflecting the average hours worked and more security over shift scheduling;
• restrictions on ‘fire and re-hire’ and ‘fire and replace’ practices;
• making flexible working the default from day one;
• establishing a new state enforcement agency, called the Fair Work Agency; and
• new rights for unions to access workplaces and other union-friendly reforms.

Draft Equality (Race and Disability) Bill

New laws will be created to ensure equality when it comes to pay, in addition to the existing measures that apply to sex only as brought in under the Equal Pay Act 1975; the aim of this change being to ‘enshrine full right to equal pay in law’.

These changes will:

• extend the equal pay regime so that it covers race and disability, as well as sex; and
• introduce mandatory ethnicity and disability pay reporting for employers with at least 250 employees.

But that’s not all. What are the other possible changes?

The government has also made commitments to:

• link the National Living Wage to the cost of living;
• remove the lower rate for 18 to 20-year-olds;
• reform the apprenticeship levy;
• establish a body called Skills England;
• introduce a pension schemes bill to help the average earner save more than £11,000; and
• appropriate legislation to regulate artificial intelligence (AI).

When will change occur?

Labour had said that the bill would be introduced within the first 100 days of office, so that suggests that it will be put before parliament by October 2024, which is already on the horizon.

But what exactly happens next? The bill has to go through both houses of parliament, will likely see changes along the way that may take a few months, so it may even be a year or more before the bill is adopted.

It is expected that the bill will undergo a thorough consultation with employers and trade unions to ensure they do not have an adverse impact in practice, including any reluctance to engage people as employees due to the increased day one protections/rights. The key is to make changes that are fair and reasonable and work in practice.

The history of employment law is a journey from basic labour regulations to what we now know, which is a complex multi-statute framework. The aim of modern-day employment law is to ensure the balance of rights and obligations of employers and employees and, as time goes on, to move closer to achieving true equity and parity. The latest legislative changes as a result of the new government will be a step even closer to a fairer working world; a far cry from the very first laws that enshrined the principles of the master/servant relationship that were built on the archaic and unfair expectation of ‘one way’ obedience and loyalty.