King Charles III marked the 2024 State Opening of Parliament yesterday with a speech outlining the new Labour government’s key legislation changes. We summarise the changes for employment and pension laws below and what the main takeaways are.

The Government’s plans for employment law

An Employment Rights Bill, an Equality (Race and Disability) Bill, and a Bill referred to as the ‘Hillsborough Law’, were all included by the new Labour government in today’s Kings’ Speech. The Bills build on Labour’s election manifesto and “Plan to Make Work Pay”. In this insight, we summarise the Bills and look at what employers can expect from the Government’s planned programme of legislative reform.

Proposed Changes

• The Employment Rights Bill - is “to be introduced within the first 100 days” (so, by October 2024). The Bill will deliver on proposals set out in the Plan to Make Work Pay that require primary legislation to implement. This includes provisions making flexible working and unfair dismissal day one rights (subject to probation periods to allow assessment of new hires). A detailed summary of the Plan is set out in our 5 July 2024 insight Labour wins the general election - what does this mean for employers? (capsticks.com).
• Equality (Race and Disability) Bill - “will tackle inequality for ethnic minority and disabled people” and delivers on one of the Plan to Make Work Pay promises to require employers with 250 or more staff members to publish ethnicity and disability pay gap reports. The Bill will also “enshrine the full right to equal pay in law” for ethnic minorities and disabled people.
• ‘Hillsborough Law’ - will deliver another of Labour’s manifesto commitments to place a legal duty of candour on public servants and authorities. The aim of this Bill is to “address the unacceptable defensive culture prevalent across too much of the public sector” by ensuring it is not repeated.

What to takeaway

We now await the publication of the draft Bills for clarity on when these proposed changes will be implemented and for more detail on the practicalities.

Employers should ensure they are planning and prepared to review existing policies, procedures and contracts to ensure that they are fully compliant with any future employment law changes.

The Government’s plans for pensions law

A Pension Schemes Bill has been included by the new Labour government in the Kings’ Speech as part of a drive to strengthen audit, corporate governance and pension investment.

Proposed Changes

The Pension Schemes Bill will include:

• Provisions to prevent individuals from losing track of their pension pots when they build up a number of small defined contribution individual pension pots. This will enable an individual's deferred small pots to be automatically brought together into one place to maximise income in retirement.
• A value for money framework/test - measures to ensure all trust based pension schemes deliver value to scheme members through a value for money framework/test. The Financial Conduct Authority will ensure the same framework is applied to contract-based pension schemes. This should result in some consolidation of the pensions market, leaving a smaller number of better performing and better governed pension schemes.
• Arequirement for pension schemes to offer retirement products so members have a pension and not just a savings pot when they stop work, by making it obligatory for trustees of occupational pension schemes to offer a retirement income solution or range of solutions, including investment options, to their members.
• Measuresconsolidating the defined benefit pensions market through the use of commercial superfunds. This will offer much greater protection for members in closed defined benefit schemes from the risk of losing part of their pension because their employer has become insolvent.
• Legislation reaffirming the Pensions Ombudsman as a competent court, removing the need for pension schemes to apply to the courts to enforce the Pension Ombudsman decisions, including in relation to the recovery of overpayments.
• Changes to the special rules for end of life for members of pension arrangements under the Pension Protection Fund (PPF) and the Financial Assistance Scheme (FAS) by extending the definition of 'terminal illness' to allow eligible members within the PPF and FAS to receive a lump sum payment at an earlier stage.

What to takeaway

These relatively straightforward changes will sit separately from the new Government’s promised full review of the pensions landscape, and any new pension policies in the light of that review will come later down the track, such as the current idea to establish a public sector consolidator aimed at pension schemes which are unattractive to commercial providers.

How Capsticks can help

Capsticks has significant experience supporting employers on a wide variety of employment law issues including compliance health checks of contracts, policies and procedures. We will keep you updated on the above developments as they progress, or further information is released.

For further information on how we might assist your organisation, such as updating policies or employment contracts, please contact Paul McFarlane, Alistair Kernohan or Jonathan Lewis.

For assistance with any pension issues, please contact Neil Bhan.