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Today’s King’s Speech has confirmed the new Labour government’s plan to make significant changes that will impact UK employers. 91̽»¨ says confirmation of an Employment Rights Bill and an Equality, Race and Disability Bill will bring about a major step change to pay and workers’ rights that employers will need to adapt to. Key changes include increasing the current National Minimum Wage (NMW) to a genuine living wage, equalising NMW pay rates across age groups, employment rights from day one, and ending zero-hours contracts.

RSM’s head of employment legal, Charlie Barnes said: 'The content of the Employment Rights Bill is no surprise, given the Labour party’s manifesto. However, the manifesto included a commitment to consult with businesses before any changes are made. This afternoon however, The Prime Minister’s office published an update indicating it will make the changes set out in the Bill. So, the question now is, to what extent will employers have a voice in the contents of the Bill? The banning of casual worker contracts could result in significant structural changes for employers, with the source of temporary labour increasingly coming from employment agencies, pushing up labour costs. Employment rights from day one could also potentially lead to a pause in recruitment decisions, as employers tread more cautiously in their expansion plans, thereby having a detrimental impact on growth.

'The Race Equality Bill will extend the right to equal pay claims under the Equality Act to ethnic minority workers and disabled people and will introduce pay reporting for larger employers, which puts them on an equal footing to the current gender pay gap rules. This is welcome news for employees, but whether this will make a fundamental difference to how people are treated in the workplace remains to be seen.'

RSM’s employment tax partner Susan Ball said: 'The change of NMW for those aged 18 and over from £8.60 per hour to £11.44 per hour represents a huge increase of nearly 50%. This massive hike could potentially put some employers off recruiting young people, and the unintended consequence could be that younger people find it harder to get a first rung on the employment ladder. Equalising pay across the age groups may lead companies to favour slightly older more experienced workers in sectors such as hospitality and retail.'

Changes to the Apprenticeship Levy were also welcomed. Susan Ball continued: 'The Apprenticeship Levy in its current form isn’t working and is therefore not fully utilised by employers. I’m hopeful that the changes announced today will enable employers to use the levy for training the workforce, so this is a very positive development.'