The UK Government’s introduction of the Labour Market Advisory Board (LMAB) marks a significant development in the evolving landscape of employment regulation. This new body, announced in late 2023, aims to offer strategic advice on labour market policy, respond to rapid changes in work dynamics, and support a more resilient, fair, and productive employment environment. But what does this mean for businesses, and how will it affect HR practices and employment law in the UK?

In this blog, we explore the key roles of the LMAB, its potential impact on your business, and how HR and employment law might adapt in response.

What Is the Labour Market Advisory Board (LMAB)?

The LMAB is an independent advisory body established to guide the UK Government on issues affecting the labour market. Comprised of a diverse panel of experts from business, academia, trade unions, and civil society, the board’s mandate is to assess current labour market trends, identify areas requiring intervention, and propose practical policy solutions.

The board will focus on several key areas:

• Labour market flexibility and innovation: Ensuring that employment regulations evolve alongside new business models, particularly in the gig economy, remote working, and tech-driven roles.
• Workforce skills and training: Advising on policies to close skills gaps, improve access to training, and future-proof the UK workforce.
• Inclusion and fair treatment: Providing insight on how to promote equality, inclusion, and protection of worker rights, particularly for vulnerable or underrepresented groups.
• Worker well-being and mental health: Ensuring that employment policies support a healthy work-life balance, addressing burnout and stress as core issues.

Impact on HR: What to Expect

HR departments must stay ahead of potential regulatory changes the LMAB may influence. Some of the primary areas of focus that could directly affect HR practices include:

1. Flexible and Remote Working Regulations

The COVID-19 pandemic fast-tracked the adoption of flexible and remote working practices, with many businesses adopting hybrid models. The LMAB is likely to further push for regulations that promote work flexibility while ensuring fair treatment of both remote and on-site workers.

This may involve:

• Mandatory right to request flexible working: Strengthening the current framework to ensure employees have the right to request flexible working from day one.
• Health and safety standards for remote workers: Introducing new obligations for employers to support the well-being of staff working from home.

HR teams will need to update policies and ensure compliance with these evolving standards.

2. Skills Development and Employee Training

One of the LMAB’s key priorities is closing the skills gap in the UK. Employers could soon be required to invest more heavily in employee training, particularly for digital and green economy skills. This may lead to:

• Increased funding and support for upskilling initiatives.
• Stricter obligations on businesses to provide training and career development opportunities.

HR will play a critical role in designing and implementing effective learning and development programs to meet future legal requirements.

3. Equity, Diversity and Inclusion (EDI) Policies

The LMAB is committed to creating a more inclusive workforce. This could lead to the introduction of new EDI regulations, including:

• Mandatory reporting of ethnicity and disability pay gaps.
• Stricter penalties for non-compliance with anti-discrimination laws.

For HR professionals, this means ensuring that diversity and inclusion strategies are more than just symbolic gestures. Data-driven EDI policies will be crucial, and companies will need to be transparent in their efforts.

Potential Changes to Employment Law

The LMAB is expected to have a significant influence on the future direction of employment law. The following are some areas where businesses could see substantial legal shifts:

1. Employment Status and Gig Economy Reform

With the rise of the gig economy, the classification of workers as “employees,” “self-employed,” or “workers” has become a hot topic. The LMAB is likely to push for reforms that clarify employment status, ensuring gig economy workers have access to core employment rights such as minimum wage, sick leave, and holiday pay.

Businesses that rely heavily on freelance or gig workers may need to reassess their employment contracts and ensure compliance with any forthcoming regulations.

2. Mental Health and Well-being Legislation

Workplace mental health is another priority for the LMAB. The board is expected to recommend more robust legal requirements for employers to support the mental health and well-being of employees, which could include:

• Mental health risk assessments: Compulsory for businesses to conduct and address risks related to stress and burnout.
• Expanded employee assistance programs (EAPs): Encouraging employers to provide mental health resources, such as counselling services.

HR professionals should prepare for these changes by integrating well-being initiatives into their overall workplace policies.

3. Fair Pay and Wage Transparency

The issue of wage inequality is likely to be a key focus for the LMAB. It is expected that new laws around pay transparency will be introduced, requiring companies to:

• Publicly disclose gender, ethnicity, and disability pay gaps.
• Take active steps to address unequal pay within their organisations.

Compliance with pay transparency laws may involve regular audits, increased reporting obligations, and a reassessment of pay structures to ensure fairness.

How Should Businesses Prepare?

The introduction of the LMAB signals a period of change for UK businesses, especially in areas related to HR and employment law. Here are some key steps your business can take to prepare for the changes ahead:

• Stay Informed: Regularly monitor updates from the LMAB and consult legal experts to understand how new recommendations may affect your business.
• Review Policies: Audit existing HR policies to ensure they align with potential future regulations, especially regarding flexible working, diversity and inclusion, and mental health.
• Invest in Training: Be proactive in offering employees opportunities for skills development and training to stay ahead of any new legal requirements.
• Prioritise Employee Well-being: Consider expanding your mental health resources and ensure that staff well-being is a core part of your HR strategy.

Contact us for advice

As UK employment law evolves with the establishment of the Labour Market Advisory Board, staying compliant and proactive in your HR practices is more critical than ever. At Bhayani Law, we specialise in helping businesses adapt to changes in employment regulations and can provide expert guidance to ensure your company stays ahead of the curve. Contact us on 0333 888 1360 or email [email protected].