The Employment Rights Bill – what next for employers?
The Labour government has published a new Employment Rights Bill (the “Bill”) setting out proposals for significant changes including day-one rights for unfair dismissal, ending fire and re-hire, zero-hours contracts, flexible working and sick pay. There are 28 separate changes in the new Bill with further proposals set out in a ‘Next Steps’ document indicating more to come.
So, what can we expect next?
Day-one rights for unfair dismissal
Currently, employees need to have two years’ continuous service to be able to claim unfair dismissal. This proposed change would remove the current two-year qualifying period, and employees would be protected from unfair dismissal from their first day of employment.
The government will consult on a statutory probationary period for new hires to assess their suitability for a role. The duration of the probationary period is not definite (the government has indicated a preference for nine months) and there will be a ‘lighter touch’ approach to assessing dismissals during the probationary period.
This process will be subject to consultation; the government has suggested that meeting with the employee to discuss performance concerns may form part of the ‘lighter touch’ approach.
Ending ‘exploitative’ zero hours contracts
The Bill does not get rid of zero hours contracts, workers may stay on them if they prefer to. Instead, it includes provisions setting out a new obligation for employers to make a guaranteed hours offer to qualifying workers.
There are also provisions for workers to receive reasonable notice of a shift, or of any cancellation or changes to a shift. Workers will then be entitled to receive compensation for any shifts cancelled, moved or curtailed at short notice. The amount of compensation is to be set out in regulations.
Fire and re-hire
The Bill restricts when ‘fire and re-hire’ processes can be used to implement changes in terms and conditions. Dismissal and re-engagement will only be permitted in very limited circumstances where “there is a genuine need to avoid serious financial issues that may threaten the business” – expected to be akin to insolvency scenarios.
It introduces a new ground of automatically unfair dismissal, where the sole or principal reason for the dismissal is that:
(a) the employer sought to vary the employee’s contract of employment; and
(b) the employee did not agree to the variation.
Redundancy
It is now anticipated that the obligation to collectively consult will be triggered by 20 proposed redundancies across a whole organisation, rather than at the particular establishment where the employee works.
Sick pay and parental leave
The right to Statutory Sick Pay (SSP) will be payable from day one of absence (currently day four) and the Lower Earnings Limit will be removed, so very low earners will now also qualify for SSP, the rate of which may differ depending on their earnings. Additional calculations will be required for lower earners who do not have earnings high enough to qualify for the full rate of SSP.
In addition, the right to parental leave and paternity leave will become a day one right. The ability to take paternity leave following a period of shared parental leave will be introduced, along with a statutory right to a week’s bereavement leave, to run alongside the current entitlement to parental bereavement leave.
Flexible working
The recent change (by the previous government) to make flexible working the default from day one will be retained, but new rules will mean that an employer will need to explain to the employee why it is 'reasonable' to refuse a flexible working request for one of eight business reasons.
Sexual Harassment
The new duty on employers to prevent workplace sexual harassment is already due to come into effect at the end of this month, 26 October 2024. As expected, the Bill aims to strengthen the duty on employers to prevent sexual harassment by requiring employers to take “all reasonable steps”, rather than just “reasonable steps”, with regulations expected setting out what those steps should be.
The Bill will also introduce liability on employers for third party harassment of their staff.
Maternity dismissal
The Bill allows for regulations to make it unlawful to dismiss a woman during or after a protected period (likely to be 6 months) of pregnancy, maternity, adoption or shared parental leave, except for reasons of redundancy.
Trade Union
The Bill sets out enhanced Trade Union rights – detailed consultation on these measures is expected.
Employees will be entitled to receive information about Trade Union rights when they start employment as part of their ‘Section 1 Statement’, which is required by the Employment Rights Act and sets out the basics of the employment relationship.
Establishment of the Fair Work Agency
The Bill proposes the creation of a new single enforcement body, the Fair Work Agency, for the enforcement of statutory employment rights. The Agency will bring together existing enforcement powers and also enforce rights such as SSP and holiday pay.
Next Steps document
The government has published a ‘Next Steps’ document, outlining reforms to be implemented in the future. Subject to consultation, these will include:
- A ‘right to switch off’, preventing employees from being contacted out of hours, except in exceptional circumstances. The government intends to introduce a statutory Code of Practice.
- The Equality (Race and Disparity) Bill, which will make it mandatory for large employers (with more than 250 staff) to report their ethnicity and disability pay gap.
- A move towards a single status of worker and transition towards a simpler two-part framework for employment status.
- Reviews of the parental leave and carers leave systems.
What happens next?
The Bill is scheduled for its second reading on 21 October 2024. It will need to be considered and passed by both the House of Commons and the House of Lords – some provisions may be amended, or even removed, during the Bill’s passage through both houses.
Regarding the timeline, the government has indicated that the first of the updates may not take effect until Autumn 2026.
This provides employers with sufficient time to begin assessing the potential adjustments needed in employment structures, policies, and processes to accommodate upcoming reforms.
Published 16 October 2024
