Liz Stevens, professional support lawyer at law firm Birketts, highlights the key takeaways from the long-awaited Employment Rights Bill
After a long summer of anticipation and speculation (not to mention numerous media leaks), the government’s flagship Employment Rights Bill has at last been published. It means that the government has met its target of introducing new employment legislation within 100 days of coming into power on 5 July 2024 (by just two days!).
Labour’s ‘Plan to Make Work Pay’, published prior to the election, set out wide-ranging proposals for reform, which according to numerous media reports over the summer were the subject of considerable debate and disagreement behind the scenes. Alongside the new Bill, a ‘Next Steps to Make Work Pay’ document has also been published, setting out details of the Bill itself as well as longer term plans for reforms that are not included in the Bill.
The government has had to tread a careful line between big promises made to the trade unions prior to the election, and responding to concerns about the practicality of the proposed reforms from the business community. The detailed provisions for many of the new rights included in the Bill will be subject to separate consultation, meaning that we could see some significant changes to the current proposals. The government has already indicated that it intends to begin consultation on the reforms in 2025, with the majority of reforms taking effect no earlier than 2026 (note that reforms to unfair dismissal will take effect no sooner than Autumn 2026).
Now that now the Bill has been published, it will be subject to the usual Parliamentary process, with debates and amendments put forward in both the Lords and the Commons before the Bill is granted Royal Assent.
In addition, it will require a substantial amount of consultation over the details of the secondary legislation required to implement the Bill’s provisions. This will all take time, hence the government’s confirmation that the majority of the changes will not take place before 2026.
There is no doubt that the Bill introduces the biggest changes to employment law in a generation. However, employers will have a long lead-in time to prepare for the changes, and the ability to influence how these changes will operate in practice by contributing to the consultation process.
The Bill is a huge document, running to 150 pages in total. We summarise below the key headline changes introduced under the Bill:
1. Day-one rights
Perhaps the most controversial provision in the Bill is the introduction of ‘Day one’ rights for employees to claim unfair dismissal. This will subject to a statutory probationary period (an ‘initial period of employment’) for new hires, during which time employers will be able to terminate employment without following a full process. Details of how this will work will be set out in separate Regulations and the length of the probationary period will be consulted over, but the Government is currently proposing a period of nine months.
The Bill also introduces day one rights to paternity leave, unpaid parental leave and a new statutory (paid) bereavement leave, based on the existing statutory right to two weeks’ parental bereavement leave.
2. Statutory Sick Pay (SSP)
Rights to receive SSP are amended under the Bill, removing the current three-day waiting period and meaning that SSP will be payable from the first day of absence. The existing Lower Earnings Limit (LEL) for qualifying for SSP, currently £123 per week, will also be removed. The Government will consult on the appropriate rate of SSP for those earning below the current weekly rate.
3. Flexible working
Employees will have a strengthened right to work on a flexible basis, but it remains a right to request flexible working. Employers will still have the ability to refuse a flexible working pattern on the specified statutory grounds, provided it notifies the employee of the grounds for refusal and that it is reasonable to refuse on that basis.
4. Right to a stable contract
Following the government’s manifesto commitment to end “exploitative” zero-hours contracts, the Bill introduces a new right to a guaranteed-hours contract for those who work regular hours over a 12-week reference period, with provision for subsequent reference review periods if hours become regular over a longer period of time. Importantly, workers who want to remain on zero-hours contracts will be able to do so.
The Bill also provides for workers on zero and low hours contracts to be given ‘reasonable notice’ of changes in shifts or working time, with compensation for shifts cancelled or curtailed at short notice.
5. Fire and rehire
The Bill provides for ‘fire and rehire’ (dismissal and re-engagement) to be added to the list of reasons constituting an ‘automatic’ unfair dismissal, other than in very limited circumstances when a business has no alternative due to financial circumstances affecting the employer’s ability to carry on the business as a going concern.
In addition, the Bill amends the existing provisions under the Trade Union and Labour Relations (Consolidation) Act 1992 relating to collective redundancy (affecting 20 or more employees) and the obligation to collectively consult with employees. These provisions will no longer apply to proposed redundancies at ‘one establishment’, meaning that the obligations will potentially be much more onerous for employers seeking to make redundancies over multiple workplaces.
6. Protection during pregnancy and after family leave
Pregnant women and new parents will have strengthened protections against dismissal, for six months after returning to work from a period of family leave. This will be subject to separate regulations that will prevent dismissals of these employees other than in specific circumstances.
7. Increased harassment protection
Amendments to the Equality Act 2010 under the Bill will introduce express protection from third party harassment and strengthen the forthcoming employer duty to prevent sexual harassment (in force from 26 October 2024). Employers will be required to take ‘all reasonable steps’ to prevent sexual harassment, rather than ‘reasonable steps’ as currently provided. Sexual harassment will also be added to the list of protected disclosures, under existing whistleblowing provisions.
8. Action on gender pay and menopause
Under the Bill, large employers (likely 250+ employees) are required to produce action plans to address their gender pay gaps and to support employees through the menopause. Currently, these are recommended but not mandated for employers.
9. Pay
The Bill also includes powers to create a Fair Pay Agreement in the adult social care sector and reinstating the School Support Staff Negotiating Body.
The government has separately committed to remove the existing “discriminatory” NMW age bands, and the Low Pay Commission is now required to take into account the cost of living when setting the annual NMW rates.
10. Public sector contracts
The Bill reinstates the two-tier code for public sector contracts, with the aim of ensuring that employees working on outsourced contracts are offered terms and conditions no less favourable to those transferred from the public sector.
11. Trade unions
As anticipated, the Bill provides for the repeal of the Strikes (Minimum Service Levels) Act 2023. It will also bring in additional protections for trade union members and extensive measures to simplify the statutory recognition process, as well as a new right of access for union officials to meet, represent, recruit and organise members in the workplace. Employers must provide workers with a written statement of their trade union rights along with their statement of employment particulars.
12. Fair Work Agency
A new Fair Work Agency will bring together existing enforcement functions (currently provided by the Gangmasters and Labour Abuse Authority, HMRC’s NMW enforcement unit and the Employment Agency Standards Inspectorate) to enforce employment rights and to support employers in compliance.
Additional proposals for reform, not included in the Bill, are set out within the ‘Next Steps’ document, including:
- Employment status – the Government plans to consult on moving towards a single status of ‘worker’ and transitioning towards a two-part framework for employment status, differentiating between workers and the genuinely self-employed
- A right to switch off, under a statutory Code of Practice, to prevent employees being contacted out of hours other than in exceptional circumstances
- A review of the existing parental leave and carers’ leave systems
- A separate Bill (the Equality (Race and Disability) Bill) to introduce new mandatory ethnicity and disability pay gap reporting for large employers and extending equal pay rights to include race and disability.>
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