The Labour Government published its Employment Rights Bill on 10 October 2024, which it labelled as the “biggest upgrade to workers’ rights in a generation”. The majority of the 28 employee-friendly reforms are subject to further consultation and will not likely become law until 2025 or 2026. Trade union related changes are the exception to this as they will be implemented this year. Whilst we await further details, the comprehensive reforms will need to be considered carefully by employers from compliance and procedural perspectives.
Some of the key points from the Bill (and its accompanying documents) are as follows:
- Trade unions (these changes will be implemented this year) – repealing the majority of the industrial relations reforms brought in by the previous Conservative government to mitigate the disruption and cost of strikes – for example, the minimum service level rules during strikes have been repealed; significantly strengthening trade unions rights, including requiring all employers to remind workers, alongside including a clause in their contract, about their right to join a trade union; and giving trade unions new rights to access workplaces to meet and organise members.
- Fire and re-hire – employees who are dismissed for not agreeing a contractual variation will be treated as being automatically unfairly dismissed, unless the employer can show the change was to eliminate, prevent or significantly reduce/mitigate the effect of any financial difficulties which impacted the employer’s ability to carry on the business, and in all the circumstances, the employer could not reasonably have avoided the need to make the variation. This will make fire and re-hire much harder in practice.
- Unfair dismissal – no qualifying period to bring an unfair dismissal claim. However, employers will be able to operate probationary periods by ‘providing an initial period during which there will be a lighter-touch process for employers to follow to dismiss an employee who is not right for the job’. The government will consult on the length of the initial statutory probation period (its preference is nine months) and how it will work in practice – at the moment, the government suggests that the ‘lighter-touch’ process should consist of holding a meeting with the employee to explain the concerns about their performance (at which the employee could choose to be accompanied by a trade union representative or colleague). After the consultation ends, but before the measures come into force, there will be a ‘substantial period’ to allow employers to prepare and adapt. The reforms on unfair dismissal will not come into effect any sooner than Autumn 2026. We expect probationary period dismissals to be heavily contested by employees and employers.
- Zero hours – complex provisions (on which the government will consult), which give workers on zero hours contracts and workers with a ‘low’ number of guaranteed hours, who regularly work more than these hours, the ability to move to guaranteed hours contracts which reflects the hours they regularly work. There will also be new rights to receive reasonable notice of a shift, or a shift’s cancellation/change and to be paid for shifts cancelled with unreasonable notice.
- Flexible working – make flexible working the default from day 1, with employers only permitted to refuse a request based on one of the current statutory grounds and only if it is reasonable for the employer to refuse the application on that ground.
- Equality action plan – employers with more than 250 employees will have to publish an action plan on how they will address gender equality.
- Collective consultation – employers will be required to collectively consult if they are proposing to dismiss 20 or more employees across the entire business in the UK, with the limit that this requirement is triggered only if all 20 affected employees are at one establishment to be scrapped.
- SSP – remove the four-day waiting time so that it is payable from day one and scrap the lower earnings limit.
- Parental leave and paternity leave – remove the qualifying periods so these become day one rights.
- Bereavement leave – extend the right to bereavement leave (so it does not just apply to parents who have lost a child).
- Sexual harassment – extend the new legislation due to come into force on 26 October 2024 (which introduces a positive legal obligation on employers to take reasonable steps to prevent sexual harassment of their workers), by requiring employers to take all reasonable steps to prevent sexual harassment of workers. Regulations may set out what ‘all reasonable steps’ will entail. The Bill will also make employers liable for sexual harassment by a third party if they have failed to take all reasonable steps to prevent it. Further, reporting sexual harassment will be a ‘protected disclosure’ for whistleblowing purposes. Separately, employers will now be liable for all third-party harassment of employees on any ground (not only sexual harassment).
- Fair Work Agency – creation of a new enforcement body to strengthen enforcement of labour rights.
Whilst not all the reforms detailed in the ‘Plan to Make Work Pay’ are contained in the Bill, the government has renewed its commitment to delivering them all at some stage. It says some changes can be delivered outside the Bill, whilst some will be contained in other pieces of legislation (e.g. Equality (Race and Disability Bill, which will deal with disability and ethnicity pay gap reporting and the extension of equal pay protection). The government acknowledges that there are other reforms which will need much more detailed consultation. For example, in its ‘Next steps to make work pay’ document, it commits in the longer-term to:
- Undertake a review of the parental leave and carers leave system.
- Consult on moving towards a single ‘worker’ status.
- Launch a call to evidence on various issues relating to TUPE.
Over the coming weeks and months, we will publish more detailed articles on some of the headline changes and what they will mean in practice for employers. Although the reforms are likely to take some time to become law (indeed, the unfair dismissal changes won’t take place until at least Autumn 2026), employers would be well-advised to become familiar with the changes so that they can start taking steps to prepare for their implementation.
Should you wish to discuss how the Employments Right Bill will impact your business, or if you have any queries arising from this article, please do not hesitate to contact Robert Forsyth.
