Employment Rights Bill: Government responds to consultation papers

Government consultation responses

Strengthening statutory sick pay (SSP)

SSP is currently £116.75 a week increasing to £118.75 next month. To be eligible, an employee must have average weekly earnings at or above the Lower Earnings Limit (LEL) of £123 a week. SSP is only paid from the fourth day of sickness absence. The consultation paper proposed extending eligibility to those earning below the LEL and removing the three days’ waiting period. This would mean that SSP is available from day one.

The Government is “committed to ensuring the safety net of sick pay is available to those who need it the most”.

In its response the Government confirmed that:

• For some lower earners, including those earning below the LEL, their rate of SSP will be calculated as a percentage of their earnings instead of the flat weekly rate.
• Employees will either receive 80% of their normal weekly earnings or the current rate of SSP whichever is lower.
• Employees will also have the right to SSP from the first day of sickness absence.

It is the Government’s view that an 80% rate strikes the right balance between protecting those on lower incomes from financial hardship and retaining the incentives to return to work whilst limiting additional costs to businesses. It also says that the changes will reduce the amount of people going to work when they are ill which will reduce the spread of infections at work boosting productivity and benefitting businesses.

Around 1.3 million employees will benefit from the changes which are expected to take effect in 2026. Employers can of course choose to pay more than SSP by paying higher rates of contractual sick pay. It is estimated that around 60% of all employees are eligible for contractual sick pay.

An amendment to the Bill to include the percentage rate will be considered at the Report Stage.

Strengthening remedies against abuse of rules on collective redundancy and fire and rehire

The Bill includes proposals to strengthen redundancy rights and to end what the Government describes as unscrupulous “fire and rehire” and “fire and replace” practices.

The obligation to collectively consult arises when 20 or more employees are dismissed “at one establishment”. Where there has been a failure to collectively consult, the employer can be ordered to pay a protective award by the Employment Tribunal. It is currently capped at the equivalent of 90 days’ pay.

In the consultation paper, the Government sought views on increasing the protective award from 90 to 180 days or removing the cap on the protective award entirely. The aim was that this would act as a deterrent to employers and would incentivise them to comply with their collective consultation obligations.

The Government stated that “there remains a need to ensure that employers do not find it financially advantageous to deliberately ignore their legal and moral obligations”.

In its response the Government confirmed that:

• Increasing the maximum period of the protective award to 180 days is the most proportionate response rather than removing the cap completely.
• Employment Tribunals will continue to have discretion to vary the length of the protected period, up to a maximum of 180 days, as they consider just and equitable in all the circumstances, taking into account the employer’s actions and any mitigating factors.
• This will provide an increased deterrent against “cynical and deliberate breaches of the collective redundancy requirements”.

The Government has amended the Bill to reflect this position. It will also issue further guidance for employers on collective redundancies consultation in due course. This will provide guidance to employers of all sizes on best practice.

The October 2024 consultation paper also included a proposal about whether the remedy of interim relief should be available to employees who bring claims for protective awards or who bring automatic unfair dismissal claims under the proposed new protections regarding “fire and rehire”.

The Government has decided that currently, interim relief would not be an effective remedy to strengthen compliance or deliver additional benefits. It took into account that the updated Code of Practice on dismissal and re-engagement, which came into force on 20 January 2025, provides for a compensation uplift of up to 25% for failing to follow the Code of Practice. With the doubling of the protective award to 180 days it is the Government’s view that this combination provides an effective remedy to strengthen compliance with collective consultation obligations. However, it intends to monitor compliance and will consider further measures if necessary.

The application of zero hours contracts measures to agency workers

Over 1 million people are on zero hours contracts and many of these are in the hospitality, retail, and health and social care sectors.

The Bill provides a right to a guaranteed hours contract reflecting the hours qualifying workers have worked during a reference period, anticipated to be 12 weeks. There will also be a right to reasonable notice of shifts and a right to payment for shifts cancelled or curtailed at short notice.

Back in October 2024, the Government consulted on how these new rights to certainty of hours and security of income should extend to agency workers. It wants to “ensure that agency work does not become a loophole in the plans to end exploitative zero hours contracts”.

In its response the Government confirmed that:

• Where a qualifying agency worker is entitled to a guaranteed hours offer, it will be the responsibility of the end hirer to make that offer although in certain circumstances, the obligation might be placed on the employment agency.
• The responsibility for providing a qualifying agency worker with reasonable notice of shifts will be placed on both the employment agency and the end hirer.
• The responsibility to pay any short notice cancellation or curtailment payments to agency workers will be placed on the employment agency.
• Employment agencies will have the right to recoup the cost of any short notice cancellation, movement or curtailment payments where they have “pre-existing” arrangements with hirers which means where the arrangement was entered into before or within two months after the Bill is passed.
• Later arrangements to determine whether short notice cancellation, movement or curtailment payments can be recouped from the hirer will be allowed.

Extensive amendments to the Bill have been made to reflect these changes and to provide the framework for the application of zero hours contracts measures to agency workers.

The Government says it understands the need to apply the measures to agency workers differently because of the temporary nature of agency work and the tripartite relationship between the agency worker, the agency and the hirer. It will continue to engage with employer organisations, the recruitment sector and trade unions to “identify the best way to achieve the policy objective of extending rights for agency workers without causing unintended consequences to employment agencies and hirers”.

Details of the changes will be set out in separate draft Regulations and the Government will consult on these. It will also prepare guidance on the new rights before they are implemented.

Creating a modern framework for industrial relations

The Bill includes numerous provisions relating to trade unions and industrial action. The Government intends to update trade union legislation and to ensure there is a new partnership approach based on four key principles: collaboration, proportionality, accountability and balancing the interests of workers, businesses and the wider public.

In its response the Government confirmed that:

• Industrial action notices will be simplified so that the information trade unions are required to include will be reduced.
• The expiry of a trade union’s mandate for industrial action will be extended from 6 to 12 months which ensures the industrial action ballot is based on a recent vote but reduces the need for re-ballots.
• There will be an increase in the notice period to employers of industrial action from 7 to 10 days. It is the Government’s view that this provides the appropriate balance in enabling employers to plan to mitigate the impact of industrial action while respecting the right to strike.
• The process and transparency around trade union recognition will be improved and provisions to prevent unfair practices during the trade union recognition process will be strengthened.
• The 10-year requirement for trade unions to ballot their members on the maintenance of a political fund will be removed as it is considered an unnecessarily burdensome administrative cost on trade unions.
• There will be a right of access to workplaces to allow trade unions to recruit and organise and there will be a framework under which trade unions and employers can negotiate access arrangements. To modernise working practices, there will be a right to digital access as well as physical access.
• Balloting will be made more accessible by delivering e-balloting which the Government anticipates will increase participation in statutory ballots and demonstrate clear mandates and there will be consultation on this.
• The Strikes (Minimum Service Levels) Act 2023 will be repealed.

Accordingly, extensive amendments have been made to the Bill regarding right of access, the recognition process, industrial action notices and mandates, political funds and notices to employers. There will be further consultation and draft Regulations published and the Code of Practice on Industrial Action Ballots and Notice to Employers will be updated once the Bill has received Royal Assent.

The Government has also said that it will “consult further on modernising the trade union landscape” following Royal Assent and will develop detailed policy options.

Finally, as well as the Government’s responses to the consultation papers mentioned above, the Business and Trade Committee published its report on the Bill on 3 March 2025 following its call for evidence on 31 October 2024. It made five recommendations to tighten up the Bill at Report Stage including the need for ministers to:

• Be explicit in law about precise reforms to end exploitative zero-hours contracts.
• Accelerate, not slow down, reform of worker status and bogus self-employment.
• Set out a clear plans to adequately resource the Fair Work Agency. New rights must also be explained to employers and Acas should lead an information campaign to do this.
• Modernise the ways unions are allowed to organise in the digital age to ensure appropriate rights of access for unions and equal time to present their case to workers.
• Review and update the Modern Slavery Act to make modern slavery statements mandatory, to introduce penalties and to “name and shame” for companies not disclosing action plans.

Useful links

• Making Work Pay: strengthening statutory sick pay – GOV.UK
• Making Work Pay: collective redundancy and fire and rehire – GOV.UK
• Making Work Pay: the application of zero hours contracts measures to agency workers – GOV.UK
• Making Work Pay: creating a modern framework for industrial relations – GOV.UK