Employment Rights Bill published

Many of the proposals are familiar not only because they were set out in the King’s Speech in the summer but because they were a key feature of Labour’s election manifesto and based on Labour’s Plan to Make Work Pay: Delivering A New Deal for Working People (published on 24 May 2024).

Described as the biggest upgrade to rights at work for a generation, the Government states that the Bill will help “drive growth in the economy and support more people into secure work”.

The purpose of the Bill is to:

• upgrade workers’ rights across the UK;
• tackle poor working conditions; and
• benefit businesses and workers alike.

The conflicting views of some business organisations and trade unions prior to the publication of the Bill has been well-publicised. Some business organisations argue that the changes will have a detrimental impact on recruitment, particularly for small employers. Some trade unions on the other hand argue that the Bill doesn’t go far enough. The Government however, describes the Bill as a “pro-worker, pro-business plan”.

The Bill is made up of six Parts and refers to 28 individual employment reforms and sits alongside a “Next Steps to Make Work Pay” document with some further details. Some of these reforms are more high-profile than others.

What are the key proposals?

Unfair dismissal

The proposal to confer day-one unfair dismissal rights has attracted considerable publicity and controversy. The existing two-year qualifying period for protection from unfair dismissal will be removed so that individuals “have a right to these protections from day one on the job”.

The details (as we have them so far) of the proposals are set out in Part 1, clause 19 of the Bill and in the “Next Steps” document.

It is important to note that Government will consult on a new statutory probation period for “new hires”. This will give employers time to carry out a proper assessment of an employee’s suitability as well as reassuring employees that they have rights from day one. During the statutory probation period, employers would be able to deliver “a lighter-touch and less onerous approach” when dismissing someone who is “not right for the job”.

It was expected that the statutory probation period would be six months but there was a last-minute change to this, and nine months is the Government’s preference. There will be a consultation exercise on the statutory probation period in 2025 and this will include consultation about how it interacts with the Acas Code of Practice on Disciplinary and Grievance procedures. The Government has already confirmed that the reform of unfair dismissal will not be before autumn 2026.

It is important to remember though that there is already extensive protection from unfair dismissal from day one in many instances – for example, dismissals relating to whistleblowing, health and safety reasons and for trade union activity.

Zero hours workers

The Bill will end “exploitative zero hours contracts” and the proposals are set out in Part 1, clauses 1-6.

The Government refers to research that shows 84% of zero hours workers would rather have guaranteed hours. There will be a right to a guaranteed hours contract if someone works regular hours over a defined period, but workers will be allowed to remain on zero hours contracts if they prefer. There will also be a right to reasonable notice of a shift, and payment for cancellation of a shift or change to it at short notice.

Fire and re-hire

The proposals are set out in Part 1, clause 22.

The Government has said that “ending unscrupulous employment practices is a priority”. This includes ending the practice of “fire and rehire”. Accordingly, it will be automatically unfair to dismiss someone for failing to agree to a variation of their contract. However, variation of the contract would be permitted in certain exceptional circumstances. For example, where the reason for the variation it is to eliminate, prevent or significantly reduce or significantly mitigate the effect of any financial difficulties likely to affect the ability to carry on the business as a going concern. The Next Steps document however, makes it clear that exceptions will only be available where there is “genuinely no alternative”. This will be difficult to evidence in many cases.

Supporting working families

The Government will:

• Change the law to make flexible working “the default” for all, unless the employer can prove it is unreasonable. The current eight business reasons for rejecting a request are unchanged but an employer will need to show it was “reasonable” to refuse the request on those grounds. (Part 1, clause 7).
• Establish a new general right to bereavement leave. Currently, there is only a right to parental bereavement leave. (Part 1, clause 14).
• Deliver stronger protections for pregnant women and new mothers returning to work including protection from dismissal whilst pregnant, on maternity leave and within six months of returning to work. (Part 1, clauses 20 and 21).
• Make parental leave and paternity leave a day-one right. Currently one year’s service and 26 weeks’ service respectively is needed to qualify for these rights. (Part 1, clauses 11 and 12).

Statutory sick pay

The proposals are set out in Part 1, clauses 8 and 9.

Statutory sick pay (SSP) will be strengthened. The lower earnings limit will be removed so that SSP is available to all employees. The current waiting period of three days before SSP is paid will also be removed so that SSP is available from the first day of sickness absence. There will be consultation on these proposals during 2025.

Protection from harassment

There are very significant proposals set out in Part 1, clauses 15-18.

You will be aware from our recent article that a new duty comes into force on 26 October 2024 whereby employers have a duty to take reasonable steps to prevent sexual harassment of their workers during the course of their employment.

The Bill extends this so that employers will be under a duty to take all reasonable steps. It also provides that future Regulations may specify steps that are regarded as reasonable. The Bill refers to such steps as carrying out assessments of a specified description, publishing plans or policies of a specified description and steps relating to the handling of complaints.

Significantly, protection from third party harassment will also be reinstated to the Equality Act 2010. It was originally included in the Equality Act 2010 but repealed in 2013.

Finally, whistleblowing protections are extended to apply to disclosures relating to sexual harassment and they will be added to the current list of “protected disclosures”.

Collective redundancy consultation

There is an important provision set out in Part 2, clause 23 regarding collective redundancy consultation.

That obligation arises when 20 or more employees are dismissed “at one establishment”. The high-profile Woolworths ECJ decision in 2015 held that the duty to collectively consult is triggered when the threshold is reached at a particular establishment rather than across the organisation. The Bill makes it clear that the duty to collectively consult will apply when the threshold is reached across the whole organisation and not at a particular establishment.

The Next Steps document also commits to a lifting of the cap on protective awards for failure to follow a proper collective redundancy process.

Equality at work

“Large employers” (over 250 employees) will be required to produce action plans on how to address their gender pay gaps and how they will support employees going through the menopause. (Part 2, clause 26).

Industrial relations

Part 4 of the Bill refers specifically to trade unions and industrial action. There are numerous provisions including an obligation on employers to provide workers with a written statement that the worker has a right to join a trade union. The statement must be given at the same time as the written statement of employment particulars. In addition, the Government wants to simplify the trade union recognition process. As announced previously, the Government will repeal the trade union legislation put in place by the previous Government including the controversial (and never used) Strikes (Minimum Service Levels) Act 2023.

There will be a consultation exercise on modernising the legislative framework that underpins trade unions.

Enforcement

Currently, there are multiple different enforcement bodies reporting to different Government departments. A new Fair Work Agency bringing together existing enforcement bodies will be established and this will also enforce rights relating to holiday pay. Having one enforcement agency is intended to make it easier for individuals to know where to go to for help and will mean a more effective use of resources.

Next steps document

As mentioned above, alongside the publication of the Bill, a “Next Steps” document was also published. This refers to the Government’s longer-term plans. There are a number of important provisions not mentioned in the Bill, but which are mentioned in this document including:

• The “right to switch off”.
• The Equality (Race and Disability) Bill which was announced in the King’s Speech whereby large employers report their ethnicity and disability pay gap.
• The review of employment status and replacing the current three-part framework (employee, worker and self-employed) with a two-part framework (worker and self-employed).
• A review of the parental leave and carers leave provisions.

What happens now?

The Bill commences its Parliamentary process and the second reading of the Bill will take place on 21 October 2024. As mentioned, there will be various consultation exercises on different parts of the Bill throughout 2025 and we will keep you updated.

One thing is for sure, we can expect a great deal of scrutiny of the Bill in the months ahead, and this could mean that in the future, the proposals as set out now may look quite different at the end of the legislative process.