Employment Rights Bill recent developments
The high-profile Employment Rights Bill was published on 10 October 2024. There has been non-stop activity since then including the publication of four consultation papers on key aspects of the Bill, an economic analysis of the Bill, ten factsheets and numerous impact assessments. This is all in addition to the second reading of the Bill on 21 October 2024.
Described as the biggest upgrade to rights at work for a generation, the purpose of the Bill is to upgrade workers’ rights, tackle poor working conditions and benefit businesses and workers alike.
For an overview of the Bill’s key proposals, see our previous article here.
What are the recent developments?
Consultation papers
On 21 October 2024, four consultation papers were published on the following:
- Strengthening statutory sick pay
- Strengthening remedies against abuse of rules on collective redundancy and fire and rehire
- The application of zero hours contracts measures to agency workers
- Creating a modern framework for industrial relations
Strengthening statutory sick pay
SSP is currently £116.75 a week and 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 forms part of the Government’s commitment to strengthen SSP as part of the Plan to Make Work Pay. Eligibility will be extended to those earning below the LEL and the three days’ waiting period will be removed so that SSP is available from day one.
It is estimated that up to 1.3 million low paid workers are not eligible for SSP. Further, because SSP is not payable until the fourth day, many people who are eligible for it, work when they are unwell.
The consultation paper accepts that many of those earning below the LEL also earn less than £116.75 a week and it would be inappropriate and unfair to pay them the flat rate of SSP as that would be more than their normal earnings.
The proposal is to introduce a taper to the current rate of SSP whereby an employee is entitled to a certain percentage of their average weekly earnings or the current SSP flat rate, whichever is lower. The consultation paper is asking for views on what this percentage should be “to ensure it provides a fair earnings replacement” when employees need to take time off work.
The consultation paper includes some illustrative examples ranging from 60% of earnings, which is the lowest rate likely not to leave employees worse off, to 80% of earnings.
Although the rate of SSP is the same across the UK, the consultation proposals only apply to England, Scotland and Wales.
The consultation period ends on 4 December 2024.
Strengthening remedies against abuse of rules on collective redundancy and fire and rehire
The Bill includes proposals to strength 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 deciding the period for which the protective award is payable, the Employment Tribunal will take into account the steps taken by the employer to collectively consult. Where there has been no consultation at all, the starting point is 90 days.
In the consultation paper, the Government is seeking views on the proposal to increase the maximum period of the protective award and is considering two options:
- Increase the protective award from 90 to 180 days
- Remove the cap on the protective award entirely which would mean that the Employment Tribunal would decide what the penalty should be
The purpose of these changes is to reduce the incentive for employers to avoid their collective consultation obligations.
Regarding “fire and rehire” it will be automatically unfair to dismiss someone who refuses to agree to a variation of their contract unless the employer can show they were facing financial difficulties that threatened their viability and varying the contract was unavoidable. In other words, variation was the only way to prevent insolvency. In the consultation paper, the Government is seeking views on whether interim relief should be available to employees bringing unfair dismissal claims under this new right. The remedy of interim relief is already available for some automatically unfair dismissal claims.
The Government is also consulting on whether interim relief should be available to those bringing protective award claims for breach of the collective consultation obligations.
The consultation proposals apply to England, Scotland and Wales.
The consultation period ends on 2 December 2024. Note however that there will further consultations during 2025 about strengthening other aspects of the collective redundancy framework including the minimum consultation period.
The application of zero hours contracts measures to agency workers
Data from August 2024 shows that over 1 million people are on zero hours contracts and the sectors where these contracts are most prevalent are hospitality, retail, and health and social care.
Through the Bill, there will be 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.
The Government is considering how these new rights should extend to agency workers and how these measures could work in practice. The Government’s view is that if these new rights were not applied to agency workers, employers could use agency workers as a way of avoiding the new rights.
According to the consultation paper, there are around one million temporary agency workers in the UK and temporary agency work is worth around £34 billion to the economy. The Government acknowledges that the measures may need to apply in a different way to agency workers because of the tripartite relationship between end hirers, employment agencies and the agency workers.
A specific question asked in the consultation paper is whether agency workers should be offered guaranteed hours by the employment agency or the end hirer.
Another question is whether the responsibility for providing an agency worker with reasonable notice of shifts should rest with both the employment agency and the hirer. As for the short notice payment cancellation or curtailment of a shift, the question is whether this payment should be the responsibility of the agency and whether they should be able to recoup this cost from the end hirer if the end hirer was responsible for the short notice.
The Bill’s proposals regarding zero hours contracts apply to England, Scotland and Wales.
The consultation period ends on 2 December 2024. There will however be further consultations in due course on other aspects of the measures, for instance, what constitutes regular hours and how employers should calculate the guaranteed hours to offer.
Creating a modern framework for industrial relations
As mentioned in our previous article, the Bill includes numerous provisions relating to trade unions and industrial action. The Government has already committed to repealing “ideological, ineffective anti-union legislation” including the Trade Union Act 2016 and the Strikes (Minimum Service Levels) Act 2023.
It intends to update trade union legislation and to ensure there is a new partnership approach of cooperation and collaboration that sees the Government, employers and trade unions working together. That industrial relations framework is based on four key principles: collaboration, proportionality, accountability and balancing the interests of workers, businesses and the wider public.
The consultation seeks views on:
- Simplifying the amount of information unions are required to provide in industrial action notices
- Strengthening provisions to prevent unfair practices during the trade union recognition process
- Removing the 10-year ballot requirement on political funds
- Securing a mandate for negotiation and dispute resolution
- Extending the expiry of the strike mandate
- Reducing the industrial action notice period
- Updating the law on repudiation and prior call
- The enforcement mechanism for right of access
The consultation period ends on 2 December 2024. The consultation and Bill are described as the first steps towards modernising the legislation underpinning trade union activity and the rights of workers to unionise. Once the Bill has received Royal Assent there will be further consultation and the Government will develop detailed policy options.
Economic analysis and impacts assessments
On 21 October 2024, the Government also published a comprehensive economic analysis relating to the Bill (107 pages).
The most prominent headline from that lengthy analysis was that the Government expects the policies to impose a direct cost on business of up to £5 billion annually. This represents, the Government says, “no more than a modest increase (less than 1.5%) on total employment costs”. It is accepted that for businesses who rely on flexible contracts or low paid employment these changes could be more disruptive, at least in the short run. Also, costs will be proportionately higher for small and micro businesses due to the fixed costs of administration and compliance burdens. However, many millions of workers will benefit from the reforms.
The economic analysis was accompanied by more than twenty impact assessments.
Factsheets
On 18 October 2024, the Government published ten factsheets on different aspects of the Bill so that businesses, employers and employees can understand the Bill and how it affects them. Apart from the factsheet about Trade Unions, the factsheets are just a few pages long and are worth looking at for a summary of the current legal position, the proposed changes and key statistics.
Conclusion
Apart from the four consultation papers covered above, the Government will consult on the majority of the reforms set out in the Bill in 2025. There will be many more consultation papers to come!
The Government has also confirmed that most reforms will take effect no earlier than 2026. We already know that the high-profile proposal to confer day-one unfair dismissal rights will not be before autumn 2026.
Links to consultation papers:
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