Breaking News: Labour unveils its Employment Rights Bill in a bid to ‘make work pay’
Labour promised an Employment Rights Bill within the first 100 days and yesterday, on day 98, it appeared! A landmark shift in UK employment law is on the horizon, with the government describing it as “the biggest upgrade to workers rights for a generation”.
There is no need to panic just yet though! Before the Bill becomes law, it will need to be debated and approved by each House of Parliament, there will be public consultations on the proposals and secondary legislation will also be required to provide further detail.
The government has indicated that most of the changes will come into force no earlier than 2026, with the unfair dismissal changes not expected until autumn 2026. However, employers may want to begin considering the potential implications of this sooner rather than later, so they are better prepared for the changes.
Now for the juicy bit… what are the key changes?!
1. A new day one right not to be unfairly dismissed: as predicted, the Bill removes the two-year qualifying period for unfair dismissal. To work in tandem with this, the government will be consulting on a new statutory probationary period which enables employers to follow a “lighter touch” dismissal process but still includes “meaningful safeguards”. They have indicated that their preference for this is 9 months.
2. Other new day one rights include: entitlement to paternity leave and unpaid parental leave, rather than having to first accrue 26 weeks’ service; and a new right to bereavement leave.
3. Strengthening Statutory Sick Pay: SSP will be paid from the first day of sickness (removing the current “waiting period”) and will be available to those who earn below the lower earnings limit.
4. Substantial limitations to ‘fire and rehire’ practices: the Bill makes it automatically unfair to dismiss an employee for refusing to agree a change in their terms or to enable the employer to recruit another person on varied terms to carry out substantially the same duties. Such a dismissal will only be fair where a business is in financial distress and there is no reasonable alternative to the fire and rehire. This will be a high hurdle for businesses to get over.
5. Increasing protection from sexual harassment: the Bill will extend the new duty on employers to take “reasonable steps” to prevent the sexual harassment of staff in the workplace (which is coming into force on 26 October 2024) to a duty to take “all” reasonable steps. The Bill makes clear that this includes third party harassment and gives workers the right to claim compensation for this. The Bill also extends whistleblowing protections to cover disclosures about sexual harassment.
6. Flexible working will become the default position: employers will only be able to refuse a flexible working request where it is “reasonable” to do so for one of the prescribed reasons. The government has suggested that these changes will ensure more requests are agreed. In turn, we may see increased disputes and claims related to flexible working.
7. Ending “exploitative” zero-hour contracts, including by:
a. Giving 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 reflect the hours they regularly work over a 12-week reference period. (If more hours become regular over time, subsequent reference review periods will provide workers with the opportunity to reflect this in their contracts.)
b. Giving workers employed on a zero-hours or minimum hours basis and workers who do not have a set working pattern a right to reasonable notice of a shift.
c. Giving workers a right to reasonable notice of cancellation of a shift or changes to a shift.
8. Strengthening protections for pregnant women and new mothers returning to work, by making it unlawful to dismiss them within 6 months of their return to work except for in specific circumstances.
9. Requiring employers with more than 250 staff to produce action plans on how to address gender pay gaps and support employees through the menopause.
10. Collective redundancy consultation trigger change: Under the current law, employers proposing 20+ redundancies “at one establishment” within a period of 90 days must follow a collective consultation process before making redundancies. Provided that there are fewer than 20 redundancies anticipated at any one site/ work location, a business making 20+ redundancies in total does not need to undertake collective consultation.
The Bill removes references to "at one establishment”, meaning that employers will need to count redundancies across all their sites/work locations. As a result, more redundancy processes will trigger onerous collective consultation requirements, and multi-site employers will need to closely monitor how many redundancies are taking place across their business.
What isn’t in the bill?
Not everything that was promised in Labour’s manifesto or “Plan to Make Work Pay” have been included in this bill. A “Next Steps to Make Work Pay” has been published which outlines the reforms that will be considered in future consultation.
These include:
• Reviewing parental and carer’s leave frameworks.
• Mandatory ethnicity and disability pay gap reporting for employers with more than 250 staff.
• The creation of a single “worker” status and a simpler framework that differentiates between workers and the genuinely self-employed (rather than our current framework of employee, worker and self-employed).
• A “right to switch off”, preventing employees from being contacted out of hours, except in limited circumstances.
Employers will have the opportunity to engage with the government consultations and should take the time to consider which proposals might affect them most.
If you would like to find out more about Labour’s Proposals, please join the BPE Employment Team at their CIPD Employment Law Update event on 13 November 2024. Places can be booked here.
For the full Employment Rights Bill, please use this link.
These notes have been prepared for the purpose of articles only. They should not be regarded as a substitute for taking legal advice.
