Employment Rights Bill – what can employers expect?

The Labour government takes first steps in implementing manifesto promises on employment law reform.

The introduction of the Employment Rights Bill represents a step towards the Labour party implementing their election manifesto proposal for extensive reform to employment law. Labour’s proposals were outlined in their Plan to Make Work Pay: New Deal for Working People campaign. Our article from June - Election Manifestos and Employment Law – What to Expect? - looked at these proposals in overview alongside proposals from the other main political parties.

The Labour Party committed to delivering new employment legislation within 100 days of taking office and introduced the Bill on 10 October. We have summarised what we believe will be the proposals of most interest to our clients below.

The Government has published a number of factsheets on different strands in the Bill which are available at: https://www.gov.uk/government/publications/employment-rights-bill-factsheets.

Zero hour contracts

The Bill intends to make changes to remove ‘exploitative’ zero-hour contracts and give workers a right to a more predictable working pattern. The intended way of achieving  this is by mandating guaranteed hours if the worker has worked regular hours over a defined reference period. The reference period will be set out in regulations and, according to the relevant Government factsheet (see link above), is anticipated to be 12 weeks.

A worker on a zero-hour contract will have a right to reasonable notice of shifts and reasonable notice must be given to the worker if shifts change.

There will be a right for the workers to receive a payment if shifts are changed, curtailed or moved at ‘short’ notice.

The Bill also includes corresponding rights for workers on zero-hours contracts to complain to the employment tribunal if the employer does not meet their new obligations. The tribunal will have the power to make a declaration and may award compensation on a just and equitable basis, having regard to any financial loss sustained.  

The detail of these new provisions will be consulted on before being set out in regulations. 

Flexible working

A new flexible working regime came in in April which meant that, among other things, employees no longer had to wait 26 weeks from the start of their employment to be able to submit a request.

The government proposes to amend the flexible working regime further by only permitting employers the right to refuse a flexible working request if one of the eight (current) specified grounds for refusing applies and it is reasonable for the employer to refuse the request on the ground(s) stated. The employer will also have to explain why it believes those grounds apply and why the refusal is reasonable.

Regulations and updated statutory guidance are expected to set out more detail on the steps employers must take before refusing a request.  

Statutory sick pay

Currently, statutory sick pay is only available after three days of sick leave. The Bill proposes to make statutory sick pay a day one right.

The Bill also removes the lower earnings limit which means all employees will be eligible for statutory sick pay but does, however, allow lower earners to be paid less than the statutory amount.

Parental leave and paternity leave

Paternity leave and unpaid parental leave will become day one rights, meaning employees will be eligible as soon as their employment begins.

Paternity leave and pay will also be available following a period of shared parental leave.

Bereavement leave

The Bill proposes that bereavement leave will be extended to cover a wider group of people. The Bill proposes that minimum bereavement leave will be one week for the loss of a person who is not a child, and that the bereaved person will be entitled to leave in regard to each person lost where there is more than one person who has died.

Unlike the existing right to two weeks’ paid parental bereavement leave, this wider bereavement leave is proposed to be unpaid.

Sexual harassment

A duty on employers to take ‘reasonable steps’ to prevent sexual harassment at work was introduced on 26 October – see our article New Employer Duty to Prevent Sexual Harassment at Work: Effective 26 October 2024. The Bill proposes to strengthen this duty to ensure employers take ‘all reasonable steps’ to prevent sexual harassment at work.

The Bill proposes that an employer must not permit a third party to harass their employee in the course of their employment and must take all reasonable steps to prevent harassment by a third party.

Dismissal following period of statutory family leave

The Bill has proposed stronger protections for pregnant employees and new mothers including possible extensions to current protections from dismissal that only currently apply to redundancy scenarios.

The timescales for new mother protection has not been set out, but it is expected to mirror the protection in redundancy situations which is six months after the mother’s return to work.

The Bill also proposes amendments that will allow regulations to be made in respect of dismissals linked to other forms of statutory family leave (such as adoption and shared parental leave). More details are expected at the consultation stage.

Unfair dismissal

The Bill proposes to make unfair dismissal a day one right. Under the Bill, the right to make a claim will only be available to those that have started their employment. This means an unfair dismissal claim cannot be brought if an accepted offer is withdrawn before the employment start date, unless it falls within a prescribed reason.

The Bill proposes to introduce a new concept of an ‘initial employment period’ during which the right to protection from unfair dismissal will be modified to account for employers and employees undertaking a probation period. However there is limited information at this time on how this will work and, for example, how long the period of ‘initial employment’ will be and what the modified requirements will be.

Regulations will be brought in, among other things to specify the initial employment period. These changes will not come into effect until 2026.

‘Fire and Rehire’

The Bill proposes to make a dismissal automatically unfair if the employer has proposed a variation of the employee’s contract, and the employee does not agree to the variation and is subsequently dismissed. There are certain exceptions, such as where the employer can show evidence of clear financial difficulties and that the employer “could not reasonably have avoided the need to make the variation”.

The Government plans to consult on lifting the cap of 90 days’ pay on protective awards for a failure to inform and consult on fire and rehire dismissals and on allowing employees to apply for interim relief in these circumstances.  

Redundancy

Currently, an employer must consult and notify the Secretary of State where it is proposing to make 20 or more employees at ‘one establishment’ redundant within a 90 day period. The Bill proposes to remove reference to ‘one establishment’, meaning employers will be required to include the number of contemplated dismissals across the whole of the business when considering whether collective consultation obligations apply.

Negotiating bodies

The Bill contains provisions for establishing different bodies, specifically the ‘School Support Staff Negotiating Body’ for school support staff and the ‘Adult Social Care Negotiating Body’ for social care workers.

The School Support Staff Negotiating Body will have the remit to negotiate on remuneration, terms and conditions, training and career progression.

The Adult Social Care Negotiating Body will have the remit to negotiate remuneration, terms and conditions and ‘any other specified matters’ relating to their employment.

Trade unions

The Bill proposes significant changes to the way trade unions operate by removing several restrictions.

This includes a proposal that a written statement informing the employee of their right to join a trade union must be given at the same time as the statement of employment particulars. The penalties for not doing so are proposed to align with the penalties for not providing a statement of employment particulars (two to four weeks’ pay).

The Bill proposes access agreements between listed trade unions and employers that will allow officials from the union access to the workplace. The trade union will be required to make an access request and the employer must respond with a notice containing their response.

Industrial action

The Bill proposes to revert to only requiring a simple majority of those voting to vote in favour of industrial action. There will be no requirement for any level of turnout.

The amount of notice the trade union will have to give to the employer will be reduced from fourteen to seven days.

The conditions in relation to minimum service levels will be repealed.

Single enforcement body

A new state enforcement agency is proposed in the Bill, likely to be called the ‘Fair Work Agency’. This will mean there is one body workers can turn to for help, instead of the multitude of organisations they currently have to consider.

What is missing?

The Bill does not include everything that was outlined in Labour’s ‘Make Work Pay’ proposal. Most notably, the following are not included in the Employment Rights Bill:

• the move to a single employment status

• increasing the time limit for bringing tribunal claims

• the ‘right to switch off’ provisions

• expanding the Equality (Race and Disability) Bill

• further reform of TUPE (Transfer of Undertakings (protection of Employment) Regulations)

• unpaid internships.

The government has published a paper called the “Next Steps to Make Work Pay”. This outlines how Labour proposes to tackle the issues excluded from the Bill.

The government has also launched consultations on the guaranteed hours for zero-hour contracts, collective redundancies, ‘fire and rehire’ practices, trade union legislation and statutory sick pay. These consultations are open until early December 2024 and give the Government an opportunity to collect views on the proposals. These consultations may result in amendments to the Bill.

The Bill had its Second Reading in the House of Commons on 21 October 2024. No timescales have been given on when the Bill is expected to pass but it seems reasonable to expect that many of the provisions of the Bill will become effective throughout 2025 once the legislation receives Royal Assent.