On 10 October the Labour government published a new Employment Rights Bill, fulfilling its promise to do so within 100 days of coming to power. The Bill sets out proposals for some important changes, including to the rules on unfair dismissal, zero-hours contracts, flexible working, fire and rehire, and sick pay. So, what do we know so far?
Before going into the specifics, it's important to appreciate that the contents of the Bill are largely still proposals, in many aspects with consultation and further details to follow. The commencement date of the Bill is not yet known and could be 12 months or even more from now. The government anticipates that the majority of reforms will take effect no earlier than 2026 (and has said that the unfair dismissal reforms will take effect no sooner than autumn 2026).
Unfair dismissal
Currently employees usually need two years’ continuous service to be able to claim unfair dismissal. Employees are going to receive protection against unfair dismissal from day one of employment. However, the government is going to consult on a new statutory probationary period.
The duration of the probationary period is not definite but could potentially be the more business-friendly option of nine months (employee representatives had advocated for six). There will be a 'lighter touch' approach to assessing dismissals during the probationary period. What this process will look like is not yet known - and will be subject to consultation - but the government has suggested that it might include meeting the employee to discuss performance concerns (with the employee having the right to be accompanied).
Existing automatically unfair dismissals (for which two years' service is not currently required) will not be impacted by the new probationary period.
Fire and re-hire, and redundancy
The government made clear its intention to outlaw the practice of dismissal and re-engagement on less favourable terms. This option will be restricted to narrow circumstances, such as the possible financial collapse of the business. Consultation with employees will likely have to be thorough before the employer can act.
Collective consultation with trade unions or other employee representatives over redundancies will apply to cases where at least 20 dismissals are planned across a whole business, rather than at each 'establishment' – usually a branch or office. It should therefore come into play more frequently.
Zero-hours contracts
With a zero-hours contract, an individual is not contracted to work a set number of hours and is only paid for the hours they actually work. Due to concerns about 'one-sided flexibility', the government wants to regulate this type of working arrangement and, after a consultation process, is going to introduce:
- a right to guaranteed hours for those who work regular hours over a set period, potentially 12 weeks;
- a right to reasonable notice for shift changes; and
- compensation for shifts curtailed, varied or cancelled at short notice.
Flexible working
The government had previously said that it would make flexible working the 'default' from day one for all workers. However, the Bill does not go this far. The statutory right for employees to request flexible working will remain but new rules will mean that an employer will need to explain to the employee why it is 'reasonable' for them to refuse a flexible working request for one of the eight business reasons.
Sick pay
The right to statutory sick pay ('SSP') is to be extended to all workers. To qualify for SSP just now, an employee must have average weekly earnings of at least the lower earnings limit (currently £123 per week) based on the eight weeks before they fell ill.
SSP will become payable from the first qualifying day (i.e. day of illness) rather than the fourth.
The current rate of SSP is £116.75 per week. Those earning less than the lower earnings limit will be entitled to a lower rate of SSP.
Family friendly rights
A 'full review' of family friendly rights is planned. Paternity leave and unpaid parental leave will be available on the first day of employment, and it will become possible to take paternity leave after shared parental leave.
More protection will be given to women on maternity leave and for a period upon their return. Unpaid bereavement leave will become a day-one right and will be extended to cover employees other than parents who have lost a child.
Fair working and equality
Employers will have enhanced duties to address and report on gender pay gaps and to support menopausal employees. Larger employers may have to publish an equality action plan.
The new proactive duty to take 'reasonable steps' to prevent sexual harassment of employees coming into force on 26 October 2024 is to be expanded to a requirement to take 'all reasonable steps', with examples of reasonable steps set out in legislation. Employer liability for third-party harassment (in relation to all relevant protected characteristics) will be reintroduced.
A 'Fair Work Agency' will be set up to enforce rights currently within the remit of various bodies, such as holiday entitlements. The Low Pay Commission will be required to take specific account of the cost of living when setting minimum wage levels, and remove bandings which allow younger workers to be paid less than older staff.
Trade unions
The key provisions of the Employment Rights Bill relating to trade unions and industrial action include:
- Simplifying the statutory union recognition process;
- Giving trade unions a new reasonable right to access workplaces;
- Requiring employers to inform staff of their right to join a trade union via section 1 statements and regularly during employment;
- Giving union representatives sufficient facilities time and new rights and protections;
- Simplifying industrial action ballots and notices;
- Removing the requirement on employers in certain sectors to operate a minimum service level during industrial action; and
- Introducing protection against detriment for taking industrial action.
Right to switch off
The government had previously indicated that it would introduce a new right to disconnect from work outside of working hours. However, instead a statutory code of practice will be published and employers will be encouraged to draw up codes of conduct on contacting staff out of hours.
Other Labour government proposals
The Employment Rights Bill does not contain all the previously announced Labour government proposals on workers' rights (Labour's Plan to Make Work Pay). For example, the Bill recognises the size of any task to define a unified status of 'worker', saying that this is still the intention but there will be further consultation.
A new Equality (Race and Disability) Bill is expected which will, among other things, introduce the right to bring equal pay claims based on ethnicity and disability, and mandatory ethnicity and disability pay gap reporting for employers with 250+ employees.
Webinar
We are running a webinar on Tuesday 29 October 12:15 – 13:00 discussing '100 days under the new Labour government: What changes does the Employment Rights Bill provide for?' Join us as we explore:
- the changes provided for in the draft Employment Rights Bill
- what the changes mean for employers and for HR policies, practices and procedures
- the likely timing for the changes coming into force
- other relevant developments since the Labour government came into power.
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Practice Development Lawyer
