The Employment Rights Bill – What you need to know

When Labour won the General Election, they promised wholesale employment law reforms, and committed to lay before Parliament a Employment Rights Bill (ERB) within 100 days of them coming into office. This seemed like an extremely tight timescale for such all-encompassing changes, however, the Government have met their commitment and on the 10th October, the ERB was published. In the press release accompanying the Bill, the Department for Business and Trade describe the reforms which the Bill introduces as “landmark” reforms, which will help to deliver “economic security and growth to businesses, workers and communities across the UK.”

Are these changes to employment law likely to be imminent?

First of all, it is worth noting that not all of the reforms which Labour propose to make require primary legislation. Some of the changes will take place via Codes of Practice, or changes to the remit of existing bodies, such as the Low Pay Commission. There also isn’t a set date when the employment law reforms will take place. The Bill itself will need to go through the Parliamentary process, where this will be scrutinized by MPs and Peers which may result in amendments being made to the original proposals. In an accompanying “next steps” to make work pay document, the Government confirm that they expect to begin consulting on reforms in 2025 and that reforms of unfair dismissal will take effect no sooner than Autumn 2026. It therefore appears that employment law changes will be piecemeal, meaning organisations will need to keep appraised of the ever evolving employment law landscape.

What are the key take aways from the Employment Rights Bill?

Dismissal

Right not to be unfairly dismissed

The two year qualifying period needed to bring a claim for “ordinary” unfair dismissal will be removed, so that this will become a day one right. As we have noted above, the Government have confirmed that this reform will take effect no sooner than Autumn 2026.

Where a dismissal takes place during an “initial period of employment” and is for the reason of capability, conduct, statutory contravention or SOSR, then section 98(4) of the Employment Rights Act which sets out when a dismissal may be fair, can be modified. This effectively means that the Bill will allow employers to operate probationary periods during which there will be a “lighter touch” process for employers to follow to dismiss an employee who is not right for the role. The Bill makes it clear that the right to claim unfair dismissal will not ordinarily apply to employees who are yet to start work.

According to media reports, the Government’s preference is for the probation period to be for 9 months, however, there will be extensive consultation on this.

Dismissal during pregnancy

The Employment Rights Bill contains proposals to strengthen protections for pregnant employees and returning mothers. The timescale for the new mother protections are not set out, but it is expected that this will be six months after their return to work.

Fire and rehire

An employee will be regarded as having been automatically unfairly dismissed either if they are dismissed because the employer sought to vary the employee’s contract of employment and the employee did not agree to the variation or to enable the employer to recruit another person (or rehire the employee) under new terms but with substantially the same duties. This is more commonly known as “fire and rehire”.

There is an exception if an employer can show that the reason for the variation was to eliminate, prevent or significantly reduce, or significantly mitigate the effect of, “any financial difficulties which at the time of the dismissal were affecting, or were likely in the immediate future to affect, the employer’s ability to carry on the business as a going concern”, and, in all the circumstances the employer could not reasonably have avoided the need to make the variation.

If any of these reasons are cited by an employer, “matters that must be considered in determining the question whether the dismissal is fair or unfair” include:

• if any consultation has been carried out by the employer with the employee about varying the employee’s contract;

• if the employer carried out consultation with a recognised trade union or employees who had authority to be consulted on about the dismissal;

• anything offered to the employee by the employer in return for agreeing to the variation.

This means that the current provisions in the Bill will place an extremely high hurdle on organisations that may want to impose changes to terms and conditions on their employees.

Flexible working

The right to request flexible working is already a day one right, but it was thought that the Employment Rights Bill would provide a wholesale change to flexible working, where this would become the default unless it was not reasonably feasible to accommodate the request. Instead, the Employment Rights Bill references there still being set grounds for rejecting a flexible working request, which are similar to those currently in place. In addition however, as well as stating the ground for refusing an application an employer will need to explain why they consider that it is reasonable to refuse the application on that ground or those grounds.

Zero hours contracts

The Employment Rights Bill introduces a right to guaranteed hours that reflects the hours worked over a “reference period” – the length of the reference period will be set by secondary legislation. There will be a requirement for employers to offer a guaranteed hours contract after the reference period, but the worker will not be required to accept this. In addition, reasonable notice will need to be given of any change to working hours and compensation may be due if a shift is cancelled, moved or curtailed at short notice. The provisions will extend to those on “low-hour” contracts, with the further legislation confirming what “low hours” look like.

However, the Government have confirmed that where work is genuinely temporary, there will no expectation on employers to offer permanent contracts.

Statutory Sick Pay

The “waiting days” prior to SSP being payable for those entitled, mean that SSP is only available from the fourth day of sickness. The Bill proposes that these waiting days are to be removed and SSP will instead be payable from day one. In addition, the lower earnings limit that was applied when looking at eligibility for SSP will be removed. However, it is worth noting the Employment Rights Bill does set out a lower level of sick pay for lower earners.

Family friendly leave

Parental leave

The qualifying period of being employed continuously for a period of not less than one year to take unpaid parental leave will be removed, so this becomes a day one right.

Paternity leave

The requirement to be employed for a period of not less than 26 weeks ending with the week immediately prior to the 14th week before the child’s expected week of childbirth will be removed, so that this becomes a day one right.

Bereavement leave

Parental bereavement leave will be replaced with wider bereavement leave provisions, which will be specified in future secondary legislation.

Harassment

You may remember that there was previously to be a requirement on employers to take “all” reasonable steps to prevent sexual harassment in the workplace. This didn’t make it into the final version of the legislation which is due to come into force on the 26th October, as this was deemed to be too onerous on employers. However, the Employment Rights Bill proposes to require employers to take “all” reasonable steps to prevent the sexual harassment of their employees. In addition, employer liability for harassment by third parties in relation to all relevant protected characteristics will be added back into the Equality Act, after this was repealed many years ago. This means that an employer will have to ensure that they do not permit a third party to harass an employee during the course of their employment by taking all reasonable steps to prevent a third party from doing so.

It appears that we will also see some secondary legislation which may specify steps that are to be regarded as “reasonable” for the purposes of determining if an employer has taken, or failed to take, all reasonable steps to prevent sexual harassment of an employee. Things that may be included in the Regulations will be carrying out assessments of a specified description; publishing plans or policies of a specified description; steps relating to the reporting of sexual harassment and steps relating to the handling of complaints.

In addition, when looking at protected disclosures, a disclosure which qualifies for protection will now include “that sexual harassment has occurred, is occurring or is likely to occur.”

Collective redundancy consultation

The “Woolworths” case considered whether the obligation to collectively consult on redundancies is triggered when 20 or more employees are dismissed across an entire business or at individual establishments. The European Court of Justice ruled that the requirement for collective consultation applies when an employer proposes 20 or more redundancies within 90 days at one establishment, not across the entire business. The Employment Rights Bill now proposes to reverse this position, so that the collective redundancy threshold will apply across an entire business rather than at one establishment.

Public sector outsourcing

The Procurement Act 2023 will be amended to protect transferring workers on outsourcing contracts, and those working alongside them. A two tier workforce code of practice will also be introduced for outsourced workers.

Equality Action Plans

Future Regulations may require employers with 250 employees or more to develop and publish an “equality action plan” to show the steps that they are taking with regard to gender equality. The steps that these employers may be required to take could include addressing the gender pay gap and supporting employees going through the menopause. The Regulations may make provision about the content of a plan, the form and manner in which a plan or information is to be published, when and how frequently a plan or information is to published or revised and the requirements for senior approval before a plan or information is published. The Regulations may require the plan to be published no more frequently than at intervals of 12 months.

Trade Unions and industrial action

Written statements: The Employment Rights Bill includes an obligation on employers to give a worker a written statement that the worker has a right to join a trade union, which must be given at the same time as the employer gives the worker their section 1 statement.

Access agreements: An access agreement will be an agreement between a listed trade union and employer which provides for access to a workplace by one or more officials of the union for “any of the access purposes”. The access purposes are to meet, represent, recruit or organise workers (whether or not they are member of a trade union) and to facilitate collective bargaining. The access purposes do not include organising industrial action. Employers will be under a duty to take reasonable steps to facilitate access and will only be permitted to refuse access entirely where it is reasonable in the circumstances to do so. The Central Arbitration Committee will determine any subsequent disputes.

Conditions for trade union recognition: There will be a change in the percentage required for recognition. The Secretary of State will have the power to lower the threshold for compulsory trade union recognition applications. The requirement for a recognition ballot to have a turnout of at least 40% of the relevant bargaining unit to be valid is removed and the ballot requirements for industrial action will be changed to a simple majority.

Time off for trade union activities: The existing time off for trade union activities will be extended to incorporate Equality Representatives for recognised trade unions. There is also a requirement for employers to provide representative with accommodation and other facilities for carrying out the duties or undergoing the training for which the employee is taking time off for – this must be reasonable in the circumstances.

Repeal of provisions about minimum service levels: Labour committed to repeal the “anti-strike” legislation, so it is unsurprising that the minimum service provisions will be repealed. By way of reminder this was a provision whereby minimum service levels were provided for during a strike in a “relevant services”.

Next steps

The Government have also committed to publish a limited number of “targeted” consultations, to seek views on some of the areas impacted by the employment bill. Those consultation will include how the provisions contained in the Employment Rights Bill around zero hours contracts can be appropriately applied to agency workers and how trade union laws can be updated so they are fit for the modern economy.

In addition, when looking at the delivery of the “make work pay” commitments via existing powers and non-legislative routes:

• There will be a Call for Evidence on unpaid internships by the end of the year.

• A working group will be launched where modern and secure electronic balloting for trade union statutory ballots will be examined. This will include cyber security experts and trade unions.

• The Government will “progress their commitment on paid travel time.”

• The Right to Switch Off will be taken forward through a Statutory Code of Practice.

• Removal of the age bands to “ensure every adult worker benefits from a genuine living wage.”

• Enacting the socio economic duty.

• Ensuring the Public Sector Equality Duty provisions cover all parties exercising public functions.

• Supporting workers with a terminal illness through the Dying to Work Charter.

• Review of Parental and Carer’s Leave.

Equality (Race and Disability) Bill (Autumn 2024 onwards)

There is also a plan to extend the pay gap reporting to ethnicity and disability for employers with more than 250 staff; extend equal pay rights to protect workers suffering discrimination on the basis of race or disability; ensure that outsourcing of services can no longer be used by employers to avoid paying equal pay; and implement a regulatory and enforcement unit for equal pay.

Conclusion

Whilst the proposed employment law changes may not be imminent, and are likely to be subject to amendments, they are extremely significant and represent significant changes to the rights of staff and so will impact on all employers. It will be interesting to observe the tightrope which the new Government must now walk, to ensure they deliver on their commitment to be both “pro-worker” and “pro-business”.