Navigating the Employment Rights Bill

Duty to prevent sexual harassment in the workplace - The duty on employers to take reasonable steps to prevent sexual harassment in the workplace was introduced on 26 October 2024.  Extending  this duty, the Bill requires employers to take “all reasonable steps” – a more onerous duty for employers.  Further regulations may specify steps that are to be regarded as “reasonable”.

Third party harassment - The Bill introduces employer liability for third party harassment in relation to all relevant protected characteristics (not just sexual harassment).  Employers will be liable if the third party harasses the employee in the course of their employment where the employer failed to take all reasonable steps to prevent the third party from doing so.  

Whistleblower protection - The Bill extends whistleblowing protection by making it a qualifying disclosure when an employee reports that sexual harassment has occurred, is occurring or is likely to occur. 

Non-disclosure agreements (“NDAs”) - NDAs used by employers will be void if attempting to preclude a worker from making an allegation of, or disclosure of information relating to relevant harassment or discrimination, or relating to the employer’s response to the harassment or discrimination or the making of the allegation or disclosure.  This will include NDAs in settlement agreements and contracts of employment.   

Equality action plans – Large employers (250 or more employees) will be required to develop and publish equality action plans under future regulations.  The plans will deal with prescribed matters such as gender equality.  

The Bill aims to limit the use of dismissal and re-engagement (aka “fire and rehire”) by employers to change certain key terms of employment. Unless the employer is in circumstances of financial difficulty, an employee will be automatically unfairly dismissed if they are dismissed for refusing to accept a change in relation to a “restricted variation”. The automatic unfair dismissal will occur where the reason, or principal reason for the dismissal is to enable the employer to employ another person, or to re-engage the employee, under a varied contract of employment to carry out the same duties, or substantially the same duties, as the employee carried out before being dismissed. The ban extends to replacing employees with non-employees, such as agency workers. A contract of employment is a “varied contract of employment” if its terms differ in relation to a “restricted variation”.  

What are restricted variations? Originally broader in scope, “restricted variations” focus on terms in relation to pay, performance, working time, time off, variation clauses and other terms to be defined in future regulations.  

Time limits – The Bill will increase time limits to bring a number of tribunal claims (including discrimination and unfair dismissal) from three months to six months.  

Fair Work Agency (“FWA”)  – The Fair Work Agency will bring together existing enforcement functions including:  minimum wage and SSP enforcement, the employment tribunal penalty scheme, labour exploitation and modern slavery, as well as introducing the enforcement of holiday pay policy.  The FWA will have a number of functions from requiring an offender to give a labour market enforcement undertaking, to bringing certain employment tribunal proceedings in place of a worker.  Offenders may also be required to pay a charge relating to the enforcement costs incurred by the FWA.  

The Bill will strengthen the protection against dismissal for pregnant women, those who have been pregnant and those taking or returning from a period of statutory family leave.  The existing protection in relation to redundancy will be extended to dismissals for other reasons. 

Paternity leave and unpaid parental leave will become a day one right for eligible employees.  

The right to bereavement leave will be extended to the loss of a wider group of people.  As with the current version of parental bereavement leave, this extended right will be a day-one right.  Statutory parental bereavement pay will still be payable but the new extended leave for a wider class of person is not paid.  

The principle of bereavement leave for pregnancy loss has been introduced.  One week of unpaid bereavement leave will be available where pregnancy loss occurs before 24 weeks of pregnancy.  

The Bill will make it harder for employers to refuse a flexible working request by introducing a test of reasonableness. The right to request flexible working will remain a day one right. Employers will still be able to refuse a request for one of the eight prescribed statutory reasons, however, they will only be able to do so when it is reasonable to do so. 

The government has previously pledged to ban “exploitative zero hours contracts” in order to end one-sided flexibility.  The amendments under the Bill do not provide for an outright ban, however they do add in a number of protections, including:

A duty to offer guaranteed hours – Employers will be required to offer a guaranteed hours contract that reflects the hours qualifying workers and qualifying agency workers regularly work over a set reference period.  The reference period will be determined in regulations, however the government has intimated it will be 12 weeks.  Employers will be required to make a guaranteed hours offer after the end of every reference period.  Workers will be able to bring an employment tribunal claim if they are not offered the hours.  Anti-avoidance measures will be introduced. 

A duty to provide reasonable notice of shifts – The question of what amounts to reasonable will be subject to consultation.  Eligible workers and agency workers will be entitled to compensation if their shift is cancelled, moved or curtailed at short notice.  The amount of compensation will be set out in regulations.  Where an employer fails in its duty, a worker will be able to bring an employment tribunal claim and will be entitled to compensation/a declaration.  

Automatic unfair dismissal and right not to suffer a detriment – Protection will be available in the form of automatic unfair dismissal in relation to dismissals for certain reasons relating to guaranteed hours.  Workers will also have protection against detriment in relation to guaranteed hours offers and the duty to provide reasonable notice of shifts.  

Collective agreements – The rights in relation to guaranteed hours, reasonable notice of shifts and compensation for cancelled, curtailed or moved shifts for zero hours, low hours and agency workers can be contracted out of by a relevant collective agreement.

Agency workers – With some differences in the approach due to the nature of agency work, the rights to guaranteed hours contracts, reasonable notice of shifts and compensation for short notice changes to shifts are extended to agency workers.  

One establishment - Currently where employers are proposing to make a large scale redundancy of 20 or more employees at one establishment within a period of 90 days or less, it must consult on its proposal with representatives of the affected employees and also notify the Secretary of State.  The trigger for consultation will be widened by the Bill and will be either:

• 20 or more employees at one establishment; or
• At least the “threshold number of employees” (to be determined by future regulations).

Obligations to consult will not require an employer to consult all employee representatives together, nor to reach the same agreement with all the employee representatives.  

The protective award - The protective award which is available when employers have failed to collectively consult will be doubled from 90 days’ gross pay per affected employee to 180 days’ gross pay.  It is also worth noting that in cases of dismissal and re-engagement this sum could be uplifted by up to 25% if the employer unreasonably failed to follow the Code of Practice on Dismissal and Re-engagement.  

The Bill will enable Statutory Sick Pay (“SSP”) to be paid from the first day of sickness absence – removing the three-day waiting period.  The lower earnings limit will also be removed for SSP eligibility.  For those earning below the lower earnings limit, a new system will be put in place to provide a fair earnings replacement.  

The Bill will make several amendments with regards to trade unions with assertions made by the government that strong collective bargaining rights and institutions are key to tackling problems of insecurity, inequality, discrimination, enforcement and low pay. The government is committed to strengthening the voice of working people. The government plan to do this by:

• Improving the process and transparency around trade union recognition, including streamlining the recognition process and strengthening protections against unfair practices.
• Extending access provisions to cover digital access and by ensuring processes are proportionate and effective by introducing a fast-track route for achieving an access agreement. Trade unions will have enhanced rights to access workplaces for the purpose of meeting, supporting, representing recruiting or organising workers and to facilitate collective bargaining. Organising industrial action is excluded from the access purposes.  
• Simplifying the current information requirements on industrial action ballots and notice to employers and ensuring trade unions provide a ten day notice period for industrial action (a reduction from 14 days). 
• Delivering e-balloting which the Government anticipate will increase participation in statutory ballots and enable the demonstration of clear mandates.
• Extending the expiry of a trade union's mandate for industrial action from six to 12 months. 

The government has for some time committed to repealing the Strikes (Minimum Service Levels) Act 2023.  

The Bill will introduce further individual rights and protections, such as the right to a statement of trade union rights and rights to time off for employees who are both a member of an independent trade union recognised by the employer and an equality representative of the trade union.  

Workers will also have the right not to be subjected to a detriment for taking part in industrial action. The Bill also enhances and streamlines the existing protections against dismissal for participating in lawful industrial action.

The previous government launched a consultation on tackling non-compliance in the umbrella company market. Amendments have been tabled to the Bill to allow umbrella companies to be regulated for the purposes of employment rights. Under a "next steps" heading in the consultation response the Government has confirmed its aim to ensure that workers get comparable rights and protections when working through an umbrella company, as they would when taken on directly by an employment business.

The government committed to removing the two-year qualifying period for unfair dismissal in its manifesto, making unfair dismissal a day-one right. The Bill will repeal the provision in the Employment Rights Act 1996 which sets out the two year qualifying period. The government will introduce a “light touch” procedure during an initial period of employment (the probationary period), the length of which will be specified in regulations. The government has intimated a preference for the initial period to be nine months. The modified procedure will only be applicable where the principal reason for dismissal is capability, conduct, statutory restriction or some other substantial reason relating to the employee. Redundancy dismissals will not be covered by the modified procedure.  We are awaiting the detail of what the modified procedure will look like. The Secretary of State will have the power to set a cap for the compensatory award for employees unfairly dismissed during the initial period of employment.  

It will be key for disciplinary, performance management and probationary procedures to be transparent, fair and reasonable.  Many employers are taking the opportunity now to review and stress test procedures to ensure they are both robust and fit for purpose.  It will be vital for recruitment processes to be reviewed to help ensure appropriate candidates are hired.  

As one of the major pieces of reform under the Bill we can expect extensive consultation on this amendment.