The Employment Rights Bill ("the Bill")
According to the government press release the legislation has been introduced in Parliament to upgrade workers' rights across the UK, tackle poor working conditions and benefit businesses and workers alike and provides a "pro-business, pro-worker" approach. The Written Statement by Jonathan Reynolds, Secretary of State for Business and Trade, ("the Written Statement") provides further detail on the Bill.
Key provisions include:
Removal of two year qualifying period for unfair dismissal – Employees will be protected from unfair dismissal from day one.
Probation period - There will be a consultation on a new statutory probation period for new hires. According to the press release the probation period will allow for a proper assessment of an employee's suitability for a role as well as reassuring employees that they have rights from day one, enabling businesses to take a chance on new hires while giving more people confidence to re-enter the job market or change careers, thereby improving living standards. The government will consult on the length of that initial probation period – the government's preference is nine months. A lighter-touch approach will be permitted during this period to dismiss someone who is not right for the job. Although subject to consultation, the government is inclined to suggest the approach should consist of holding a meeting with the employee to explain the concerns about their performance (at which the employee could choose to be accompanied by a trade union representative or a colleague).
Zero hours contracts – The government will give 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 reference period. This will give workers security of earnings whilst also allowing them to remain on zero hours contracts where preferable.
Fire and rehire – According to the press release the Bill will end unscrupulous employment practices and shut down loopholes allowing "bullying" fire and rehire and fire and replace. The government has committed to providing greater unfair dismissal protection and to providing effective remedies to stop these practices. The government are committed to consulting on lifting the cap of the protective award if an employer is found to not have properly followed the collective redundancy process as well as reviewing what role interim relief could play in protecting workers in these situations. However, businesses will be able to restructure to remain viable, to preserve their workforce and the company where there is genuinely no alternative.
Statutory sick pay – The lower earnings limit will be removed for all workers and the waiting period before sick pay takes effect will be cut out.
Trade unions – Anti-union legislation put in place by the previous administration, including the Strikes (Minimum Service Levels) Act 2023 will be repealed.
Flexible working – The law will be changed to make flexible working the default for all, unless the employer can prove it's unreasonable.
Bereavement leave – A new statutory right to bereavement leave will be introduced.
Paternity leave and unpaid parental leave – There will be a new day one entitlement to this leave.
Pregnant women and new mothers – Stronger protection will be introduced for pregnant women and new working mothers returning to work including protection from dismissal whilst pregnant, on maternity leave and within six months [not set out in the Bill but referenced in all government accompanying documents] of returning to work.
Gender pay gap – The gender pay gap reporting requirements will be expanded, requiring large employers to produce equality action plans on how to address their gender pay gaps and support employees through the menopause.
Fair Pay Agreement – The Bill will enable the government to bring forward a framework for a Fair Pay Agreement process in the adult social care sector. A Fair Pay Agreement will empower workers, trade unions and employers to negotiate fair pay, terms and conditions, and training standards.
Harassment – Further regulations may specify steps that are to be regarded as "reasonable" for the purpose of determining whether the employer has taken or failed to take reasonable steps to prevent sexual harassment. Steps that may be specified include carrying out assessments, publishing plans or policies, reporting requirements and steps in relation to handling complaints.
The new duty on employers to take reasonable steps to prevent sexual harassment will be extended to "all reasonable steps".
The Equality Act 2010 shall be amended so as to require an employer not to permit a third party to harass a person who is an employee.
Collective redundancy consultation – Currently the duty to collectively consult arises when 20 or more dismissals are proposed at one establishment. The Bill removes the requirement that the proposed dismissals are at one establishment and will instead consider the number of proposed dismissals across the business.
Fair Work Agency – A new fair work agency will be established bringing together existing enforcement bodies to enforce rights such as holiday pay and support employers looking for guidance on legal compliance.
Please note that further regulations are required in some instances to bring the changes into force.
Beyond the Bill
The government has further plans for employment law reform beyond the Employment Rights Bill; much of the detail is set out in the government's Next Steps to Make Work Pay Policy Paper. Reforms referenced in the Plan to Make Work Pay still on the agenda include:
A right to switch off – Preventing employees from being contacted out of hours (unless exceptional circumstances).
Ethnicity and disability pay gap reporting – It will be mandatory for large employers to report their ethnicity and disability pay gap.
Equal pay – Equal pay rights will be extended to protect workers suffering discrimination on the basis of race or disability.
Employment status – There will be a move towards a single status of workers and transition towards a simpler two-part framework for employment status.
Parental leave and carers' leave – There will be a review into the two systems to ensure they are delivering for employers, workers and their loved ones.
The Transfer of Undertakings (Protection of Employment) Regulations 2006 ("TUPE") – A call for evidence will be launched to holistically examine a wide variety of issues relating to TUPE, including how TUPE is implemented in practice.
Minimum Wage – Low pay will be tackled by accounting for cost of living when setting the Minimum Wage and the "discriminatory" age bands will be removed.
Comment
The Bill will bring forward 28 individual employment reforms representing a significant shift in employment law. The Written Statement confirms that further detail on many of the policies in the Bill will be provided through regulations after Royal Assent. Consultation is expected to begin in 2025, seeking significant input from all stakeholders, meaning that it unlikely for the majority of the reforms to take place before 2026. Reforms on unfair dismissal will take effect no sooner than Autumn 2026.
