The Employment Rights Bill

On 5 July 2024, Labour came into power promising that an Employment Rights Bill would be published within the first 100 days of their being in power. The Bill was described as a “new deal for working people” and “the biggest upgrade to rights at work for a generation.” 100 days later, the highly anticipated Employment Rights Bill was published on 10^th October 2024, setting out  28 new individuals reforms to Employment Law.

In accompaniment to the Bill, the policy paper; “Next Steps to Make Work Pay” was published, providing  context and the intent behind the proposed changes.

In this article we will be focusing on seven of the 28 reforms outlined in the Bill.

Zero hours contracts

The Government has said they want to place a ban on “exploitative” zero hours contracts by providing workers with a right to guaranteed hours, and that these hours are reflected in their contracts. For a worker to qualify for a guaranteed hours contract, the worker must be on a zero hours contract and have a low number of guaranteed hours. If a worker meets the criteria they will have the opportunity to move to a guaranteed hours contract, however, there is no obligation on the worker to move to this  contract.  The worker can therefore remain on a zero hours contract if they wish to. For the employer, there is a continuing obligation for guaranteed hours contracts to be offered to workers, even where the offer is rejected.

The guaranteed hours contract will be over a 12 week reference period and at the end of the 12 week period, the hours worked will be reviewed. Should more hours become available for the worker, and the worker accepts these hours, this will be reflected in the guaranteed hours contract.

A key point for employers to note with this reform, is their obligations to inform workers of changes and/or cancellations to shifts. Where reasonable notice has not been provided to workers of such changes, workers have a right to compensation proportionate to the shift.

Currently, it is not clear what is meant by ‘low hours’ and consultations are due to take place to address this. It is also not clear how the new rules under the Bill will apply to agency workers and seasonal workers and so, further information is expected from the Government.

Flexible Working

The law on flexible working recently changed following the enactment of the Employment Relations (Flexible Working) Act 2023 which came into force in April 2024. That Act did not go as far as expected and therefore it is believed that the Government are seeking to strengthen the law in relation to flexible working to make this the “default” position. Currently, employees can request flexible working from day one (whereas previously there was a requirement to have 26 weeks’ qualifying service before any request could be made). Similarly to the proposed changes to zero hour contracts, the proposals to flexible working are intended to ‘end one sided flexibility.’

The Bill provides that employers will only be permitted to refuse a request for flexible working if it considers that one of the specified grounds (the 8 business reasons) is reasonable. Where an application for flexible working is refused, an employer will need to explain their reason.

Employers should note that the right is simply a right to request flexible working arrangements, not an automatic right to flexible working.

It is not yet known if there will be any shift from the current rules for breaching the statutory flexible working regime.

Statutory Sick Pay (‘SSP’)

Currently, for an employee to be eligible to receive SSP they must have an average weekly earning at or above the Lower Earnings Limit (currently £123 per week). There is also a 3 day waiting period for SSP which means that most short-term sickness absences (i.e. absences less than 3 days), do not meet the eligibility criteria for SSP and will be unpaid (unless the sick employee’s employer offers their own discretionary company sick pay policy). Consequently, approximately 1.3 million low paid employees are not eligible to receive sick pay.

In accompanying factsheets published on gov.uk on 18^th October 2024, the Government identified that many employees have no choice but to work when they are sick because their short-term sickness absence will be unpaid. This can lead  to;  infectious diseases spreading at work, long term health issues worsening and lower productivity as employees will be presenting at work when they are not fit to work.

The proposed reforms to SSP are that both the 3 day waiting period and the Lower Earnings Limit will be removed. The Bill makes reference to establishing an enforcement agency (Fair Work Agency) that will be able to handle disputes about statutory sick pay (amongst other issues).

Entitlements to Leave

Under the Employment Rights Bill, paternity leave, paternal leave and bereavement leave will become a day one right.

Under current legislation, employees who wish to take paternal leave must have worked for their employer continuously for 26 weeks’ in order for leave to be taken. As for paternity leave which is unpaid leave, employees must have worked for their employer continually for 1 year.

It is anticipated that there may be further changes to the paternal leave system with the Government confirming there will be a review of this.

Presently, there is no statutory right to bereavement leave, unless the leave is for a parent who has lost a child under the age of 18. The Bill intends to change this by creating a regulation for bereavement leave. The Regulation will provide:

1. Who can take leave;
2. How leave can be taken;
3. The length of leave that can be taken (it is proposed that the leave must last for a minimum of 1 week and 2 weeks where the leave is for the loss of a child); and
4. That the leave must be taken within 56 days following the death of the individual.

Unfair Dismissal

The reform most criticised and with the biggest change for both employers and employees alike is unfair dismissal, which will become a day one right. This means any employee from their first date of employment with their employer can bring a claim for unfair dismissal. This right does not apply to workers or employees who have not yet started working for their employer.

The Government have advised that they will be carrying out consultations for a statutory probation period, with a preference for this period lasting 9 months. The Government is reviewing how dismissal during probation will be managed, such as dismissal during probation being automatically fair less the reason for dismissal is not a fair reason or creating a probationary dismissal procedure. Should a probationary dismissal procedure be adopted, Regulation will be created to reflect this.

Unsurprisingly, there has uproar over the new reform to unfair dismissal with severe consequences predicted when the reform is enforced. This includes:

1. An increase in unfair dismissal claims being brought to the Employment Tribunal;
2. Employers being deterred from recruiting new employees for fear of dismissing them and a claim arising from this; and
3. Costs for employers for Employment Tribunal claims or Settlement Agreements arising from unfair dismissal claims.

Protection from Harassment

The law concerning harassment has also recently been changed, following the introduction of the Worker Protection Act (Amendment of Equality Act 2010) Act 2023 which came into effect on 26^th October 2024. That Act introduced a new duty for employers to be proactive and take preventative measures to protect their workers from sexual harassment.

Similarly to the changes made to flexible working, the changes initially promised were somewhat watered down. It was initially understood that employers would have a  duty  to take all reasonable steps to prevent harassment, however this was instead reduced to a duty to take “reasonable steps”. In addition, it was expected that the change in October would also deal with third party harassment, but this too was omitted. Under the new proposals, employers will be liable for harassment by third parties that occurs in the course of employment.

Further to placing a greater burden on employers to take “all reasonable steps to prevent harassment”, the Bill will also amend the definition of a “protected disclosure” to include a disclosure that sexual harassment has taken place. This means that where a worker makes a qualifying protected disclosure, they will have whistleblowing protections.

The Government have said that the Bill intends to further strengthen protections and prioritise fairness, equality and the wellbeing of workers.

Collective Redundancies

The current position is that where an employer is proposing to make 20 or more redundancies “at one establishment” within a period of 90 days, they musty go through a period of collective consultation. If an employer breaches this requirement, they are liable to pay the affected employees a protected award of up to 90 days’ pay (per employee).

The Bill reverses the decision in Usdaw v Woolworths (known as ‘the Woolworths case’). This case stated that employers must undergo collective consultation where they propose to make 20 or more employees redundant at one establishment (i.e. one location). Now, the need to collectively consult will be triggered if the employer is proposing to make 20+ redundancies across the business.

In addition to this, the Government is also in consultation to consider whether the protective award should be increased to 180 days or whether this should be uncapped.

Government Consultations – Have your say.

The Government has launched four consultations to canvass views on the proposed changes:

1. “Making Working Pay: Consultation on strengthening remedies against abuse of rules on collective redundancy and fire and rehire”[i]. This Consultation closes on 2 December 2024. However the consultation does refer to the Government’s intention to seek further consultation in 2025 in respect of collective redundancy in particular.

2. “Making Work Pay: Consultation on the application of zero hour contract measures to agency workers”[ii]. This consultation closes on 2 December 2024.

3. “Making Work Pay: Strengthening Statutory Sick Pay”[iii]. This Consultation ends on 4 December 2024.

4. “Consultation on creating a modern framework for industrial relations”. This consultation concerns the proposes changes that will affect trade unions and this also closes on 2 December 2024.

How can employers prepare for the changes?

Employers can breathe a short sigh of relief because many of these proposed changes are subject to consultation and will not come into effect until Autumn 2025 or even as late as 2026 meaning that there is time to prepare before the law changes.

We anticipate that further guidance will be provided to employers throughout the next year whilst these changes are debated and start to take shape, so it is important to watch out for this.

There are a number of proactive steps that you can take now to  prepare for the changes. These include:

• Understanding the new changes to come into effect;

• Reviewing staff contracts to ensure they are in line with current rules and regulations;

• Reviewing existing policies and ensuring that they are clear, well-structured and up to date with legislation. It is also important that staff members understand the policies and know where to find them. Having a policy is not enough;

• Carrying out risk assessments in key areas such as recruitment and harassment;

• Considering what flexible working changes can be accommodated early on in an employee’s employment. Employers should review the types of flexible working arrangements that they currently have and consider what other types of flexible working may be appropriate;

• Training: all employees at all levels should be required to undertake regular training, particularly in relation to sexual harassment and how they can prevent this, given  the onus on employers to take reasonable steps to prevent harassment. Managers should also be provided with training to deal with any flexible working requests to minimise the risk of discrimination;

• Having conversations early on with low performing employees and encouraging open dialogue with employees. This is of importance when employees are not performing and there is a view to dismiss them. Having conversations about performance prior to dismissal will decrease the risk in unfair dismissal claims. Additionally, this is of importance should any employee wish to report experiencing or witnessing sexual harassment in the workplace; and

• Factoring additional costs into the Company budget when planning for the new financial year. For example, the costs associated with potential unfair dismissal claims and compensation for late cancellation or notice of change in shift patterns for workers on zero hours or guaranteed hours contracts.

If you would like further information on the Employment Rights Bill or our Employment service,   please do not hesitate to contact our Employment Team.

[i] Consultation on strengthening remedies against abuse of rules on collective redundancy and fire and rehire

[ii] Consultation on the application of zero hours contracts measures to agency workers

[iii] Making Work Pay: Strengthening Statutory Sick Pay – GOV.UK