The Employment Rights Bill was introduced to parliament on 10 October 2024 and acts as the first phase of delivering the ‘Plan to Make Work Pay’ scheme, pledged by the Labour government in their manifesto.
As an employer, it’s important to keep up to date with the proposed developments of this Bill – and at the time of writing, no changes are expected until 2026. There are also several stages which will come prior to the Bill becoming law. The date of commencement is not yet known and the details set out in the bill could change as it progresses through Parliament.
In this article we provide an overview of the potential changes posed in this Bill, and how they may impact you as an employer.
Employment Rights Bill timeline
The first reading of the Employment Rights Bill was held on 10 October, and a second on 21October. Following these dates, the Bill will then be debated by MPs and the House of Lords prior to the Bill being put forward for Royal Assent. As we are now closer to 2025, it is anticipated that for the most part these reforms will become law no earlier than 2026.
It is prudent for businesses to use this time to make necessary plans and amends to their policies and processes and be ready for the changes to come.
Changes to be consulted
Unfair dismissal
The Bill will remove the current requirement for employees to have two years of service to make a claim of unfair dismissal. This provides protection from unfair dismissal to all employees from the first day of employment.
This will mean that moving forward employers will have to ensure they have a valid reason for the dismissal, such as one of the five reasons for dismissal outlined under the Employment Rights Act 1996 which are: capability, conduct, redundancy, illegality, or some other substantial reason (SOSR).
Employers will also have to ensure they carry out a fair procedure when dismissing an employee. This would potentially mean that employers will have to use escalating sanctions such as a verbal warning, a first written warning and then a final written warning when dismissing for misconduct.
Probation periods
The government has suggested the initial probationary period of an employee should be nine months, and that during a probationary period should an employer wish to dismiss an employee they would again need to follow a fair process such as holding probation reviews at regular intervals throughout the probationary period to show what support and direction has been received by the employee prior to dismissal.
Discrimination and automatic unfair dismissal will remain unaffected.
Zero-hour contracts
Zero-hour contracts are used to give flexibility for both employers and employees. In some instances, these contracts can be genuine and may suit the needs of both parties – for example increase staffing to cover unexpected absence or peak demand.
Currently there is little protection for those on zero-hours contracts if hours are withdrawn or reduced at short notice.
The government have committed to introducing regulations to improve this level of protection, including the right to move to guaranteed hours contracts to reflect hours which a worker regularly worked over a 12-week reference period.
This also applies to workers on who are on contacts where only a minimal number of hours are worked. However, what constitutes a ‘low hours’ contract has not yet been specified. The Bill also introduces a right to reasonable notice of the date and time of when they’re expected to work and how many hours the shift will last.
There is also a right to notice of changes to shifts. If the employer does not abide by this and allow reasonable time, the worker would be entitled to compensation.
Flexible working
In April 2024 recent changes to flexible working came into force. The updated law gave employees the right to request flexible working from day one of their employment and increased the number of requests an employee can make from one to two per year. It also introduced a legal obligation for employers to consult with the employee before refusing a request.
The Employment Rights Bill will amend the current law and introduce a further requirement that employers must also state the reason for any refusal of a request and explain why they consider that decision to be reasonable.
Our advice would be that it is good practice to hold a meeting and provide this information to offer an alternative route and explain, if required, why a request has been refused.
Bereavement leave
Currently there is no legal rights for employees to receive bereavement leave beyond the rights to unpaid time off to deal with the death of a dependent (two weeks for a child under the age of 18 or still born after 24 weeks of pregnancy).
The Bill has a provision to make bereavement leave a legal right with employees being entitled to one weeks leave. Also included within the Bill will be reference to which relationships this right will apply to.
Family-based Statutory Leave
The Bill allows the Secretary of State to make regulations in the future about protection from dismissal following employees returning from family-based statutory leave. This includes maternity, adoption, shared parental leave, neonatal care leave, and in some cases paternity leave.
Earlier this year the law was updated to protect employees who had returned from maternity leave. However, the new regulations will strengthen protection from dismissal for any reasons, not just during or after a period of pregnancy.
Paternity Leave – will become a day one right.
Parental Leave – will become a day one right.
Sick pay
This will also become a day one right and no lower earnings limit will be required, which could affect employers dramatically. Employers could see a significant increase in costs to the business, which could potentially see many revisiting their company sick pay schemes.
Employers may wish to consider reviewing their policies, considering how they can best effectively manage absence and ensure their managers have the skills and confidence to effectively hold conversations with their team regarding their health.
Extra protection from sexual harassment
By increasing the duty from “taking reasonable steps” to “all reasonable steps”, the Government are placing an ownness on the employer to protect their workers from being harassed by a third party. The duty will apply to all protected characteristics and not just sexual harassment.
The act will set to provide sexual harassment as a public interest disclosure (whistleblowing) to encourage employees to be able to report incidents of sexual harassment.
Fire and rehire
A statutory code of practice on dismissal and re-engagement was introduced by the previous government and implemented by the current, which came into force on 18 July 2024.
The code reinforces what has previously been considered good practice, that such an approach should be a last resort only. Employers who do not comply with the code could have tribunal claims increased by 25%.
The Bill now seeks to further strengthen the law surrounding this practice. It specifies that should employers dismiss employees for a refusal to accept a variation of contract, or to enable the employer to recruit another person or rehire the same employee under a varied contract to carry out substantially the same duties, it will be deemed as automatically unfair.
The only exception to this rule will be in cases where the contract variation is needed to avoid financial difficulties likely to affect the employer’s ability to carry on business as a going concern, and the employer could not reasonably have avoided.
Tips
On the 1 October 2024 new tipping laws came into place. The Bill will strengthen the law stating that before producing a written policy on the distribution of tips, staff must be consulted, either directly or through other elected representatives or if relevant, a recognised trade union. It also stipulates that the policy must be reviewed at least once every three years.
Collective redundancy
Currently the law ensures that collective consultation rules apply where 20 or more employees are to be made redundant at one establishment within a 90-day period.
Under the Bill employers will need to consider the number of redundancies being made across the organisation as a whole, not just individual places of work.
Annual Equality Action Plans
Regulations may require companies with over 250 employees to publish an annual equality action plan on what steps they are taking in relation to gender equality. These steps will be taken to close the gendered pay gap and as a provision of menopause support.
Strike action
The Employment Rights Bill will repeal the Strikes Minimum Service Levels Act 2023 on the day the Bill is passed into law. The law, introduced by the previous government, mandated a minimum level of service during strikes applicable to designated sectors such as the NHS and the fire service.
Other provisions within the Employment Rights Bill in relation to trade union activity are that a trade union may give a request to physically access a workplace for union purposes, such as recruiting, organising and collective bargaining.
Right to join a trade union
The Bill will ensure thatthere will be an ownness onemployers to inform employees of their right to join a trade union. This must be given in a written statement given along with the written statement of employment or contract of employment. The Secretary of State is yet to determine what information must be included in the statement.
Trade Union Representative Protection
The Bill introduces new rights and protections for trade union representatives to allow reasonable time off for equality representatives to be provided with facilities, where reasonable, and if requested for carrying out their duties or training.
Currently unions need 50% member turnout and in important public services 40% of eligible members must vote in favour of strike action for a ballot to be valid. The Bill proposes to reduce thresholds for industrial action ballots, meaning a union will be able to legally take strike action based on a simple majority of those voting.
There are also provisions which will allow union members a legal right to participate in electronic ballots. The 14-day notice period required by unions to give employers notice of industrial action will be reduced to seven days. The Bill also reduces the number of employees who need to be members to obtain recognition. However, this will be introduced by statutory instrument later. This increases protection from detriment for workers taking part in industrial action, with the removal of the limited time period after industrial action that an employee can be protected from dismissal.
Finally, the Bill removes the opt-in notice requirement for members, they will be automatically opted in unless they opt out.
Labour Market Enforcement
The Bill gives power to the Secretary of State to enforcing specific laws, including statutory sick pay, national minimum wage, statutory holiday pay, certain rules relating to employment agencies and businesses, some offences relating to gang masters and modern slavery, penalties for failure to pay compensation awarded by the employment tribunal.
The Bill requires the Secretary of State to create an impartial and expert advisory board on labour market enforcement and to publish an enforcement strategy every three years. The Bill allows the Secretary of State to delegate these enforcement functions into a new public body, called the Fair Work Agency, the Bill will enable new body to enforce labour market legislation.
How we can help
Although these changes are not yet in effect and the Bill is yet to be debated by MPs and a member of the House of Lords and pass Royal Assent, it’s important as a business owner and employer to review your policies in preparation. Some of these changes can significantly affect businesses and planning is essential.
With this in mind, our HR services can offer strategic guidance and a professional review of your organisations policies and procedures to help build the right structure for the future of your business. Please don’t hesitate to contact our team.
This article is distributed for educational purposes only and should not be considered advice. We recommend that you seek professional advice.
This article is based on current UK legislation, that is subject to change at any time.
