Don’t leave today’s work for tomorrow? Employment Rights Bill published outlining employment related reform
The Employment Rights Bill was published today running to more than 150 pages and containing 28 changes to employment law. There are no major surprises as most of the changes were trailed in the Labour Party Manifesto and to some extent in the King’s Speech in July, although there is some unexpected detail. Employers yet to take any steps to prepare for the trailed reform can take comfort in the fact that only a handful of smaller changes are expected in the short term, including the changes to flexible working, which are not groundbreaking.
The much publicised ‘day one’ right to claim unfair dismissal will (in good news for employers) be subject to a probationary period during which a “lighter touch” process to justify dismissal may be followed. A nine-month probationary period is the Government’s preference although that detail is not included in the Bill and will be decided following consultation and further regulations. This change will not be introduced until Autumn 2026, with consultation beginning in 2025.
Aimed at resetting industrial relations, the Bill also contains significant changes to the way in which trade unions interact with employers and has been well received by the TUC.
Other notable changes include reducing the threshold for collective redundancy consultation by providing that employers look across their business rather than separate establishments.
In addition to the Bill, the Government’s Next Steps to Make Work Pay has been published outlining consultations on wider reforms sitting outside of the Bill including a right to switch off, mandatory pay gap reporting for disability and ethnicity pay gaps and changes to worker status.
Outlined below is a summary of the Government’s key changes and proposed next steps along with some key actions for employers to consider.
Statutory rights
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Unfair dismissal: The two-year qualifying period for unfair dismissal will be removed so that employees can claim ordinary unfair dismissal from day one of employment. Employers will be able to use probationary periods; the Government has indicated in the Next Steps document that their preference is for a 9-month probationary period during which employers could follow a truncated dismissal procedure.
How that will operate in practice will be crucial; the Bill does not contain that detail and it will be subject to consultation. The Government has, however, stated that: “As a starting point, the government is inclined to suggest it 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).”
Statutory sick pay will be available from day one of employment, and the lower earnings limit eligibility requirement will be removed. Currently there is a 3 day waiting period before an employee can receive SSP.
Parental leave, paternity leave and bereavement leave will be available from day one of employment. Currently there is a one year service requirement before an employee is entitled to parental leave and the right to paternity leave requires 26 weeks’ service. Paternity leave will also be available to be taken after statutory parental leave which is currently prohibited. The Bill will broaden the right to statutory bereavement leave to categories other than parents although those categories are to be specified in regulations. |
Contracts
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Fire and rehire – The Bill introduces a new category of automatic unfair dismissal where the reason for the dismissal is that the employer sought to vary the employee’s contract of employment and the employee did not agree to the variation. There will be no qualifying period for this right.
Employers will, however, be able to avoid a finding of unfair dismissal if they can show that the reason for the variation related to financial difficulties affecting its business and the employer could not reasonably have avoided making the variation. Other factors that will be taken into account will include any consultation carried out with the employee (or a trade union) about varying the employee’s contract of employment and anything offered to the employee in return for agreeing to the variation.
This is a significant change. It had previously been anticipated that the Government would publish an updated code of practice but the nature of this reform means that an employer will have to approach any dismissal and re-engagement process relating to changes to terms and conditions of employment carefully, to ensure they meet the financial difficulties threshold contained in this provision.
We may also see additional measures relating to fire and rehire. The Next Steps document also states “..we are committed to consult 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 what role interim relief could play in protecting workers in these situations.”
Zero hours contracts – The anticipated ban on “exploitative” zero hours contracts goes much further than expected. Qualifying workers will have a right to a guaranteed hours offer at the end of every reference period reflective of the hours actually worked in a preceding period. The applicable reference period is not defined in the Bill and will be left to regulations but is expected to be 12 weeks. For example, if an individual works increased hours over a set reference period, they would be able to increase their hours accordingly. Employers will be required to make the guaranteed hours offer unless exceptions apply.
There is a complex procedure to consider and new enforcement provisions and remedies for breaches before an employment tribunal. There will also be a right to reasonable notice of a shift, and a right to payment for a qualifying shift that is cancelled, moved or curtailed.
Flexible working – The right to request flexible working will be strengthened although only marginally by introducing a requirement for an employer to ‘reasonably’ refuse a request on one or more of the existing statutory grounds. |
Sexual harassment
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All reasonable steps – The duty to prevent sexual harassment in the workplace, which comes into force on 26 October 2024, will be strengthened by requiring an employer to take “all reasonable steps” rather than just reasonable steps. Given the high threshold for reasonable steps outlined in the EHRC’s updated technical guidance on sexual harassment at work, it remains to be seen what more (if anything) this will involve in practice.
The Bill also paves the way for the introduction of regulations specifying what “reasonable steps” involve which may include: carrying out assessments, publishing policies, and steps relating to the reporting and handling of sexual harassment complaints.
Third party harassment – In addition, the Bill imposes employer liability for third party harassment. An employer will be liable if a third party harasses an employee in the course of their employment and they failed to take all reasonable steps to prevent it. This is another significant change in the law.
Protected disclosure – The Bill introduces a new category of disclosure qualifying for protection under the existing whistleblowing regime – a report that “sexual harassment has occurred, is occurring or is likely to occur,” will amount to a relevant disclosure and protect employees against any related detriment or if that is the reason they are dismissed. This may also affect an employer’s use of confidentiality provisions in settlement agreements.
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Equality
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Large employers (that is, those with 250 or more employees) will be required to develop and publish (on no more than an annual basis) an equality action plan on steps taken to address gender pay gaps and supporting employees through the menopause. Currently employers that are obliged to report their gender pay gap are encouraged to publish an action plan but there is no legal requirement to do so.
Protections for new mothers will also be introduced – it will be unlawful to dismiss a woman (for any reason, not just redundancy) in the 6-month period after she returns to work. |
Trade unions
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Minimum service levels legislation – Legislation introduced by the previous Government on minimum employee levels during some strikes will be repealed.
Right to statement of trade union rights – Employers will be required to give a worker a statement informing them of their right to join a trade union which will need to be provided on day one of their employment (at the same time as their section 1 Employment Rights Act 1996 statement of particulars).
Rights of access – Trade unions will have increased rights of access, making it easier to meet with, recruit and organise workers and facilitate collective bargaining. The Bill states that access includes physical entry to a workplace and makes provision for disagreements in relation to a trade union’s request for access to be determined by the Central Arbitration Committee.
Statutory recognition – The Bill makes provision for the lowering of various support thresholds that apply to the statutory recognition process to make it easier for unions to gain recognition.
Industrial action – The conditions to be met for voting in favour of industrial action are softened and the notice requirement is reduced from 14 days to 7 days.
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Enforcement
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| A new enforcement agency will be created bringing together existing enforcement agencies and giving new powers. The agency will be empowered to enforce statutory rights such as the right to paid holiday and guide employers on compliance with statutory employment rights. |
Next Steps
The Next Steps to Make Work Pay document outlines further changes that will be subject to prior consultation. We anticipate, therefore, that any related reform will be some way off. These include:
- A Right to Switch Off which would prevent employers from contacting employees outside of work hours, except in exceptional circumstances, to allow for adequate rest and recuperation.
- A strong commitment to end pay discrimination by expanding an Equality (Race and Disparity) Bill (which is yet to be published) to make it mandatory for large employers to report their ethnicity and disability pay gap.
- A move towards a single status of worker and transition towards a simpler two-part framework for employment status.
- Reviews into the effectiveness of the statutory parental leave and carer’s leave regimes.
Impact for employers?
CMS employment law specialists will be discussing the impact of these employment related reforms in webinars on Thursday 14 and Wednesday 27 November. You can register for those webinars, here: Employment Rights Bill webinar series.
For now, what is clear is that change is afoot and employers will need to:
- Review their approach and contractual provisions relating to probationary periods and other policies which interact with the probationary periods, such as disciplinary and performance management. Many employers no longer use probationary periods and in light of the extension of unfair dismissal rights they may consider whether it would be prudent to reinstate their use. Managers should also receive training in these processes.
- Trade union rights will be a key issue going forward, with the right of access affecting all employers, including those that are not currently unionised. The proposed reform may well see an increase in voluntary and statutory requests from trade unions for recognition and trade unions are likely to be proactive in using this new right.
- Policies and processes will need to be updated to reflect the broadening of existing statutory entitlements. This will range from significant changes to policies such as flexible working to minor changes to sickness absence and parental leave policies. Managers dealing with flexible working requests will also need training on the new rules/policy.
- Given the broadening of unfair dismissal rights, it is reasonable to expect an uptick in employment tribunal claims which may not be welcome news for existing users of the Employment Tribunal system. Careful handling of probationary periods will be crucial and HR teams will play a key role in supporting dismissals within those periods including documenting the reasons for dismissal.
Watch out for further commentary from CMS’ employment specialists on the proposed reform in the coming weeks.
