Unveiled Employment Rights Bill paces change for employers and workers
Heralded as the greatest shake up in UK employment law for more than 30 years, and the biggest upgrade to worker rights in a generation, the much-anticipated Employment Rights Bill has finally landed. But with many of the sweeping reforms postponed or diluted, it feels more like the start of a steady transition than a seismic shift.
Fulfilling the government’s election promise to publish the Bill within 100 days of its landslide election victory generated a time pressure that has resulted in a lack of detail and inevitable compromises.
Powerful voices from employer representatives have forced a rowing back on some of the most impactful employee protections proposed in the government’s Make Work Pay manifesto plan to tackle low pay, poor working conditions and poor job security to help more people to stay in work.
Employment Rights Bill – what is changing?
The much-trailed provision for unfair dismissal rights from day one now includes a probationary period to help ease employer concerns, although details are yet to be finalised, a 9 month period is proposed. This compromise allows employers time to assess employee suitability for a role, without having to worry about an ordinary unfair dismissal claim.
Other day one rights include the right to paternity, bereavement and parental leave, although there will only be a right to be paid for paternity leave. Bereavement leave will be extended beyond the current scope of parental bereavement.
From April this year it became a day one right to make a flexible working request, and Labour has said that, going forward, employers will only be able to refuse a request where it is reasonable to do so and if one of the statutory reasons apply. Although the eight permissible business reasons for refusal remain unchanged, this is likely to make it easier for employees to challenge refusals.
The right to fire and rehire has not been abolished, instead its use has been limited. It will be automatically unfair to dismiss an employee for refusing to agree a contractual change, unless the employer can show there were financial difficulties and that the change was not reasonably avoidable.
There will not be a complete ban on zero hours contracts, as originally intended only on “exploitative zero hours contracts” – the question therefore is what is meant by “exploitative”. It is anticipated that workers will have the right to a contract which reflects the number of hours regularly worked over a 12-week reference period. However, a potential problem with this is that employers may avoid offering predictable hours during the reference period. Also outlined are new provisions to give workers reasonable notice of changes to their hours and to compensate them when shifts or working times are cancelled or cut short.
The right to statutory sick pay will kick in from day one of sickness absence, with employees no longer having to wait three days before becoming entitled. It is also anticipated that the lower earnings limit will be removed and that the statutory rate of sick pay will be increased. Employers are likely to see increased rates of absence and higher costs, especially if the right is extended to workers.
Collective redundancy consultation will no longer apply to the number of redundancies being made at one establishment. Instead, collective consultation will be triggered according to the number of redundancies being made across the entire business. This is likely to affect larger employers more, with consultation having to take place more regularly.
The Bill strengthens existing requirements to guard against sexual workplace harassment, due to come into force later this month, by raising the bar from a duty to take ‘reasonable steps’ into a duty to take ‘all reasonable steps’. The Bill also makes employers liable for harassment which occurs in the course of employment in relation to any protected characteristic, not just sexual harassment.
For pregnant women and new mothers, further details are awaited, but the Bill strengthens protections against dismissal in a significant extension of current safeguards. It will be unlawful to dismiss a woman on maternity leave, as well as for six months after her return, except in specific circumstances. It remains to be seen whether these reforms will extend to returners from other types of family leave, such as adoption leave.
What is not happening?
As a result of the promise to publish within 100 days, some of the expected reforms make it through, whilst others are noticeably absent or subject to further consultation and refinement.
That is evident in the simultaneous publication of a companion paper to the Bill, called the Next Steps. This outlines how Labour intends to meet the election promises not yet covered by the Bill. This includes the right to disconnect — a provision aimed at protecting employees’ time away from work — which was widely expected to be contained within the Bill. Instead, the government has promised to address it via a new code of practice, with consultation expected next year.
Another long-standing Labour commitment is the abolition of the UK’s three-tier employment framework, towards a single worker status. This aims to expand the range of workers who qualify for employment rights, a fundamental change that could reshape the employer-employee dynamic, by merging the existing categories of ‘worker’ and ‘employee’, leaving only the status of ‘employed’ or ‘self-employed’. A significant proposal, designed to reduce ambiguity, this has provoked loud debate over its potential impact on business flexibility and for now, this promise has proven too complex to address within the time frame. However, the government has confirmed its continued commitment to a single worker status model with consultation plans in the Next Steps paper.
Timescales
While a raft of sweeping changes has been outlined in the Bill, and a timeline indicated for those in the Next Steps, there’s little in the way of immediate action. Instead, it’s a case of waiting to see how Parliament will shape the final version of the Bill. Notably, before the ink is even dry on this initial working, the government has hinted that it might amend its own draft in the coming months.
Many of the requirements also depend on secondary legislation, the outcome of consultation, or codes of practice. Taken together with an assurance that significant changes, such as those around unfair dismissal, will not take effect until 2026, this staged approach should offer some relief to employers, knowing that there will be no overnight change of regime.
For now, employers should take account of the potential changes in their thinking and future strategy and keep their ear to the ground for further legislative changes. As the Bill moves through Parliament and consultation documents are released, the practical implications will become clearer.
However, many of the changes are substantial, and smaller businesses without dedicated specialist support will need to devote time and resources to navigate them effectively. Ensuring positive outcomes for both employees and the business will require careful planning and support together with a regular review of policies.
For any advice and information on the above points or any employment issues please email our specialist employment law team here.
This is not legal advice; it is intended to provide information of general interest about current legal issues.