This blog is written by Simon John.

The Employment Rights Bill, introduced to Parliament on 10 October 2024, is said to be the first phase of delivering Labour’s ‘Plan to Make Work Pay’ and follows the Government’s manifesto commitment to introduce (draft) legislation within the first 100 days of coming to office.

The stated intention behind the bill is to support employers and businesses whilst also creating a level playing field and to modernise the employment rights framework to suit the modern-day economy, in what is hailed as being “the biggest upgrade in employment rights for a generation”.

However, bold and ambitious visions need to be implemented in a workable way and the Government has already launched four consultations seeking views from business and employee groups on: Zero hours contracts, collective redundancy, fire and hire, trade union and SSP reforms. So, there is every prospect of meaningful amendment to the Bill during its passage through Parliament. The new rights are expected to come into force in Autumn 2026.

The 158 page Bill brings forward 28 individual employment reforms, and the government is expected to publish a ‘Next Steps’ document outlining further reforms.

Broadly, the Bill has measures to:

  • establish unfair dismissal as a ‘day one’ right – this is perhaps the most fundamental change – the current two-year qualifying period for protection from unfair dismissal will be removed and the Government will consult on a statutory 9 month probation period for new hires to assess their suitability for a role;
  • reinforce flexible working by making it the default where this is ‘practical’ – it is a day one right and it is for a refusing employer to establish it would be “unreasonable” to permit. Potential grounds to refuse include: burden of additional costs; detrimental effect on ability to meet customer demand; inability to re-organise work among staff or to recruit additional staff; or detrimental impact on quality. Examples of flexible working include: flexible start and finish times or working from home;
  • beef up protections for pregnant women and new mothers, including protection from dismissal while pregnant, on maternity leave and within six months of returning to work;
  • start rights to paternity, unpaid parental and bereavement leave from day one;
  • stop ‘unscrupulous fire and rehire practices’ – such practices were utilised to impose changes to workers T&C’s, pay or shift patterns if they were unwilling to accept the change. This will now be banned, and dismissals on this basis will be automatically unfair, unless a company can establish that otherwise it would genuinely risk insolvency and the dismissal was otherwise unfair;
  • require large (250+ employee) employers to create action plans on assisting employees through the menopause and dealing with gender pay gaps;
  • repeal the Minimum Service Levels legislation introduced by the previous Government;
  • end ‘exploitative’ zero-hours contracts – those on zero and low hours contracts will gain the right to a guaranteed hours contract if they work regular hours over a 12 week period. Employees can remain on zero hours contracts if they wish, but now at least have the option. Those on zero hours contracts will also be entitled to “reasonable” notice ahead of changes to their shifts, as well as compensation if a shift is cancelled or ended early;
  • get rid of the current three-day waiting period and the lower earnings (£123/week) limit for statutory sick pay;
  • create a new enforcement agency, the Fair Work Agency, this will unite existing enforcement powers and enforce rights like holiday pay;
  • respond to low pay by taking into consideration the cost of living when setting minimum wage rates and the removing discriminatory age bands.

Concurrent with the proposed legislation, the Government will publish a ‘Next Steps’ document that will set out the reforms it will look to implement in the future. Contingent on the outcome of the consultation, these will include:

  • a pledge to end pay discrimination through the expansion of the Equality (Race and Disparity) Bill, which would make it compulsory for large employers to report their ethnicity and disability pay gap. This was heralded in the King’s Speech on 17 July 2024. However, it is likely to have significant complexity in its application, and one imagines would take considerable consultation and detail to be workable.
  • a shift to a single status of worker, constituting a change from the current three tiered: worker/employer/self-employed system to a simpler two-part framework for employment status. This is intended to increase protection for those classed as self-employed and who largely work for one employer but have fewer entitlements than other employees. There is no consultation yet underway on this.
  • a ‘right to disconnect’, thus precluding employees from being contacted out of office hours, other than in exceptional circumstances. The manifesto clarified that the right would likely follow models similar to those in Ireland and Belgium. It is unclear however whether any such a right would be protected by an outright statutory restriction or by a code of practice, as in Ireland.
  • reviews of the parental leave and carers leave systems.

Comment

A Government published impact assessment has warned that these policies will impose a direct cost on businesses in ‘the low billions’ (under £5billion) and that 17% of businesses indicated they would respond to such costs by cutting jobs. It also warned of a proportionally higher cost for small and micro-businesses.

So it is far from clear yet, how the legislation will crystallise into the fine detail once in force.

However, as most of the new rights and obligations created by the Bill will unlikely be in force until late 2026, and consultation is already underway on the biggest reforms, businesses should have time to plan and to make the policy and planning changes and adjustments needed, including management training, to best ensure that they are chance-ready.