Employment Rights Bill – Time to catch-up

The much-anticipated Employment Rights Bill was published on Thursday 10 October.  Running to over 150 pages it is likely to be one of the biggest overhauls to workers’ rights and Employment law in nearly 30 years. It is important to bear in mind, however, that this is a Bill and not an Act.  These provisions may well change before the Bill receives Royal Assent which is expected to be no earlier than mid-2025, so it is important to keep an eye on developments in this area over the coming months.

The main provisions are:

• Unfair dismissal. Employees will receive day one rights for protection from unfair dismissal. Given that they will still be able to have a probationary period of up to nine months (perhaps 6 months plus an extension of 3 months) (an ‘initial’ period of employment), it is yet unknown what protection they will actually have from day 1. However, the right may reduce the time frame from a requisite 2 years down to 6-9 months meaning that there will be a necessity to comply with appropriate procedures before dismissal as you would with someone over 2 years currently. Also importantly redundancy has been omitted from the fair reasons to dismiss in the initial period meaning that it is likely that you would have to follow a fair redundancy procedure for everyone.  The Government has given assurances that this change will not be implemented until at least Autumn 2026 and so there will be time to debate how this will work in practice.

• Fire and rehire. It will become automatically unfair to dismiss an employee if the principal reason for dismissal was because the employer sought to vary a term of their employment and the employee then refused to accept that term or the variation was to enable the employer to hire somebody else (or re-engage the same employee) on different terms, with substantially the same duties. The only exception to this rule is if the decision to vary any terms was a result of the business in serious financial difficulties – although we expect this will be a very hard hurdle to overcome. Since this appears to be the only loophole it is likely to be relied upon by a number of businesses wanting to still use fire and rehire in certain circumstance so we can expect to see more guidance/better clarification of this definition before the legislation is implemented.

• Zero-hour contracts. In original discussions regarding the content of the Bill it was proposed that there would be a provision banning ‘exploitative’ zero hours contracts, but this led to protests from employers and workers alike who argued that they liked the flexibility of these types of contracts. The Bill as a result now contains a requirement for the employer to produce a ‘guaranteed hours’ contract if a worker has been working regular hours over any given reference period. Having said that, the workers themselves may not want this degree of certainty and can indicate that they do not want this.  At the moment it is unclear as to what this reference period refers to, but we are sure this will undergo some scrutiny as it goes through Parliament. The current suggestion is a 12-week reference period which has been used in other worker legislation such as holidays. Workers have also been given a right to ‘reasonable notice of a shift’ and the right to ‘reasonable notice of cancellation of a shift’. The minutiae of these provisions have yet to be ironed out, but it is clear that there is going to be a lot more protection for those on ‘zero-hour’ or minimum hours contracts.  This does not mean that zero hours contracts will cease to exist, but it does mean that unscrupulous employers will come under greater scrutiny.

• Protection from third-party harassment. This is additional to the Worker Protection (Amendment of Equality Act 2010) Act 2023 provisions which come into force on 26 October 2024 for employers to take reasonable steps to prevent third party sexual harassment. The level of expectation of what an employer will be required to do will be raised to all reasonable steps which will be a high bar. The Bill also provides for regulations which will explain and specify the reasonable steps required – a welcome clarification for employers once published since at present it is uncertain.

• Flexible Working. Earlier this year, flexible working requests became a day 1 right. This right remains but the Bill will now require the employer to explain why they consider it reasonable to refuse a flexible working request on one or more of the grounds that already exist (i.e. additional costs, not meeting customer demand etc). The penalty for breach remains at 8 weeks’ pay so no change there. This is one of the provisions which is furthest away from the promise of “making flexible working the default from day one for all workers, except where it is not reasonably feasible”[1] that the new government promised in its election pledges.

• Paternity, Parental and Bereavement Leave. Under this Bill, Paternity and Parental Leave will be day one rights. The current Parental Bereavement Leave will extend to a general entitlement to bereavement leave (two weeks for a loss of a child, one week for other bereavement). This still needs to be expanded on further in secondary legislation including what relationships to the bereaved are covered so we await further information.

• Statutory Sick Pay. This will be payable from the first day of sickness (instead of the current payment from the fourth day) and the lower earnings threshold for SSP will be removed. The weekly rate of SSP will either be the lower of £116.75 (or whatever rate comes in every April) or a prescribed percentage of the employee’s normal weekly earnings (the latter determination of percentage will likely be subject to further consultation). The Government announced today, 21 October 2024, that it has launched a consultation seeking views on what the prescribed percentage rate for SSP should be. Full details of the consultation (open until 4 December 2024) can be found here.

• Collective Redundancies. Redundancies (for 20+ redundancies in a business) held simultaneously in different locations will be caught by the collective redundancy provisions. Separate establishments should therefore not be treated separately. This could have a significant impact on businesses with multiple sites who had previously not had to consult in relation to certain establishments because that particular location had had under 20 employees.

• Trade Unions. The Bill significantly strengthens the power of trade unions. In particular, workers will now have a right to a ‘statement of trade union rights’ – i.e. the employer must give the worker a written statement stating that the worker has the right to join a trade union. It appears that this statement needs to be given alongside their statement of employment particulars, i.e. on day one. Although it is not entirely clear, we suspect if this is not given it would be possible to complain to the Tribunal as part of other claims in the same way as an employee currently can if an employer fails to give particulars of employment. Trade unions will now also have the right to access workplaces. An “access agreement”, between a listed trade union and an employer, would provide for access to a workplace by one or more officials of the union for any access purposes (to recruit / meet new members or facilitate collective bargaining). Access does not include organising industrial action. An employer must take reasonable steps to facilitate access so long as it does not ‘unreasonably interfere with the employer’s business’. Any disputes will be resolved by the Central Arbitration Committee. The conditions for trade union recognition have also been amended by the Bill, lowering the threshold from a requisite 10% to a 2-10% threshold depending on what the Regulations end up stipulating. A simple majority in the voting in the final ballot is also now sufficient. There also will be a bolstered requirement for employers to allow time off to participate in trade union activities by providing ‘accommodation and other facilities’ for the employee to carry out those activities. Workers will also now have protection from detriment for taking part in industrial action under this Bill.

• The Bill makes provision for the creation of the Fair Work Agency – a new enforcement body which will have powers to enforce rights (such as holiday pay, NMW, aspects of the Modern Slavery Act) and support employers looking for guidance on how to comply with the law.

As well as the Bill, the Government has also produced a ‘Next Steps’ document filling the gaps of pledges that were made but that are not included in the published Bill. The Bill itself contains enabling provisions, but it will require some secondary legislation (law created by ministers (or other bodies) under powers given to them under an Act of Parliament) to put some further provisions into law.

Some key provisions currently missing, or incomplete, under the Bill from Labour’s “Making Work Pay” paper and their 2024 Election manifesto are:

• The employee’s ‘right to switch off’ – preventing employees to be contacted out of hours except in exceptional circumstances. This will now be subject to a consultation and so it remains to be seen if this will ever make it into legislation.

• A requirement for large employers to report their ethnicity and diversity pay gap. The Government have indicated that these measures will now be dealt with in the Equality (Race and Disability) Bill due to be published from Autumn 2024 onwards.

• Moving towards a single status of employment – starting by a creation of a two-tier status system providing less ambiguity for both employers and employees. This will now also be subject to a consultation. This is a very complicated area involving lots of case law so we consider that this will take a long time, if at all, to actually be made law.

• Review of parental leave and carer’s leave to ensure they are protecting both the employee and employers (especially small employers).

• Stronger protection for pregnant employees – the Bill contains proposals on strengthening provisions for pregnant employees but there are no specifics on timescale for any new protection from dismissal on return to work from a pregnancy. Many are suspecting that this will be for 6 months, but this is something we will monitor during the consultation phase.

As highlighted above, the good news for employers is that the Bill will not likely receive Royal Assent until at least mid-2025, with the date for implementation running into 2026 (with the unfair dismissal provisions not taking effect until at least ‘Autumn 2026’), giving employers time to get provisions into place and seek advice where needed.

If you wish to discuss any aspect of this article or seek advice for your business, please contact our Employment department who will be able to assist with your queries.

There have been many further updates to the world of Employment Law in 2024 and so SMB have created a table of updates. If you would like to request a copy of this table, please contact marketing@smb.london