Earlier this month Labour published its long-awaited Employment Rights Bill. Described by the Government as the “biggest upgrade to rights at work for a generation”, the Bill is intended to boost workers’ rights by introducing reforms that include banning zero-hours contracts, ending fire and rehire practices and bringing in basic employment rights from day one. But will these changes that are being brought in be as seismic as suggested? There is a possibility this will be the case, but many of these reforms will not come into force until 2026 with a large volume of this subject to consultation.
The 158-page Bill introduces 28 reforms to employment law. Here are some of the most key changes employers should be aware of, even if in most cases the actual changes are still some way off.
Day one rights
There are a number of existing rights that currently have a qualifying period of service that are set to become ‘day one’ rights, meaning they will apply from the first day of employment. Some of these will include paternity leave, bereavement leave and parental leave.
One of the most crucial day one rights however, is unfair dismissal. The current legislation states employees need to have two years of service to bring a claim. The Employment Rights Bill will make this a day one right. There has been apprehension from employers as to what this will mean for probation periods. The Bill deals with this by including a provision for a statutory probation period, during which the normal rules on unfair dismissal may be varied.
We don’t yet know what this will mean in practice for employers. Consultation will begin next week and will include considering the length of the statutory probation period. The Government is currently suggesting a 9-month period for which “normal” unfair dismissal law will be departed from during the probation period, and the extent to which compensation may be restricted for dismissals during the probation period. No law is expected until 2026.
It seems likely that removing this qualifying period could lead to an increase in claims, which would increase the pressure on the Employment Tribunal system as well as the burden on the employer. The current legislation provides relatively few constraints in dealing with hires that don’t work out in the first two years, so the extent of the impact of the new legislation remains to be seen.
Enhanced maternity protection
Another introduction the Bill will make is enhancing protection against unfair dismissals for employees that return from maternity leave and extends those protections to employees returning from other statutory family leave. The protection from redundancy when returning from maternity leave is somewhat limited in the current legislation, so the new Bill aims to “ban dismissal of women who are pregnant, on maternity leave, and during a six-month return-to-work period – except in specific circumstances”. This could be a potentially huge change, so employers should keep an eye on this one.
Flexible working
The Bill is set to strengthen the current right to request flexible working, introducing a new requirement that turning down a request must be reasonable and explained in writing. Changes will be made following a consultation period.
Zero-hour contracts
There are some potentially complex changes being made that relate to zero-hours contracts. One of the Government’s key promises when proposing the Bill was to ‘ban exploitative zero-hours contracts’. The Bill does this by introducing a right to guaranteed hours in certain circumstances as well as a right to be given reasonable notice of work schedules and proportionate compensation. Further details will likely follow and these protections could be extended to agency workers.
Harassment
A crucial reform to laws surrounding sexual harassment is coming into force this month, requiring employers to take ‘reasonable steps’ to prevent workplace sexual harassment. The Bill proposes extending this duty to ‘all reasonable steps’ and employers will be liable for harassment on grounds of any relevant protected characteristic of employees by third parties.
These changes will be implemented in new regulations and will likely not be coming into force until 2026. Whilst details have not yet been confirmed, now would be a good time for employers to be reviewing their sexual harassment policies given there are more imminent changes already approaching.
Fire and rehire
The Bill will limit the circumstances in which an employer can dismiss and re-engage an employee as a way of imposing a change to the terms of their employment, by making these dismissals automatically unfair. Fire and rehire is typically not a commonly used practice, so this change will likely not have a big impact overall. As with other reforms, the details will follow in regulations following a consultation period.
Collective Redundancy
The current law gives employers the obligation to inform and consult with employees on collective redundancy where there are 20 or more employees proposed to be made redundant ‘at one establishment’ within 90 days. The Bill removes the ‘one establishment’ requirement, meaning employers with multiple sites will need to be careful not inadvertently to trigger the collective consultation obligation where redundancies are carried out at multiple sites.
Collective consultation, which is conducted through recognised unions or elected representatives takes at least 30 days and failure to do it properly can lead to “protective awards” of up to 90 days’ uncapped pay for each affected employee, so it can be costly.
The Government will also consult on removing this 90-day cap on protective awards, which would increase the potential costs significantly.
Statutory sick pay
The three-day waiting period and lower earnings limit for statutory sick pay will be removed.
More changes to come
Any upcoming changes will not be confined to the Employment Rights Bill. The Government have produced a ‘Next Steps’ document that highlights its commitment to further reviews of employment law, including TUPE, parental leave and employment status. There is intention for large employers (250+ employees) to report ethnicity and disability pay gaps.
What now?
The majority of the reforms discussed in this article are not set to come into force until 2026. This allows employers some breathing space while there are consultation periods and regulations are drafted. However, whilst the Bill will further modify the employers’ duties to prevent sexual harassment in the workplace, the law on this is changing imminently. Employers would be well-advised, if they haven’t done so already, to review their sexual harassment policies and procedures and ensure that they are taking ‘reasonable steps’ to prevent sexual harassment from occurring in the workplace, as required by the legislation.
The employment team at Glaisyers are offering engaging, interactive and legally compliant in-person training to its clients regarding the new sexual harassment legislation. If you are interested in learning more about this, please contact a member of the employment team.
