The Employment Rights Bill

The Labour Party pledged to introduce extensive reforms to UK employment law within 100 days of power, via its ‘Plan to Make Work Pay’. This has led to the unveiling of the hugely anticipated Employment Rights Bill, which could be one of the most significant pieces of legislation for workers in decades.

The Bill will bring forward a number of employment reforms, and we summarise some of the key elements below.

Day one rights

Unfair dismissal

Employees are to be protected from unfair dismissal from day one, previously a right only obtained after two years’ continuous service.

This will mean that employers cannot dismiss an employee at any stage of their employment, unless they fall into at least one of the five fair reasons for dismissal – conduct, capability or performance, redundancy, statutory illegality, or some other substantial reason.  However, some have suggested unfair dismissal rights are being delivered with one hand and quietly taken away with the other, with wide probationary periods.  The government are planning to bring in a statutory probation period for new hires to allow for ‘a proper assessment of an employee’s suitability for a role…’. Whilst they will need to consult on the length of the period, the government’s preference is nine months.

It is currently anticipated that having to do a ‘proper assessment’ is likely to mean that employers will need evidence of unsuitability, and may even have to provide further training and warnings before dismissing. The risk if they do not, is that the employee may be able to bring an unfair dismissal claim.

Even if the decision itself if proportionate and justified, a claim could still be brought for procedural failings.

Sick pay

Entitlement to statutory sick pay (SSP) does not currently take effect until the fourth day of illness. This will be changed so SSP becomes payable from the first day.

The eligibility criteria will also be changed. At present, employees earning less than £123 per week cannot claim SSP. This limit will be removed, however, there will be a lesser level of SSP for lower earners. What that lesser level of SSP will be, remains to be seen.

Parental leave and paternity leave

Parents will also become eligible for unpaid parental leave from day one of their employment. Parents currently, have to be continuously employed by their employer for at least one year.

The government has committed to review the existing parental leave system, as it believes this does not currently support working parents. They also announced  in addition, the introduction of protected leave for carers.

Those entitled to take paternity leave will no longer have to be employed for at least 26 weeks to be eligible. This will become a day one right.

Further details are expected to be confirmed in this respect in the governments pledge to support working families.

Bereavement leave

Protected time off work for bereaved employees is a further implementation by the act. Entitlement to this right will depend on the employee’s relationship with the deceased person and details will follow in the regulations. Leave entitlement will be at least one week and taken within 56 days of the persons death.

Zero hours contracts

The original suggestion was that ‘exploitative’ zero-hours contracts were going to be banned.

However, Labour have likely realised how difficult it would have been to distinguish between what is an exploitative zero-hours contract and what isn’t. Some employees also like the flexibility of a zero-hours contract.

Instead, employers will have to offer a guaranteed-hours contract based on the average hours an employee has worked during a 12-week reference period.

Employees will also be entitled to ‘reasonable’ notice ahead of any changes being made to their shifts, as well as fair compensation for cancelled shifts, or shifts that are ended early.

This may cause challenges for businesses, for example those in the hospitality sector.  It could see employees being entitled to be given guaranteed hours based on busy seasonal periods at quieter times, i.e. the reference period might take into account Christmas shifts entitling individuals to be paid for more shifts in January.

The government are likely to discuss this further during the consultation period, so we may see an exception for seasonal and overtime arrangements.

Restrictions on ‘Fire and Rehire’

Again, there was a suggestion that the practice of ‘fire and rehire’ was going to be banned, but it is now going to be restricted instead.

The detail remains to be seen, but what we do know is that the right is likely to be severely restricted to circumstances which present significant financial risks to business survival.

Flexible working

The Bill introduces changes meaning an employer will only be permitted to refuse a flexible working request from an employee if it considers grounds as contained in the Employment Rights Act 1996, apply. They will also need to consider if the refusal is reasonable based on those identified grounds.  It is not enough for the employer to refuse a flexible working request because of the existence of one of the grounds, they must be able to explain the reasoning for relying on this ground.

This comes as part of the government’s pledge to support working families and to “make sure that everyone can get on in work and not be held back because work isn’t compatible with important family responsibilities.”

Fair pay

Discriminatory age bands are set to be removed as part of the plans to ‘Make Work Pay’, so that all adults can benefit from a liveable wage.  The aim for this is ‘to continue to narrow the gap with the National Living Wage, taking steps year by year in order to achieve a single adult rate’. For the first time, the Low Pay Commission will have to factor in the cost of living when making future recommendations to the government to advise on minimum wage.

What next?

The government will now enter a period of consultation, so it is likely that most of the planned changes will not come into effect until the Autumn of 2026.

Given the extent of the landmark changes, this does not come as much of a surprise. Employers will need time to plan accordingly and make sure they are compliant when the new law comes into force.

Further support

The Brachers Employment and HR team will continue to update as developments occur. For more in-depth guidance or support on The Employment Rights Bill, book a free 30-minute consultation with a member of our Employment team today.

Our employment law update 2024 provides regular updates further employment law changes. To keep up to date with employment law changes, sign up to receive regular business updates along with industry specific updates for the healthcare and education industries.

This content is correct at time of publication