On 10 October, the Government published the Employment Rights Bill 2024 (the Bill). The Bill contains significant reforms to employment rights and has been hailed as being a “once in a generation” change to the employment rights of workers. Its aim is to “deliver economic security and growth to businesses, workers and communities across the UK”. There are 28 individual employment reforms contained in the Bill and further detail on many of these will be provided through regulations. In addition, the Government has committed to ensuring that there will be further consultation with stakeholders on some of the proposed reforms before they are brought into effect, meaning that the majority of the reforms will not come into force until 2026. The Government also published a “Next Steps to Make Work Pay” which outlines the Government’s vision and long-term plans in relation to other reforms. So, what is included in the Bill, what are the outstanding issues and questions and what will this mean for employers?
Zero hours workers: The Bill contains details regarding changes to contracts for zero hours workers. The proposal is to provide qualifying zero hours workers with the right to be offered guaranteed hours. A worker is a qualified worker for these purposes if they work under a zero hours contract or a contract with a guaranteed low number of hours and the worker regularly works more than those hours. Where they are a qualified worker, they will be entitled to be offered the opportunity to move to a guaranteed hours contract which reflects the hours they work over a 12-week reference period. There is no obligation on a worker to accept a regular contract of employment, they can remain on the zero hours contract. A worker may present a complaint to an employment tribunal for failure to make an offer, where the offer is not a guaranteed hours offer, or the offer does not comply with the terms in the legislation.
Another provision is that the employer must give reasonable notice of a shift if the worker is employed under a zero hours contract or the worker is employed under a contract that requires the employer to make some work available to the worker but does not provide on what days and at what times or in accordance with what pattern of days and times that work is to be done. The Bill does not set out what the reasonable notice is. There must also be reasonable notice of cancellation or change of a shift. These changes are to give workers greater ability to plan their lives without banning flexible arrangements that some workers benefit from. If the shift is cancelled or curtailed the employee will be entitled to the amount of remuneration to which they would have been entitled had they worked the hours that will not be worked because of the cancellation or curtailment.
The Bill leaves a number of issues to be included in secondary legislation or guidance.
Flexible working: The Bill amends the Employment Rights Act 1996 (ERA) to make flexible working arrangements the default position. The amendment sets out that the employer may only refuse an application for flexible working if the employer considers that the application should be refused on the grounds listed in the Bill (which mirror the current statutory grounds) and that it is reasonable for the employer to refuse the application on those grounds. The employer must also set out the grounds for refusing the application and explain why the employer considers that it is reasonable to refuse the application on that ground or grounds.
Statutory Sick Pay: Another area which has been widely reported is the change to statutory sick pay (SSP). Currently employees must wait for three days before becoming entitled to SSP, known as the waiting period. The proposal in the Bill is that employees will be entitled to SSP from day one and the waiting period will be abolished. In addition, the Government will remove the Lower Earnings Limit to make SSP available to a greater number of employees. The rate of SSP will also change so that it will be the lower of the statutory rate applied from time to time and the prescribed percentage earnings of the employee’s normal weekly earnings. The Government will consult on what the percentage rate for those individuals earning below the current flat rate of SSP should be.
Day one rights – paternity and parental leave: Significant press coverage has been given to the removal of qualifying periods for certain employment rights. The Bill clarifies that the qualifying period for parental and paternity leave will be abolished so that all eligible employees will become entitled to these rights from day one. The Bill also provides that the restriction which prevented employees from taking paternity leave once they had taken any period of shared parental leave will be abolished. This means that an employee will be able to take paternity leave following shared parental leave.
Protection from harassment and additional provisions about reasonable steps to prevent sexual harassment: The Bill contains amendment to s40A Equality Act 2010 which is due to come into force on 26 October 2024 in the Worker Protection (Amendment of Equality Act 2010) 2023. This changes the duty to prevent sexual harassment from one which requires the employer to take reasonable steps to prevent sexual harassment to one which requires them to take “all” reasonable steps. In addition, there is another significant change to the Equality Act which is to introduce liability on the employer for third party harassment. Finally, the Bill provides that allegations of sexual harassment are to be included as an express disclosure qualifying for protection under whistleblowing legislation.
Right to unfair dismissal a day one right: One of the other proposals which has been the subject of much publicity in the press is the removal of the existing qualifying period for employees to access the right to claim unfair dismissal. Currently, employees are generally required to meet a qualifying period of two years’ service before they can bring a claim for unfair dismissal (unless the dismissal falls within one of the categories which is automatically unfair). Employers will be able to dismiss the employee for certain reasons during an initial period of employment (effectively a statutory probationary period) as long as the employer gives notice to terminate the employment before the end of the initial period and the effective date of dismissal is within three months after the end of the initial period. There are no details yet of how long this “initial period” will be – and this will be determined following consultation. It appears that an employer will still not be able to dismiss for redundancy during that period without following a fair procedure.
Fire and rehire: The Bill will make it automatically unfair for an employer to dismiss an employee if the reason for the dismissal is that the employer sought to vary the employee’s contract of employment and the employee did not agree to the variation or that the employer wanted to dismiss the employee to enable them to employ another person or to re-engage the employee under a varied contract of employment to carry out substantially the same duties as the employee carried out before being dismissed. There will only be a limited exception where there is a genuine need to avoid serious financial difficulties, and the employer could not reasonably have avoided the need to make that variation. However, even in those circumstances the question must still be considered as to whether the dismissal was fair, and this will include consideration of the consultation that was entered into with employee representatives or the employees themselves.
Collective consultation: The requirement to consult with employees where there is a collective consultation on redundancy will be significantly widened. Currently in determining the threshold of employees for collective consultation the employer must consider the number of dismissals at one establishment. The change would be that employers must consider the number in the business. For national employers with a large workforce this could mean additional collective consultation obligations.
Equality Action Plans: The Equality Act 2010 will be amended, and regulations may be introduced to require employers with over 250 employees to produce equality action plans showing the steps that they are taking in relation to their employees regarding gender equality. The matters covered by these plans would include addressing the gender pay gap and supporting employees through the menopause. There is significantly more detail required about the action plan and regulations will make provision about such matters as the contents of the plan, how frequently it should be introduced and the form and manner of the plan.
Trade unions and industrial action: Part 4 of the Bill covers a wide number of proposals relating to the rights of trade unions and industrial action. These include the following:
- Inclusion of a right to join a trade union to be included in the workers section 1 statement (statement of employment particulars).
- The Government will strengthen trade unions’ right of entry to workplaces to organise, meet and represent their members by introducing access agreements.
- Simplifying the law for trade union recognition by changing the percentage thresholds.
- Allowing trade unions to use secure electronic and workplace ballots.
- Repealing the minimum service level provisions for certain sectors.
Enforcement of Labour Market legislation: The Government will introduce a new single labour market enforcement agency.
Policy about allocating tips: The ERA will be amended so that where a company is required to have a policy regarding allocating tips the employer must consult with representatives of a trade union or other worker representatives or, where there are none, workers who are likely to be affected by the policy.
Bereavement leave: The Government proposes to amend the existing right to parental bereavement leave to extend it to all bereaved persons. There will be regulations which will define the relationship with a person who has died to determine who will be eligible to take bereavement leave.
Dismissal during pregnancy: The ERA will be amended to mean that a woman is protected during a protected period of pregnancy not simply from redundancy dismissals to any dismissal.
There are matters which are missing from the Bill and will require further consultation and are referred to in the Next Steps documents. These include the right to switch off, a requirement for large employers to report their ethnicity and disability pay gap, the consideration of a single status of worker and full review of the parental leave and carers leave systems. Even without these provisions there are a significant number of changes proposed in the Bill which will require consultation with stakeholders over the next months and even into 2026. We will be monitoring the Bill and the accompanying regulations closely.