In October last year the government published the Employment Rights Bill (the Bill) which contained significant reforms to employment rights (The new Employment Rights Bill:  What does it mean for employers? | Global Workplace Insider).  The Government has subsequently consulted on various proposals and on 5 March it published five responses to consultation.  This was followed on 14^th March by an amended version of the Bill including further amendments for change to employment rights.  We have summarised the key changes that employers need to be aware of.

Zero hours workers

The original draft of the Bill contains complicated provisions providing zero hours and low hours workers with the right to be offered a guaranteed hours contract and the right to receive reasonable notice of shifts and compensation if shifts are cancelled, curtailed or moved.   The government consulted on additional matters regarding the application of the zero hours provisions and whether those provisions should be extended to agency workers. 

• Extension of rights to agency workers: The fundamental change in the new draft of the bill is inclusion of provisions extending these rights to agency workers.  New clauses in the Bill will:
  • Allow the rights regarding zero and low hour workers to be extended to agency workers by inserting a new schedule into the Employment Rights Act 1996 (ERA).    
  • Clarify that where a qualifying agency worker is entitled to a guaranteed hours offer it will be the responsibility of the end hirer to make that offer.  The government indicated that it should be the end hirer rather than the agency as the end hirer is better placed to forecast and manage the flow of work. 
  • Allow for regulations to be put in place which place obligations on agencies or other entitles in certain scenarios to allow for additional flexibility. 
  • Set out that the responsibility for providing a qualifying agency worker with reasonable notice of shifts will be placed on both the employment agency and the end user and that there will be joint liability. 
  • Provide that the responsibility to pay any short notice cancellation or curtailment payments to agency workers will rest on employment agencies. 
  • Give agencies the right to recoup the cost of any such short notice cancellation, movement or curtailment payments where they have pre-existing arrangements with hirers which were entered into before a date two months after the Bill is passed and where it has not been modified by the parties since.
  • Allow later arrangements to determine whether short notice cancellation, movement or curtailment payments can be recouped from the hirer or not.

The government has confirmed that it will consult on the more technical aspects of the measures to be set out in the secondary legislation.

• Collective Agreements: A new provision will allow for the parties to agree a collective agreement to exclude the rights relating to the obligation to offer guaranteed hours, reasonable notice of shifts and compensation for cancelled, curtailed, or moved shifts for zero hours, low hours and agency workers.  This would apply both in respect of directly engaged workers and agency workers.
• Reasonable belief:  An additional amendment proposed is that in relation to shift patterns a worker will not be entitled to a payment for a short notice cancellation, movement, or curtailment of a shift unless at some point prior to that they reasonably believed they would be needed to work the shift.

Employers should be aware of which workers this would affect and how this will apply to agency workers.

Collective redundancy consultation and fire and rehire.

Under the original draft of the Bill the government proposed to amend the threshold for collective consultation by removing the words “at one establishment” when determining the trigger for collective consultation.  This would have had a significant impact on multi-site employers. It appears now that in a major concession to employers the government will not introduce this change.  However, instead the government has included further amendments.

• Two options for determining the threshold: The amendment the Bill would mean that the Secretary of State can, by regulations, in a case where employees are being made redundant at more than one establishment, prescribe a higher number than 20 of those employees for the purposes of determining when the collective consultation obligations are triggered.  The number may be determined by reference to criteria set out in the regulations (for example, by reference to a particular percentage of total employees across the business as a whole).  The proposal effectively means that the obligation to consult will be triggered either where an employer is proposing to dismiss as redundant within a period of 90 days or less 20 or more employees at one establishment OR at least “the threshold number of employees”.
• Consultation with employee representatives: An additional amendment clarifies that collective consultation will not need to be carried out with all employee representatives together, or with a view to reaching the same agreement with all employee representatives. This will be of particular relevance if the duty to consult is across more than one establishment under the proposal for the new trigger for consultation as it may be more difficult to arrange for consultation meetings with representatives in a large number of locations.
• Increase in protective award: The maximum protective award for failure to collectively inform and consult on collective redundancies will increase from 90 days’ pay per employee to 180 days’ pay. Employment tribunals will continue to have discretion to vary the length of the protected period, up to the maximum, as they consider just and equitable in all the circumstances, having regard to the seriousness of the employer’s default, as well as any mitigating factors.  However, this is a significant change and will increase the financial risk to employers if they fail in their collective consultation obligations.
• Interim relief will not be included: Finally, the new draft of the Bill does not contain any provisions relating to the introduction of interim relief as a remedy for failure to comply with collective consultation obligations and in claims for unfair dismissal in relation to fire and rehire. 
• Fire and rehire:  The government has included new provisions making it automatically unfair to dismiss an employee for refusing to agree to a change in their terms and conditions of employment (except in situations of serious financial difficulties).  However, there will be no extension of interim relief applying in relation to these dismissals.  The government will monitor the level of compliance and will consider if further measures are necessary if the remedies in place do not prove to be a sufficient deterrent.

Sick pay

In the first draft of the Bill the government proposed changes to the statutory sick pay regime, and it has confirmed that it will continue with those changes.

• SSP payable from the first day of sickness absence:   This is a change as currently SSP is only payable from the fourth day of absence.
• Removal of the lower earnings limit so that SSP will also be payable to lower paid workers. The government response to the consultation was to establish the level of pay for those earning below the lower earnings limit.  It has been determined that the weekly rate of SSP will be the lower of the normal statutory rate or 80% of the employee’s normal weekly earnings. 

There were also calls in the response for an increase in the flat SSP rate. The government responded that the rate would continue to be subject to an annual uprating process but made no commitment to other increases to the flat rate.

Trade Unions and Industrial relations

The first draft of the Bill included significant provisions to create a modern framework for industrial relations.  The government consultation paper sought views on various additional proposals and in response the government has proposed further amendments to the Bill.

• Right of access:  The new right for a trade union to have right of access to the workplace will be a digital, as well as a physical, one.
• Streamlining the trade union recognition process:   This will be implemented by requiring a union to simply show that 10% of a proposed bargaining unit are union members (with no need for majority support). The government had been consulting on lowering the support threshold to 2% but the proposed amendment will not state a figure and will simply give the Secretary of State the power to lower the 10% threshold.
• Political fund: To introduce a new political resolution clause which would remove the requirement for a trade union to ballot their members every ten years on maintaining a political fund. Instead, a new provision would require a trade union to give notice to its members every ten years that they have the right to opt out of contributing to the political fund.
• Simplification of notice:  To require trade unions to provide a 10 days’ notice period for strikes/industrial action (currently 14 days’ notice is required) and simplifying the information requirements on industrial action ballots and notices to employers.
• E-ballots: To allow trade unions to utilise e-balloting with a hope that this will increase participation in statutory ballots.  This does not need to be provided in the legislation, and the government has pledged to establish a working group to review this and progress it imminently.
• Ballot mandate: To increase the time period for which an industrial action ballot has effect from 6 months to 12 months (without the possibility of extension).

Other changes

There are other amendments in the Bill.

• Records relating to annual leave:  A new provision will be included which would require an employer to keep records which are adequate to show whether they have complied with the entitlements relating to statutory holiday and holiday pay in the Working Time Regulations 1998.  The records should be maintained for six years, and the employer can determine the format of the records.  It also makes it an offence punishable with a fine if the employer fails to comply with the duty.
• Umbrella companies: The Bill includes a new clause which would expand the scope of the Employment Agencies Act 1973 to cover other types of business that participate in arrangements under which persons are supplied by their employer to work for other persons (“umbrella companies”). 
• Underpayment:  The amendments to the Bill contain a power for the government to issue “notices of underpayment”.  This power will apply where an employer has failed to pay a worker an amount due under certain legislation (e.g. National Minimum Wage, Working Time Regulations or Statutory Sick Pay).  It is assumed that this right will be exercised through the Fair Work Agency.  The notice of underpayment will require the employer to pay the amount due to the individual within 28 days of the notice being given. This new right will cover any underpayments over the previous six years. There are also new provisions regarding penalties for underpayment which are payable to the government.  The penalty is payable within 28 days and will amount to 200% of the amount due under the notice of underpayment, with a minimum penalty of £100 and a maximum of £20,000 which may be reduced in certain circumstances.
• Fair Work Agency:  There is also a new power for the government to bring Employment Tribunal proceedings again, in the form of the Fair Work Agency.  In addition, a new provision in the Bill, the government will also have the power to provide, or arrange for the provision of, legal assistance to any person who is a party to civil proceedings relating to employment or trade union law or the law of labour relations.  

We will continue to monitor the progress of the Bill and will keep you informed of significant developments.  We will also be holding a webinar on 24 April looking at these issues in more detail.