Labour has delivered on its promise to publish its Employment Rights Bill within the first 100 days in government! But what does the Bill say and does it represent "the biggest upgrade to rights at work for a generation" as the government press release claims?
One thing is certain, it won't be an overnight process. The Bill itself is not expected to pass into law until June or July next year and many changes will be implemented after this via secondary legislation. The government expects to begin consulting on the reforms in 2025 and anticipates that the majority of reforms will not take effect until 2026. The government has specifically stated that the new day one right to unfair dismissal will not take effect before the Autumn of 2026.
As well as the Bill, the government has also published a policy paper, 'Next Steps to Make Work Pay'. This sets out detail of the reforms in the Employment Rights Bill, as well as other non-statutory measures, including codes of practice and consultations which the government plans to implement during its time in office.
So, what's in the Bill?
Day 1 rights
- Unfair dismissal
The two year qualifying period will be swept away under the Bill and the right not to be unfairly dismissed will be in place from day 1 of employment. However, this will not prevent fair dismissals. The Bill allows employers to operate probationary periods during which employees can be dismissed more easily for performance after following a lighter-touch process. The government has committed to consulting on the length of the statutory probation period - its preference is for a period of 9 months (up from the rumoured 6 months).
As part of this "lighter touch" process, the government states in its 'Next Steps to Make Work Pay' document that, as a starting point, it is inclined to suggest that it should consist of holding a meeting with the employee to explain the concerns about their performance (at which the employee could choose to be accompanied). The government will consult extensively on the new right, including on how it interacts with Acas's Code of Practice on disciplinary and grievance procedures, and on the detail of the compensation regime for successful claims during the probationary period.
In order to provide sufficient time for the consultation, and to allow employers to prepare and adapt, the unfair dismissal reforms won't be in any sooner than Autumn 2026 so, until then, the current qualifying period will continue to apply.
- Paternity, parental and bereavement leave
Day one rights will apply to employees taking paternity leave and unpaid parental leave.
The Bill introduces a new right to unpaid bereavement leave for employees. Currently, there is a statutory right to two weeks' parental bereavement leave and pay in the event of the death of a child or stillbirth. The new right will be a broader right and the details will be set out in secondary legislation, presumably following consultation.
- Sick pay
Statutory sick pay (SSP) is currently available to employees who meet an earnings limit and is not payable until the fourth day of absence. The minimum earnings limit will be removed, but lower earners will be entitled to a lower level of SSP, and SSP will be available from day one.
Fire and rehire
The practice of fire and rehire is going to be restricted, not abolished as originally promised. The Bill provides remedies to stop the practice, while also providing that businesses can restructure to remain viable where there is genuinely no alternative. The government has committed to consulting on lifting the cap of the protective award if an employer is found not to have properly followed the collective redundancy process. It will also consult over the role that interim relief could play in protecting workers in these situations.
Zero hours
Zero-hours contracts (contracts between a business and a casual worker where the worker is engaged on an ad hoc basis with no guarantee of work for the business) are currently legal. They won't be banned altogether but Labour will end "one-sided flexibility".
The Bill provides that workers on zero hours contracts and workers with a "low" number of guaranteed hours, who regularly work more than these hours, will have the ability to move to guaranteed hours contracts which reflect the hours they regularly work over a fixed reference period (this was initially thought to be a 12 week period, but is going to be the subject of consultation). If more hours become regular over time, subsequent reference periods will provide workers with the opportunity to reflect this in their contracts.
The government will consult on these measures, as well as what constitutes "low hours". It has stated that where work is genuinely temporary there will be no expectation on employers to offer permanent contracts. It also makes it clear that those who are offered guaranteed hours will be able to remain on zero hours contract if they wish to. If the guaranteed hours provisions are not complied with, workers will be able to bring claims in the Employment Tribunal for a declaration and compensation (which will be capped).
The government has also made it clear that the measures will be adapted and applied to agency workers; it will consult on the best way to achieve this.
Flexible working
Flexible working will be the "default" from day one for all workers, but only where "practicable". The Bill also makes it clear that, in addition to the existing requirement that an employer can only refuse a request on specified grounds, the refusal must also be reasonable. The government has committed to developing the detail of this new right in consultation and partnership with business, trade unions and third sector bodies.
Strengthening maternity protections
Under the Bill it will be unlawful for an employer to dismiss a person returning from maternity leave for six months after their return to work except in specific circumstances. Currently protection from unfavourable treatment continues until the end of maternity leave, or until a return to work (if earlier).
Gender pay and equality action plans
There is currently no mandatory requirement to publish action plans, but under the Bill employers with 250 or more employees will have to develop, publish and implement action plans to close their gender pay gaps and ensure that outsourced workers are included in gender pay gap and pay ratio reporting.
The Bill provides that in addition to showing how it is addressing the gender pay gap in its equality action plan, the employer will also have to show how it is supporting employees going through the menopause. There are currently no specific obligations on employers in relation to the menopause so this is a first!
Increasing protection from sexual harassment
Labour will strengthen the legal duty for employers to take "all" reasonable steps to stop sexual harassment before it starts and require employers to create and maintain workplaces and working conditions free from harassment, including by third parties. This will build on the new duty on employers to take reasonable steps to prevent sexual harassment of their workers which is coming in on 26 October. There is also a power within the Bill for regulations to be made to specify what constitutes "reasonable steps".
Collective redundancy consultation
Under current case law the "local unit" approach is taken for collective redundancy purposes, so individual workplaces are looked at as separate establishments rather than the entire business.
Redundancy rights will be strengthened by ensuring that the right to collective consultation is determined by the number of people impacted across the wider business rather than in one workplace.
Fair Pay Agreement in the adult social care sector
The Bill provides for the establishment of a new body – the Adult Social Care Negotiating Body (ASCNB). This will have the power to negotiate terms and conditions and the pay of workers in the adult social care sector. The outcome of these negotiations can also potentially be incorporated into the relevant workers' terms and conditions of employment. The ASCNB will be responsible for bringing forward a framework for a Fair Pay Agreement (FPA) in the adult social care sector. The government has committed to launching a consultation soon to consider exactly how the FPA should work in its 'Next Steps' document.
TUPE and the two-tier code for public sector contracts
The Bill provides for the reinstatement of the two-tier code for public sector contracts. This will provide that contractors will not be able to replace workers who have transferred across from public services with workers employed on less favourable terms and conditions.
Fair Work Agency
A new Fair Work Agency will bring together existing enforcement bodies, including minimum wage, statutory sick pay, the employment tribunal penalty scheme, labour exploitation and modern slavery. It will also introduce the enforcement of holiday pay policy.
Trade Unions reforms
The Bill will repeal the Strikes (Minimum Service Levels) Act 2023.
Other measures contained within the Bill are a simplification of the union recognition process. When requesting union recognition there is currently a requirement that 10% of those in the bargaining unit are trade union members. This can be reduced to 2% in the Bill. There is also a power in the Bill to remove the requirement for a 40% turnout to obtain recognition.
A new right of access will be brought in for union officials to meet, represent, recruit and organise members. If employers refuse, the union(s) will be able to challenge this at the Central Arbitration Committee (a specialist tribunal). The government has committed to working with stakeholders to make sure that this new right of access is effectively enforced.
The Bill also brings forward measures to protect workers from detriment or dismissal for taking part in official and protected industrial action and blacklisting for trade union activity. Employers will need to provide workers with a written statement to inform them of their right to join a trade union.
What isn't in the Bill?
As discussed above, the government has also published a "Next Steps" document in tandem with the Bill. This outlines the reforms that it will look to implement in the future. These include:
- Launching a Call for Evidence on unpaid internships with the intention of banning them, except where they are part of an education or training course;
- A commitment to allow the use of modern and secure electronic balloting for trade union statutory ballots. A working group with stakeholders will be formed by the end of the year with a full rollout implemented following the Royal Assent of the Employment Rights Bill;
- Strengthening protections for the self-employed by tackling late payments and ensuring that travel time is paid using the new Fair Payment Code; and.
- Introducing the Right to Switch Off through a statutory Code of Practice.
Other measures not requiring legislation include:
- Removing the minimum wage age bands;
- Supporting workers with a terminal illness through the Dying to Work Charter;
- Modernising health and safety guidance;
- Enacting the socioeconomic duty;
- Ensuring the Public Sector Equality Duty provisions cover all parties exercising public functions; and
- Developing menopause guidance for employers and guidance on health and wellbeing.
Measures to be introduced under the Equality (Race and Disability) Bill
The government has committed to publishing a draft Bill during this parliamentary session and has stated that further consultation will also take place prior to the making of any required secondary legislation. The measures to be covered by the Bill include:
- Extending pay gap reporting to ethnicity and disability for employees with more than 250 staff and measures on equal pay;
- Extending equal pay rights to protect workers suffering discrimination on the basis of race or disability;
- Ensuring that employers cannot use the outsourcing of services as an excuse to avoid paying equal pay; and
- Implementing a regulatory and enforcement unit for equal pay with involvement from trade unions.
And in the longer term...
The government has identified some reforms which are scheduled for a longer-term delivery. These include:
- Undertaking a full review of the parental leave system;
- Reviewing the implementation of carer's leave and looking into the benefits of introducing paid carer's leave;
- Consulting on the use of workplace surveillance technologies;
- Consulting on the implementation of a single worker status so that there is a simpler two-part framework for employment status;
- Consulting on strengthening protections for the self-employed through a right to a written contract; extending blacklisting protections and health and safety protections;
- Launching a call for evidence "to holistically examine a wide range of issues relating to TUPE";
- Reviewing health and safety guidance and regulations with a view to modernising legislation and guidance (this will include looking at neurodiversity awareness in the workplace, and whether existing regulations and guidance are adequate to support and protect those experiencing the symptoms of long Covid);
- Consulting with Acas on enabling employees to collectively raise grievances about conduct in their place of work;
- Ensuring that social value is mandatory in contract design; using public procurement to raise standards on employment rights; and ensuring that public bodies must carry out a quick and proportionate public interest test; and
- Extending the Freedom of Information Act to private companies that hold public contracts and extending the Act to publicly funded employers.
Conclusion
The Bill delivers a firm commitment to implement change, but the detail of many of these provisions will take time to come to light and it will be a while before the promised rights are implemented in full. Let's say it's still very much a work in progress.
In the meantime, employers have been put on notice of new rights though it seems that they may have a bit more time to prepare for them than it was first thought! It's also useful to know that the government hasn't lost sight of the reforms which fall outside the remit of the Employment Rights Bill and the "Next Steps" document provides a useful reminder of all the other things that form part of its' employment agenda.
For an in-depth discussion of the various rights set out in the Employment Bill and their potential implications for employers please join us on Trowers Tuesday.
