The Labour government has introduced a new Employment Rights Bill which stands to be the most significant piece of employment legislation in decades.
The Labour Party’s “New Deal for Working People” was a central tenet of their general election campaign and has now been transformed into the Employment Rights Bill (the “Bill”), introduced in Parliament on 10 October 2024.
Some of the headline points:
Zero Hours Workers – ending “one-sided flexibility”
Labour’s manifesto promised to “ban exploitative zero hours contracts” and the government is now seeking to “end one-sided flexibility”.
Employers will be obliged to offer contracts with guaranteed hours to certain “qualifying workers”, including zero hours and “low hours” workers. A qualifying worker will qualify for an offer of guaranteed hours if over a “reference period” they “regularly” work more than their minimum number of contractual hours.
Many of the terms above are yet to be defined and the impact of these provisions in relation to seasonal workers remains particularly unclear.
- Shift working – notices and compensation
Zero hours and other workers are to be given the right to reasonable notice of shifts they are required or requested to work. The notice is to include the hours to be worked, from what time and on what day.
Employers will also need to give workers reasonable notice of cancellation of or changes to a shift.
Employers will need to pay compensation to workers for qualifying shifts that have subsequently been cancelled, moved or curtailed.
Which workers will be entitled to the above rights, what constitutes “reasonable notice” and the amount of compensation which workers will receive are all to be determined in regulations.
- Flexible working
Employees already have the right to request flexible working in relation to their hours, times and place of work under the Employment Rights Act 1996. Currently, an employer is required to deal with any such request in a “reasonable manner” and there are eight statutory business grounds for refusal. The eight grounds include the burden of additional costs and detrimental impact on performance.
The Bill introduces a new provision, such that an employer can only refuse the request if one of the eight grounds applies and it is reasonable to refuse for that reason. The employer will also be required to state which ground they are relying on and explain why it is reasonable to do so.
- Statutory sick pay from day one of sickness
The current position under the Social Security Contributions and Benefits Act 1992 is that statutory sick pay (“SSP”) is payable from day four of sickness to employees earning over the lower earnings limit (currently £123 per week).
The Bill makes SSP payable from day one of sickness and removes the lower earnings limit.
- Tips and gratuities policies
Workers should already be receiving tips in full and in a fair and transparent way, in accordance with the Employment (Allocation of Tips) Act 2023.
The Bill requires employers to produce and maintain a written policy about the allocation of tips, to be created after consultation with trade union representatives or the workers themselves. All such policies will need to be reviewed at least every three years.
- Right not to be unfairly dismissed – no more qualifying period
Presently, workers must have been continuously employed for a period of two years before they gain the right not to be unfairly dismissed, per the Employment Rights Act 1996.
The qualifying period has changed in the past (generally increasing under Conservative governments and decreasing under Labour governments), but the proposal is now to abolish it entirely, meaning the right not to be unfairly dismissed will become a “day one” right. The Bill replaces the current probationary period with an “initial period of employment”, which is to be determined in regulations.
- Ending fire & rehire
Labour promised to “end the scourges of ‘fire and rehire’ and ‘fire and replace’”, and these points are addressed at Clause 22 of the Bill.
It will become automatically unfair to dismiss an employee if the reason for so doing is to vary the employee’s contract without the employee’s consent or if it is to enable the employer to employ another person to carry out substantially the same duties.
- Equality action plans
Employers with 250 or more employees may be required under new regulations to develop and publish an equality action plan showing the steps that they are taking in relation to addressing the gender pay gap and supporting employees going through the menopause. This is an additional burden on these employers beyond the existing requirement to publish gender pay gap information.
- Trade unions
The Bill provides a significant expansion of trade union-related rights.
Strike rules and voting thresholds are to be relaxed, as provisions introduced by the last government will be repealed. Workers taking industrial action will receive greater protection from detriment or dismissal, bringing UK law closer in line with Article 11 of the European Convention on Human Rights.
Employees are to be given information about their right to join a trade union, while trade unions will have the right to access workplaces to meet, represent, recruit or organise workers, or to facilitate collective bargaining.
- Fair Work Agency
A new body, the Fair Work Agency, will be established to bring together existing enforcement functions, as the government seeks to create a “strong, recognisable single brand” so workers know where to look for help with their rights.
Summary
The Bill is wide-ranging and will change the landscape for employers and workers, with a particular impact expected for SMEs. However, many of the details still need to be fleshed out and we expect a consultation period on various issues before any regulations are published.
Should you have any questions about how the forthcoming changes to UK employment law might affect you or your business, please contact Ed Henderson on 0207 222 5381.