16 October 2024

On 10 October 2024, the Government published the Employment Rights Bill in draft form.

While the Bill does not include every proposal from the Labour Party manifesto, it is a very substantial piece of legislation which, as drafted, would significantly alter employment rights in the UK.

The Bill is subject to consultation, which will begin in 2025. The Government states that the majority of the Bill’s reforms will take effect no sooner than 2026 (with reforms of unfair dismissal to take effect no sooner than autumn of 2026).

The key provisions of the Bill are:

• “Day-one” unfair dismissal rights: The right to claim against an employer for unfair dismissal will become a “day-one” right (i.e., the two-year qualifying period will be removed). However, there will be a statutory “initial period of employment” (i.e., a probationary period) for new hires, during which there will be a modified threshold of reasonableness for a dismissal if it relates to capability, conduct, statutory restriction, or “some other substantial reason relating to the employee”. (The fact that redundancy is not included here means that, as drafted, all employees would have exactly the same statutory redundancy rights from the first day of employment.)

  • How the new test of reasonableness will operate, and the length of the statutory probationary period, will be consulted on by the Government and determined by the Secretary of State (meaning they would be fairly easy to change for a future Government). The Government has announced, however, that it currently favours an initial probationary period of 9 months and that it considers that an employer would dismiss fairly during this period if it held a meeting with the employee to explain its concerns. This may presage the reintroduction of a statutory procedure for fairly dismissing during a probationary period.

• One “establishment” for collective redundancy: Collective consultation requirements will apply to redundancy exercises across a business: the 20-person trigger for notifying the Secretary of State and commencing collective consultation will apply to all the redundancies an employer proposes to make within a 90-day period, not just those at any single establishment. This will be a significant change: if we are no longer able to partition redundancy exercises in separate establishments, many more collective redundancy exercises will result in practice.

• “Fire and rehire” restricted: An employee will be regarded as automatically unfairly dismissed if the reason for the dismissal is that they failed to agree to a contract variation. There is only one, narrow, exception to this, whereby, in summary, the contract variation was an unavoidable measure to help save the business from imminent financial failure. This provision effectively makes “fire and rehire” practices unlawful unless they meet the exception. This will be a significant change, since it will limit the ability to update employment contracts in certain scenarios; it is likely to increase employers’ reliance on variation clauses to achieve any necessary changes.

• Third-party harassment liability: Employers will be liable for acts of harassment committed against their employees by third parties, unless the employer has taken “all reasonable steps” in prevention. Regulations will specify what “reasonable steps” are. This should not be confused with another forthcoming change in the law: as covered in our recent article, from 26 October 2024, employers will be under a new duty to prevent sexual harassment (including third-party harassment); but employees will not be able to bring a claim against their employer for harassment by a third party. The Employment Rights Bill, however, would give employees this additional power.

• Sexual harassment whistleblowing: Complainants of sexual harassment will be given whistleblowing protection, meaning that dismissing such a complainant could give rise to an automatically unfair dismissal.

• Flexible working rights: There will be a new duty of reasonableness on employers in refusing a “flexible working request” (e.g., a request to change working hours or to work part-time). This will mean both that the refusal must be objectively reasonable and that the employer must explain the reasonability of the refusal in writing. The statutory grounds for refusing a request remain unchanged. In practice, employers generally do explain why they consider a refusal to be reasonable, so we do not consider that this will be a material change for employers.

• Dismissal protection for family-related leave: There will be protections against all forms of dismissal for employees who are pregnant or on family leave – details will be given in regulations.

• Gender equality action plans: Employers with 250+ staff will be required to publish gender equality action plans addressing matters including the gender pay gap and measures to support employees going through the menopause.

• Gender pay gap client naming: Employers with 250+ staff may be obliged to include the names of end clients in gender pay gap reports where employees within the scope of the report are contracted out.

• Paternity/Parental leave: The qualifying periods of employment will be removed from the following types of statutory leave, making them “day-one” employment rights

  • Paternity leave (currently requires 26 weeks’ service)

  • Unpaid parental leave (currently requires 1 year’s service)

• Bereavement leave: Statutory parental bereavement leave will be expanded into “bereavement leave”, bringing other family members within scope. Previously this type of leave was only available to bereaved parents of children; regulations will determine who will fall within the scope of the expanded right.

• Day 1 SSP: The three-day waiting period for statutory sick pay (SSP) will be removed, so that it becomes a right from the first day of sickness; and the SSP lower earnings limit will be removed.

• Public-sector outsourcing terms: There will be a requirement on public authorities to ensure workers in outsourced services have equivalent terms to in-house staff.

• Trade union membership notification: Employers will be obliged to provide all staff with a written statement of their right to join a trade union (this will be an additional Section 1 requirement under the Employment Rights Act 1996).

• Union right of access: Unions will have a new right to apply for access to a workplace to meet, represent, recruit or organise workers (but organising industrial action is not within scope). If the employer refuses access and agreement cannot be reached within a set period, the Central Arbitration Committee can order access on prescribed terms (or refuse it). Non-compliance with such an order may give rise to the imposition of fines, with a right of appeal to the Employment Appeal Tribunal.

• Lower threshold for union recognition: Allowance will be made for the Secretary of State to lower the membership threshold for union recognition within a workplace from 10% (the current figure) to as low as 2%.

• Lower threshold for collective bargaining: The threshold for recognition for collective bargaining will be a simple majority of the workers voting (removing the current additional requirement that 40% of the workers constituting the bargaining unit support the union).

• Time off for union officials: Where union officials and learning/equality representatives claim they have been denied reasonable time off for carrying out their duties, the burden of proof will be on the employer to disprove the allegation.

• Lower threshold for industrial action: On ballots for industrial action, the requirement that the action is supported by 50% of members entitled to vote will be removed. Instead, the action will be lawful if a simple majority of those voting support the action.

• Protection against detriment: Workers will be protected against detriments for taking part in lawful industrial action. (Currently, it is unlawful to dismiss on this basis, but there is no protection against detriments short of dismissal.)

• Strike-breaking law removed: The Strikes (Minimum Service Levels) Act 2023 will be repealed. This law was enacted to prevent workers in certain key public-sector services from striking. 

• New enforcement body: Employment rights enforcement powers will be given to the Secretary of State. These will be exercised by a new enforcement body.

• Restrictions on zero-hours contracts: Those on zero-hours/fixed-hours contracts will gain a right to a contract with guaranteed hours if they work regular hours over a defined period. Reasonable notice of cancelled/changed/curtailed shifts must be given, with compensation paid for changes made at short notice.

• Sector-based collective bargaining: Nationwide collective bargaining bodies will be established:

  • Adult Social Care Negotiating Body – for all workers in the adult social care sector. Matters within the body’s remit will include remuneration, T&Cs, and other employment matters.

  • School Support Staff Negotiating Body – for all or most employees of state schools and Academies other than teachers. Matters within the body’s remit will include remuneration, T&Cs, training, and career progression.

Further changes

The Government has also published a paper entitled Next Steps to Make Work Pay which includes details of changes it will “look to implement in the future”. These include the following:

• A “right to switch off”, preventing employees from being contacted out of hours except in exceptional circumstances

• A “move towards” a two-part employment status framework (employee or contractor): this is likely to presage an expansion of full employment rights to many workers (e.g. in the care/hospitality sectors and in the “gig economy”), but defining the extent of each status will be very complex, and the Government is likely to consult extensively

• Ethnicity and disability pay gap reporting for employers with 250+ staff

• Reviews of unpaid parental leave and carer’s leave rights

There are some changes which have previously been discussed by Labour which it is possible they will introduce via secondary legislation (it would not be necessary to include them in the new Bill):

• Increasing the time limit for bringing most Employment Tribunal claims from 3 months to 6 months (this was a manifesto commitment)

• Removing the compensation cap on unfair dismissal claims (this was discussed before the election, but was not a manifesto commitment)

For further information, please contact the team at Synchrony Law.

This article is for general information only and does not constitute legal or professional advice. Please note that the law may have changed since this article was published.