Labour’s Employment Rights Bill was published on 10th October, the first stage of their Plan to Make Work Pay, in what’s been hailed by CEO of the CIPD as ”the greatest shift in employment legislation in decades”.
The Bill is the headline plan, there is still lots of detail missing, and some changes that were predicted, have not been included in this stage. The government plans to consult on the reforms next year, and any new legislation will not be implemented until 2026, at the earliest.
Here are the key things you need to be aware of:
Right to claim unfair dismissal will be a day one right, but with a caveat
Currently those dismissed with less than 2 years continuous service can’t claim unfair dismissal at an employment tribunal. This requirement for 2 years service will disappear, and any employee would in theory have the right to make a claim.
However, there will be consultation on the use of a statutory probation period to allow for an initial judgement about a new joiner’s suitability for the role. Indications are this will either be a 6 or 9 month statutory probation period. The suggestion is that there will be a simplified process for dismissal during the statutory probation period, but there is still much detail to be provided prior to 2026 about how it will work in practice.
Employers will be thinking about how they can make their recruitment processes more stringent, so the right hiring decisions are made at the start, with some employers saying that they are less likely to take risks at the appointment stage, for example offering a role to a candidate who lacks experience but shows enthusiasm.
Flexible working will be the default, but with a caveat
Flexibility will be the default, unless the employer can prove it’s unreasonable, for a potentially valid reason, including the burden of additional costs, a detrimental effect on ability to meet customer demand, an inability to re-organise work among existing staff or recruit additional staff, and a detrimental effect on quality or performance; all of which are currently justifiable reasons for rejecting a flexible working request.
Currently employees with any length of service can request to work flexibly, and this request can only be refused on specific grounds – which are similar if not the same as those included as a valid reason for disallowing default flexibility. There is a change of emphasis and there will be a greater requirement for the employer to demonstrate why the role can’t be done flexibly as requested.
Employers will be thinking about how they manage the selection and onboarding processes so there is transparency about the employee’s requirement or desire for flexibility and what is reasonable, from the start.
Zero-hours contracts will stop, but with a caveat
Workers will have the right to be offered a contract with guaranteed hours, based on their regular hours worked over a defined period, expected to be the previous 12 weeks. However, workers can opt to remain on a zero hours contract if they prefer.
This replaces previous legislation due to be implemented where workers could request a predictable working pattern if they had 26 weeks’ service.
Employers will be considering how they currently use zero hours contracts, if there’s an alternative contract (for example a fixed term contract), and review the hours their zero hours workers currently work to see how they may be impacted.
Parental rights will be strengthened with expanded leave entitlements
Employees will have a day one right to paternity, parental, and bereavement leave. Currently employees need 26 weeks of continuous service to qualify for statutory paternity and ordinary parental leave.
Bereavement leave will extend beyond the existing entitlement for parents who lose a child. Broader compassionate leave rights are expected but the details of how long and whether it will be paid remain uncertain.
Employers will be considering what the financial and practical impact of this change might be, looking at the demographics of their workforce, allowing for planning and mitigating risk.
Employees will get sick pay from their first day of illness
There will no longer be any ‘waiting days’ before an employee who is off work due to sickness will be eligible for SSP. This pay will now be available from the first day of their absence, provided the employee meets the eligibility criteria. The criteria are also likely to be changed to make it more accessible for all employees, regardless of their earnings level.
Employers will be looking at their current sickness absence figures, and planning for the increase in costs of the additional 3 days SSP applicable.
There will be a ban on ‘fire and rehire’ practices, but with a caveat
The government will shut down the ‘loopholes’ that allow ‘fire and rehire’ and ‘fire and replace’ to continue. The practice of terminating an employee’s contract and rehiring them on different terms will be restricted, and these dismissals will be treated as ‘automatically unfair’, unless employers can evidence financial hardship as the reason for the change to terms and it was unavoidable. Employers will need to show such a change was a ‘last resort’ after thorough consultation and consideration of alternatives.
Employers will be considering what other changes they could make should there be a need to reduce costs across the business, before looking at forcing through changes to worker terms and conditions, so they can demonstrate it is a last resort.
Collective redundancy consultation and notification requirements will change
When an employer proposes making 20 or more redundancies at one establishment, there is a requirement to notify the DBIS and collectively consult. The changes proposed mean there will be a requirement to collectively consult if the Company intends to make more than 20 redundancies, regardless of which establishment in the UK the losses will apply.
Employers will need to review their policies and internal procedures for establishing the need for collective consultation processes and plan accordingly should redundancies be necessary.
Requirement to prevent sexual harassment of workers will be extended
On 26 October, the Worker Protection Act 2023 came into force, introducing a new duty for employers to take ‘reasonable steps’ to prevent sexual harassment of their employees. The Labour government has set out its intention to require employers to take ‘all reasonable steps’ to prevent sexual harassment, rather than just ‘reasonable steps’. It will also make employers vicariously responsible for protecting workers against harassment by third parties, a measure which was removed from the Worker Protection Act during the parliamentary process.
Employers will need to go ‘belt and braces’ with the preventative steps they can take in their business to prevent sexual harassment and tighten up how they can reasonably prevent harassment by a third party, as well as how they should respond to a complaint in light of this new liability.
Firms will be required to publish their intentions around improving equality
Large organisations (250+ employees) will have to develop and publish an equality action plan to show the steps they are taking in relation to gender equality.
A new Fair Work Agency will crack down on unscrupulous employers
The government has announced it will establish the Fair Work Agency, combining existing enforcement functions around minimum wage, statutory sick pay, the employment tribunal penalty scheme, labour exploitation and modern slavery, to create a “strong, recognisable single brand” that will make it easier for individuals to know where to go for help. The Fair Work Agency will also cover a new area of enforcement – the holiday pay policy.
The Strikes Act and Trade Union Act 2016 will be repealed
The Bill will repeal the minimum service levels legislation introduced in 2023, and will repeal all but two parts of the Trade Union Act 2016.
The new government has set out plans to introduce new rights of workplace access for trade union officials and employer obligation to inform employees of their right to join a union. The bill also brought forward measures to modernise trade union laws, including a reduction in the threshold for a recognition application from 10 per cent of the workforce.
Employers may want to introduce a ‘staff forum’ as a preventative measure to minimise the likelihood of union presence or recognition, or how they could engage proactively with unions in a positive way to build good employee relations. Contracts will need to be revised to include employee’s rights to join a union, and a communications plan to ensure the need to remind them will need to be devised.
Other plans outside of the Employment Rights Bill
The government has stated some of its commitments will be delivered outside of legislation, and they believe they can deliver more reform and therefore do not need all the commitments to be included in the bill.
This includes:
- Introducing the ‘right to switch off’, to prevent employers from contacting staff outside of their working hours.
- expanding the Equality (Race and Disability) Bill making it mandatory for large employers to report their ethnicity and disability pay gap.
- consulting on single worker status, aiming to transition towards a simpler two-part framework for employment status
- reviewing parental leave and carers’ leave systems
As a reminder, Labour’s Employment Rights Bill is subject to consultation as well as the usual passage through the House of Commons and the House of Lords, before it will become law in 2026, so there is plenty of time to prepare. More information is available here.
If you need help preparing, please get in touch.
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