The Employment Rights Bill is here: What does it mean for employers and employees?

The new Employment Rights Bill marks a significant shift in UK employment law – here’s what you need to know.

The wait is over – the new Employment Rights Bill (the “Bill”) has been announced by the Government, promising an overhaul of the UK’s existing employment rights, but what could the Bill mean for employers and employees? While not much will change immediately (as it will take some time for the Bill to go through Parliament), the implications for the future could be significant.

Below, we outline the headline changes that the Government is proposing in the Bill, with reference to the original proposals in their “New Deal” manifesto of 13 June 2024, and the potential impact on employment rights in the UK.

“Day One” Unfair Dismissal Rights

As one of the headline manifesto proposals, Labour promised automatic protection against unfair dismissal from day one of employment, thereby reducing the current two-year qualifying period. This promise aimed to increase protection for millions of employees.

The Bill has softened the manifesto proposal to allow for an extended probationary period of nine months, during which there should be greater flexibility to terminate employment where the dismissal relates to an employee’s conduct or performance. While this does not fully implement the “New Deal” proposal of protection against unfair dismissal from day one, there will still be a significant reduction of the existing qualifying period (currently two years). Where the issue of the probationary period applies, employers will need to undertake “a proportionate assessment of any employee’s suitability to a role”. We await further clarification of what that will actually mean.

We do not expect these rights to be implemented for quite some time. Certainly, once these rights are implemented, there will be a significant change to unfair dismissal rights as we know them.

Fire and Rehire

The original proposal to abolish fire and rehire was soon narrowed to restricting fire and rehire.

The Bill focuses on restricting and explains that an employee who is dismissed due to a variation of their contract of employment that they did not agree to will be treated as unfairly dismissed. This is unless the employer can demonstrate that the reason for the contractual variation was to “eliminate, prevent or significantly…mitigate the effect of, any financial difficulties which at the time of the dismissal were affecting, or were likely in the immediate future to affect, the employer’s ability to carry on the business as a going concern or otherwise to carry on the activities constituting the business”, and that the employer “could not reasonably have avoided the need to make the variation.

This is a far higher standard of accountability than which exists at present, and an employer may effectively need to show that it would go bust unless the variation happened. From an employer’s perspective, there will be far less flexibility to vary contracts of employment while employees will be afforded far greater protection.

Zero-Hours Contracts

The “New Deal” proposed to give those with zero-hours contracts the guarantee of hours calculated based on a twelve-week reference period, aiming to provide greater certainty for employees with such contracts.

The Bill has remained true to the proposal by introducing the right for qualifying workers to be offered guaranteed hours. However, the precise details as to how this will be implemented are at present lacking.

Flexible Working

While employees currently have the right to request flexible working, the proposals in the “New Deal” sought to introduce a right not just to request flexible working, but to have flexible working.

The Bill follows a similar framework to the current legislation, whereby there are grounds to which an employer can refuse an employee’s right to request flexible work. The difference is the wording that an employer “may” refuse an application for a flexible working request rather than “shall”. The grounds set out in the Bill remain the same and include the burden of additional costs, detrimental impact on quality, and detrimental impact on performance.

The true impact of this amendment to the current legislation at first glance is relatively limited. This right is one that existed before the Bill and has changed only minimally. However, the employer will now need to demonstrate that it is reasonable to refuse the request, which is a higher bar.  It is another proposal that we will await to see the true details explained in due course.

Statutory Sick Pay

The “New Deal” proposal sought to introduce Statutory Sick Pay (SSP) from day one of an employee’s sickness, removing the current three-day waiting period before SSP is available.

The Bill has removed the waiting period, meaning employees will be entitled to SSP of £116.75 per week (as of October 2024) from the first day of their illness. Employers will need to adapt to and ensure that their policies are in line with the Bill (once enacted).

Preventing Sexual Harassment

In previously proposed legislation due to come into force later this month, employers would have been required to take “reasonable steps” to prevent sexual harassment. Now, the Bill seeks to increase this duty to taking “all reasonable steps” to prevent sexual harassment, which will place a higher burden on employers.

Other key highlights from the Bill

The Bill also introduces the following:

  • Employers will have a duty to prevent harassment by third parties. What that will look like in practice is yet to be seen.
  • Collective redundancy changes were also included in the Bill, removing the current legislative framework for consultation “at one establishment”. Mooted in response to the P&O collective redundancy situation in March 2022, the Bill aims to expand collective consultation to a whole establishment (i.e. offices across the country and the entire workforce) rather than a single establishment (i.e. a single office’s workforce). This will place an emphasis on increased forward planning for employers when considering a redundancy situation and potentially increased occasions where collective redundancy will be required.
  • The removal of a qualifying period of employment for parental leave and proposals to change bereavement pay. The removal of the qualifying period for parental leave arguably has a limited impact on whether employees will choose to take parental leave, given it remains an unpaid right. Bereavement leave on the other hand has the potential to cause wider employment right changes due to the amendment of “parental bereavement leave” being changed to simply “bereavement leave”. This has the potential to extend bereavement leave rights further than solely the death of a child meaning increased bereavement rights for millions.
Final thoughts

The changes that the Bill seeks to introduce are far-ranging and, as detailed above, could have many impacts on both employers and employees. It will be important to monitor how the Bill evolves throughout Parliament and what is eventually enacted into law, noting that many of the proposals are subject to further consultation and parliamentary scrutiny. What is for certain, is the changes are ambitious and arguably  some of the biggest employment changes seen in the UK for decades. We will watch and wait with bated breath at how the “New Deal” is implemented into our lives and whether work will actually pay.

How TWM can help you

Whatever the outcome, our specialist employment law solicitors are on hand to provide expert guidance on all aspects of employment law for both employers and employees.

If you have any questions about the Bill or need assistance navigating these historic changes and the current legal landscape, please contact our specialist Employment Law team.

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Picture of Co-authored by Oliver Milton

Co-authored by Oliver Milton

The Employment Rights Bill is here: What does it mean for employers and employees?

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