Employment Rights Bill – 10 October

The Labour Government, as promised within the first 100 days of being in power, has published its Employment Rights Bill, which has the power to significantly impact the employment law landscape over the next few years.  The Bill will bring forward 28 individual employment reforms and will be put before Parliament today (10 October), where its contents will be further detailed.   Of course, it will be a while before any of this becomes new law, but it is clear to see the intentions of Labour are to increase rights for workers, which they say will promote economic growth. 

The headlines from the Bill are:

Day one rights

Unfair dismissal claims, and parental leave will become day one rights. 

Whilst we will not see the immediate effect of removing the current 1 year 51 weeks’ service eligibility for an employee to claim ordinary unfair dismissal, removing the length of service criteria is highly likely to lead to an increase in future tribunal claims.  It will now be more important than ever for employers to carefully consider any termination of employment, even in the early stages, and have a proper and lawful basis for dismissal, ensuring supporting evidence and a fair reason and process are provided. 

The Government are looking to consult on a statutory probation period for new hires and will be introduced in Autumn 2026. The Government favours a limit of nine months. This will mean employers can dismiss new employees if things are not working out; however, the employee may still have the right to bring an unfair dismissal claim.

The Bill proposes to remove the 26 weeks’ service eligibility requirement before an employee is entitled to statutory paternity leave pay and shared parental leave.  Bereavement leave will also become a day one right for employees.

Flexible working will become the default from day one for all workers, where it is practical.  The right to request a flexible working became a day one right in April, but the Bill will extend workers’ rights, creating an assumption that workers will work flexibly in any role.  As to what “where it is practical means” we await further guidance.

Zero-hours contracts

The Bill will look to ban “exploitative” zero hours contracts and ensure that everyone has a contract that reflects the number of hours they regularly work. Those on zero and low hours contracts will gain the right to a guaranteed hours contract if they work regular hours over a defined period. In their original proposal, Labour said they would base this on a twelve-week reference period.  There is no proposal to ban zero hours contracts outright, but they seek to increase job security and predictability for the workforce, seeking to ensure that all workers get reasonable notice of changes in shifts or working time.  Labour have also previously referred to compensation for any shifts cancelled or curtailed by employers.  Again, more guidance is needed on what will be deemed ”exploitative”.

Sick pay

Labour proposes to “strengthen” sick pay, which we understand means they will increase the amount of statutory sick pay (“SSP”) an employee receives.  The Bill will remove the waiting period so that SSP will be payable from the first day of sickness absence, rather than the fourth day.  This may not have a specific impact on employers which provide enhanced contractual sick pay, but employers providing SSP only may need to reflect on the impact of those extra three days. The lower earnings limit for SSP will also be removed, however the rate may be lower for workers who were initially not entitled to sick pay.  

Fire and rehire

The Bill will look to ban the practice of sacking employees and rehiring them on different contract terms and conditions. The practice will only be permitted where a business is going through restructuring or is in financial difficulty and ‘fire and rehire’ is the only way to preserve their workforce or prevent them from going bust. Employers will need to seriously consider this and review the contracts they issue to any employees, as they will likely be final and unable to be changed without the consent of the employee.

National Minimum Wage

For the first time, age bands for the National Minimum Wage will be removed. The National Minimum Wage will also be strengthened by increasing it in line with a “real living wage”.  Alongside median wages and economic conditions, the minimum wage will reflect the need for pay to take into account the cost of living.

Maternity

More detail is to come, however protections against dismissal will be strengthened for pregnant women and new mothers. The Bill will make it unlawful to dismiss a woman on maternity leave and for six months after they return from maternity leave, except in specific circumstances.  This will go significantly beyond current protections. We anticipate, however, that one of the specific circumstances will be in a genuine redundancy situation, in which case the current protection (giving a woman in the protected period priority for a suitable alternative role) will remain.

Fair Work Agency

A new Fair Work Agency will be introduced which will bring together existing enforcement bodies and will be established to enforce and police employment rights such as holiday pay. They will also support employers looking for guidance on how to comply with employment law.

Next steps

Today (10 October), the Government will also publish a ‘Next Steps’ document stating what reforms they are looking to implement in the future. This will include:

Right to switch off

• This refers to the blurring of boundaries between home and work life, recognising that technology allows us to work more flexibly, but this can require employees to be always available. Labour proposes a right to switch off, similar to rights introduced in Belgium and Ireland.  This may prevent employees from being contacted out of hours, except in exceptional circumstances.

Equality (Race and Disparity) Bill

• The government are proposing expanding the Equality (Race and Disparity) Bill, introducing the mandatory reporting of pay on ethnicity and disability. This will likely only apply initially to employers who have over 250 employees. Employers should start to look at whether they have any incomplete data and complete this in preparation for the legislation being introduced.

Single status of worker

• The government proposes creating a single status of worker (as opposed to worker and employee). They will also propose to move towards a simpler two-part framework for establishing employment status. They propose to consult in detail on how this might feasibly be done but indicate that would consider measures to provide accessible and authoritative information for people on employment status and what rights they are owed.

Parental/Carer’s leave

• The government are looking to review parental leave and carers leave systems.

Plans for the future

The Bill will ultimately create more employee-friendly rights.  Labour pledges to work with employers and create opportunities for negotiations between government, employers and unions to work towards cooperation and alleviate the strike action which has become more prevalent in the UK in recent years.

For employers, it will be essential to keep up to date with new rules and regulation, and any guidance or best practices.  Contracts of employments and employee handbooks and policies may need to be reviewed and updated, and we would recommend additional training and support for managers and employees at all levels.

Aaron and Partners’ employment team will be following the progress of the proposed changes and will provide updates to ensure that employers are ready for their new responsibilities.  Employers can be assured that with high quality advice and legal support from specialist professionals, they can navigate any challenges arising from these upcoming changes.