The government published its much-anticipated Employment Rights Bill on 10 October, to meet its promise to bring this in within its first 100 days in power. Hailed as “the biggest upgrade to workers’ rights in a generation”, the Bill and its accompanying Next Steps to Make Work Pay document, set out detailed plans about how they intend to bring these reforms into effect.
These changes, when implemented, will bring about a significant shift from current practices and change the way businesses operate their people practices.
As outlined in our post-election blog, key changes are around Employment Rights; Pay, and Workplace conditions.
Employment rights
Unfair dismissal
Current situation
Employees should have at least 2 years’ service to bring a claim for unfair dismissal (with certain exclusions).
What’s planned?
The government wants to make dismissal a day one right. The Employment Rights Bill delivers on this by removing the qualifying period for unfair dismissal protection altogether.
This has brought about a discussion about the relevance of ‘probation periods’. How can a business ensure that a new employee is fit for the role?
- The Government intends to legislate to “introduce fair and proportionate processes for dismissal” during probationary periods.
- They promise to introduce a simple process for businesses to be able to dismiss someone who is not a good fit for the job.
- To try to alleviate business concerns, the government’s consultation will include exploring the length of probation periods and measures that will support both the business and its employees. The government favours a 9 month probation period.
Employment status
In Employment Law terms, there are currently 3 categories of employment status – Employees, Workers, and Self-employed. Differentiating between them can be contentious. Generally speaking, ‘employees’ have more rights and obligations than the other categories because there are stronger mutual obligations. A ‘worker’ may perhaps be on a zero-hours contract where, for example, they can choose when they work. Included in their manifesto was a pledge to simplify employment status, making a clear distinction between those who are ‘employed’ and ‘self-employed.
This proposal was not included in the Bill. The government will consult on a new framework for this, date to be confirmed.
Fire and rehire
Current situation
“Fire and rehire” (also known as dismissal and re-engagement) refers to the practice where an employer dismisses an employee and offers to re-engage them on new, often less favourable, contractual terms.
What’s planned?
Fire and rehire will cease to exist. The Bill will make it automatically unfair to dismiss an employee if the main reason for dismissal includes the following:
- The employer sought to vary the employee’s contract of employment, and the employee did not agree to the variation; or
- To enable the employer to re-engage the employee, or employ another person, under a varied contract of employment to carry out substantially the same duties as the employee carried out before being dismissed.
The Bill will allow for exceptions if the employer can demonstrate that:
- The reason for the variation was to prevent or significantly reduce financial difficulties.
- The financial difficulties were affecting the employer’s ability to carry on the business as a going concern.
- In all the circumstances the employer could not reasonably have avoided the need to make the variation.
- In determining fairness, the Employment Tribunal must consider whether any consultation was carried out about varying the contract and if anything was offered to the employee by the employer in return for agreeing to the variation.
This may be difficult for employers who may have genuine reasons to restructure or change contractual terms for business reasons. However, the government is serious about ensuring fire and rehire will only be available where there is “genuinely no alternative”.
Zero hours contracts
Current situation
Zero-hours contracts allow flexibility whereby the employment agreement where no minimum hours are guaranteed, and typically a worker is not required to accept any hours offered. Since 2015, employers have not been allowed to include exclusivity clauses in zero-hours contracts.
What’s planned?
The Government has committed to “banning exploitative zero-hours contracts”. While the Employment Bill does not include an outright ban, they have confirmed that “where work is genuinely temporary, there will be no expectation on employers to offer permanent contracts”. Employers will also not be under an obligation to offer guaranteed hours if a worker’s contract terminates before the end of the relevant reference period. People who would like to maintain their zero-hours contracts will be able to do so.
Employers will need to offer guaranteed hours to both zero-hours workers and workers on “low” guaranteed hours who regularly work more than those hours. The provisions in the Bill relating to guaranteed hours are detailed and complicated, but in summary, guaranteed hours should reflect the hours someone regularly works over a reference period, and employers should set out details of the days and times when they will make work available for the worker. Subsequent review periods will provide parties with the opportunity to reflect changes over time.
If people are needed to work a shift, employers will need to provide them with reasonable notice, and also if a shift is cancelled or amended, they will need to give them reasonable notice. They will need to compensate people for shifts that are cancelled at short notice.
The government has not provided information on how this will work in practice, in terms of what ‘reasonable notice’ looks like. This along with other aspects of the Bill will be subject to consultation.
Flexible working
Current situation
The right to request flexible working has been a Day One right for all employees since April this year. Employers are required to respond to requests within two months and consult with employees before refusing a request.
What’s planned?
The Employment Rights Bill does not appear to include as many changes as originally expected. However, employers will only be able to refuse an application if it is “reasonable” to do so and will need to state the facts relied upon and explain why they consider it reasonable to refuse the application on those facts. The eight statutory reasons for turning down a request will remain the same.
Other provisions in the Bill:
- Statutory Sick Pay – Currently, employees are only entitled to SSP from the fourth day of sickness and if they meet the lower earnings threshold (currently at least £123 per week). The Bill removes both the waiting period for SSP and the earnings limit, meaning all workers will be entitled to SSP from their first day of illness. The Government will consult on what rate of SSP those earning below the earnings threshold should receive.
- Parental and paternity leave – The Bill will remove the qualifying service requirement for paternity leave (currently 26 weeks) and unpaid parental leave (currently one year). Both will become day one rights.
- Bereavement leave – Current provisions on parental bereavement leave will be extended beyond parents to create a general right to bereavement leave. It will be confirmed in later regulations what conditions about relationship will apply to this leave. Leave will remain as two weeks following the death of a child, and will be one week for any other bereavement.
- Maternity protection – Additional protection is currently given to pregnant women and those on or returning from extended family leave in a redundancy situation. The Bill will strengthen protections for pregnant women and new mothers. In the Next Steps document the Government indicates it intends to make it unlawful to dismiss a pregnant worker within six months of their return to work, except in specific circumstances.
It is worth noting that a Bill is legislation in draft form and is subject to consultation and scrutiny by both Houses of Parliament. Nothing will change until it receives Royal Assent and becomes law. Therefore it is expected that many of the changes will not come into effect until 2026. Even when they do come in, we expect a transition period to allow businesses to adjust.
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