The long-awaited Employment Rights Bill was published on 10 October 2024. Many of the commitments in Labour's Make Work Pay manifesto have now been fleshed out in the draft legislation. However, while a few of the changes will come into force immediately (once the Bill is passed), in many areas there will have to be further consultation, and many proposals did not appear in the Bill. Notably, the abolition of the qualifying period for unfair dismissal will not happen before autumn 2026.
What we now know
Day 1 unfair dismissal rights
Employees will have the right not to be unfairly dismissed from Day 1 of their employment.
- The current qualifying period of two years' service to bring a claim will be abolished.
- A statutory probationary period will be introduced, during which there will be a light touch process for employers to follow in order to dismiss an employee fairly.
- The Government will consult on the length of a probationary period but their preference currently is 9 months.
- The Government has made clear that none of these changes will come into effect before autumn 2026.
Flexible working
The current right to request flexible working, which already applies from Day 1, will be strengthened as follows:
- The employer will need to show that it is reasonable to refuse the request on one or more of 8 existing grounds, which include the burden of additional costs, inability to meet customer demand.
- If an application is refused, the employer must both state the ground and explain why they consider it reasonable to refuse the application on that ground.
The Government has indicated that this change will be immediate, although subject to consultation. It has not specified a time scale.
Sick pay
- All employees will be entitled to Statutory Sick Pay (SSP) from the first day they are ill, rather than waiting until the 4th day of absence.
- SSP is currently paid at £116.75 per week with those who earn less than £123 per week unable to claim it at all. This lower earnings limit will be removed so all employees will be eligible. However, the Bill provides for lower earners to be paid at a lower rate than the prevailing rate, effectively a percentage of their earnings.
Family friendly rights
- Paternity leave and unpaid parental leave will become a Day 1 right. Currently there is a qualifying period for these leaves of 26 weeks and one year respectively.
- Protection from dismissal will be strengthened for pregnant women and new mothers, as well as those returning from family-related leave. Current protections which apply in the event of redundancy, including the right to be offered suitable alternative employment, may be extended through future regulation to apply to other types of dismissal taking place after a protected period (broadly a period 6 months after leave has ended).
Changes to bereavement leave
Currently there is a right for employees to take parental bereavement leave after six months' service. This right will be broadened so that it is not confined to bereaved parents and will become a Day 1 right. Regulations will set out the relationship to the deceased that will be required in order to qualify.
Zero hours contracts
The Government will give workers on zero hours contracts the right to:
- guaranteed hours which reflect hours regularly worked over a 12-week reference period
- be given reasonable notice of shift changes; and
- be compensated where shifts are cancelled or curtailed.
Consultation will flesh out how this will work in practice.
Fire and re-hire
A new ground of automatic unfair dismissal (for which unlimited compensation can be awarded) will be introduced where employers seek to impose new terms and conditions and employees do not agree to these. Employer may avoid liability if they can show the reason for the contractual variation was to reduce financial difficulties and they had no other choice.
Other measures in the Bill
The Government will establish a new enforcement agency, the Fair Work Agency, which will bring together existing enforcement powers and also enforce 'relevant labour market legislation', including SSP, national minimum wage, general record-keeping obligations and holiday pay. This Agency will have powers to enter employers' premises and inspect documents.
The Bill proposes to extend protection from sexual harassment so that employers will become directly liable for third-party harassment. It also contains a measure that would require employers to take 'all reasonable steps' to prevent sexual harassment, rather than the current provision (in force from 26 October) which only requires 'reasonable steps'.
The Bill will also require employers to give workers a written statement advising that they have the right to join a trade union. Trade union recognition will be made easier and trade unions will be provided with the right of access to workplace through access agreements.
Future developments
The Government makes clear that The Make Work Pay Plan doesn’t stop with this Bill and has also published a policy paper, Next Steps to Make Work Pay, that outlines reforms it will look to implement in the future. Subject to consultations, these includes a right to switch off, a commitment to end pay discrimination by expanding the Equality (Race and Disparity) Bill to make it mandatory for large employers to report their ethnicity and disability pay gap, a move towards a single status of worker and a review of the parental leave and carers' leave systems.
The Government anticipates that it will begin consulting on the reforms in the Bill in 2025 and so that it is likely that the majority of reforms will take effect no earlier than 2026. As previously highlighted, unfair dismissal becoming a Day 1 right will not take effect until autumn 2026.
We will comment further on the Bill as more details emerge. In the meantime, if you would like to hear further how the new changes may affect your organisation, please do sign up to join on us at our in person client seminar on 16 October.
