Draft Employment Rights Bill - A Summary of Proposed Changes
Alan Kitto
Before July’s general election, Labour published its plan to ‘Make Work Pay’, which outlined several significant changes to employment law billed as being the biggest update to this area of the law in more than a generation.
Labour’s manifesto promised these changes would be announced within its first hundred days of its government and a few days ahead of this deadline, on 10th October 2024, the new Employment Rights Bill was published.
The government has also published a ‘next steps’ document within which they state:
“We expect to begin consulting on these reforms in 2025, seeking significant input from all stakeholders, and anticipate this meaning that the majority of reforms will take effect no earlier than 2026. Reforms of unfair dismissal will take effect no sooner than autumn 2026.”
Only some of the changes proposed in the ‘Make Work Pay’ plan are included in the Employment Rights Bill, these include:
Unfair Dismissal to be a Day One Right
Under current legislation, an employer can generally dismiss an employee without the risk of an unfair dismissal claim, provided the employee has less than two years of continuous service; common exceptions include whistleblowing and discriminatory dismissals where there is no minimum service requirement.
Under the draft legislation, this two-year qualifying period will be removed, meaning employees can bring an unfair dismissal claim from day one of employment; this won’t apply to the withdrawal of an offer of employment before employment starts.
Statutory probationary periods will be introduced, and employees failing their probation may be dismissed fairly, it is unclear though, how this will be handled given the employee’s right to bring an unfair dismissal will be a day one right but almost certainly will require documentation to show the employee’s conduct and performance has been assessed against the expected standards.
More details on how the government see this working will be available when the consultation document is published next year.
Ending Fire and Re-Hire
Where an employer is seeking to change employees’ terms and conditions of employment and cannot get an employee’s agreement to the proposed changes, currently a last resort is to service notice of dismissal and offer to re-hire them employee on the new terms of employment.
The proposed legislation will make any dismissal automatically unfair if the main reason for the dismissal is the employee’s refusal to accept new terms of employment or to employ someone else under new terms to carry out largely the same duties.
Ending ‘Exploitative’ Zero Hour Contracts
There are three main changes to proposed in relation to zero hour contracts:
Workers will be entitled to a contract that guarantees them a specific number of hours, based in some way on the number of hours they have worked previously. The wording in the draft legislation is incredibly vague in terms of what period previous hours worked will be based, but workers will be able to seek compensation if the employer doesn’t provide the minimum number of hours.
Workers will be entitled to reasonable notice of a shift
Workers will be entitled to compensation if work offered is withdrawn at short notice
The specific details on the length of notice is unclear and more details will likely be provided in the consultation document.
Protection from Third Party Harassment
For some time now, employers have not been liable for harassment on employees but third parties, such as customers, service users, suppliers etc.
From 26th October 2024, the Equality and Human Rights Commission can intervene if employers don’t take reasonable steps to prevent third party sexual harassment (harassment of a sexual nature). This change doesn’t apply to third-party harassment on the basis of another protected characteristic (i.e. race, disability, sexuality, age, religious belief, marital status etc.).
Employees aren’t able to bring a direct claim for third party sexual harassment against their employer but compensation in other claims can be increased by up to 25% where this is an aggravating factor and the employer hasn’t taken reasonable steps to prevent the harassment from happening.
The draft new legislation will make employers directly liable if they fail to take ‘all’ reasonable steps - not just reasonable steps, ‘all’ reasonable steps to prevent third party harassment (irrespective of the protective characteristic). This raises the bar in terms of what employers will need to do and will likely involved having clear policies, that have been reviewed regularly, carrying out risk assessments, training managers and staff and taking action when faced with a complaint.
Paternity, Parental abduction Bereavement Leave
Under the proposed legislation, paternity and parental leave will be day one entitlements; currently they require a minimum of 26 weeks service.
Employees who lose a child under the age of eighteen are eligible for two weeks parental bereavement leave but bereavement leave in relation to other relatives is currently at the discretion of the employer.
The new legislation will give employees one week’s bereavement leave although there is no detail of whether this is per year, per bereavement or whether it is limited to the loss of specific relatives.
More details to follow in the consultation document.
Statutory Sick Pay
Currently, SSP is payable from the fourth day of a sickness absence. The draft legislation will make this payable from the first day of each absence.
In addition, the lower earnings threshold for paying SSP will be removed meaning it is available to everyone and the rate of SSP will be set by the government albeit as a percentage of pay as opposed to a fixed rate as is currently the case.
There’s no mention in the draft legislation as to what the percentage will be although this will mean that higher earners will be paid more than lower earners.
Collective Redundancy Consultation
Under current legislation, collective redundancy consultation is required where more then twenty redundancies are anticipated within a ninety day period at a specific location as determined by case law in the Woolworths case.
The draft legislation looks to reverse the decision in this case and determines that collective redundancy consultation will be required where more than twenty redundancies are likely across an entire business irrespective of location within a ninety day period.
Gender Pay Gap and Menopause
The draft legislation requires employers with more than 250 employees to not merely report gender pay gap details but to have an action plan on how it is addressing any imbalances and also on how employees going through the menopause are being supported.
Right to be a Trade Union Member
The draft legislation will require a specific clause in an employee’s contract that expressly affords them the right to be a trade union member.
What Isn’t in the Draft Legislation
There are several changes that had been outlined in the ‘Making Work Pay’ plan that have not been included in this draft legislation. The government has said that it is still committed to these pledges but will look to address these at a later date, many believe in a new parliament, assuming Labour are re-elected.
The omissions include:
The right to switch off, which would prevent employees being contacted out of hours other than in extreme circumstances
The combining of employee and worker statuses into one
A requirement for large companies to report ethnicity and disability pay gaps
For more information or to discuss any of these proposed changes and how they may impact your business, please give us a call.