As we set out in our update of 5 July 2024, Labour’s election manifesto promised wide-ranging changes to employment law. The King’s Speech on 17 July 2024 gave little additional information, but confirmed a number of the proposed changes would be brought before Parliament during this session.
Today, Labour have published their Employment Rights Bill. Whilst this is still in the very early stages, with a significant majority in parliament it seems likely that this will be a pretty accurate reflection of the likely changes in employment law over the coming months.
So what does the Employment Rights Bill contain?
- ‘Day one rights’ to be strengthened, including:
- Perhaps most significantly, removal of the two-year qualifying period to claim unfair dismissal. The Government has confirmed that this will not take effect until Autumn 2026 at the earliest to ensure that employers have time to prepare and adapt;
- Flexible working to be the default where this is ‘practical’, with employers needing to demonstrate why this is not possible if they wish to turn down such requests. The reasons for refusal will need to be along the same lines as now, but with an added requirement to explain why it is reasonable for the employer to refuse on those grounds;
- Paternity, parental and bereavement leave for all employees. Parental Bereavement leave will be amended so that the reference to ‘parental’ is removed, becoming simply ‘bereavement leave’.
- A proposed statutory probationary period will be introduced, which will allow employers to dismiss employees during the probationary period without fear of an unfair dismissal claim:
- The dismissal will either need to take effect before the end of the probationary period, or if notice is given during the probationary period, the dismissal will need to take effect within three months of the end of the probationary period.
- The Next Steps to Make Work Pay document states that there will be a ‘lighter touch’ process to dismiss an employee who is not right for the job during a probationary period, albeit there will still be ‘meaningful safeguards to provide stability and security for business and workers’. The precise details will be subject to consultation but the Government’s view is that this should include holding a meeting to explain the concerns relating to the employee’s performance. The Government’s stated preference is for a nine-month probationary period, but this will remain subject to consultation.
- There is a suggestion that compensation for a dismissal during a probationary period will be more limited than that which applies in ‘normal’ unfair dismissal claims, although the details are again subject to consultation.
- There will be an end to ‘exploitative’ zero hours contracts, with those with zero and low-hours contracts having the right to guaranteed based on the hours worked over a 12-week reference period, as well as ensuring that workers are given reasonable notice of any changes in shifts or working time, with compensation for any short-notice cancellation or curtailment. It is recognised that for some workers, the flexibility of these contracts can be very valuable and there is therefore provision for such employees not to accept any such offer.
- The current three day ‘waiting period’ for Statutory Sick Pay is to be removed, with sick pay being payable from day one of absence. In addition, the lower earnings limit for SSP will be removed meaning that all employees will qualify. There will be a consultation regarding the rates at which SSP will be paid for lower earners.
- The protection from harassment provisions will be strengthened, so that employers will be required to take allreasonable steps to prevent harassment, and provisions relating to third party harassment are to be introduced. Further, there will be a new category of protected disclosure to include an allegation ‘that sexual harassment has occurred, is occurring or is likely to occur’.
- Additional protections from dismissal during pregnancy and following any period of family leave will be introduced.
- Collective consultation obligations on redundancy will be enhanced, so that any dismissal of 20 or more staff within one employer will give rise to an obligation to collectively consult, rather than at one ‘establishment’ as at present.
- Action plans will need to be drawn up by large employers to address the gender pay gap and to support employees through the menopause. There will additionally be a new enforcement body for equal pay.
- A new Fair Pay Agreement will be implemented in the adult social care sector, designed to empower workers to negotiate fair pay and training standards. This will be overseen by the new Adult Social Care Negotiating Body.
- Trade Union laws will be ‘modernised’, with employers required to give employees a ‘statement of trade unions’, setting out that the employer has the right to join a trade union. There will also be changes to:
- trade unions’ access rights to workplaces;
- requirements for trade union recognition; time off for trade union activities – including for equality representatives; balloting requirements for industrial action; repeal of minimum service level requirements (introduced by the Conservative Government);blacklisting provisions; and
- significantly, detriment on grounds of industrial action.
- The National Minimum Wage age bands will be removed, with one rate set for all employees, and the Low Pay Commission will be required to take the cost of living into account.
- Abolishing the ‘scourge’ of fire and rehire. Dismissal for failure to agree to a change to the contract of employment will be automatically unfair, unless the employer can show that:
- The reason for the variation was to ‘eliminate, prevent or 15 significantly reduce, or significantly mitigate the effect of, any financial difficulties’ which were likely to affect the employers ability to carry on the business – ie. That the employer was facing insolvency; and
- The employer could not reasonably avoid the need to make the variation.
Next Steps to ‘Make Work Pay’
A number of the promises from the election manifesto have not made it into the Employment Rights Bill, instead appearing in a ‘next steps’ document which has been published at the same time. This includes:
- The right to switch off;
- The expansion of the pay-gap reporting requirements to include ethnicity and disability;
- The ‘simplification’ of employment status, moving towards a single ‘worker’ status; and
- A review of parental and carers leave rights.
Whilst these are very much still on the agenda, they are likely to take a back seat for the time being, whilst the Employment Rights Bill progresses.
What next?
There is certainly a lot to take in, and a lot to keep HR professionals and employment lawyers busy. The Government has confirmed that consultation on the reforms is expected to take place in 2025, and that the majority of the reforms will not take effect until 2026. However, astute employer will nonetheless want to use this time to get their ducks in a row, and to ensure that they are ready for the changes – whenever they come into effect.
It will be important to keep abreast of any amendments to the Bill as this makes its way through Parliament, so that you can be prepared for the changes as and when they come in. We understand that a second reading is planned for 21 October 2024, and consultations are likely to follow into 2025.
If you have any questions on the Bill, either now or as the legislation moves through the stages, please do not hesitate to contact a member of the employment team.
Contact Details
Gemma.Sherbourne@tyrlaw.co.uk +44 (0)7535 652758 +44 (0)113 521 7556
