Employment Rights Bill Is Laid Before UK Parliament: What Employers Need to Know

Quick Hits

• The King’s Speech of 17 July 2024 detailed the UK government’s upcoming priorities with employment legislation in the form of the Employment Rights Bill, which was published on 10 October 2024.
• The bill sets out proposed changes to well-established employment rights and practices in what has been called the biggest change to employment laws in a generation.
• The most potentially significant change will give employees the right to bring an unfair dismissal claim on “day one” of employment, down from the current two years’ service.

The bill includes numerous significant changes to existing employment rights and proposes banning established employment practices in what has been called the biggest change to employment laws in a generation. But what do these proposed changes involve, and how would they differ from what is already in place?

New ‘Day One’ Rights: Parental Leave, Paternity Leave, Sick Pay, Bereavement Leave, and Protection From Unfair Dismissal

The bill includes proposals to amend eligibility criteria for certain employment rights, meaning that all employees would be entitled to these rights from the start of their employment, rather than acquiring the rights following a qualifying period of service.

At present, employees who wish to take parental leave and paternity leave must wait a certain amount of time before they are eligible for these types of statutory leave. If the current proposed changes to parental leave and paternity leave are implemented, employees would be entitled to this leave from the first day of their employment.

What is currently called “parental bereavement leave” will also be amended to be called “bereavement leave” and will apply from an employee’s first day of employment. The bill proposes that an employee will be able to take bereavement leave when a death relates to other people—not only the individual’s child. Regulations will set out who this applies to.

Among the more drastic of the proposals is the intention to make protection from unfair dismissal a “day one” right for all employees. Employees currently only benefit from this protection when they have at least two years’ continuous service with their employers. Whilst the change is significant, the government does recognise the importance of employers being able to assess new recruits during the start of their working relationship, and the government has announced that it will consult on a “statutory probationary period,” when employers can assess new hires’ suitability for roles over a certain period of time (currently favoured at nine months).

In addition to making statutory sick pay (SSP) a “day one” right for all employees and removing the three-day statutory waiting period, the bill proposes to remove the lower earnings limit (currently £123 gross per week), which is a condition for receiving SSP, with the aim of increasing SSP accessibility to employees.

Banning ‘Exploitative’ Zero-Hours Contracts

Employers that engage workers under a zero-hours contract are not required to give their staff any minimum working hours, nor are staff required to accept working hours offered. In addition, exclusivity clauses in any zero-hours contract are not enforceable, and individuals are permitted to work for multiple employers. This arrangement is typically used for casual workers, such as students, or “gig economy” workers, such as delivery drivers.

The bill proposes “ending one-sided flexibility” by ensuring that workers have a right to request a contract that reflects the number of hours usually worked over a reference period (expected to be twelve weeks) and guarantees reasonable notice when offering a shift, or making any changes to or cancelling a shift. There is also a proposal for a right to payment where an employer cancels, moves, or curtails a shift at short notice.

Ending ‘Fire and Rehire’

Also known as “dismissal and re-engagement,” this current practice is when employers give notice to discharge employees whilst proposing to re-employ them on new (and usually, less-favourable) terms. The bill proposes to regard the dismissal of an employee who is dismissed as a result of not accepting a contract variation as unfair, unless the employer meets certain requirements (relating to financial difficulties).

Default Flexible Working

Changes to the Flexible Working Regulations implemented by the previous government took effect earlier this year. As of 6 April 2024, all employees are entitled to make a statutory flexible working request regardless of their length of service and are permitted to make two requests in a twelve-month period. Employers must provide an outcome on the decision within two months of receipt of the request. Employers are currently permitted to refuse a request on specified grounds.

However, under the current proposal, employers would be required to facilitate flexible working from day one of employment and may only refuse the application based on specified grounds under the bill, and it would be reasonable for the employer to refuse the application on those ground(s).

Sexual Harassment and Protected Disclosures

Legislation regarding the duty to prevent sexual harassment is due to come into force on 26 October 2024. However, the bill proposes to enhance this duty and require employers to take “all” reasonable steps to prevent harassment. Currently, “reasonable steps” are not set out in legislation, but the bill gives the government the power to draft regulations that specify steps that are to be regarded as “reasonable.” There is a further provision in the bill that proposes to protect employees against third-party harassment and requires the employer to take “all” reasonable steps to prevent third-party harassment, otherwise risking liability for that harassment.

Allegations that sexual harassment has occurred, is occurring, or is likely to occur, are proposed to be considered disclosures qualifying for protection (otherwise known as “whistleblowing”), meaning an employee could bring a claim for automatic unfair dismissal if the employee believes he or she was dismissed as a result of complaining about sexual harassment.

Collective Redundancies

Currently, employers must only follow collective consultation rules when at least twenty employees will be impacted by redundancy at one single establishment. The bill proposes to remove the “single establishment” test, so that collective consultation rules will now be based on the number of employees impacted across the whole business, rather than in the one establishment.

Protections for New Mothers

The bill proposes increased employment protection for new mothers by preventing employers from dismissing new mothers within six months after their return to work—except in specific circumstances. It is not yet clear what these specific circumstances will be.

If implemented, these rights will expand on the existing changes in force since 6 April 2024, which strengthened redundancy protections for pregnant employees and those returning to work from maternity, adoption, or shared parental leave.

Establishing the Fair Work Agency

The government also announced that it would establish a “Single Enforcement Body” or a “Fair Work Agency” to enforce these enhanced employment rights.

It is unclear what enforcement powers this agency would have, how it would operate, and how it would compare to the current Employment Tribunal system. Justin Madders MP, Parliamentary Under-Secretary of State for Employment Rights, Competition and Markets, recently stated, “It [the Fair Work Agency] will bring together existing enforcement functions to create a strong, recognisable single brand so individuals and businesses know where to go for help. It will also have strong powers to inspect workplaces and take action against employers who are deliberately breaking the law.”

‘Next Steps’ Document

In addition to these proposals, the government has published a “Next Steps” document for reforms not included in the proposed bill. This includes:

• a “Right to Switch Off”;
• a commitment to ending pay discrimination by expanding the Equality (Race and Disparity) Bill, making it mandatory for large employers to report their ethnicity and disability pay gap;
• a move toward a single status of “worker” and transition to a simpler two-part framework for employment status; and
• reviews of the parental leave and carers leave systems to “ensure they are delivering for employers, workers and their loved ones.”

What Does This Mean for Employers?

The Employment Rights Bill must go through a number of stages before it can become law, involving multiple opportunities for consultation and amendment at various stages. Key aspects of the bill will be debated by MPs, and a parliamentary committee will carry out a detailed examination of the proposals under the bill. This will not be a quick process by any means.

Any changes are unlikely to come into effect until 2026, as many of these proposals require government consultation and secondary legislation to be implemented.

However, employers may wish to consider the potential impact on practices if the proposals are approved and implemented. This could include reviewing the suitability of any zero-hours contracts currently in use, establishing a robust and well-documented capability procedure including management of probationary periods, and considering what sort of flexible working patterns could potentially be accommodated.

Ogletree Deakins’ London office will continue to monitor developments and will provide updates on the Cross-Border, Employment Law, Global Reorganizations, and Leaves of Absence blogs as additional information becomes available.

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