The new Labour government has promised to deliver ‘the biggest upgrade to rights at work for a generation’ with the introduction of the Employment Rights Bill on 10 October 2024. This signals significant changes for employers across the country.
The legislation, as part of the government’s ‘make work pay’ agenda, will include 28 individual employment reforms, including the end of zero-hours contracts, extending family leave and introducing streamlined processes for dismissal.
It will also create a new Fair Work Agency that will bring together existing enforcement bodies and be responsible for upholding statutory employment rights, such as holiday pay and minimum wage compliance. The new agency will offer guidance to help businesses comply with the law, but it also signals stricter enforcement of worker rights.
While the specifics of the bill may evolve as it moves through Parliament, it presents both challenges and opportunities to adapt your HR and operational practices.
This article gives you an overview of the changes ahead and some practical steps that you will need to take:
Contents:
Day-one employment rights
Employees will have enhanced protection from their first day, including the right to unfair dismissal protection and parental leave. While businesses can still use probation periods, this change could lead to increased risk of tribunal claims early in employment.
Reviewing your onboarding and probation processes will be essential to reduce the risk of potential claims effectively.
Zero-hours contracts
The bill is set to clamp down on ‘exploitative’ zero-hours contracts by giving workers the right to a contract that reflects their actual hours and receive adequate notice of any shift changes.
This change will likely impact certain sectors including hospitality, health, social care and retail, where flexibility is key. Employers may need to rethink their staffing models and ensure contracts are more reflective of regular working patterns to avoid penalties.
Ban on fire and rehire
The controversial practice of firing and rehiring employees on less favourable terms will be banned.
Businesses that have relied on this method for restructuring will need to explore alternative approaches to workforce changes. This may require a more strategic focus on negotiation and consultation processes with employees.
Enhanced Statutory Sick Pay (SSP)
The Bill removes the lower earnings limit and the abolition of the three-day waiting period for SSP. More employees will qualify for sick pay from the start.
You will need to consider the potential increased costs associated with offering sick pay to a broader section of your workforce and may need to implement stronger absence management procedures to mitigate potential misuse.
Changes to family-related leave
The bill strengthens protection against dismissal for pregnant women and new mothers, including during pregnancy, maternity leave, and six months after returning to work.
This could impact staffing coverage if employees take extended leave. Updating your employee handbook and managing temporary staffing or role-sharing solutions will be crucial.
Flexible working as the default
Employers will have to offer flexible working arrangements as the default for all employees unless they can provide a clear and reasonable business case for refusal.
This change will be especially relevant for businesses with limited resources, as accommodating flexible schedules may require adjustments in operational workflows, investment in remote work infrastructure, or even hiring additional staff to cover gaps.
Fair pay agreements
Initially targeted at the adult social care sector, this reform introduces sector-wide pay standards, which could be expanded to other industries over time.
Organisations in sectors where low pay is prevalent should prepare for potential increases in wage costs and review their budgeting and forecasting practices accordingly.
What the bill doesn't include, yet...
The bill will also consult on a number of other changes:
- A new statutory probation period for companies which could help to balance the new employee ‘day-one’ rights
- The Right to Switch Off – a move to protect employees from being contacted out of hours, except in exceptional circumstances
- Expanding the Equality (Race and Disparity) Bill - mandatory for large employers to report on Ethnicity and disability pay gap
- Moving towards a single status of worker, simplifying the employment status framework
- Reviewing parental and carers' leave to ensure they are right for employers, employees and their families
How should businesses prepare?
The Employment Rights Bill represents the most significant overhaul of UK employment law in decades, and businesses must start preparing now.
- Review and update your policies: Many of the changes introduced by the Employment Rights Bill will require you to update existing policies or implement new ones. This includes your flexible working policies, harassment prevention procedures, and family leave entitlements.
- Communication and training: Your staff will need to be aware of their new rights, and managers will need to understand the implications of managing requests and disputes. Training will be a key factor in ensuring smooth implementation.
- Monitor costs and workforce planning: While the bill aims to support employees, organisations will need to plan carefully to manage potential increased costs, especially when it comes to covering absences or responding to flexible working requests. Be proactive in evaluating how these changes impact your bottom line.
- Legal advice: The changes to employment law are significant, and non-compliance could lead to costly tribunal claims. It’s essential to seek professional legal advice to guide you through the complexities of the new legislation.
By staying informed and taking steps to adapt to these changes, you can ensure your business remains compliant and continues to thrive in the evolving legal landscape.
We can help. There is a huge amount of information to absorb and understand from these changes. If you need guidance on how to prepare your business for the new regulations, our experienced employment law solicitors are on hand. Please get in touch.
