On 10 October 2024, the newly elected Government introduced the Employment Rights Bill, which is set to be one of the most significant overhauls of employment rights in recent history. When the Bill receives Royal Assent, it will significantly strengthen employee rights and entitlements, covering everything from unfair dismissal to zero-hours contracts and collective redundancies. There will be consultation on the proposed changes, with significant detail around the Bill still to be published meaning most of the reforms won’t take place until 2026. Even so, employers should start planning for the changes where they can. In this article, we cover the key areas of reform under the Bill and what they mean for your business.
The changes are wide-ranging, and this article is particularly detailed. If you’re short on time, here is a summary of some of the key upcoming changes:
Contents:
- A ‘new deal’ for working people
- Dismissals
- Statutory probationary periods
- Right to written reasons for dismissal
- Restricting ‘fire-and-rehire’ practices
- Enforcement of employment rights
- Fair pay
- Job security and stability
- Equality and inclusion
- Family-friendly rights
- Redundancies and TUPE
- Trade unions and collective bargaining
- Fair pay agreements in social care
- What’s not included in the Bill?
- Key dates for reform
- Summary
A ‘new deal’ for working people
The Employment Rights Bill is a major overhaul of employment laws in the UK that the Government introduced on 10 October 2024. The Government’s stated intention behind the Bill is to increase productivity and raise living standards across the country. The Bill comes off the back of a series of pre-election commitments from the Labour Party towards improving the lives of working people. Before the election, Labour had published its New Deal for Working People, which included a number of specific changes to employment laws in the UK that it would implement within 100 days of entering government.
The New Deal touched on broad areas of working life, from flexible working and zero-hours contracts to trade unions and artificial intelligence. Now in Government, the Bill is the primary legislation that attempts to translate the aims of Labour’s New Deal into law. It provides some additional detail on the proposed reforms and the Government has also published factsheets on the Bill. Not all of Labour’s previous proposals made it into the Bill, and the Government has clarified the status of some of these proposals in a Next Steps policy paper.
Businesses will naturally be concerned about what they need to do to prepare for the Bill and further proposed reforms. Reassuringly, it’s still early days - the Bill has only recently had its second reading, and still needs to make it through Parliament. Even after the Bill receives Royal Assent, the Government has indicated that most of the reforms won’t take effect until 2026, giving businesses time to prepare.
Employers are still encouraged to take stock of the upcoming changes and take steps to prepare for them, even if many of the proposals we discuss in this article will take effect later down the line. Below, we cover the main proposals for reform together with our view on what they might mean for your business.
Dismissals
Unfair dismissal: day one protection
One of the most significant changes for businesses under the Bill is that unfair dismissal protection will become a day one right for all employees, subject to a statutory probationary period framework (discussed below). In its current form, the Bill extends this protection only to employees and not the broader category of workers.
Many businesses will be aware of the requirement for employees to have, in most cases, at least two years’ continuous service to qualify for unfair dismissal protection and to bring unfair dismissal claims. This requirement has typically provided employers with flexibility to assess an employee’s compatibility during the first two years of employment and dismiss short-serving employees on notice without needing a fair reason or fair process.
We await the specific details of the Government’s proposals, but a genuine day one right not to be unfairly dismissed would effectively require employers to approach the dismissal of all employees from day one of their employment in the same way they currently approach dismissals of employees with over two years’ service (ie by having one of the potentially fair reasons for dismissal and adopting a fair process), subject to a lighter touch approach for employees within their probationary periods. This would be a significant departure from long-standing employment laws - for over fifty years, there has always been some form of minimum service requirement for employees to qualify for unfair dismissal protection.
It’s clear that these changes are significant and will likely add additional time, risk and cost to your businesses when it comes to implementing dismissals. You will need to think more carefully about your initial hiring decisions to ensure employees are right for the job. It’s also likely to increase the overall number of employment tribunal claims.
Unlike most reforms under the Bill which are set to be introduced no earlier than 2026, the Government has stated that reforms to unfair dismissal will not take place until at least Autumn 2026, meaning businesses have additional time to prepare for this change.
Statutory probationary periods
Although the Bill significantly expands unfair dismissal protection, you will still have flexibility to dismiss employees for a fair reason during their ‘initial period of employment’ under a new statutory probationary period framework. Fair reasons for dismissal during an employee’s probationary period will be performance, conduct, capability, or some other substantial reason. It will not include redundancy dismissals, meaning employees who are at risk of redundancy during their statutory probationary period will still need to be fully and fairly consulted on proposals to dismiss them.
It’s not clear what exactly the lighter touch dismissal process will look like where it is permitted, other than the fact it is expected to be less onerous than the process employers normally adopt in respect of employees with full unfair dismissal rights. We do know that the Government is proposing that the statutory probation period will last for the first nine months of employment, with a termination date permitted for up to three months after expiry of the initial period. This allows you to serve notice of dismissal at any time during the initial period, as long as the notice expires within three months of the expiry of the initial period. This may provide some comfort since it makes it possible to adopt a lighter touch approach to many dismissals for potentially the first 12 months of employment.
More detail is expected to come in future consultation and guidance, but for now it does appear that probationary periods will become an important tool in being able to dismiss short serving employees. We advise reviewing your current contracts of employment and preparing for these changes.
Right to written reasons for dismissal
Employees will be entitled to written reasons for dismissal where the dismissal occurs after expiry of their statutory probationary period. Currently, most employees only have the right to written reasons for dismissal where they have over two years’ service, making this an additional administrative requirement for HR teams. Employees who are dismissed while pregnant, or on statutory maternity leave or adoption leave, would still be entitled to written reasons for dismissal without having to request one, including during their statutory probationary period.
Restricting ‘fire-and-rehire’ practices
Another major development under the Bill is the Government’s proposal to significantly restrict so-called ‘fire-and-rehire’ practices, which is more formally known as dismissal and re-engagement. Dismissal and re-engagement involves terminating existing contracts of employment and immediately offering a new employment contract, usually with less favourable terms and conditions around pay and benefits.
The purpose behind dismissal and re-engagement is usually to make forced changes to terms and conditions where employees are refusing to accept changes to their existing contracts. For example, legacy contractual benefits such as pensions and severance terms may have become too expensive for an employer to administer, or an employer may be in financial distress and need to take measures to reduce its staff costs by cutting pay. Removing these terms is likely to be very unpopular with the employees entitled to them and they would be unlikely to accept the change. Terminating the existing contracts with these terms and offering re-engagement on a new contract is a potential solution in these circumstances to transition staff onto new terms, although often at the expense of good employee relations.
Dismissal and re-engagement practices became particularly controversial during the Covid-19 pandemic, with many high-profile cases making the news. Steps had already been taken to limit the use of dismissal and re-engagement, with a new statutory code of practice which came into force on 18 July 2024, limiting its use only as a last resort.
The Bill severely restricts an employer’s ability to use dismissal and re-engagement practices by introducing new unfair dismissal protection. It will be automatically unfair to dismiss an employee where the employee has refused to agree to a change in their terms and conditions of employment, or where the employer dismisses an employee to replace or re-engage the employee on new terms but with substantially the same duties. There will be exceptions for businesses who can show all three below:
- evidence of financial difficulties that were affecting or were likely to affect their viability as a business
- the changes were needed to eliminate, prevent, significantly reduce or significantly mitigate the effects of the financial difficulties
- changes in terms and conditions were unavoidable
In other words, termination and re-engagement will only be permitted where the variation to the employment contract is needed to prevent total and imminent financial collapse of the employer.
Even where businesses can show the above, employment tribunals will take into account a number of matters in assessing whether a dismissal and re-engagement was fair, including the extent to which the business consulted employees and trade unions, and what the business offered in return for the employee agreeing to the change in their terms and conditions.
Overall, dismissal and re-engagement is a delicate balance for the Government. On the one hand, these practices are controversial with the trade unions, many of whom are affiliated with Labour. On the other hand, dismissal and re-engagement can be a lifeline for businesses that are experiencing shock economic conditions and need to take urgent cost-saving action. It seems the Government is trying to pull off this balance delicately, but with a strong message that it will scrutinise dismissal and re-engagement measures robustly. Consequently, we expect businesses in only the most extreme financial difficulties to try to implement dismissal and re-engagement when the new laws take effect.
Enforcement of employment rights
New enforcement body for employment rights
The Bill gives the government power to set up a new Fair Work Agency (FWA) responsible for enforcing workers’ rights against non-compliant employers. The FWA will have powers to inspect workplaces, inspect and seize documents, hold meetings with employers, and take legal action against employers who fail to uphold employment rights, including imposing fines and using civil proceedings. The FWA will include representation from trade unions, and it’s expected its remit will cover regulation of employment businesses and employment agencies, health and safety matters, breach of national minimum wage and statutory sick pay laws, worker exploitation (including modern slavery) and the enforcement of holiday pay compliance.
Although the creation of a new government body to oversee employment law compliance might sound alarming to some employers, it’s really an amalgamation of existing state enforcement bodies into a single nationally recognised brand (eg the Gangmasters and Labour Abuse Authority, HMRC’s national minimum wage unit, and the Employment Agency Standards Inspectorate). This is something previous governments had considered following the Taylor Review in 2017, which recommended better enforcement of employment rights by state bodies.
However, the remit and powers of the FWA are expected to be broad, meaning employers will need to make sure they take more proactive steps to comply with statutory employment rights and keep robust records to demonstrate their compliance.
Fair pay
National Living Wage
The National Living Wage is the higher rate of the National Minimum Wage that’s payable to workers aged 21 or over. The exact rate is set each year based on recommendations from the Low Pay Commission (the independent body that advises the government on the National Living Wage and National Minimum Wage). The Low Pay Commission typically looks at factors such as median pay and economic conditions when recommending rates to the government.
The Government is proposing to remove the age threshold for receipt of the National Living Wage, meaning every adult worker would be entitled to the National Living Wage, and not just the National Minimum Wage. The Government also plans to give the Low Pay Commission a wider remit to take into account the cost of living when making its recommendations. These proposals would result in added costs for employers, which will be felt mostly by businesses operating in sectors that engage younger staff, for example, the hospitality and leisure sectors.
The Government recently announced an increase in National Living Wage and National Minimum Wage rates in its Autumn 2024 budget. While different rates for each will apply from April 2025, the Government has indicated that it will gradually align the rates to create a single adult wage rate over time.
Statutory sick pay
Statutory Sick Pay (SSP) is a statutory entitlement available to employees who have been off work sick for more than three days in a row. It’s payable for up to 28 weeks of sickness absence, except for the first three days. To be eligible, employees must have average weekly earnings of at least the lower earnings limit.
The Bill removes both the three-day waiting period and the lower earnings limit for eligibility. This will mean all employees will be entitled to SSP from their first day of sickness absence and there will be no earnings requirement to be eligible. The rate of SSP will be the lower of the prescribed weekly rate (currently £116.75 per week) and a prescribed percentage of the employee’s normal weekly earnings.
For employers, these changes will increase direct costs and administration around sick pay. It may potentially encourage higher levels of short-term sickness absence if workers know they no longer need to wait for sick pay to kick in. Changes to sick pay are just one example of where you will need to update your HR policies - our employment solicitors are on hand to assist as and when these changes take effect.
Tipping
The Employment (Allocations of Tips) Act 2023 came into effect on 1 October 2024 and aims to rectify the long-term issue of employers deducting service charges from tips and gratuities, which has often left employees with less than what customers believe they are receiving. The Bill adds some additional requirements regarding tipping policies. Employers will be required to consult workers affected by the policy and review the policy at least once every three years.
Job security and stability
Labour’s general philosophy under its New Deal was that workers should be entitled to a ‘baseline level of security and predictability’. The Bill achieves this through changes to how employers use zero-hours contracts. Zero-hours contracts are employment contracts that do not set a minimum number of working hours and do not oblige the employer to provide any work. These types of contracts have come under scrutiny in recent years as trapping workers in low-paid and unstable employment.
Labour had previously proposed a ban on ‘exploitative’ zero-hours contracts. The Bill does not explicitly ban exploitative zero-hours contracts, but it does introduce complex rules on offering a guaranteed hours contract that reflects the number of hours regularly worked over a reference period (which is expected to be 12 weeks). A new guaranteed hours offer would need to be offered after every reference period, with complex rules that will add a lot of administration for businesses looking to engage casual workers.
There will be a minimum number of guaranteed hours which will be set out in further regulations. As an employer you will also need to give reasonable notice to workers of a shift (or changes in shift patterns or times), with compensation if cancelling or cutting short a worker’s shift. Again, this could add costs for those who rely on shift-based staff and will increase the amount of administration required on HR and payroll when processing payslips.
Employers may be concerned about added costs and increased administration in managing flexible workforces. It may not be practically possible for employers in some sectors to guarantee an average number of hours. Employers may need to consider alternative staffing models, for example the use of fixed-term employment contracts.
Equality and inclusion
Discrimination and harassment
The Bill will reintroduce liability for harassment by third parties, a protection that was repealed over a decade ago. It will do this by amending the Equality Act 2010 to require employers to prohibit third parties from harassing their employees. Third party harassment will occur where:
- The third party harasses the employee in the course of their employment with the employer.
- The employer fails to take reasonable steps to prevent the third party from harassing the employee in the course of their employment.
This would cover any situation where an employee is being harassed by someone other than a colleague or their employer in the course of their employment (eg by customers and suppliers). Employers may wish to start taking steps to update their workplace harassment policies to include third-party harassment and educate employees about third-party harassment in their respect in the workplace training programs.
The Bill also provides for regulations to be made to clarify what is required under the new duty to take reasonable steps to prevent sexual harassment that came into force in October 2024. The detail about this new duty has been relatively light to date, but the Bill suggests this could include carrying out risk assessments, putting in place sexual harassment policies, as well as the steps to be taken to report and handle sexual harassment complaints.
Interestingly, the Bill will also provide whistleblower protection to workers who report sexual harassment in the workplace, meaning additional care will need to be taken when handling sexual harassment complaints. This will also make it more difficult to use a non-disclosure agreement in respect of a sexual harassment complaint since confidentiality terms that prevent someone from making a whistleblowing disclosure are void.
Again, we await the specific detail, but given the increased focus on discrimination and harassment, now would be a good time for employers to audit their business for discrimination and harassment risks (including sexual harassment) and develop policies, practices and procedures to minimise these risks.
Gender pay gaps
Businesses in the UK that employ at least 250 employees have to report on their gender pay gap. Although many employers who are required to report on their gender pay gaps voluntarily provide a narrative and action plan alongside their gender pay gap data, it’s not currently compulsory to do so.
The Bill will require these businesses to create equality action plans detailing how they intend to close their gender pay gaps. The Government intends to require in-scope firms to include outsourced workers in their pay gap reports. Further regulations will specify the content and format of equality action plans, including when and how frequently they need to be published.
Menopause action plans
Large businesses with at least 250 employees will have to produce a ‘menopause action plan’. The plan would need to demonstrate how the business supports employees going through menopause. The Government will also develop guidance and the factors employers should consider when supporting employees going through menopause. We have developed a guide for employers on supporting employees through the menopause which looks at these reforms in more detail.
Flexible working
The Government plans to build on recent improvements to flexible working rights by making flexible working the ‘default’ working arrangement for all workers from day one. Since 6 April 2024, employees already have a day one right to make a flexible working request. Under the Bill, this remains simply a right to make a request and not a day one obligation on employers to provide flexible working arrangements. Employers can still turn down a flexible working request on one of eight statutory grounds (eg burden of additional costs, inability to meet customer demand), but the Bill makes it more difficult to do so by introducing an additional requirement for the refusal to be reasonable. We expect the number of flexible working requests to increase as a result, with potentially an increase in disputes about the reasonableness of an employer’s refusal to allow flexible working.
Family-friendly rights
The Bill proposes a package of improved protections that will benefit those taking leave for family reasons. These include:
New protections for pregnant women
It would be unlawful to dismiss a woman during a protected period of pregnancy (expected to be during pregnancy and within six months of her return to work), except in specific circumstances which are yet to be defined. Currently, it’s automatically unfair and discriminatory to dismiss an employee because of their pregnancy or because they took maternity leave. However, there is no restriction against dismissing pregnant employees or employees returning from maternity leave for reasons unrelated to their pregnancy or maternity leave. Although there have been recent developments to improve protections for such employees in redundancy situations, the Bill goes much further and would make it very difficult to dismiss pregnant employees or those returning from maternity leave for reasons unrelated to their pregnancy or maternity leave. The Bill also allows the Government to make regulations to provide similar protection for other types of family friendly leave such as adoption and shared parental leave.
A day one entitlement to take paternity leave
Paternity leave will become a day one right for eligible employees. Currently, employees need to have at least 26 weeks’ service to take paternity leave. The Government’s stated intention behind this reform is to align paternity leave with other types of family friendly leave entitlements.
A day one entitlement to take parental leave
Unpaid parental leave will become a day one right for eligible employees. Under current parental leave rules, the parent of a child can take a total of 18 weeks of unpaid leave up to the child’s 18th birthday, with a maximum of four weeks’ leave per year per child, but the employee must have been continuously employed for at least one year. Again, the Government’s stated intention is to align parental leave with other family-friendly leave entitlements.
Bereavement leave
Bereavement leave will become a day one entitlement for employees. Currently, a framework exists for parents to take bereavement leave following the death of a child or stillbirth. Employers tend to offer time off in other circumstances and to other categories of workers at their discretion on compassionate grounds. Under the Bill, bereavement leave will apply to a wider category of ‘bereaved persons’ and not just parents. The leave will be a minimum of one week where the person who has died is not a child, and two weeks where they are a child. Statutory parental bereavement pay will remain for bereaved parents, but there is no mention in the Bill of bereavement pay in other circumstances. Further regulations will specify the types of relationships to which the new bereavement leave framework will apply.
Redundancies and TUPE
The Bill introduces changes around when collective redundancy consultation is triggered in large-scale redundancy situations. Currently, if an employer proposes 20 or more redundancies at one establishment within a 90-day period, it must consult collectively with employee representatives or trade unions on how to avoid or limit the impact of redundancies. Case law in the UK has confirmed that this requirement is only triggered if the threshold of 20 employees is reached at one workplace (eg a single manufacturing plant or store). This has typically allowed employers to avoid collective consultation where staff are dispersed across multiple sites and the overall number of affected workers at each site is below the threshold of 20.
Changes under the Bill trigger collective consultation where that threshold is reached across the business as a whole, rather than at a single establishment. For example, a business with two sites with ten redundancies proposed at each site will, under these reforms, be required to consult collectively. This change will have a significant impact on how employers approach redundancies where the workforce is spread across different sites and will likely result in an increase in collective consultation processes. It’s also worth mentioning that businesses have to notify the Secretary of State of collective redundancies, and so this change potentially increases the amount of administration on employers running multi-site redundancies.
In the Next Steps paper, the Government states it will also consult on lifting the current cap on protective awards where an employer has failed to follow collective redundancy consultation processes. The cap is currently up to 90 days’ pay per employee, meaning an increase in the cap could result in additional financial exposure for businesses that fail to collectively consult.
Trade unions and collective bargaining
The Bill proposes several improvements to trade union rights, with implications for businesses operating in unionised environments. The reforms are wide-ranging, but these are some of the key changes:
Removal of restrictions on industrial action
Legislation passed by the previous Conservative government placed restrictions on when lawful industrial action can take place (eg with longer notice periods, higher ballot thresholds and picketing restrictions). The Bill repeals many of these restrictions, together with abolishing minimum service levels in certain industries and restrictions on certain workers going on strike. This will make it easier for trade unions to organise industrial action, possibly on short notice.
Access to workplaces
Trade unions and employers will be allowed to enter into access agreements, giving trade union officials a right of access to the employer’s workplace with the employer’s consent. The aim is to allow trade unions better access to workers for recruitment and industrial organisational purposes, for example for meeting, representing and organising workers, or negotiating collective bargaining agreements. An increase in access to the workplace might be of alarm to some employers, but the Government makes it clear in its fact sheet that employers will have a right to object to an access request and there will be a framework for resolving disputes over access requests with the Central Arbitration Committee. The right of access framework will be designed in consultation with both trade unions and businesses and with an underlying set of ‘clear rules’. If you have any concerns or questions about this development, our employment lawyers have extensive experience in trade union laws and are on hand to help.
Simpler statutory recognition
The Bill reforms and simplifies the process of statutory recognition (ie the legal process by which an employer formally recognises a trade union). This will involve changing admissibility requirements such as the current requirement to show that at least 10% of workers are members of the union, and removing the requirement for trade unions to show that a majority of workers are likely to support trade union recognition before the formal recognition process begins. It will also modernise final ballot rules.
Provision of union information
The Bill introduces a new duty on employers to inform new joiners of their right to join a trade union and to periodically remind existing staff of this right. Employers will be required to include information about the right to join a trade union in the section 1 statement of employment particulars given to employees at the start of their employment.
New rights for trade union representatives
The Bill also proposes strengthening protections for trade union representatives and trade union officials when carrying out their work (eg protection against dismissal, intimidation and blacklisting).
Fair pay agreements in social care
The Bill proposes a Fair Pay Agreement in the adult social care sector. This would allow workers and trade unions to negotiate better pay and working conditions in the adult social care sector. Employers operating in this sector should take note of these changes. If and when they come into force, they will likely involve minimum terms around pay and working conditions that would be set under collective bargaining processes, as opposed to something they set themselves as the employer. Collective bargaining agreements also tend to include terms around termination procedures and severance payments, so businesses operating in the care sector may wish to stay up to date on developments by subscribing to our newsletter to receive legal updates and details about upcoming events and webinars.
What’s not included in the Bill?
Before its election victory, Labour had proposed a number of employment law reforms that have not made it into the Employment Rights Bill itself. In some cases, this is because the Government has existing powers to introduce the relevant reforms, whereas in other cases, it intends to engage in further consultation before proceeding with reform. The Government clarifies the status of these reforms in its Next Steps policy paper:
- Increase in employment tribunal time limits from three to six months. Labour had proposed increasing the time limit for bringing employment claims from three to six months. The Government will introduce this through a future amendment to the Bill and so this is certainly something still on the Government’s agenda for employment law reform. When this reform takes effect, it is expected to have direct consequences for many employers. It’s likely that the number of employment tribunal cases will increase. And that’s within an employment tribunal system which is already at capacity and where employees can currently expect to wait on average one year for an employment tribunal to hear their claim. For employers, the increase in the time limit means they will need to wait out any claims for a much longer period than before - employees will have much longer to think about bringing a claim, which might happen if they are struggling to find new employment after being dismissed from a job.
- Employment status. Labour had planned to move towards a single status of ‘worker’, ending the distinction between ‘employee’ and ‘worker’. This would then leave a simpler distinction between those categorised as a ‘worker’ and those categorised as ‘self-employed’ from an employment law perspective. The Government plans to consult on a ‘simpler framework’ to implement this change, although given the enormous complexity of employment status generally, employers may find the Government’s goal of simplification somewhat naive.
- Ethnicity and disability pay gaps. Labour had planned to introduce ethnicity and disability pay gap reporting for large employers to mirror existing gender pay gap reporting requirements. The Government confirms it will introduce new equality legislation that will require large businesses with at least 250 employees to report on their ethnicity and disability pay gaps. There is currently no legal requirement to do so, although some large employers already report on these matters voluntarily as part of their DE&I initiatives.
- Expansion of equal pay laws. Under the Equality Act 2010, men and women must receive equal pay for equal work. This is known as the principle of equal pay. Workers can bring equal pay claims where they believe they are being paid less than a comparator of the opposite sex for the same work. The Government intends to reform equal pay laws by extending equal pay rights to workers experiencing discrimination on the basis of race or disability, and prohibiting the outsourcing of services as a means of avoiding equal pay laws. It will also strengthen Equality Impact Assessments for public sector bodies that have public sector equality duties. Additionally, it intends to set up a regulatory and enforcement unit to oversee equal pay, with a view to making it easier to enforce equal pay rights.
- Right to disconnect. Labour had planned to mirror developments in other parts of the world around ‘right to disconnect’ laws. These laws emerged following the rise in remote working during the Covid-19 pandemic to promote personal time and wellbeing when working from home or outside of normal working hours. Rather than create a legal right to switch off, the Government intends to introduce a statutory code of practice (presumably aimed at employers), although the detail around what this will entail is unknown.
- Carer’s leave reform. The previous government recently introduced a new unpaid time-off right for carers. The Government intends to review the implementation of this new right and consider whether there is a need to change the approach to carer’s leave, although it has stopped short of making a commitment to paid time off.
- TUPE reform. Labour had promised reforms to TUPE (the employment laws that apply on a business transfer or outsourcing). Rather vaguely, the Government will launch a call for evidence to “holistically examine a wide variety of issues relating to TUPE regulations and process, including how they are implemented in practice.” We will need to see the detail from the consultation in due course, but imminent changes seem unlikely.
- Collective grievances. Labour had previously proposed a mechanism to allow employees to raise a collective grievance with ACAS. The Government remains coy about this proposal, stating it will consult with ACAS on enabling employees to raise collective grievances. It’s not clear what this would mean in practice as employees raise internal grievances with their employer and not with ACAS. It’s likely that what Labour actually intends is for employees to be able to raise collective grievances with their employer, although it could mean employees will be able to start ACAS Early Conciliation (ie the first step when making an employment tribunal claim) on a collective basis.
Unpaid internships. Labour had previously promised to bring an end to unpaid internships, except where they are part of an education or training course. The Government states that powers already exist to deliver this type of reform and that the Government will launch a consultation specifically on unpaid internships by the end of 2024. This is clearly a positive development from a social mobility perspective, although it’s not clear why a ban is more effective than, for example, mandating a statutory rate of pay for all internships. A total ban on the use of unpaid internships could have unintended consequences, such as a reduction in the overall number of internships posted by businesses due to confusion about the rules. When this change takes effect, businesses that wish to continue to offer internships will need to update their internship agreements. Our employment solicitors will be on hand to help you make these updates.
- Artificial intelligence. Before its election victory, Labour had expressed concerns about the risks of artificial intelligence on workers and had suggested better protections for workers. The only commitment the Government makes in this sphere is that it will consult on surveillance technologies. There is no detail on how the Government will support the workforce with the very real and pressing threats posed by artificial intelligence, for example through job losses through the widespread deployment of generative AI.
- Self-employed workers. The focus of the Employment Rights Bill is unequivocally the improvement of the rights of employees and workers. The self-employed are largely ignored in the Government’s reform of workers’ rights, although the Government mentions it has introduced a Fair Payment Code aimed at tackling late payments for the self-employed.
Key dates for reform
| Date | Action |
| 2024 - 2025 | Parliamentary scrutiny of the Employment Rights Bill and consultation |
| 2026 | Introduction of most employment law reforms under the Bill and additional reforms under the Next Steps paper |
| Autumn 2026 | Introduction of day one unfair dismissal rights and statutory probationary period framework |
Summary
The Employment Rights Bill represents a new dawn for employment laws in the UK. If implemented as proposed, it introduces considerably improved employee rights and protections for workers. However, it also comes with enormous additional obligations and consequences for employers, with everything from administering statutory entitlements to dismissals and relationships with trade unions covered under the Bill. The Bill is still in its early days with most of the reforms expected to take effect in 2026. You can stay tuned on developments by attending our webinars and subscribing to our newsletter.
