Our article published on 25 June 2024, Employment law and the UK General Election, discussed some of the Labour Government's proposed changes to employment law.
As promised, the Labour Government introduced a new Employment Rights Bill. Now that we have had some time to digest the Bill, let's consider which proposals have come to fruition.
Unfair dismissal as a 'day one' right
As anticipated, unfair dismissal will become a day one right for employees from Autumn 2026 so long as they have begun work. A day one right is a right that an employee is entitled to from the first day of employment. We have now had more information on how this will operate in practice.
The qualifying period of employment will start to decrease for those bringing an unfair dismissal claim between now and Autumn 2026. For example, an employee who starts work in six months' time will gain unfair dismissal rights after 18 months.
There will be an 'initial period of employment', which Labour's 'Next Steps' guidance has suggested is likely to be nine months. Within this period, employers will be able to dismiss employees following a 'light touch' process, which is anticipated to consist of a meeting to explain the employer's concerns and will allow the employee to be accompanied.
However, the light touch process will only apply to conduct, capability, statutory restriction, and other substantial reasons. Notably, it will not apply to dismissal by way of redundancy.
Employer tip: Do not panic. It will not come into force until Autumn 2026. In the meantime, be prepared to have clear employee performance expectations and consider how best to monitor employees during their initial period of employment.
Flexible working
It was expected that flexible working would become a 'default' right for all unless the employer could show that it was 'unreasonable'.
The law currently entitles employees to request flexible working twice a year, and employers can lawfully refuse if the request meets any one of eight reasons (including, but not limited to, if the request gives rise to burdensome, additional costs, a detrimental effect on the ability to meet customer demand or a detrimental impact on performance).
In the Bill, the eight existing reasons for refusal are unchanged. The Bill imposes an additional requirement on the employer to explain their reason for refusal rather than simply stating the request is refused.
Employer tip: although there is no requirement for a reason to refuse flexible working to be given in writing, as always, it is strongly advised that it is put to the employee in writing and safely recorded.
Family-friendly rights
As expected, the Bill deals with and updates family-friendly rights, as outlined below.
Bereavement leave
Bereavement leave currently only applies to parents who lose a child aged 18 or under (entitled to two weeks unpaid leave). As expected, the Bill extends this right to others, although exactly who is not yet known.
Paternity leave and unpaid parental leave
Paternity leave is currently only available to employees who have been in continuous employment with the company for 26 weeks, and unpaid parental leave is currently only available to employees who have been in continuous employment for 52 weeks. The Bill will introduce paternity and parental leave as a 'day one' right for employees.
Notably, the Bill does not deal with the complicated legislation relating to shared parental leave.
Enhanced protection for pregnancy and new mothers
Currently, there are protections against dismissing women on maternity leave and reasons relating to pregnancy. The Bill extends this by giving the government powers to make regulations that deem it automatically unfair to dismiss someone during their pregnancy, maternity leave or return from maternity leave.
Gender pay gap/menopause reporting
The Bill introduces potential obligations on large employers (250+ employees) to publish action plans on gender pay gap reporting and supporting employees going through menopause.
Protection from third-party harassment
On 26 October 2024, the Worker Protection (Amendments of Equality Act 2010) Act was amended to provide that employers have a duty to take reasonable steps to prevent third-party sexual harassment of employees (i.e. sexual harassment by clients, customers or contractors).
The Bill will expand this duty and impose direct liability on the employer if they fail to take all reasonable steps to prevent third-party harassment.
Employer tip: ensure all anti-harassment and bullying policies are up to date, hold regular training sessions, and uphold a zero-tolerance policy.
Zero-hour contracts
The Labour Government was clear in its proposal to ban exploitative zero-hour contracts, and (in theory) this is translated in the Bill.
The Bill stipulates that workers will have a right to be offered a guaranteed hours contract. This will be calculated based on how many hours the worker worked during the previous' reference period'. Although the 'reference period' is yet to be defined, it is understood it will be the number of hours worked over a number of weeks. The worker will then have a 'response period' during which they can choose to accept or reject the guaranteed hours contract. This is intended to ensure that only exploitative contracts are being abolished.
Importantly, this also applies to minimum hours contracts to avoid employers circumventing the issue of zero hours by imposing a one- or two-hour contract, for example.
Workers will also have a right to reasonable notice of an upcoming shift and reasonable notice of shift cancellation. Employers can argue for shorter notice where reasonable given the circumstances; however, what is 'reasonable' has not yet been determined.
Employer tip: be aware that these rights will also apply to agency workers.
Fire and re-hire
Labour proposed abolishing 'fire and rehire' practices as a way of varying an employee's contract of employment without their agreement, and broadly, this is what the Bill delivers.
The Bill makes it automatically unfair for an employer to dismiss an employee where the principal reason for dismissal is either:
- that the employee refuses a variation to their contract of employment; or
- to enable the employer to recruit another employee under new contractual terms but with substantially similar duties.
The exception to this is where the reason for fire and rehire is to prevent an imminent business collapse.
Employer tip: be aware that option (b) above encompasses the abolishment of 'fire and replace' in addition to fire and rehire of the same employee only.
Redundancy
As expected, the Bill stipulates that the number of employees at risk of redundancy will be the aggregate of employees impacted across the business as opposed to 'one establishment' (i.e. one shop/office within the business).
The Bill removes the term 'one establishment' in order that the business is viewed in its entirety so that different establishments within a business cannot be viewed as separate. This means that where there are 20+ employees at risk of redundancy across the business, an employer's duty of collective consultation will kick in.
Employer tip: internal monitoring and communication is essential here, particularly for larger employers with multiple different 'establishments'.
Other changes to take note of:
Statutory sick pay
As expected, the three-day 'waiting period' before statutory sick pay (SSP) is payable is to be removed. The Bill states that SSP will become a day one right.
The lower earnings threshold for SSP will also be removed. Consequently, the rate of statutory sick pay will be modified to the lower of:
- the current lower earnings amount (£116.75 per week); or
- if lower than the lower earnings amount, a percentage of the employee's earnings.
Whistleblowing: definition of 'qualifying disclosure'
The Bill adds 'sexual harassment that has occurred, is occurring or is likely to occur' to the current list of acts that constitute a 'relevant failure' for the purposes of disclosures that qualify for protection.
Tips and service charges
Employers will have to maintain a tipping policy and consult with workers to ensure the policy is kept up to date and relevant. At a minimum, policies will need to be updated every three years.
Trade unions and collective bargaining
A large part of the Bill deals with trade union activity and includes many clauses which impact employers. These include, but are not limited to, a written statement of particulars that includes an express statement that the worker has a right to join a trade union. Furthermore, where trade union officials are denied time off work for union duties, the burden of proof will lie with the employer to show that the request for time off was unreasonable.
What is not covered…but will later be considered?
- Single 'worker' status – abolishing the difference between 'employee' and 'worker'
- TUPE – a review of the legislation
- The right to 'switch off' – employers not being able to contact employees outside of their contractual working hours.
What this means for you
The Bill materialises substantial proposals and this is undoubtedly going to be a turbulent time for employers as they navigate the new provisions of the Bill. Labours' Next Steps' document goes into depth about how the Bill will translate in practice and what we can expect to come. For now, employers can prepare for the enactment of the Bill anticipated to be in 2025.
