Employment rights bill goes before UK parliament: what employers need to know | Ogletree, Deakins, Nash, Smoak & Stewart, PC

The new Labor government has set out its plans for labor market reform in its Employment Rights Bill, just within its first 100 days in office. This scale of change was initially set out in the Labor government’s “Plan to Make Work Pay”, which Labor pledged to fully implement as part of its election manifesto.

Quick hits

• The King’s Speech of 17 July 2024 set out the UK Government’s upcoming priorities in employment law in the form of the Employment Rights Bill, which was published on 10 October 2024.
• The bill sets out proposed changes to established labor rights and practices in what has been called the biggest change to labor law in a generation.
• The potentially most significant change will give employees the right to make an unfair dismissal claim on “the first day” of their employment, compared to the current two years of employment.

The bill includes numerous significant changes to existing labor rights and proposes to ban established labor practices in what has been called the biggest change to labor law in a generation. But what do these proposed changes entail, and how would they differ from what’s already in place?

New ‘Day One’ rights: parental leave, paternity leave, sick leave, bereavement leave and protection against unfair dismissal

The bill includes proposals to change the 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 these rights after a qualifying period of service.

Currently, employees who want to take parental and paternity leave must wait a certain amount of time before they are eligible for this type 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 leave” will also be changed to the name “bereavement leave” and will apply from the employee’s first day of work. The bill proposes that an employee can take bereavement leave if the death involves other people – and not just the individual’s child. The regulations specify to whom this applies.

One of the most drastic proposals is the intention to make protection against unfair dismissal a ‘day one’ right for all employees. Employees currently only benefit from this protection if they have been continuously employed by their employer for at least two years. Although the change is significant, the government recognizes the importance of employers being able to assess new employees at the start of their working relationship. The government has announced it will consult on a ‘statutory probationary period’ during which employers can assess new hires. suitability of employees for positions over a specified period (currently nine months preferred).

As well as making statutory sick pay (SSP) a ‘day one’ entitlement for all employees and abolishing the statutory three-day waiting period, the bill proposes to abolish the lower income limit (currently £123 gross per week). condition for receiving SSP, with the aim of increasing the accessibility of SSP for employees.

A ban on ‘exploitative’ zero-hour contracts

Employers who hire employees on a zero-hours contract are not obliged to give their staff a minimum working hours, nor are the staff obliged to accept the working hours offered. Furthermore, exclusivity clauses in a zero-hour contract are unenforceable and individuals may work for multiple employers. This scheme is typically used for temporary workers, such as students, or for workers in the ‘gig economy’, such as delivery drivers.

The bill proposes to “end unilateral flexibility” by ensuring that workers have the right to request a contract that reflects the number of hours usually worked over a reference period (expected to be twelve weeks) and that guarantees a reasonable notice period when offering a service, or making changes or canceling a service. There is also a proposal for a right to payment when an employer cancels, moves or shortens a service at short notice.

End of ‘Fire and Rehire’

Also known as “layoff and rehire,” this current practice is when employers terminate their employees and offer to rehire them on new (and usually less favorable) terms. The bill proposes that the dismissal of an employee who is dismissed as a result of not accepting a contract amendment should be considered unreasonable, unless the employer meets certain requirements (related to financial difficulties).

Standard Flexible Working

Changes to the Flexible Working Regulations implemented by the previous government came into effect earlier this year. From 6 April 2024, all employees, regardless of length of service, will be entitled to make a statutory request for flexible working and may make two requests within a twelve-month period. Employers must announce an outcome of the decision within two months of receiving the request. Employers are currently allowed to refuse a request on certain grounds.

However, under the current proposal, employers would have to facilitate flexible working from the first day of employment and may only refuse the application on the basis of specified grounds in the bill, and it would be reasonable for the employer to refuse the application on that ground ( S).

Sexual Harassment and Protected Disclosures

The legislation regarding the duty to prevent sexual harassment is expected to come into force on October 26, 2024. However, the bill proposes to strengthen 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 make regulations specifying steps that should be considered ‘reasonable’. There is another provision in the bill that proposes to protect employees from harassment by third parties and requires the employer to take “all” reasonable steps to prevent harassment by third parties or risk liability for that harassment.

It is proposed that allegations that sexual harassment has occurred, is occurring or is likely to occur should be considered disclosures eligible for protection (also known as ‘whistleblowing’). This means that an employee can make a claim for automatic unfair dismissal if the employee believes he or she was dismissed due to complaints of sexual harassment.

Collective redundancies

Currently, employers only have to follow collective bargaining rules if at least twenty employees are affected by dismissal at one establishment. The bill proposes to abolish the ‘single establishment’ test, so that collective bargaining rules will now be based on the number of employees affecting the whole company, rather than in one establishment.

Protection for new mothers

The bill proposes stronger employment protections for new mothers by preventing employers from firing new mothers within six months of returning to work, except in specific circumstances. It is not yet clear what these specific circumstances will be.

If implemented, these rights will build on existing changes in force since April 6, 2024, which have strengthened dismissal protections for pregnant employees and employees returning to work after maternity, adoption or shared parental leave.

Establishment of the Fair Work Agency

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

It is unclear what enforcement powers this agency would have, how it would operate and how it would relate 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, recognizable single brand, so individuals and businesses know where to go . go for help. It will also have strong powers to inspect workplaces and take action against employers who deliberately break the law.”

Document ‘Next steps’

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 end pay discrimination by extending the Equality (Race and Disparity) Bill, making it mandatory for large employers to report their ethnicity and disability pay gaps;
• a move towards a single ’employee’ status and a move towards a simpler two-tier employment status framework; And
• reviews of parental and care leave systems to “ensure they deliver results for employers, employees and their loved ones.”

What does this mean for employers?

The Employment Rights Act must go through a number of stages before it can become law, with multiple opportunities for consultation and amendment at different stages. Key aspects of the bill will be debated by MPs, and a parliamentary committee will examine the proposals under the bill in detail. This will by no means be a quick process.

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

However, employers may wish to consider the potential impact on practice if the proposals are adopted and implemented. This could include assessing the suitability of zero-hours contracts currently in use, putting in place a robust and well-documented capability process, including the management of trial periods, and considering what kind of flexible working patterns might be possible.