It has introduced a wide range of reforms that will significantly alter the way businesses handle employment issues and give HR departments a lot to think about.
Some key things include day one protection from unfair dismissal, access to Statutory Sick Pay with no waiting period and a clamp-down on so-called “exploitative” zero hours contracts.
The government has also held consultations with interested parties on some of the proposed changes. Our employment law experts take a look at the results of the consultations and how this might shape the final version of the Bill.
Proposed changes to ‘fire and rehire’
Under the Bill, a dismissal will be considered automatically unfair if it was because:
- the employer tried to vary the employee’s contract, and the employee did not agree to that variation
- the reason for the dismissal was to employ another person or re-engage the employee under a new contract to carry the same duties they carried out before being dismissed
However, an employer may still be able to carry out ‘fire and rehire’ if they show it couldn’t be avoided, and the reason for the proposed contract variation was to mitigate the effect of any financial difficulties that would likely:
- lead to dismissals in the near future
- affect the ability of the business to carry on as a going concern
- affect the ability of the business to carry on with its main business activity.
In practice, this would effectively ban ‘fire and rehire’ except in the limited circumstances outlined above.
The government launched a consultation seeking views on strengthening the collective redundancy framework and employee protection against fire and rehire practices.
For the collective redundancy framework, the government was considering the following two options to increase the maximum period of the protective award a tribunal can give:
- increase the protective award that a tribunal can award from 90 to 180 days
- remove the cap on the protective award entirely
For the employee protection against fire and rehire practices, the government sought views on whether interim relief should be available to employees who bring an unfair dismissal claim under this new right. Interim relief is an award of either:
- reinstatement of employment – when an employee gets their job back
- compensation
The government has analysed the feedback from the consultation and concluded that:
- the maximum period of the protective award a tribunal can give will be increased from 90 days to 180 days
- interim relief available to employees who bring an unfair dismissal claim under this right will not be taken forward
Ending ‘exploitative’ zero-hours contracts
Under the Bill, employees on zero-hours contracts will have the right to be offered guaranteed hours from their employer. However, employees can remain on their current zero-hours contract terms if they prefer.
They will also be entitled to:
- ‘reasonable’ notice prior to any changes to their hours or shifts
- compensation if their shift is cancelled or ended early
A government consultation sought views on whether agency workers should be included in these proposed changes. The government analysed the feedback and concluded that guaranteed hours will be extended to agency workers. However, there is likely to be an exception to this where there is a genuine need for temporary work, such as seasonal work.
It will be the responsibility of both the agency and the employer to provide agency workers with reasonable notice of shifts.
Agencies will be responsible for paying eligible agency workers compensation if their shift is cancelled or ended early. However, agencies will be able to recover the proportion of payments made to the agency worker. This will only apply where the arrangement between the agency and the hirer was entered into before a date 2 months after the Bill is passed.
It’s expected that by this time, employment agencies should be aware that they are expected to pay compensation for short notice cancellations or if the shift is ended early.
Stronger protections from unfair dismissals
Under the Bill, the 2-year qualifying period for protection from unfair dismissal will be removed, and all workers will be entitled to protection from day one. This will mean that employers can’t dismiss someone without a sufficient reason in their first 2 years of employment and beyond.
However, this is likely to be subject to an ‘initial period of employment’, such as a new statutory probationary period. This will not apply to redundancy dismissals but to those relating to:
- capability
- conduct
- contravention of law
- some other substantial reason
Therefore, a dismissal related to any of the above made within the initial period of employment will be treated as fair as long as some minimal level of procedure has been followed. The length of the new statutory probationary period has not yet been specified. Reports suggest 9 months, although this is not confirmed.
The government consultation sought views on whether interim relief should be available to employees who bring an unfair dismissal claim under this new right. Interim relief is an award of either:
- reinstatement of employment – when an employee gets their job back
- compensation
The government has analysed the feedback and concluded that interim relief available to employees who bring an unfair dismissal claim under this right will not be taken forward.
‘Strengthening’ Statutory Sick Pay (SSP)
Under the Bill, workers will be eligible for SSP from the first day they are ill. The lower earnings limit will also be removed so those who earn less than £125 per week will be eligible for SSP. However, a lower amount of sick pay will be introduced for those who earn less than this amount.
Employees who earn less than the lower earnings limit will be entitled to either:
- a certain percentage of their average weekly earnings
- the current SSP rate
whichever is lower.
The government consultation sought views on what the percentage replacement rate should be for those who earn less than the lower earnings limit. The government has analysed the feedback and concluded that employees who earn less than the lower earnings limit will be entitled to 80% of their average weekly earnings. Employers can, of course, choose to pay more through occupational sick pay.
Day one rights
Other areas of the Bill focus on the following day one rights:
Paternity leave
Fathers to be eligible from day one of employment, instead of 26 weeks.
Unpaid parental leave and Parental Bereavement Leave
Parents to be eligible from day one of employment, instead of one year.
Bereavement leave
Employees will be entitled to receive one week of Bereavement Leave in respect of a person other than a child. This will also be a day one right.
Flexible working
Employers will be expected to consider any flexible working requests made from day one, and say yes unless they can prove it is reasonable to refuse.
What do businesses think?
In December 2024, the Institute of Directors responded to the government’s call for evidence. In their document, they said:
“Ultimately, the Bill’s measures will make employing staff more expensive and riskier for businesses. As a result, they will hire fewer people and where they do hire, hiring decisions will be made more conservatively. The direct costs related to employment will increase as a result of, for instance, more frequent SSP payments. Business costs will also increase as a result of the resources needed to meet the increased compliance burden.”
IoD response to the Employment Rights Bill: call for evidence.
For SMEs, it will be harder as they are already operating at capacity, with little flexibility to cope with increased requirements, both administrative and financial. Businesses will need access to expert legal advice and guidance from experienced legal sources in order to make sure that what has started out as a landmark change to employment rights doesn’t end up in tribunal claims, stress and financial worry.
Robin White, rradar’s Legal Director – Head of Insured Employment said
“The changes proposed in the Employment Rights Bill 2024 represent one of the greatest shifts in employment practices in decades. We anticipate that whilst there will need to be consultation on a wide range of matters that might not come into force for some time, businesses will need to be proactive in managing their policies and procedures in order to ensure compliance with the new legislation.”
Need advice?
Talk to our team of Employment legal experts if your business needs support in navigating changes that could have an effect.