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A new era for workers’ rights in the UK

Briefing
11 October 2024
9 MIN READ
2 AUTHORS

The Labour Party has delivered on its manifesto pledge to put forward legislation introducing major employment law reforms within its first 100 days in government. The publication of the Employment Rights Bill on 10 October 2024 represents one of the most significant legislative developments UK employers have seen in an entire generation.

The UK Government has announced that the Bill contains 28 employment reforms, all of which were alluded to in its pre-election “Plan to Make Work Pay“.

Here are some key provisions of the Bill that UK employers of all shapes and sizes need to keep an eye on and start planning for:

1. Protection from unfair dismissal on day one of employment.

This is the most significant change and the one that makes employers most nervous. Currently – except for in limited circumstances (including where the reason for dismissal relates to pregnancy or childbirth, health and safety activities, whistleblowing, or in cases of discrimination) – employers can terminate the employment of a “new” employee within the first two years of their employment, provided they do so in accordance with the terms of their employment contract. This affords businesses flexibility when determining whether new employees are a good fit for their organisation and capable of performing their role to the expected standard.

However, once Labour’s new Bill becomes law, statutory hurdles which prolong the dismissal process, and which currently only apply after two years continuous employment, will now apply from day one of employment. In short – starting from the first day employees begin a new job – they can only be dismissed for a fair reason (including redundancy, capability, or conduct) and after a fair process, such as a disciplinary or performance management process has been followed. Considering this represents a drastic change from the existing rules, the UK Government has expressed that it will consult about the introduction of a new, shorter statutory probation period. (Nine months has been bandied around, which is significantly longer than most contractual probationary periods, which are usually 3 or 6 months, but can be extended.) During this time, the requirements for dismissal will be relaxed (although employers will still need to provide written reasons for dismissal) with a view to ensuring that employers can “take a chance” on new hires and prevent stifling of labour markets. During this “initial period of employment” a modified version of the right will apply, meaning it will be more straightforward during this period to dismiss for capability or conduct, but – interestingly – not for redundancy.

2. Giving zero-hours workers the right to request a guaranteed-hours contract based on the regular hours worked over a defined look back period.

The previous UK Government had already banned “exclusivity clauses” in zero-hours contracts, and this additional right will go one step further to ending one sided flexibility in favour of the employer only. However, Unite the Union have already criticised the measure as failing to end zero-hours contracts as promised by the Labour Party. The Union’s general secretary, Sharon Graham, denounced the Bill overall, claiming it contained “more holes than Swiss cheese” while welcoming the pro-union changes such as the repeal of the controversial Minimum Service Levels (Strikes) Act.

3. Day one paternity and bereavement rights.

The new Bill introduces paternity leave from day one of employment (rather than after 26 weeks), unpaid parental leave from day one (rather than one year), and bereavement leave from day one (currently there is only a statutory right to bereavement leave on the death of a child under 18).

4. Abolishing the three “waiting days” for Statutory Sick Pay.

The Bill goes one step further by extending the right to sick pay to lower-paid workers as well.

5. Stronger protection for pregnant women and new mothers.

This includes the implementation of additional protections against dismissal – a notable step up from the current status where an employee can be offered suitable alternative employment (in priority to other employees) in a redundancy scenario.

6. Supporting women in the workplace to improve retention rates.

The Government may introduce Regulations requiring large employers to develop and publish action plans to address their gender pay gap and to support employees going through menopause.  

7. Restricting the use of so called “fire and re-hire” practices.

This may include firing and re-hiring someone else in the same role on worse terms. The Bill provides that this will only be permitted if the employer is in serious financial difficulties.

8. Bringing more employees within the scope of collective redundancy consultation.

Employers will have to consider the number of proposed redundancies across its entire business (rather than at just one establishment) to determine whether 20 or more employees will be affected, meaning more time-consuming and onerous consultation will be required. This is a significant change, as it is likely to bring more employees within scope of the compulsory 45-day consultation period (where 100 or more redundancies are proposed) rather than 30 days (when 20 or more redundancies are proposed).

9. Making flexible working the “default for all” – unless the employer can prove that flexible working is unreasonable.

The UK Government is seeking to achieve this by introducing an additional requirement of “reasonableness” if an employer seeks to refuse a flexible working request from an employee. A request can still be denied for prescribed reasons (which remain unchanged from the current regime) but now it must also be reasonable for the employer to deny the request and it must explain why it is reasonable to the employee.

Whilst not heralded in the Government announcement, but found in the details of the Bill itself, our team discovered a few additional points of which employers should be aware:

  • A return of liability on employers for harassment of employees by third parties.
  • A further enhancement of the new duty to take reasonable steps to prevent sexual harassment of employees – introduced by the previous Government and set to come into force on 26 October – with the addition of “all” before “reasonable steps”.
  • Both changes were originally included within the Worker Protection (Amendment of Equality Act 2010) Bill 2023 but were removed before it became law. This Employment Rights Bill will also pass through the parliamentary process before it becomes law, but given Labour’s significant majority, are likely to make it through this time.

The following points were not included in the Bill, but have been announced (and published in a “Next Steps to Make Work Pay” document) and are subject to further consultations:

  • The introduction of a “Right to Disconnect” – likely to be in the form of a statutory (or possibly even a voluntary) code. Following in the footsteps of other countries like Australia, Ireland, and Belgium, comprehensive consideration will likely precede the introduction of this controversial right in the UK. Workers and employers will need a reasonable amount of flexibility to implement a “right to disconnect” that matches the unique needs of a particular workplace and their customer base. What constitutes “reasonable” flexibility and what can actually be followed in practice, not just theory, remains to be seen.
  • Expanding pay gap reporting to highlight disparity on the basis of ethnicity and disability. Currently, reporting requirements are limited to gender disparity.
  • Moving to a Single Status of Worker Model. Ending the confusing – and often highly technical – distinction between “workers” and “employees” is likely to have significant implications for the casual and gig economy.

As promised in pre-election communications, the UK Government will also introduce a new enforcement body called the Fair Work Agency – lending “teeth” to their ambitious employment reforms.

In its “Plan to Make Work Pay” Labour promised a “long-term plan, working with employers and workers to get Britain moving forward” and have lauded their Bill as a “pro-business, pro-worker” approach. However, whether the UK Government’s wide-reaching employment law reforms contained in this Bill, and teased in its Next Steps document, has got the balance right and will actually help deliver both economic security for workers and growth for businesses remains to be seen.

With respect to the implementation of these reforms, there will be no overnight changes. The Government’s promise to consult on details of many of the headline grabbing proposals – including probation periods, the Right to Switch Off, and the move to a single status of worker model – bodes well for achieving the practical workability and clarity organisations require.

For more information about how the Employment Rights Bill may impact your business, please reach out to one of the authors of this briefing. Our UK employment team is ready to help employers navigate this new world of employment reforms and the next evolution of the employer/employee relationship.