On October 10, 2024, Labour unveiled its highly anticipated Employment Rights Bill, fulfilling its promise to introduce the legislation within its first 100 days in office. Described as “the most significant upgrade to workers’ rights in a generation,” the Bill, along with the accompanying “Next Steps to Make Work Pay” document, lays out detailed plans for Labour’s employment reform agenda.
The new Employment Rights Bill, which spans over 150 pages and encompasses 28 key employment measures, represents a comprehensive overhaul. The proposed changes are ambitious, signaling a substantial departure from current practices. However, it is essential to note that the Bill does not provide all the answers, as many specifics remain to be determined through consultation and secondary legislation.
Furthermore, the pace of change will be gradual. The government plans to begin consultations on the reforms in 2025. Following a “substantial” transition period, the majority of the changes are not expected to take effect until 2026. As such, these reforms are likely to remain a focal point of discussion in employment circles for the foreseeable future.
Labour’s proposed employment reforms aim to enhance worker protections, job security, and working conditions. Alongside increases to employers’ National Insurance Contributions and the National Minimum Wage, universities may face rising administrative and operational costs, requiring careful consideration and planning.
In this article, we examine some of the key provisions of the new Employment Rights Bill and compare the current legal framework with the planned changes.
Unfair Dismissal
Current Position
Under the current legal framework, employees must have at least two years of service to bring a claim for unfair dismissal, with some exceptions where dismissal is considered automatically unfair. There are no specific statutory restrictions regarding the length or terms of probationary periods, which are typically governed by an individual’s employment contract. Only employees, not workers, have the right to challenge an unfair dismissal.
What Is Planned?
One of Labour’s prominent employment manifesto pledges was to make protection against unfair dismissal a day-one right. The Employment Rights Bill fulfills this promise by eliminating the qualifying period for unfair dismissal protection.
However, the Government has outlined several key considerations:
- Probationary Periods
The Government intends to legislate for “fair and proportionate processes for dismissal” during probationary periods. The exact nature of this process remains unclear, but the “Next Steps” document suggests a more streamlined approach for businesses to follow when dismissing an employee who is not suitable for the role. At a minimum, this would involve holding a meeting with the employee to address performance concerns, with the option for the employee to be represented. - Consultation and Key Areas of Focus
The Government has committed to extensive consultations to refine the details of this proposal, including:- The proposed length of the statutory probationary period, with a preference for nine months.
- The “meaningful safeguards” that should be in place during probation.
- How many changes would interact with the Acas Code of Practice on disciplinary and grievance procedures?
- Compensation levels for successful unfair dismissal claims during the probation period are expected to be lower than the current compensatory levels.
- Exclusions and Limitations
The new unfair dismissal protection will not apply to:- Employees who have not yet commenced their employment.
- While there was a suggestion in the King’s Speech that protection from unfair dismissal would extend to “all workers,” under the Bill, it will apply solely to employees. A review of worker status is set to be a longer-term objective for the Government.
- Implementation Timeline
The government has clarified that the reforms to unfair dismissal protection will not take effect until autumn 2026. This timeline ensures that sought time developed the need for detailed rules and for employers to prepare for the changes. In the interim, the current two-year qualifying period will remain in place, though it is expected to gradually phase out.
Implications for Universities
While these changes will not take effect immediately, universities may wish to begin preparing for the upcoming reforms. One key area for consideration is reviewing template employment contracts to ensure they adequately address probationary period provisions in line with the anticipated changes.
Harassment
Current Position
As of October 26, 2024, a new duty has been placed on employers to take reasonable steps to prevent sexual harassment in the workplace. While the European Court of Human Rights (ECHR) clarifies that the preventative duty extends to sexual harassment by third parties, employers are currently not liable for third-party harassment under the Equality Act 2010.
What Is Planned?
The Employment Rights Bill introduces several key changes to harassment under the Equality Act, including:
- Employer Obligations
Employers will be legally required to take all reasonable steps to prevent sexual harassment. The Bill allows the Government to issue regulations specifying what constitutes “reasonable” steps, further clarifying the actions employers must take. - Liability for Third-Party Harassment
The Bill introduces new liability for third-party harassment, holding employers accountable for taking all reasonable steps to prevent it. A third party is defined broadly as anyone who is neither the employer nor an employee, which could include individuals such as students, contractors, or visitors. - Protected Disclosures
Any disclosure regarding sexual harassment will be classified as a “protected disclosure.” This will grant protection to individuals who report harassment under the existing whistleblowing regime, ensuring greater security for those who come forward.
These proposed changes underscore the importance of employers, particularly universities, ensuring full compliance with the new preventative duty that took effect on October 26, 2024.
Additionally, this aligns with the Office for Students’ new condition of registration on harassment and sexual misconduct, marking a significant shift in universities’ responsibilities regarding sexual harassment.
These developments require universities to take proactive measures to protect their staff and students from harassment, ensuring a safer and more accountable environment.
Fire and Rehire
Current Position
“Fire and rehire” (also known as dismissal and re-engagement) is the practice of dismissing an employee and offering to re-engage them on new, often less favorable, contractual terms. Despite the controversy surrounding this practice, the Conservative Government has resisted calls for an outright ban.
Instead, it implemented a Statutory Code of Practice on dismissal and re-engagement. The code states that firing and rehiring should only be used as a last resort after considering alternatives and consulting with staff representatives.
What Is Planned?
The Government is moving forward with its plan to end the fire and rehire (and fire and replace) practice. Under the Employment Rights Bill, it will become automatically unfair for an employer to dismiss an employee if the principal reason for dismissal is:
- The employer attempted to change the employee’s contract of employment, and the employee did not agree to the change.
- To facilitate the re-engagement of the employee or the hiring of another person under a modified contract, the employee must perform substantially the same duties as the dismissed employee.
However, an exception is provided if the employer can demonstrate that:
- The reason for the variation was to prevent or significantly reduce financial difficulties.
- The financial difficulties were impacting the employer’s ability to continue operating as a viable business.
- In the circumstances, the employer could not reasonably have avoided the need to make the variation.
When determining fairness, the Employment Tribunal will consider whether consultation was carried out regarding the contract variation and whether the employer offered anything in return for the employee’s agreement to the variation.
These provisions create a high threshold for employers to meet. As emphasized in the Government’s “Next Steps” document, the aim is to ensure that fire and rehire will only be used where there is “genuinely no alternative.”
The introduction of these measures is expected to have significant implications for universities, particularly when restructuring or changing contractual terms. Universities will need to carefully consider the new rules to avoid potential claims of unfair dismissal when attempting to modify employment contracts.
Zero-hours Contracts
Current Position
A zero-hours contract is an employment agreement in which no minimum number of hours is guaranteed, and workers are typically not required to accept any hours offered. Since 2015, employers have been prohibited from including exclusivity clauses in zero-hours contracts.
What Is Planned?
In the King’s Speech, the Government pledged to “ban exploitative zero-hours contracts.” While the Employment Rights Bill does not outright ban zero-hours contracts, it introduces several key reforms:
- Guaranteed Hours for Zero-Hours Workers
Employers will be required to offer guaranteed hours to workers on zero-hours contracts and those on “low” guaranteed hours who regularly work more than their guaranteed hours. The Bill outlines complex provisions regarding guaranteed hours, ensuring that they reflect the hours an employee periodically works over a reference period. Employers will be required to specify the days and times when work will be available for the worker, with review periods allowing adjustments over time. - Right to Reasonable Notice
Workers will have the right to reasonable notice if they are required to work a shift or if a shift is canceled or changed. Compensation will be payable for shifts that are canceled or curtailed at short notice. However, details on what constitutes “reasonable” notice or “proportionate” compensation are still under consideration and will be clarified through consultation and secondary legislation.
Impact on Employers
There has been significant concern about how these reforms will affect employers who rely on the flexibility of zero-hours contracts, especially those with seasonal or fluctuating work demands. For universities, this could impact staff roles such as event staff, outreach workers, invigilators, or certain teaching positions.
However, the Government’s “Next Steps” document clarifies that employers will not be required to offer permanent contracts for genuinely temporary work. Additionally, employers will not be obligated to offer guaranteed hours if a worker’s contract terminates before the reference period ends.
Under the new legislation, workers who wish to continue on zero-hours contracts will still be allowed to do so. The reforms aim to balance stability for workers and flexibility for employers in specific sectors.
Flexible Working
Current Position
Since April 2024, the right to request flexible working has become a day-one entitlement for all employees, regardless of their length of service. Employers must respond to requests within two months and consult with employees before refusing a request.
What Is Planned?
The Government, in its King’s Speech, promised to make flexible working “the default from day one for all workers.” While the Employment Rights Bill introduces additional obligations for employers when handling requests, the changes are more modest than initially expected. Key provisions include:
- Refusal Criteria
Employers can only refuse a flexible working request if it is “reasonable.” In cases of refusal, employers must clearly state the grounds for the denial and explain why it is reasonable to reject the request based on those grounds. - Unchanged Provisions
- The eight statutory reasons for refusal will remain unchanged.
- The right to request flexible working will still apply exclusively to employees, not workers, despite suggestions in the King’s Speech to the contrary.
- Compensation for failing to comply with the statutory provisions will remain capped at a maximum of eight weeks’ pay (currently £700 per week).
Despite these changes, the flexible working regime continues to be described as a “right to request” rather than an automatic right. It remains to be seen whether these reforms will significantly increase the number of requests granted, as the government hopes. However, the initial response from campaign groups has been one of disappointment, with many characterizing the new provisions as “weak and disappointing.”
Other Provisions in the Employment Rights Bill
Equality Action Plans
Large employers, including universities with 250 or more employees, will be required to produce action plans on gender equality. These plans must address gender pay gaps and provide support for employees going through menopause. Universities should begin preparing for these action plans ahead of the Bill’s implementation.
Trade Union Reform
The Bill seeks to reverse the Conservative Government’s restrictions on trade unions. Key provisions include:
- Updating trade union legislation to remove restrictions on union activity.
- Introducing a process for workers to request access to the workplace by unions.
- The written particulars of employment are required to include a statement informing workers of their right to join a trade union. Additionally, the Government will consult on further reforms to update the legislative framework supporting trade unions.
Statutory Sick Pay (SSP)
The Bill will remove the waiting period for SSP, meaning employees will be entitled to SSP from their first day of illness. It will also remove the earnings threshold, so workers earning below the current £123-per-week threshold will still be entitled to SSP. The government will consult on what rate of SSP should be applied to those earning below this threshold.
Parental and Paternity Leave
The Employment Rights Bill will remove the qualifying service requirement for paternity leave (currently 26 weeks) and unpaid parental leave (currently one year). Both paternity and parental leave will become day-one rights for employees.
Bereavement Leave
The Bill will extend the current provisions on parental bereavement leave to create a general right to bereavement leave. While specific relationship criteria will be clarified in later regulations, the leave will remain as two weeks for the death of a child and one week for other types of bereavement.
Maternity Protection
The Bill will strengthen protections for pregnant women and new mothers, particularly regarding redundancy situations. It will make it unlawful to dismiss a pregnant worker within six months of their return to work, except under specific circumstances.
Collective Redundancy Consultation
The threshold for collective redundancy consultation will be adjusted. Currently, the obligation to consult is triggered when an employer proposes to dismiss 20 or more employees at a single establishment within 90 days. The Bill will extend this requirement to include dismissals across the entire business, even if the dismissals are spread across multiple locations.
Additionally, the Bill includes a commitment to lifting the cap on protective awards if employers fail to follow the collective redundancy process properly. This change could impact universities with multiple campuses, as it could trigger consultation for dismissals at any location within the same 90-day period.
Frequently Asked Questions
What is the Employment Rights Bill?
The Employment Rights Bill is a draft of legislation introduced by the UK government to enhance workers’ rights. It includes reforms to existing employment laws, covering issues like flexible working, zero-hours contracts, dismissal practices, and gender equality in the workplace.
What changes does the Employment Rights Bill propose for flexible working?
The Bill aims to make flexible working more accessible by making it a day-one right for all employees. Employers can only refuse requests if they are ” reasonable,” and they must explain their reasons for refusing.
What is the Government’s stance on zero-hours contracts?
The Government plans to limit the use of zero-hours contracts by requiring employers to offer guaranteed hours to workers who regularly work more than their contracted hours. It also introduces provisions for compensation if shifts are canceled or changed at short notice.
How does the Bill address fire and rehire practices?
The Bill aims to make it automatically unfair to dismiss an employee to alter their contract terms unless it is to avoid significant financial difficulties. This reform seeks to restrict the controversial practice of “fire and rehire.”
What does the Employment Rights Bill say about statutory sick pay (SSP)?
The Bill removes the waiting period for SSP, meaning workers are entitled to sick pay from the first day of illness, regardless of earnings. Consultations will also be held on what rate of SSP should apply to those earning below the current threshold.
Will the Employment Rights Bill impact redundancy consultations?
Yes, the Bill extends the obligation for collective redundancy consultations to include dismissals across multiple locations within the same 90-day period, not just dismissals at one site. This is particularly relevant for organizations like universities with multiple campuses.
Conclusion
The Employment Rights Bill represents a significant step forward in enhancing workers’ rights in the UK. By focusing on key areas such as flexible working, zero-hours contracts, and strengthened protections for workers, the Bill aims to create a fairer, more transparent workplace. However, while the Bill lays the foundation for these reforms, it remains in draft form and will undergo further scrutiny, amendments, and consultations before becoming law.
The proposed changes—such as making flexible working a day-one right, removing the waiting period for statutory sick pay, and addressing gender equality through action plans—reflect the Government’s commitment to modernizing employment practices. At the same time, specific reforms, like the Right to Switch Off and the overhaul of trade union legislation, highlight the Government’s desire to protect worker well-being and union rights.
