Employment Update – October 2024

The Government has set out its proposed legislation to implement its Plan to Make Work Pay that it announced would be introduced within 100 days of coming into power. However, one of the most important things to understand about the Employment Rights Bill is that there are no firm timescales for any of the reforms. None of the reforms have a specific proposed implementation date, with the suggestion that many are unlikely to come into force until 2026. In addition, a large number of the reforms are subject to consultation and the detail may well change before implementation.

Here is our summary of the Bill

The Government’s accompanying announcement stated that the following changes would be “immediate” (but still with no firm implementation date):

• Flexible working will be “the default”. This appears in the bill as the following reforms to the current Flexible Working system:
  • Requests can only be refused for reasons falling within the relevant statutory grounds and if it is reasonable to do so
  • The employer must give their reasons for refusal and explain why they consider it reasonable to refuse the application
• Bereavement leave
  • The law currently provides up to two weeks of bereavement leave and pay for parents on the death of a child. The Bill introduces up to one week’s bereavement leave for all, with regulations to be introduced to clarify the circumstances in which individuals can take bereavement leave (e.g. the relationship to the deceased).
• Paternity and Parental Leave become day one rights
  • As with maternity leave, there will be no qualifying period for an employee to serve before becoming entitled to paternity or parental leave.
• Protections from dismissal for pregnant employees and new mothers returning to work
  • At present, the protection exists in the form of a right to be offered a suitable available vacancy in the event that such an employee is made redundant during pregnancy or within 18 months of childbirth/adoption placement. The Employment Rights Bill empowers the Secretary of State to make regulations to protect such employees where they are dismissed for reasons other than redundancy.  There is no detail in the bill about what such protection would entail.

The Employment Rights Bill contains the additional following provisions, with the timeframe for implementation unclear.

• Reform of zero hours contracts and ending exploitation of them
  • “Qualifying workers” will have a right to be offered a guaranteed hours contract reflecting the hours they regularly work over a reference period (which had been suggested as 12 weeks, but which will be confirmed following consultation)
  • This right will apply to “low hours” workers as well as “zero hours” workers (in order to avoid employers circumventing the rules by engaging people on contracts that offer guaranteed hours, but low hours). The concept of “low hours” is not yet defined and will be the subject of consultation. The Bill also clarifies that employers will not be able to circumvent the rules by offering guaranteed hours contracts for limited-terms (save where it is reasonable to do so).
  • The Government have said that they will ensure that workers who are on full-time contracts and occasionally pick up overtime will not be affected by these reforms.
  • The Government will consult about the impact of these reforms on agency workers.
  • Zero hours and other variable hours workers will have rights to:
    • reasonable notice of a shift
    • reasonable notice of a cancellation or change to a shift
    • payment for a shift that is cancelled, moved or curtailed at short notice.
• “Day One” unfair dismissal rights
  • There will be a removal of the qualifying period (currently two years) for claiming unfair dismissal (but this will be implemented no earlier than Autumn 2026) and there will also be full consultation on this proposal and the details.
  • In response to initial feedback on their proposals for “day one” unfair dismissal rights, the Bill provides that Regulations may be made in relation to an “initial period of employment”, i.e. a probationary period. The Government have expressed a preference for a 9-month probationary period.
  • It is unclear exactly what these provisions about a probationary period will entail, but suggestions are:
    • A “lighter-touch and less onerous” process to be followed, perhaps consisting of a requirement to hold a meeting with the employee to explain concerns about their performance
    • There will be consultation about an appropriate compensation regime for probationary dismissals (suggesting perhaps a lower maximum unfair dismissal award in such circumstances)
• Pre-Day One unfair dismissal rights
  • Where an individual is dismissed on one of the automatically unfair grounds (e.g. whistleblowing), they may claim unfair dismissal even where such termination is before they have started work.
• Reform to “fire and rehire” law
  • The Government had announced that it would strengthen protections against the abuse of terminating and re-engaging employment contracts in order to implement changes to terms and conditions. The Bill does so by:
    • Deeming an employee to be automatically unfairly dismissed if the reason for dismissal is because the employee refused to agree to a proposed variation to their contract of employment or because the employer wants to hire a replacement or re-hire the employee under a varied contract to carry out substantially the same duties, unless:
      • The reason for the variation was to eliminate, prevent or significantly reduce financial difficulties which were likely in the immediate future to endanger the operation of the business as going concern; and
      • In all the circumstances, the employer could not reasonably have avoided the need for the variation.
    • The Government will also consult about:
      • lifting the cap on the protective awards for failure to carry out collective consultation
      • considering the role interim relief could play (which would prevent dismissals taking effect where there was a dispute)
    • If carried through, these changes will significantly impact on the ability of employers to seek to change contractual terms through termination and re-engagement exercises, potentially limiting them only to changes absolutely necessary for business survival. Employers may want to consider how they draft employment contracts and reserve for themselves as much flexibility as possibility because the opportunities to change terms without employment agreement will be significantly reduced.
• Reform to collective consultation law
  • Collective consultation obligations are currently triggered where there are 20 or more proposed redundancies at one establishment within a 90-day period. The Bill provides for the removal of the words “at one establishment” meaning that collective consultation obligations will be triggered by 20 or more proposed redundancies across an employer’s business.
• Reform to equality protections
  • On the duty to take reasonable steps to prevent sexual harassment, this law comes into force on 26 October 2024. However, the Employment Rights Bill will increase the duty from taking “reasonable steps” to “all reasonable steps”. The current law does not define what “reasonable steps” are, although we have EHRC guidance on what factors might be taken into account. The Bill provides that Regulations may be made to specify what steps are to be regarded as reasonable
  • The Bill has provisions under which an employer would be liable for failing to take reasonable steps to prevent a worker from being harassed by a third party. This is important. Whilst the new duty to prevent sexual harassment extends to preventing sexual harassment by third parties, the law does not currently provide a worker with the right to bring a stand-alone claim if they have been harassed by a third party (such as a customer) whilst at work.  Employers will need to ensure that they have robust systems in place to seek to prevent third-party harassment.
  • The Bill contains provisions increasing the reporting obligations of large employers, namely a requirement to produce an Equality Action Plan covering:
    • Gender pay gap
    • Supporting employees going through the menopause
• Strengthening trade unions
  • Employers to provide each worker with a statement that they have a right to join a trade union
  • Rights of trade unions to access workplaces, including provisions around the right to seek access, response notices from the employer and negotiations about the terms of access
  • Simplification of processes for trade union recognition
  • Repeal of minimum service level provisions
• Social care
  • The Bill provides for there to be an Adult Social Care Negotiating Body with a view to reaching a Fair Pay Agreement for workers in social care
• Statutory sick pay 
  • Removal of waiting days, so workers will be entitled to sick pay from the first day of absence
  • Removal of the lower earnings limit for eligibility (with consultation to take place about what an appropriate level of sickness payment should be for those earning less than SSP)
• Public sector contracts
  • The Bill contains provisions designed to prevent a two-tier system and ensure that when a public sector contract is outsourced:
    • Employees transferring out of the public sector are treated no less favourably than workers of the contractor; and
    • Employees of the contractor are treated no less favourably than the transferring public sector workers
• Enforcement
  • The Bill provides a framework for the establishment of a single enforcement body (the Fair Work Agency), which is expected to have responsibility for enforcement of:
    • National Minimum Wage
    • Statutory Sick Pay
    • Employment Tribunal penalties
    • Holiday Pay
    • Modern Slavery
  • The Government has announced that there will be measures to extend the time limit for bringing Employment Tribunal claims (previous suggestions were that this would be extended to 6 months)

The Employment Rights Bill does not contain provisions about the following items, which the Government has stated separately are not being ruled out, but which will be consulted upon and delivered “in the longer term”.

• Review of parental leave and carer’s leave
• Regulation of workplace surveillance technologies
• Introducing a single status of “worker”
• The right to a written contract for the self-employed
• A call for evidence on TUPE reform
• A review of Health and Safety guidance and regulations
• Enabling workers to raise collective grievances
• Ensuring social value is mandatory in contract design and the use of public procurement to raise standards on employment rights
• A right to switch off
• Requiring employers to report on Disability and Ethnicity pay gaps

Businesses were telling us that they wanted some certainty to enable them to prepare for reforms. The lack of specific timeframes for implementation and the extensive scope for consultation and change to the detail mean that we still do not have certainty about the vast majority of the reforms.