Thursday, 10th October 2024

Employment Rights Bill released today – what does this mean for you?

The government’s Employment Rights Bill, described by prime minister Sir Keir Starmer yesterday as “the biggest upgrade of workers’ rights in a generation”, has been released today. There are a number of regulations proposed intended to help employees, the most significant of which are:

 

• Unfair dismissal becoming a right from the first day of employment (a protection which is currently only achieved after two years’ continuous service). There will still likely be a degree of flexibility for employers to assess new employees’ suitability for a role with a statutory probationary period in which it is suggested employees could be fairly dismissed. It now seems like the length of this probationary period could be up to nine months (up from the six previously mentioned) but there will now be a period of consultation with businesses on this and how this probationary period will work and what could constitute a fair dismissal.

 

• Employees will be entitled to receive statutory sick pay from the first day of employment (currently, they are only entitled to it from their fourth day of sickness).

 

• “Exploitative” zero-hours contracts will be banned. Preventing the ‘exploitative’ nature of these appears to be addressed through rights including to guaranteed hours, to reasonable notice for shifts and to payment for cancelled, moved or curtailed shifts.

 

• Flexible working rights will be strengthened and the default position, where this is practical, and requests will seemingly harder for employers to refuse. There is however no increased penalty against employers for any breaches, which had been a possibility.

 

• Pregnant women and new mothers will receive further protections from dismissal while they are pregnant, on maternity leave, or on return to work within the first six months.

 

• Enhanced rights to paternity leave, unpaid parental leave and bereavement leave (widening the scope from its current form ‘parental bereavement leave’).

 

• Almost stopping altogether the use of the controversial practice of dismissing and re-engaging employees on new terms (i.e. ‘fire and rehire’), other than in limited and exceptional circumstances. A new Statutory Code (set in motion by the former government) setting out employers’ responsibilities when carrying out this practice was released in July. Labour have deemed the Code inadequate and want to stop the practice entirely.

 

There has been a great degree of concern from businesses that this raft of new and enhanced rights will deter businesses from taking on new hires. They say that economic growth, which is the key driver behind these reforms, will in fact be stymied by this. While they may not necessarily discourage new hires, and employees will feel emboldened to take up and change roles more frequently if they achieve unfair dismissal protection sooner (positive for economic growth), the more likely adverse impact that will be felt by small to medium size businesses from these reforms is a financial one. This could particularly come from the right to sick pay from day one and banning of zero hours contracts. Small to medium sized businesses, whose requirements for a role often change and need to remain flexible (which zero hours contracts give them), lose that degree of flexibility.

 

The Bill will not be passed until summer 2025, and many of the new rights (including unfair dismissal from day one) is not expected to be implemented until autumn 2026 (according to the BBC), so there are no immediate changes coming into force. There will also be a period of consultation for the finer details.

 

Other employment law pledges that have been made by Labour during the election campaign, in their manifesto, or in the July King’s Speech, which are not part of this Bill include the right to switch off and a ‘simplified’ status of worker (as part of a two-tier framework self-employed). These are not included in this Bill and will be implemented in the future, as set out in the ‘Next Steps’ document published by the government.

 

It is a busy time in employment law reform – new laws on employers’ obligations to prevent sexual harassment come into effect shortly on 26 October 2024 and new legislation on tipping came into force on 1 October 2024.

 

If you require further information about anything covered in this briefing, please contact Michael McDonnell, William Gubbins or your usual contact at the firm on +44 (0)20 7526 6000.

 

This article is for general purpose and guidance only and does not constitute legal advice.  It should not replace legal advice tailored to your specific circumstances