On Friday 10 October 2024, the Government submitted the Employment Rights Bill to Parliament. The Bill has brought forward 28 individual employment law reforms, although further detail on the various measures will be provided through regulations. The Government expects to begin consulting on the reforms in 2025, with the majority of the changes taking effect no earlier than 2026. The Government also introduced its ‘Next Steps to Make Work Pay’ policy paper, outlining further proposals it wishes to implement in the future.
Read on for a summary of the Bill and the ‘Next Steps to Make Work Pay’ document…
Employment Rights Bill
The Bill includes the following key measures:
Unfair Dismissal
- Unfair dismissal will become a ‘day one’ right for employees, and so the current two-year qualifying period for protection from unfair dismissal will be removed. The right is currently only limited to ‘employees’, and will not be extended to include ‘workers’.
- The concept of an ‘initial period of employment’ will also be introduced. During this time, dismissals may not be subject to requirements of fairness. However, the specific details of this – including the length of the initial period – are to be confirmed by regulations, together with guidance on how this period will interact with the ACAS Code of Practice on disciplinary procedures and grievances.
- The Government is also due to consult on the length of the statutory probation period for new hires, to assess their suitability for a role, and has confirmed that its preference would be nine months. The ‘Next Steps to Make Work Pay’ suggests that there will be a process for employers to follow to dismiss someone who is not right for the job which, as a starting point, will include holding a meeting with the employee to explain the concerns about their performance (at which the employee could choose to be accompanied by a trade union representative or a colleague). The Government has also indicated that consultation will be undertaken as to the compensation regime that should apply for successful claims during probationary periods.
- The Government has indicated that the reforms to unfair dismissal will take effect no sooner than Autumn 2026.
- The obvious implication of this proposal is that employers are likely to face a higher volume of unfair dismissal claims, necessitating a more attentive approach to managing probationary periods and performance, as well as disciplinary procedures where applicable.
Collective Redundancies
- The Bill amends the current thresholds for when the need to collectively consult arises.
- The reference to ‘one establishment’ is being removed, so that the thresholds will apply to the whole of the business i.e. employers will need to collectively consult when they are looking at making 20 or more redundancies across the whole business (rather than at one establishment).
Fire and Rehire
- On 18 July 2024, a new Code of Practice on Dismissal and Re-engagement (commonly known as the practice of ‘Fire and Rehire’) came into force. The Code of Practice applies to all scenarios where an employer proposes to introduce changes to employees’ terms and conditions of employment by firing them and rehiring them on new terms. This is regardless of the number of employees or the business reason for the proposed changes.
- The Bill creates a new category of automatically unfair dismissal, providing that a dismissal will be unfair if the reason for it was that the employer sought, and the employee refused, a variation to the contract of employment (or if the employer replaces the employee with someone else carrying out substantially the same duties on the varied terms). To avoid such claims, employers need to show that the reason for the variation was to eliminate, prevent, significantly reduce or mitigate financial difficulties which at the time of dismissal were affecting (or were likely in the immediate future to affect) the employer’s ability to carry on the business as a going concern (or otherwise carry on the activities constituting the business), and the need to make the variation could not reasonably have been avoided. This appears to be a high threshold and would dramatically affect an employer’s ability to impose variations.
Flexible Working
- Currently under the Employment Relations (Flexible Working) Act 2023, an employer is only required to deal with an employee’s flexible working request in a ‘reasonable manner’, rather than to make a reasonable decision. The Bill will make it so that an employer will only be permitted to refuse a request if it considers that a specified ground or grounds (similar to previous business reasons) applies and if it is reasonable to refuse the request on that ground or those grounds.
- The employer must provide written reasons for refusal and explain why it considers that the decision is reasonable. It will not be sufficient for the employer to refer to one of the permitted reasons for refusal; the employer must explain why it believes the reason applies.
Harassment
- The new positive duty for employers to take ‘reasonable steps’ to prevent sexual harassment in the workplace will come into force from 26 October 2024. The Bill will extending this upcoming duty even further, requiring employers to take ‘all reasonable steps’ to prevent sexual harassment in the workplace.
- The Bill provides for regulations specifying the ‘reasonable steps’ required, for example carrying out risk assessments, publishing plans or policies, and taking steps to handle complaints/reports of sexual harassment.
- The Bill includes a new category of protected disclosure in respect of sexual harassment within the meaning of the Equality Act 2010. It is unclear how this extends protection in practice, as such a disclosure would already be protected under existing whistleblowing legislation.
- Most importantly, the Bill will reverse the position in respect of third party harassment under the Equality Act 2010. The Bill prohibits employers from permitting third parties to harass employees at work – and employers will be taken to have permitted harassment if they fail to take all reasonable steps to prevent third party harassment.
Enhanced Protection for Pregnant Women
- The Bill contains a power for the Secretary of State to make further regulations about dismissal during or after a protected period of pregnancy, extending the current provisions relating to redundancy.
- There will be protection from dismissal in specific circumstances while pregnant, on maternity leave and within six months of returning to work.
Paternity, Parental and Bereavement Leave
- The Bill makes paternity, parental and bereavement leave a ‘day one’ right and removes the current qualifying periods of employment for such leave.
- The Bill expands the right to parental bereavement leave by giving protected time off work to all bereaved employees (i.e. if there is a loss of a child under 18 years or there is a still birth after 24 weeks of pregnancy).
- Leave will be one week (save in the case of death of a child, which will be two weeks leave).
Changes to Statutory Sick Pay (‘SSP’)
- Currently SSP is not payable for the first three qualifying days in any period of entitlement.However, the Bill will amend the Social Security Contributions and Benefits Act 1992 and remove the three-day waiting period, making SSP payable to employees from the first day of incapacity for work.
- The lower earnings limit will also be removed, making all employees eligible for SSP.
- However, the Bill allows for lower earners to be paid less than the statutory rate of SSP.
Ending ‘Exploitative’ Zero-Hours or ‘Low Hours’ Contracts
- Individuals on zero hours contracts will gain the right to a guaranteed hours contract if they work regular hours over a defined period.
- Workers will also get reasonable notice of work patterns and receive compensation if shifts are changed or cancelled.
- The Government claims that the new rules will provide more security and less instability for workers.
Trade Unions
- The Bill creates a new requirement that an employer provides a worker with a written statement of his or her right to join a trade union. This statement must be given at the same time as the employer provides the statement of their employment particulars, and at ‘other prescribed times’ that will be set out in regulations.
- Details of the content and form of the statement, and the manner in which it must be provided, will also be specified in a statutory instrument.
- The penalties for failure to comply with this new requirement will align with those that apply to a failure to provide a statement of employment particulars.
Addressing the Gender Pay Gap
- The Bill provides that regulations may require large private sector employers (those with 250 or more employees) and certain public authorities listed in the Equality Act 2010 to develop and publish an ‘equality action plan’ showing the steps that they are taking in relation to their employees with regard to gender equality, including addressing the gender pay gap and supporting employees going through the menopause.
- The regulations may also set out certain requirements in respect of the plan, such as its contents, frequency of publication and any requirements for senior approvals.
‘Next Steps to Make Work Pay’
The policy paper published by the Government on 10 October 2024 sets out the next steps the Government intends to make the Employment Rights Bill. The paper further details that many of the policies contained within the Bill will be provided through regulations. The Government will also ensure that appropriate time is given to prepare for the changes ahead of their commencement.
The policy paper indicates that the following items are on the horizon from Autumn 2024 onwards:
Unpaid Internships Ban
- The Government has committed to tightening the ban on unpaid internships where it will launch a ‘Call for Evidence’ by the end of the year.
Right to Disconnect / ‘Switch Off’
- The Government will deliver some reforms through other means, such as taking forward the right to disconnect through a statutory Code of Practice. The Government has promised to introduce a right to disconnect (i.e. an employee’s right to switch off from work outside of normal working hours), similar to models adopted in Ireland and Belgium. Delivery of these type of commitments will take place alongside the Employment Rights Bill’s passage and beyond Royal Assent.
- The Government will give ‘workers and employers the opportunity to have constructive conversations and work together on bespoke workplace policies or contractual terms that benefit both parties’. We expect that a soft approach will be adopted, so that there will be no absolute right to disconnect, but rather that UK employers will be required to engage with their staff about a right to disconnect policy.
- Employers consider introducing a right to disconnect policy. Although there is currently no requirement to do so, this can be a helpful document to set out your values, culture and expectations. Also, consider other measures to better improve an employee’s ability to switch off. Small steps could include encouraging email footers to set out an employee’s working days/hours or encouraging staff to schedule emails to be sent within working hours only.
Single ‘Worker’ Status
- The Government will consult on a simpler framework that differentiates between workers and the genuinely self-employed, ensuring that all workers know their rights and have the comfort of protection at work.
Parental Leave Review
- Alongside provisions in the Employment Rights Bill to ensure parental leave is right from ‘day one’ of employment, the Government will conduct a full review of the current parental leave system, which does not support working parents.
Carer’s Leave Review
- The Government will review the implementation of carer’s leave and examine all the benefits of introducing paid carers’ leave, while being mindful of the impact of any changes on employers (and particularly small employers).
Transfer of Undertakings (Protection of Employment) (TUPE)
- The Government will launch a ‘Call for Evidence’ to holistically examine a wide variety of issues relating to TUPE regulations and process, including how they are implemented in practice.
National Minimum Wage and Other Non-Legislative Changes
- The Government will remove the age bands to ensure that every adult worker benefits from a genuine living wage.
- In terms of other non-legislative changes, the Government will also: support workers with a terminal illness through the Dying to Work Charter; modernise health and safety guidance; enact the socioeconomic duty; ensure the Public Sector Equality Duty provisions cover all parties exercising public functions; and develop menopause guidance for employers and guidance on health and wellbeing.
Introducing a ‘Fair Work Agency’
- The Government intends to implement the ‘Fair Work Agency’ – a single enforcement body with powers to inspect workplaces and enforce legal action (prosecutions or fines) against employers who are found to have breached statutory rights. The idea is that the organisation would specifically enforce a raft of new rights, as promised by Labour in its previous New Deal for Working People document.
- It is currently unclear what powers this body will have, or when it will be implemented; however, it is likely that requirements for documentation and record-keeping will become more significant.
Requirement to Consult with Employees Before Implementing AI
- The Government also plans to implement an AI Bill, which will aim to lay down rules for the fair and safe use of AI systems in the workplace by introducing a matrix of obligations on employers and a series of protections for workers. For example:
- Prior to implementing AI systems to be used for the purposes of high-risk decision-making activities, employers must undertake a workplace AI risk assessment.
- All AI systems used by an employer in high-risk decision-making must be recorded on a register which should identify the categories of decision-making the system takes and the purpose and aim of the system.
- The AI Bill will give workers and jobseekers the rights to seek a personalised explanation of any high-risk decision which is or might be to their detriment.
- The AI Bill will propose a reverse burden of proof, requiring employers to demonstrate that the output of an AI tool was not discriminatory.
- The AI Bill will introduce a ban on emotion recognition technology where its use would be detrimental to a worker or jobseeker.
- A number of the protections contained in the AI Bill will be backed up by the right to bring an Employment Tribunal claim in the event of a breach and to seek compensation.
Equality (Race and Disability) Bill
- Finally, some measures will be delivered through the Government’s Equality (Race and Disability) Bill, such as:
- Extending pay gap reporting to ethnicity and disability for employers with more than 250 staff and measures on equal pay.
- Extending equal pay rights to protect workers suffering discrimination on the basis of race or disability.
- Ensuring that outsourcing of services can no longer be used by employers to avoid paying equal pay.
- Implementing a regulatory and enforcement unit for equal pay with involvement from trade unions.
- The Government will begin consulting on this legislation in due course, with a draft Bill to be published during this parliamentary session for pre-legislative scrutiny.
- The Equality (Race and Disability) Bill will also introduce a right to bring a claim for equal pay for ethnic minorities and disabled people.
Graham Irons comments:
The Employment Rights Bill and ‘Next Steps to Make Work pay’ policy paper set out some of the most significant employment law reforms we have seen in years. Although many changes won’t take effect until 2026 and the specific detail will follow after further consultations and regulations being published, employers should get to grips with the upcoming changes now and keep an eye out as they progress.
If you have any questions on any of the upcoming changes, please contact a member of the team here.
We also invite you to sign up to one of our upcoming Employment Law Update seminars and/or webinar from 15 to 23 October 2024 for free, where we will be reviewing the numerous employment law reforms being proposed by the new Labour Government, as well as the practical implications for employers and HR professionals. To view our current events and register your place, please click here.
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