Employment Rights Bill at-a-glance

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Employment Rights Bill at-a-glance

Employment Rights Bill at-a-glance

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October 11, 2024

The government has, as promised, published its hotly anticipated Employment Rights Bill (the Bill) within the first 100 days of the new Parliament. Our table sets out the key measures the Bill contains, the likely impact these measures will have on employers and some suggestions for actions that businesses should consider taking now. Unsurprisingly, the Bill and associated publications do not contain any indication of timescales at this stage, but we will update you through our PRM hub on important developments. Many measures will need secondary legislation, meaning it is likely to take longer to bring them into force. The government has indicated that the majority of the reforms will not take effect before 2026 and the unfair dismissal reforms will take effect no sooner than autumn 2026.

Topic	What does the Bill say?	What is the likely impact? What should we do now?
Bereavement leave	Will make bereavement leave available to all workers by adapting the existing parental bereavement leave regime to cover all eligible bereaved people. The government will set out in secondary legislation the types of relationship to a deceased person that will qualify for bereavement leave.	Nothing to do yet. In due course, you will need to update any policy covering bereavement leave, or consider introducing one, and ensure managers are aware of the new entitlement.
Day one rights	Will make certain "basic" rights available from day one of employment, including: protection from "ordinary" unfair dismissal; paternity leave; and parental leave.	The Bill will remove the two-year qualifying period for unfair dismissal claims (no earlier than autumn 2026). The government will consult on introducing a statutory probation period and has indicated that its preference is for this to last nine months. For more information, please see the "Unfair dismissal" entry below. The Bill will also make entitlement to statutory maternity pay, paternity leave and parental leave day one rights. Be ready to update your policies when these changes come into effect. Consider if you wish to maintain a qualifying service entitlement for any enhanced maternity pay you offer and ensure you make this clear in your policy.
Fire and rehire	Will make it automatically unfair to dismiss an employee if the reason for dismissal is: that the employee did not agree to a variation of their contract; or to enable the employer to employ another person, or re-engage the employee, under a varied contract of employment to carry out substantially the same duties as the employee carried out before their dismissal. There will be an exception where the employer shows that the reason for the variation was to address financial difficulties that were affecting (or were likely to affect) the employer's ability to carry on the business as a going concern and the employer could not reasonably avoid the need to make the variation in the circumstances.	Nothing to do yet other than ensure you follow the existing code of practice on dismissal and re-engagement, which came into force in July 2024. Once these provisions come into force, they will significantly restrict the circumstances in which an employer may dismiss and re-engage employees to those situations in which the viability of the business is under threat. The government will consult on lifting the 90-day cap on protective awards if a tribunal finds that an employer did not follow the collective consultation process properly, and on what role interim relief could play in protecting workers in these situations.
Flexible working	Contains provisions to make flexible working the default from day one by requiring an employer's refusal of a request to be reasonable, from a list of specified grounds. The employer will also have to explain in writing to the employee why their refusal is reasonable.	You will need to prepare to accommodate flexible working for all roles, except where it is not reasonably feasible. It might be helpful to carry out an audit of where flexibility already exists and consider how you can overcome any barriers to flexible working in particular roles.
Gender pay gap	Will require employers with more than 250 employees to publish and implement an equality action plan showing the steps they are taking in relation to prescribed matters related to gender equality, which include addressing the gender pay gap and supporting employees through the menopause. Secondary legislation is likely to follow setting out various requirements that an equality action plan must meet.	If you do not already have an action plan for closing your gender pay gap, you will need to work on putting one in place. Many employers already publish an action plan alongside their gender pay gap data and you may wish to consider publishing your plan before it becomes a legal requirement. It makes sense to start implementing your plan before you are required to do so.
Harassment	Will re-introduce employer liability for harassment of employees by third parties.	This provision covers harassment on the grounds of any relevant protected characteristic, not just sexual harassment. The relevant protected characteristics for the purposes of harassment are age, disability, gender reassignment, race, religion or belief, sex or sexual orientation. Harassment related to marriage and civil partnership, or pregnancy and maternity, is not covered, but harassment because of these protected characteristics is likely to give rise to a claim of harassment on the grounds of sex or sexual orientation. Consider the risks of third parties harassing employees and take steps to mitigate those risks in advance of the new liability taking effect.
Maternity and other statutory family leave: dismissal protection	Paves the way for enhanced protection against dismissal during pregnancy and for six months upon return from leave for workers on maternity leave and on return from other statutory family leave.	Nothing to do yet. When the new protection comes into force, you will need to ensure managers are aware of it. This protection against dismissal is wider than the enhanced protection introduced in April 2024, which covers redundancy situations only.
Menopause	Employers with more than 250 employees will be required to produce an equality action plan (see the "Gender pay gap" entry above), which includes the steps they are taking to support employees going through the menopause.	You could consider preparing a menopause action plan now, ahead of it becoming a legal requirement.
Minimum service levels during Industrial Action	The Bill would repeal the legislation that allows employers in certain sectors to impose minimum service levels in the event of strikes.	The government has encouraged employers not to impose minimum service levels pending repeal of the legislation.
Parental leave	Will make eligibility for statutory parental leave a day one right.	You will need to update your policies and procedures in due course.
Paternity leave	Will make eligibility for statutory paternity leave a day one right and will allow employees to take paternity leave after taking shared parental leave.	You will need to update your policies and procedures in due course.
Redundancy	Will require employers to consult collectively if the number of people impacted across the business meets the threshold, rather than treating each workplace separately.	Nothing to do yet. This will impact future redundancy exercises and will mean more proposals trigger an obligation to consult collectively.
Right to disconnect/switch off	Does not feature in the Bill. This forms part of the government's Next Steps paper (see below).	Consider if you wish to introduce a code of conduct setting out expectations around contacting staff out of hours.
Sexual harassment	Will strengthen the new duty to take reasonable steps to prevent sexual harassment in the workplace by requiring employers to take all reasonable steps to prevent it. Will give the government the power to make regulations setting out what steps are to be regarded as "reasonable" for the purposes of this duty.	The duty to take reasonable steps to prevent sexual harassment comes into effect on 26 October 2024. For more information, see our recent insight and blogs. For now, you only have to show you have taken "reasonable steps" but this will change to taking "all reasonable steps" when these provisions in the Bill come into force, which will be no earlier than 2026. In the meantime, ensure you have taken reasonable steps to prevent sexual harassment in the workplace and pay particular attention to assessing the risk of sexual harassment by third parties so that you are well placed to defend any claims when the new liability for harassment by third parties takes effect.
Sick pay	Will remove the lower earnings limit and three-day waiting period for SSP.	You will need to update your policies and procedures on sick pay to reflect the new requirements and ensure your payroll team are ready to implement them. The government will consult on what the percentage weekly rate of SSP should be for those who earn less than the current flat SSP rate.
Single enforcement body	Will create a single enforcement body, called the Fair Work Agency. The new body's role will be to ensure greater protection of workers' rights, with representation from trade unions and businesses to improve cooperation.	No action needed from employers. The Fair Work Agency will work with employers to provide support on employment law compliance.
Social care for adults	Will enable a framework for a Fair Pay Agreement process in the adult social care sector.	Nothing to do yet for employers in this sector. The government will consult on how the Fair Pay Agreement should work.
Tips and gratuities	Will require employers to consult with a recognised trade union or employee representatives (or affected workers if there is neither) before producing the first version of a written policy about the allocation of tips. Will require employers to review that policy at least once every three years.	Nothing to do yet. Prepare to review your allocation of tips policy on a three-yearly basis once these provisions come into force.
Trade unions	Amongst other things: Will remove the requirement for at least 50% of those entitled to vote in a ballot for industrial action to vote and replace it with a requirement for a simple majority of those who vote. Will reduce the required period of notice before industrial action to seven days. Will introduce protection from detriment on the grounds of industrial action. Will give trade unions a reasonable right to access workplaces and put in place a framework for entering into an access agreement with an employer. Will place a duty on employers to inform new employees of their right to join a union at the same time as providing their section 1 statement of conditions of employment and remind employees on a regular basis. Will give equalities representatives statutory rights to ensure they have adequate time to support colleagues facing discrimination or inequality and to contribute to changes in the workplace. Will require employers to provide accommodation and other reasonable facilities where requested by an employee granted time off to carry out trade union duties or as a union learning representative.	If you recognise a trade union, you will need to comply with the new right to reasonable access to workplaces and respect the new rights for equalities representatives when they come into force. All employers will need to update documentation for new joiners to inform them of their right to join a union and devise a process for reminding employees of this on a regular basis. The government will consult on many of these proposals.
Unfair dismissal	As set out above, protection from "ordinary" unfair dismissal will become a day-one right.	The Bill will remove the two-year qualifying period for unfair dismissal claims (no earlier than autumn 2026). The government will consult on introducing a statutory probation period and has indicated that its preference is for this to last nine months. The Bill will allow the government to make regulations disapplying the "day one" unfair dismissal protection during that statutory probation period where the reason for dismissal is capability, conduct, legal bar or some other substantial reason relating to the employee. The government will consult on a lighter touch process for businesses to follow before dismissing someone during the statutory probation period. It will also consult on what compensation should be available in successful claims. For now, review the probationary period clauses in your template employment contracts. Consider your process for assessing performance during a probationary period and put in place a/review your policy on this.
Whistleblowing	Will provide employees who report sexual harassment with the same protections as other whistleblowers by specifying that a disclosure that sexual harassment has occurred, is occurring or is likely to occur, is a disclosure qualifying for protection.	You will need to train managers so that they are aware that employees who report sexual harassment benefit from the same protections as other whistleblowers.
Worker status	Does not contain any provisions on worker status but the government has committed to consulting on the implementation of a new single status of workers to eliminate the complexities of the tiers of employment status and to streamline the distinctions between employees and self-employed individuals.	If you engage individuals as workers rather than employees, you may in due course wish to respond to the consultation on implementing a new single status of worker.
Zero-hours contracts	Will introduce a right for workers on zero hours or low hours contracts to: a "guaranteed hours" contract that reflects the employee's normal hours, based on a 12-week reference period; reasonable notice of changes to shifts or working time; and proportionate compensation for cancelled or curtailed shifts. Workers will be able to bring tribunal claims in relation to breach of these rights and for detriment or unfair dismissal in relation to the operation of these rights.	If you use zero-hours contracts, you should carry out an audit of your existing practices and ensure they do not fall foul of the ban on "exploitative practices". You should consider how you will manage the new right to reasonable notice of changes to shifts or working time. You should budget for providing proportionate compensation for cancelled or curtailed shifts and ensure managers are aware of these new rights. The government will consult on: how reference review periods should work so that, if a worker's regular hours increase over time, workers have the opportunity to reflect this in their contract; what constitutes "low hours" for each measure; and how to apply these reforms effectively and appropriately to agency workers.

Parliamentary process

It would usually take six to nine months for a Bill of this size to make its way through both Houses of Parliament. Along the way there will be several "readings" of the Bill, including debates on the Bill as a whole, and a committee stage, which involves line-by-line scrutiny. Both the House of Commons and the House of Lords vote on the Bill at different stages but, given the government's majority, we do not expect any difficulty with the Bill passing these votes. Once both Houses have passed the Bill, it then goes to the King for Royal Assent – this is the final stage, which transforms the Bill into an Act of Parliament. That does not necessarily mean it comes into force immediately. Often a Minister will have to issue a commencement order or the Act may state that certain of its provisions come into force on a specified date (e.g. a year after the Act receives Royal Assent).

As we have mentioned, some of the measures will require secondary legislation, which means a statutory instrument setting out the nuts and bolts about key details such as eligibility and how a new right will work in practice. Parliament does not scrutinise secondary legislation in the same way as it does Bills, so this process does not take as long. Nonetheless, it will take time for the government to draft and publish appropriate secondary legislation, which will lead to a longer lead time before these measures come into effect. As noted above, the government anticipates that most of the reforms will not take effect before 2026 and the unfair dismissal reforms will not take effect until at least autumn 2026.

Next Steps

The government has published a Next Steps paper alongside the Bill with commentary on the Bill and details of reforms it intends to implement in the future. These include:

launching a Call for Evidence on unpaid internships;
implementing a right to switch off through a statutory Code of Practice;
establishing a working group on the use of secure electronic balloting for trade union statutory ballots;
introducing an Equality (Race and Disability) Bill, which would introduce mandatory ethnicity and disability pay gap reporting for large employers;
consulting on a single status of worker and a simpler two-part framework for employment status;
launching a Call for Evidence to examine a variety of issues relating to TUPE regulations and related processes;
consulting with Acas on enabling employees to raise collective grievances about conduct in their place of work;
reviewing health and safety guidance and regulations; and
reviewing the parental leave and carers' leave systems.

Key takeaways

While the government's plans are still at an early stage, you might want to carry out an audit to assess which policies and contractual terms you will need to keep under review and update in due course. Given how much change is afoot, you may want to start considering how you will accommodate the changes, particularly when it comes to aligning employees' need for certainty and the business' need for flexibility.