Thank you to those who were able to join us earlier this week at our HR Informed: Coffee & Catch-up webinar.
For those of you who couldn’t make it, please see below links to the Employment Rights Bill (‘the Bill’) and the Government’s summary document, ‘Next Steps to Make Work Pay’. Appreciating that not everyone will have the time to read these documents cover to cover, we have summarised some of the key points employers need to be aware of below.
As discussed on the webinar, Greene & Greene will be running further webinars and producing further updates for clients. We will also look to engage with the various government consultation processes to ensure your voices are heard. In the meantime, please do not hesitate to get in touch if you have any comments or questions you would like to discuss sooner.
Useful Links:
You can access the Employment Rights Bill here: Employment Rights Bill (parliament.uk)
You can access the Next Steps to Make Work Pay document here: Next Steps to Make Work Pay (publishing.service.gov.uk)
Key Points discussed:
Unfair dismissal protection
The Bill proposes to completely remove the qualifying period to pursue a claim of unfair dismissal, which is currently two years, meaning protection from unfair dismissal will become a day one right for all employees. It is important to note that this protection shall only apply to those who have already started working (i.e. employees will not be able to claim unfair dismissal if a signed contract is withdrawn before the start date).
There will be an initial period during which employers can dismiss more easily. The Bill does not use the term probationary period, instead referring to it as an ‘initial period of employment’. Employers will be able to dismiss more easily within this initial period, although specific details have not been given and will be contained within separate regulations. The Bill does not provide guidance on the length of the initial period, it will be subject to consultation, but the Government has given a preference of nine months. What the Bill does explain is that employers will not only be able to dismiss more easily within the initial period, but also if notice is given during that initial period, it can expire up to three months after the initial period had ended.
For dismissals during the initial period of employment, an employer will still have to show a potentially fair reason, and the Bill lists four: capability, conduct, illegality and some other substantial reason related to the employee. Redundancies are not included, which presumably means that for redundancy dismissals, the same test of fairness will apply from day one as it does after two years.
There will be plenty of time for employers to prepare as the Government has confirmed that these changes to unfair dismissal protection will not come into force any sooner than Autumn 2026. In that time there will be extensive consultation on the proposals, so please take time to get involved where possible and have your say.
Whilst the new law won’t come into effect for nearly two years, employers should start preparing now by scrutinising their recruitment and onboarding practices and by ensuring their managers have the skills to effectively implement these during the ‘initial period’. Putting the Bill to one side, these are all things that will help employers to attract and retain the best people, and avoid complex claims of discrimination and whistleblowing (which employees can already bring from day one!). So, time well spent.
Right to guaranteed hours
The Government plans to end ‘exploitative zero-hour contracts’. It seeks to do this by giving workers on zero-hours or low hours contracts the right to a guaranteed hours contract that reflects the hours they actually work over a reference period. The definition of the reference period is due to be set by secondary legislation. This was initially thought to be a 12-week period but is going to be the subject of consultation. If more hours become regular over time, subsequent reference periods can be used to increase the worker’s contractual guaranteed hours. If the guaranteed hours provisions are not complied with, workers can bring claims in the Employment Tribunal. Whilst the remedies include a declaration and compensation, which is capped by a number of weeks’ pay yet to be decided, there is no power to order an employer to make an offer of guaranteed hours or impose such terms on the parties.
The Bill also requires employers to provide reasonable notice of shifts, shift changes or cancellations to zero-hours and low-hours workers. The secondary legislation will set out what is considered reasonable notice and what is considered to be ‘low hours’. Where shifts are cancelled, moved, or curtailed at short notice, workers must be paid a specified amount in relation to such shifts, details of which are left to secondary legislation. There will be consultation on how reference periods will work in practice, what constitutes low hours and how to apply these reforms effectively and appropriately to agency workers. If employers utilise zero-hour contracts, they should carry out an audit of their existing practices and ensure they do not fall foul of the ban on ‘exploitative practices’. Employers should consider how they will manage the new right to reasonable notice of changes to shifts and working time, and budget for providing proportionate compensation for cancelled or curtailed shifts, and ensure managers are aware of these new rights.
Firing and rehiring
The employee’s dismissal will be deemed automatically unfair if the reason (or principal reason) was that the employer sought, and the employee refused, a variation to the contract of employment. Perhaps more significantly, a dismissal will also be unfair if the employer replaces the employee with another person carrying out substantially the same duties who is willing to accept the varied terms.
Dismissal and re-engagement will only be permitted in very limited circumstances where ‘there is a genuine need to avoid serious financial issues that may threaten the business’ to carry on as a going concern. Employer’s will then have to show that, in all the circumstances, the employer could not reasonably have avoided the need to make the variation. Even then, thorough consultations will need to be carried out with the employee and with any recognised trade union.
For now, employers should ensure compliance with the existing Code of Practice (Dismissal and Re-engagement) Order 2024, which came into force on 18th July 2024.
Flexible working
The Bill introduces a small but crucial change to the current flexible working rules. The right to request flexible working has been a ‘Day one’ entitlement for employees since 6th April 2024. However, the Bill seeks to go further by making flexible working the ‘default’ position from the first day of employment.
Employers can still refuse a request on eight business grounds. Namely:
- it will cost your business too much
- you cannot reorganise the work among other staff
- you cannot recruit more staff
- there will be a negative effect on quality of work
- there will be a negative effect on the business’ ability to meet customer demand
- there will be a negative effect on performance
- there’s not enough work for your employee to do when they’ve requested to work
- there are planned changes to the business, for example, you intend to reorganise or change the business and think the request will not fit with these plans.
However, employers will then have to explain why they consider it ‘reasonable’ to refuse the application on one or more of those grounds.
In practice, the Bill does not change much; employers will need to give clearer reasons as to why they are refusing the flexible working request (however, due to the risk of discrimination claims this has always been best practice). There is no change to the remedies for refusal of request or failure to deal with the request in accordance with the statutory regime, (namely compensation of up to eight weeks’ pay (which is also subject to the statutory cap on a week’s pay).
Given the changes introduced in April 2024, we envisage that many employers have already reviewed and updated their Flexible Working Policies. However, employers should review working practices and consider how they can make flexible working the default in the workplace and consider in what way roles can flex, which could be multi-dimensional.
Sexual harassment
The Worker Protection Act (amendment of the Equality Act 2010) 2023, which comes into force on 26th October 2024, states that employers must take ‘reasonable steps’ to prevent sexual harassment in the workplace. The Bill extends this duty for employers to take ‘all reasonable steps’ to prevent sexual harassment in the workplace. Notably this wording was originally proposed but was changed to ‘reasonable steps’ when the Worker Protection Act (amendment of the Equality Act 2010) 2023 was considered by the House of Lords.
The Bill raises the bar on the preventative duty an employer is expected to take. The Bill also provides for regulations specifying the ‘reasonable steps’ required, such as carrying out assessments of a specified description, publishing plans or policies, and taking steps relating to the handling of complaints and reporting of sexual harassment.
In addition, the Bill provides that an employer can be liable where an employee is harassed in the course of their employment by a third-party and the employer has failed to take all reasonable steps to prevent that harassment.
Additionally, allegations of sexual harassment will be added to the list of protected disclosures, under existing whistleblowing provisions.
Employers should be taking steps now, in light of the changes coming into effect next week. Employers should review and update relevant policies to ensure sexual harassment is covered in sufficient detail and that staff have access to these policies. Employers should continue to roll-out and refresh training on appropriate behaviour in the workplace, and implement adequate reporting procedures to ensure issues are properly investigated and dealt with. More details of what steps an employer can take can be found here: New law permits 25% uplift in compensation for sexual harassment – Greene & Greene (greene-greene.com).
Further regulations are expected to be published setting out guidance as to what constitutes ‘all reasonable steps’.
Statutory sick pay – (‘SSP’)
Currently, SSP is only available to employees who are absent from work due to sickness for at least four consecutive days. Employees are not eligible to receive SSP for the first three days of absence (known as ‘waiting days’). In order to be eligible for SSP, employees must also earn above the lower earnings limit, which is currently £123 a week.
The Bill looks to remove the three-day waiting period, meaning that SSP will be paid to employees from the first day of sickness absence. The Bill also removes the lower earnings limit, so employees will receive SSP regardless of how much they earn.
The weekly rate of SSP will be the lower of the current flat rate of SSP, which currently is £116.75 or a prescribed percentage of the employee’s weekly earnings if they earn below the flat rate. A consultation will take place next year to decide what the percentage weekly rate should be for those earning below the current flat rate.
In readiness for the changes to SSP, employers should update policies and procedures on sick pay to reflect the new requirements and ensure payroll are ready to implement the same. Given the increase in costs for employers, it will be important for employers to ensure sickness absence is managed appropriately.
Equality action plan
The Bill envisions (but does not require) the passing of regulations that oblige employers to develop and publish ‘equality action plans’. These plans must set out the steps that they are taking to address gender equality, including addressing the gender pay gap and supporting employees going through menopause. Details of the content, form and manner of the action plans are left to future regulations.
However, the Bill excludes employers with fewer than 250 employees and public authorities and provides that employers cannot be required to publish the information more than once a year.
Collective redundancy consultation
The Bill also expands the scope of obligations relating to collective redundancies. At present, the duties to consult representatives and notify the Secretary of State regarding collective redundancies applies when an employer proposes to make 20 or more redundancies within 90 days at one establishment.
The Bill reverses this and provides that collective redundancy consultation must take place if 20 or more employees are affected across the whole business, not just at one establishment, meaning that the obligations will potentially be much more onerous for employers seeking to make redundancies over multiple workplaces.
Additionally, the Government has separately confirmed that it remains ‘committed to consult on lifting the cap of the protective award if an employer is found to not have properly followed the collective redundancy process’.
Employers do not have to worry about this right now, the new duty is envisaged to come into force in around two years’ time.
Trade union
As anticipated, the Bill provides for the repeal of the Strikes (Minimum Service Levels) Act 2023. It will also bring in additional protections for trade union members and extensive measures to simplify the statutory recognition process, as well as a new right of access for union officials to meet, represent, recruit and organise members in the workplace. Employers must provide workers with a written statement of their trade union rights along with their statement of employment particulars.
What’s missing in the Bill?
Additional proposals for reform, not included in the Bill, are set out within the ‘Next Steps’ document, including:
- Employment status – the Government plans to consult on moving towards a single status of ‘worker’ and transitioning towards a two-part framework for employment status, differentiating between workers and the genuinely self-employed.
- A right to switch off, under a statutory Code of Practice, to prevent employees being contacted out of hours other than in exceptional circumstances.
- A review of the existing parental leave and carers’ leave systems.
- A separate Bill (the Equality (Race and Disability) Bill) to introduce new mandatory ethnicity and disability pay gap reporting for large employers and extending equal pay rights to include race and disability.
The Government’s proposals are notably silent on the issue of Employment Tribunal capacity. The proposed changes will inevitably lead to an increase in Employment Tribunal Claims but the Government does not provide for how it will prepare Tribunals for this. Hopefully, they intend to increase the budget.
What happens next
The Employment Rights Bill will need to be considered and passed by both the House of Commons and the House of Lords. It has already been confirmed that the Bill’s second reading in the House of Commons will take place on 21st October 2024, which will be Parliament’s first opportunity to scrutinise the Bill and debate its contents. Some provisions may be amended, scaled back or even removed during the Bill’s passage through both houses.
The Government will then need to consult on many of the measures proposed, with some consultation exercises commencing shortly, meanwhile others deferred until next year.
When these changes take effect
Employers can take some comfort in the lengthy timelines for change. The Bill does not outline a specific ‘commencement date’ for its provisions, suggesting that implementation will likely occur in stages, with different aspects taking effect at various times.
Consultation on the Bill’s numerous measures is expected to be time-intensive and complex, likely extending into much of next year. It is generally believed that the Bill’s key policies will not be enacted until 2026. Notably, the ‘Next Steps’ document includes a commitment that the day one right to claim unfair dismissal will not be implemented until Autumn 2026.
This is only intended to be a summary and not specific legal advice. If you would like further information or advice, please do contact a member of our Employment team.
