Employment Rights Bill: Eight things HR needs to know

Author: Stephen Simpson

During the state opening of Parliament and the King's Speech, the Government trailed its Employment Rights Bill, which will make wide-ranging and radical changes to employment law in the coming years. In advance of the publication of the full text of the Employment Rights Bill, what do HR professionals need to know about what is in store for them?

1. Unfair dismissal change: a big headache for employers?

When we asked attendees in our interactive pre-election webinar which Labour proposal could have the most significant practical impact, over half of respondents answered that it would be the removal of the two-year service requirement to bring an unfair dismissal claim. This change is expected to be included in the Employment Rights Bill.

There are clearly concerns among HR professionals that this change will mean that employers will have to review how they:

• manage, train and induct new recruits; and
• deal with employees who are not performing during their probationary period.

How quickly the Government will implement this change remains to be seen. The removal of the qualifying period from the Employment Rights Act 1996 can be achieved relatively easily via secondary legislation - an Act of Parliament is not needed.

However, the Government may choose to accompany this change with non-statutory guidance or a more formal statutory code of practice setting out a minimum fair procedure for employers to follow before they can dismiss an employee during their probationary period. This would extend the time needed for the Government to implement this reform.

• How is the qualifying period for unfair dismissal claims calculated?

2. More reforms to flexible working laws on the way

Under the previous Government, reforms to the right to request flexible working took effect for requests made on or after 6 April 2024. These included:

• making the statutory right to request flexible working a "day one" right;
• removing the requirement for an employee to explain what effect, if any, their request would have on the employer and how that might be dealt with; and
• placing an obligation on an employer to consult with an employee before rejecting a request.

The new Government has indicated that it intends to use the Employment Rights Bill to make more radical changes to flexible working laws. It says that it will "make flexible working the default from day one for all workers, with employers required to accommodate this as far as is reasonable".

The shape that these reforms will take remains to be seen - the proposals set out in the King's Speech are light on detail. Employers should find out more about the Government's approach in this area once it publishes the full text of the Employment Rights Bill.

• Flexible working: Employment tribunal round-up

3. Employers will face procedural changes to SSP

It looks like employers will face some technical changes to statutory sick pay (SSP).

Changes expected to be introduced via the Employment Rights Bill include:

• removing the requirement for earnings to be at the lower earnings limit as an eligibility criterion; and
• removing the three-day waiting period (where SSP is not paid for the first three "waiting days" in a period of incapacity for work).

In light of these changes, employers will have to review their sickness absence policies.

• Employment law guide: Sick pay

4. Thawing relations with trade unions is a priority

When it comes to employment issues, it is already clear that one of the Government's priorities will be the improvement of relations between trade unions and the Government.

The Employment Rights Bill will contain measures to:

• remove the requirement where strikes take place in "relevant services", such as passenger rail, ambulance and fire and rescue services, to maintain minimum service levels (MSLs); and
• simplify the statutory trade union recognition process to "ensure workers and union members have a reasonable right to access a union within workplaces".

This will be a key policy area for employers that are in traditionally highly unionised sectors/industries.

• Minimum service levels - what are they and what does the future hold?

5. Zero hours contracts plans remain unclear

In our interactive pre-election webinar, many of the questions we received from employers revolved around exactly what is meant by the Government's proposal to "ban exploitative zero-hour contracts".

The Government says that it will use the Employment Rights Bill to "ensure workers have a right to a contract that reflects the number of hours they regularly work and that all workers get reasonable notice of any changes in shift with proportionate compensation for any shifts cancelled or curtailed".

This wording suggests that the Government intends to take a targeted approach to stamping out unfair zero hours contacts, rather than banning them outright.

It is now a waiting game for employers that use zero hours contracts. We should find out more about the Government's approach in this area once it publishes the full text of the Employment Rights Bill.

• Model zero hours contract (employee)

6. Ethnicity/disability pay gap reporting get their own Bill

The proposals to require employers with 250 or more employees to report their ethnicity pay gap and disability pay gap are not included in the Employment Rights Bill.

Instead, these proposals get their own Bill - implementation will raise tricky issues for employers around classifying employees' ethnicity/disability, gathering the data and processing the data safely.

As well as introducing ethnicity and disability pay gap reporting, the Equality (Race and Disability) Bill is expected to enshrine in law specific rights to claim equal pay because of the protected characteristics of race and disability.

The decision to give ethnicity and disability pay gap reporting their own Bill suggests that the Government is serious about extending the pay gap reporting regime.

• How to measure and report an ethnicity pay gap

7. Look out for the full text of the Employment Rights Bill

The Government's briefing notes that support the King's Speech reiterate its plan to publish the full text of the Employment Rights Bill in its first 100 days in power.

This means that, if the Government sticks to this timetable, the Employment Rights Bill will be published by 12 October at the latest.

8. Expect a long lead-in time for many of the proposals

While the Labour Government's large majority should make it easier to get legislation through Parliament, many of the proposals in the Employment Rights Bill will need public consultation.

In particular, the Government is likely to consult on the detailed secondary legislation and/or non-statutory government guidance/statutory codes of practice necessary to implement some of the more substantial changes, including:

• the removal of the two-year service requirement to bring an unfair dismissal claim, which will mean that employers are going to have to review how they induct, train and manage new recruits and how they deal with employees who are not performing during their probationary period;
• "making flexible working the default from day one for all workers, with employers required to accommodate this as far as is reasonable", which goes significantly further than the flexible working reforms introduced by the previous Government on 6 April 2024; and
• the introduction of mandatory ethnicity and disability pay gap reporting for larger organisations, which adds significant complexity to the current pay gap reporting regime.

The complexity of many of the proposals, the time required for the Bill's passage through Parliament, and the need for public consultation all mean that we are unlikely to see most of the major legal changes introduced before 2026 at the earliest.