Employment Rights Bill published: 10 highlights for HR from the first draft

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Author: Stephen Simpson

After months of waiting, the Government has finally published the first draft of its wide-ranging Employment Rights Bill, which will make radical changes to employment law in the next few years. Now that the Employment Rights Bill has begun its progress through Parliament, we highlight the key points from the first draft for HR professionals.

The key measures contained in the Employment Rights Bill, the first draft of which was published on 10 October 2024, will apply to England, Wales and Scotland.

The majority of the Bill does not apply to Northern Ireland because the implementation of employment laws is devolved - if any of the measures are to be mirrored there, the Northern Ireland Assembly will have to introduce them via separate legislation.

The complexity of many of the changes, the time it will take for the Bill to proceed through Parliament, and the need for public consultation mean that most of the changes are unlikely to take effect until 2026 at the earliest.

Webinar: Employment Rights Bill - how HR can get ahead of the changes, 11am, Thursday 24 October 2024

In this webinar, Brightmine legal editors Stephen Simpson and Zeba Sayed will explain what the changes are going to be, what employers can do now to begin preparing and the potential timelines for implementation. To attend, register here.

1. Removal of two-year service requirement to bring unfair dismissal claim

As is typical with employment legislation, further detail on many of the policies in the Bill will be provided through regulations after Royal Assent. We expect to begin consulting on these reforms in 2025, seeking significant input from all stakeholders, and anticipate this meaning that the majority of reforms will take effect no earlier than 2026. Reforms of unfair dismissal will take effect no sooner than autumn 2026.

Written statement to Parliament from Jonathan Reynolds, Secretary of State for Business and Trade

What is the current position?

  • Claimants require two years' service to bring an unfair dismissal claim, except where the reason for dismissal makes it automatically unfair (for example if the dismissal is because of pregnancy, for making a protected disclosure, or for asserting a statutory right).
  • This can lead to the assumption among some employers that they can dismiss a new hire who is falling short of expectations without following a procedure on this basis that they cannot bring an "ordinary" unfair dismissal claim.
  • New hires can still bring a claim for automatic unfair dismissal or discrimination from day one of employment.

What is changing?

  • The Employment Rights Act 1996 will be amended to remove the service requirement to bring an ordinary unfair dismissal claim, meaning that new hires can claim unfair dismissal from day one of employment.
  • The big question mark that remains for employers is the impact that this will have on probationary periods, which is not covered in the Bill.
  • To address employers' concerns about probationary periods, the Government says that it intends to "consult on a new statutory probation period for companies' new hires" to "allow for a proper assessment of an employee's suitability to a role as well as reassuring employees that they have rights from day one".

2. Further reforms to flexible working laws

What is the current position?

  • 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 changing the statutory right to request flexible working to become a day-one employment right and some procedural changes to the right-to-request procedure.
  • It remains the case that employers can turn down requests for flexible working if their reason for doing so falls within the widely drafted list of acceptable business reasons for employers to refuse requests. (However, employers should be very cautious about turning down requests from maternity leave returners or disabled workers seeking flexible working as a reasonable adjustment.)

What is changing?

  • The current Government believes that these reforms did not go far enough and is using the Bill to bring forward further change to flexible working laws.
  • In particular, the Bill seeks to change the emphasis so that employers are required to accommodate flexible working requests as far as is reasonable.
  • While the existing permissible business reasons for refusing a request will remain in place, employers will be required to write to the employee stating the ground or grounds for refusing the request and explaining why the employer considers that decision to be reasonable.

3. Requirement for large employers to create an action plan to address gender pay gap

What is the current position?

  • Organisations with 250 or more employees have an annual obligation to publish their gender pay gap figures.
  • They have 12 months to publish their gender pay gap figures from the relevant snapshot date, which is 31 March for the public sector and 5 April for the private and voluntary sectors. This means that the reporting deadlines are 30 March for public-sector employers and 4 April for private-sector and voluntary-sector employers.
  • There is currently no obligation on employers to publish any supporting narrative alongside their gender pay gap reporting figures. However, some employers choose to do so to set out any actions that they are taking, or plan to take, to address their gender pay gap.

What is changing?

  • The Bill means that organisations with 250 or more employees will have to develop and publish an action plan to address any gender pay gap.
  • In addition, organisations with 250 or more employees will have to develop and publish an action plan to address how they support employees through the menopause.
  • It remains to be seen if the action plans will have to meet any specific minimum standards or framework or if employers will simply be given guidance or recommendations as to what the action plans should include.

Did you know?

The Employment Rights Bill also includes substantial changes to trade union legislation, including:

  • the repeal of minimum service levels during strikes;
  • a requirement for employers to give workers a written statement that they have the right to join a trade union at the same time as they are provided with a written statement of terms and conditions;
  • a right for trade unions to have access to workplaces in a regulated and responsible manner, on appropriate notice to meet, represent, recruit or organise workers and to facilitate collective bargaining; and
  • reforms to the statutory trade union recognition procedure.

4. Entitlement and procedural changes to SSP

What is the current position?

  • A key eligibility requirement to receive statutory sick pay (SSP) is that the individual's average weekly earnings must be at least the lower earnings limit for the eight weeks before they went off sick.
  • There is currently a three-day waiting period where SSP is not paid for the first three "waiting days" in a period of incapacity for work.

What is changing?

  • The Bill will lead to some important entitlement and procedural changes to SSP, widening the number of individuals who are entitled to it.
  • The requirement for earnings to be at the lower earnings limit as an eligibility criterion will be removed.
  • The three-day waiting period will also be abolished.

What is the current position?

  • In a genuine redundancy situation, employers can make employees redundant during pregnancy and on return to work from maternity leave, adoption leave and shared parental family-related leave.
  • However, there is a "protected period" during which employees who have informed their employer that they are pregnant, who are on maternity leave or who have recently returned from maternity leave have the right to be offered any suitable alternative vacancy in a redundancy situation.
  • A protected period also applies to employees on adoption leave and shared parental leave, as well as those who have recently returned from adoption leave or a continuous period of six weeks or more shared parental leave.

What is changing?

  • The Bill will prohibit employers from dismissing an employee during pregnancy, while on maternity leave, and during the six months after their return to work period, except in specific circumstances.
  • This additional protection will also apply to employees during, and on return from, adoption leave and shared parental leave.
  • The specific exceptions where employers will be permitted to dismiss an employee during these periods will be defined in secondary legislation.

6. New statutory right to bereavement leave

What is the current position?

  • Employees do not currently have the statutory right to bereavement leave, with the exception of parental bereavement leave.
  • Parents whose child dies or who suffer a stillbirth after 24 weeks of pregnancy are entitled to take two weeks' parental bereavement leave.
  • Some employers do provide contractual bereavement or compassionate leave that exceeds this statutory entitlement - for example by providing paid leave of this type.

What is changing?

  • The Bill will introduce a new statutory right to bereavement leave, allowing employees to take leave from work to grieve the loss of loved ones.
  • In other words, the statutory entitlement to bereavement leave will no longer be limited to parents who lose a child.
  • If statutory bereavement leave largely mirrors parental bereavement leave, statutory bereavement pay will be available.

7. Paternity leave and ordinary parental leave to become day-one rights

What is the current position?

  • At the moment, there are qualifying periods for employees to take paternity leave or ordinary parental leave.
  • For paternity leave, a key eligibility requirement is that the employee must have at least 26 weeks' continuous employment at the end of the 15th week before the expected week of childbirth.
  • Similarly, an employee can take ordinary (unpaid) parental leave only once they have a minimum of one year's continuous service with the employer by the time they take the leave.

What is changing?

  • The Bill will remove the qualifying periods for paternity leave and ordinary parental leave, making them day-one rights.
  • The Bill will also tweak the legislation to remove the restriction on employees taking paternity leave following shared parental leave.

Did you know?

The Employment Rights Bill also includes an important change to the rules on collective redundancy consultation.

Currently, an employer that is proposing 20 or more redundancies in one "establishment" - ie work location such as a single store in retail - within a period of 90 days or less has collective consultation obligations.

The Bill will change the threshold so that employers' collective consultation obligations kick in if they are proposing 20 or more redundancies across the whole organisation within a period of 90 days.

8. Zero and low hours workers: entitlement to stable contractual arrangements

What is the current position?

  • There is widespread use of casual or zero hours contracts in some sectors, particularly where business is seasonal or where demand can fluctuate from week to week and where the requirement for workers is unpredictable (for example the agricultural, hospitality, retail and tourism sectors).
  • However, there is very little specific regulation of casual or zero hours contracts, despite the rise of the gig economy.
  • For example, there is no right to a minimum number of hours and employers can renege on promises of work with little or no notice.

What is changing?

  • The Bill makes provision for workers to be given the right to a guaranteed number of hours if they work regular hours over a defined period.
  • In addition, the Bill will result in a new right to reasonable notice of a shift, and reasonable notice of cancellation of, or change to, a shift.
  • There will also be a right to payment for cancelled, moved or curtailed shifts.

9. Further reforms to prevent "fire and rehire"

What is the current position?

  • The previous Government's statutory code of practice on dismissal and re-engagement came into effect on 18 July 2024.
  • The code applies where the prospect of dismissal and re-engagement is raised by the employer with the employee and/or their representative on or after 18 July 2024.
  • The code's aim is to ensure that employers that dismiss employees and offer to re-engage them on new terms are acting fairly and reasonably, particularly when it comes to consultation with staff.

What is changing?

  • The current Government believes that the statutory code of practice does not go far enough and is using the Bill to bring forward further change to prevent employers from engaging in "fire and rehire" tactics.
  • The Bill will amend unfair dismissal laws so that, where employees are dismissed for failing to agree to a change in their contract of employment, those dismissals will be treated as automatically unfair.
  • An employer will be able to defend itself if it can provide evidence of financial difficulties and demonstrate that the need to make the change in contractual terms was unavoidable.

10. Further reforms to harassment laws

What is the current position?

  • On 26 October 2024, the Worker Protection (Amendment of Equality Act 2010) Act 2023 introduces a new duty on employers to take reasonable steps to prevent sexual harassment of their workers "in the course of their employment".
  • In relation to harassment across all relevant protected characteristics, technically employers cannot be held liable in an employment tribunal for failing to prevent third-party harassment.
  • While the Equality and Human Rights Commission may take enforcement action against employers that fail to prevent third-party harassment, individuals who are subjected to this type of harassment currently have no legal recourse.

What is changing?

  • The current Government believes that these reforms do not go far enough and is using the Bill to bring forward further change to anti-harassment laws.
  • The Bill will lead to the closure of this loophole in equality legislation, with employers becoming fully liable for third-party harassment.
  • The Bill will also result in the strengthening of anti-harassment laws by requiring employers to take all reasonable steps to prevent sexual harassment of their workers "in the course of their employment".

What has not made the Employment Rights Bill

Alongside the Bill, the Government has published a Next steps to make work pay policy paper, which confirms that the following proposals will be brought forward separately:

  • Move to two-tier employee/worker employment status: The Government says that it will consult on a new framework that differentiates between workers and the genuinely self-employed, replacing the current three-tier employee/worker/self-employed classification.
  • New right to switch off: The Government states that a statutory code of practice will be introduced to prevent employees from being contacted out of hours, except in exceptional circumstances.
  • Review of family-friendly leave and carer's leave: The Government highlights that it will carry out a review of the current family-friendly leave system to ensure that it supports working parents. It will also review statutory carer's leave, including whether statutory pay for carers should be introduced.
  • Mandatory ethnicity and disability pay gap reporting for large employers: The separate Equality (Race and Disability) Bill will introduce mandatory ethnicity and disability pay gap reporting for employers with 250 or more employees. The Bill will also extend the right to equal pay to include race and disability.