Employment Rights Bill - What Does It Mean For Employers?

Unfair dismissal

• The two-year qualifying service requirement for unfair dismissal claims will be removed
• Employers will be able to operate a probation period during which a modified unfair dismissal test will apply

• All workers will have unfair dismissal protection from day one of employment. (This protection will not apply where the employee has signed a contract but not yet started.)
• There will be a statutory probation period during which the employer can terminate the employment or serve up to three months' notice to terminate the employment, for performance or conduct, following a lighter touch dismissal process.
• The length of the probation period and the dismissal process will be subject to future consultation but the Government has indicated a preference for a nine month period and a process which at least includes a meeting with the employee.
• There will also be consultation on whether reduced compensation should apply to unfair dismissal claims during probation.

• This is a significant change meaning that many more employees will have unfair dismissal rights than was previously the case. It will be important to ensure that all new starters have a probation period in their contracts and that there is a process in place to ensure that the employee's performance is regularly reviewed during this time.
• More widely, employers will need to review disciplinary and dismissal policies and processes, and ensure that managers are trained on managing conduct and performance issues.
• The unfair dismissal changes will not come into effect until Autumn 2026 at the earliest, and the current two year qualifying period will apply until then.

Harassment at work

• Strengthening of the duty to take reasonable steps to prevent sexual harassment at work
• Whistleblowing protection for sexual harassment complainants
• Introducing protection from third party harassment

• The new duty to take reasonable steps to prevent sexual harassment at work (in force from 26 October 2024) will become a duty to take "all" reasonable steps to prevent sexual harassment. Regulations will specify the steps that employers should take, such as carrying out risk assessments and implementing harassment policies and complaints procedures.
• A complaint of sexual harassment at work will be treated as a protected disclosure under whistleblowing legislation.
• Employers will be liable for harassment (of any kind) by third parties, such as clients or suppliers, unless they take reasonable steps to prevent it.

• Employers which have put in place reasonable steps to prevent sexual harassment at work in order to comply with the October 2024 duty should be in a good position when this duty is increased, although it is important to review all anti-harassment measures regularly in any event.
• The new whistleblowing protection for employees who complain of sexual harassment may limit the effectiveness of confidentiality provisions in settlement agreements, as it is not possible to prevent a worker from making whistleblowing disclosures. Notwithstanding this point, confidentiality provisions should continue be used with caution in settlement agreements.
• The new third party harassment provision will extend to all types of harassment, and employers will need to ensure that they have measures in place, such as appropriate wording in contracts with clients and suppliers.

Flexible working

• Strengthening flexible working by making it the default where this is "practical"

• Employers will still be able to refuse flexible working requests on specified business grounds but there will be a new requirement for any refusal to be "reasonable".
• Employers rejecting a flexible working request will have to state the grounds for refusal and explain why the rejection is reasonable.

• The Government pledged to make flexible working the default for all roles with employers required to accommodate this as far as is reasonable.
• The changes in the Bill stop short of this as employers will continue to be able to refuse flexible working requests on specified business grounds. The new requirement for the refusal to be reasonable may have a limited impact but it remains to be seen how this will be interpreted by tribunals and government guidance.
• Employers will need to review their flexible working policies and practices in the light of the changes, and ensure managers receive training in how to handle flexible working requests.

Family rights

• Paternity leave and unpaid parental leave will become a day one right
• Protection from dismissal during pregnancy, or maternity or adoption or shared parental leave or within six months of returning to work
• New right to bereavement leave

• The current qualifying periods for paternity leave (26 weeks) and unpaid parental leave (one year) will be removed, so that employees will be able to take leave from day one.
• Employees will be able to take paternity leave following shared parental leave (currently if an employee takes shared parental leave, they lose the right to take paternity leave)
• Dismissal of employees during pregnancy, or maternity, adoption or shared parental leave, or within six months of their return to work will be unlawful, except in certain circumstances (to be set out in future regulations).
• Parental bereavement leave (which was introduced in April 2020) will be extended to cover other family bereavements. This will give employees the right to at least one week of bereavement leave following the death of a family member (the detail of which family members are covered will be set out in regulations).

• Removal of the qualifying periods for paternity and unpaid parental leave will entitle many more employees to take these types of leave. However, since paternity leave is for a maximum of two weeks, and many employees do not take parental leave because it is unpaid, it seems unlikely that there will be a significant impact on employers from this change.
• Employers will need to ensure they have appropriate processes and training in place to ensure that they do not unlawfully dismiss employees who are on or recently returned from family leave.
• Many employers already offer some form of family bereavement leave, in which case the new statutory right will not have a significant impact in practice.

Fire and rehire

• Ending "unscrupulous fire and rehire practices"

• It will become automatically unfair to dismiss an employee for refusing to agree changes to their employment contract.
• There will be a limited exception where the change is in response to financial difficulties likely to affect the ability of business to continue as a going concern and the change could not reasonably have been avoided.

• This is a significant change as it means employers will have much less flexibility when seeking to change terms and conditions of employment and a significantly higher onus of showing the need for the change. It may also lead to additional redundancies given the limited scope for employers to force through changes to terms and conditions.
• Employers should ensure that employment contracts are drafted so that they contain as much in-built flexibility as possible.

Collective redundancy consultation

• Expanding the collective redundancy consultation requirements

• The threshold for collective redundancy consultation will be changed so that the duty to consult collectively will be triggered where the employer is proposing 20 or more redundancies across the business, rather than 20 or more redundancies at a single establishment. However, the threshold will continue to apply per employing entity (rather than across the group).

• The change in threshold for collective redundancy consultation will mean the collective consultation duty is triggered more easily and more frequently.
• Employers will need processes in place to track redundancies and changes to terms and conditions across the entire business.

Equality reporting

• Requiring large employers to publish menopause and gender pay gap action plans

• Employers with 250+ employees will be required to produce a gender pay gap action plan to accompany their gender pay gap reports.
• Employers with 250+ will also be required to produce action plans on how they support employees through the menopause.
• Details of the requirements will be set out in regulations.

• The devil will be in the detail as the Government plans to set out in regulations the content and form of such action plans and how they are to be published.
• Employers may wish to consider what narrative they already publish or could publish alongside their gender pay gap figures and how this could form the basis of the gender pay gap action plan.
• Employers who do not have a menopause policy may consider introducing one.

Zero hours / casual / irregular hours workers

• Zero/low hours workers will have a right to be offered a contract reflecting regular hours
• Zero/irregular hours workers will be given a right to notice of shifts and compensation for cancellation

• The new right to a contract will apply to workers on a zero hours contract/arrangement or a contract with minimum guaranteed hours.
• If the worker's hours regularly exceed the zero/minimum hours over a 12 week reference period, then they will have to be offered a new contract reflecting regular hours.
• Employers will be required to give zero hours workers and irregular hours workers reasonable notice of shifts which the worker is either required or requested to work, as well as reasonable notice of cancellations or changes.
• Workers will be entitled to receive a set payment where a shift is cancelled, changed or curtailed, at short notice.
• The thresholds for minimum hours and notice periods, and the amount of the cancellation payment, will all be subject to future consultation.

• Zero hours contracts are not being banned (contrary to some previous reports) but the new laws aim to ensure that zero hours or casual workers who in practice work fairly regular hours, can have a contract which reflects this. Also, all such workers will have increased reliability and certainty around their working arrangements.
• Employers who rely heavily on casual or zero hours workers may wish to review their arrangements to assess which workers may be entitled to a regular hours contract. Also if shifts are usually offered at short notice and/or regularly cancelled or curtailed, then it would be advisable to assess how this may be improved, to reduce the exposure to compensation when the changes come into force.

Pay and sickness

• Statutory sick pay to be available to all workers, with no waiting period and no earnings threshold
• Minimum wage to reflect cost of living and apply from age 18

• The current three-day waiting period for statutory sick pay (SSP) will be removed, so that it is available from day one. The earnings threshold will also be removed so that SSP is available to all workers regardless of their earnings.
• The Low Pay Commission will take into account the cost of living when setting the rates of the National Living Wage and the National Minimum Wage, and the age bands will be removed, so that the same rate applies to all workers aged 18 or above.

• There will be an increase in wage bills, in that a greater number of workers will qualify for SSP and the National Living Wage (which itself may increase to reflect the cost of living).
• Employers should also review their sick pay policies and contractual provisions on statutory sick pay.

Enforcement

• Establishing a new single enforcement body for workers' rights

• A new Fair Work Agency will be established to enforce workers' rights.
• The Fair Work Agency will bring together the work of existing agencies and enforce rights such as holiday pay, statutory sick pay, national minimum wage, unpaid tribunal awards and other rights.
• The Agency will also provide support and guidance for employers on compliance.

• The single enforcement body will make it easier for workers to enforce their rights and will be welcomed by workers and trade unions in particular.

Trade unions and strikes

• Strengthening the rights of trade unions

• Additional strike ballot requirements will be repealed, and electronic balloting will be introduced.
• Recently introduced legislation on minimum service levels during industrial action will be repealed.
• The trade union recognition process will be simplified and the thresholds reduced.
• Employers will have a new duty to inform workers of their right to join trade union, to be included in the employment contract/statement of particulars.
• Trade unions will be given new rights to request access agreements from employers to allow access to the workplace for recruitment and organising purposes.
• The rights of trade union officials, learning representatives and equality representatives will be enhanced.
• Sector wide collective bargaining will be introduced in the social care (and possibly other sectors in the longer term) and the School Support Staff Negotiating Body will be re-established.
• Workers will receive protection from blacklisting for trade union activity.

• The Government's plans are likely to mean trade unions will have a much greater role to play in employee relations. As a minimum, they will mean it is easier for trade unions to call strikes (and other industrial action) and harder for employers to manage strikes. They will also mean it is easier for trade unions to seek recognition.
• If sector wide collective bargaining is introduced in future in sectors beyond social care, this could lead to a real change in the employee relations landscape.
• Employers will need to update employment contracts to refer to the right to join a trade union.
• Employers may also wish to review any employee consultative arrangements they currently have or could put in place, and consider how likely future requests for trade union recognition might be.