The Labour government’s Employment Rights Bill continues to make its way through Parliament, with the government recently introducing a number of amendments to the Bill following consultation with businesses and unions.  More changes are expected.

While the Bill has yet to become law, the Labour government’s strong Parliamentary majority means that it is likely to in the near future. For this reason, it is important that employers are aware of the proposed changes and what steps they will need to take to remain compliant with the new rights that employees would be granted.

In this article, we cover the key proposed changes (including the new amendments), when the changes might be expected to come into effect, what employers will need to do when the Bill becomes law and what other changes we might expect from future legislation.

Need help with the Bill or any other aspect of employment law? Please contact Richard Gvero or Miranda Mulligan, who will be happy to advise.

Key points for employers to know about the Employment Rights Bill

The original provisions of the Employment Rights Bill include:

• Employees’ rights, such as protection from unfair dismissal and the right to request flexible working, will now apply from day one of a person’s employment
• Employees will have the right to contracted hours reflecting their average hours worked (mitigating “exploitative” zero-hour contracts)
• ‘Fire and rehire’ and ‘fire and replace’ practices will be restricted
• Large companies will need to take action to address gender equality issues, such as protecting pregnant workers and those returning from maternity
• Creating a new ‘Fair Work Agency’ to enforce employee rights

The latest proposed amendments include:

• The protection from zero-hours contracts will also apply to agency workers
• All workers will be entitled to Statutory Sick Pay (SSP) at either 80% of their average weekly earnings or the current SSP rate (whichever is lower)
• Extending the rights and protections enjoyed by workers employed through recruitment agencies to those employed through umbrella companies
• Where an employer fails to comply with collective redundancy consultation rules, an employment tribunal will be able to award up to 180 days’ pay to employees, up from the previous maximum of 90 days

Key Proposals contained in the original version of the Employment Rights Bill

Extending Employment rights to apply from day one of employment

Employees will have the right to parental leave and protection from unfair dismissal (subject to a probationary period during which lesser dismissal rights and capped compensation apply) from the first day of their employment.

This is a significant change as currently parental leave rights only kick in after a year of employment and protection from unfair dismissal after two years.

 Zero-hour contracts

Employees will have a right to contracted hours that reflect the average number of hours they typically work, ending the use of zero-hour contracts (except where an employee chooses a zero-hours contract). This is not quite the “ban” on exploitative zero hours contracts first proposed.

There will also be a new right to reasonable notice of any changes to an employee’s normal shift pattern and compensation if a shift is cancelled or reduced in length.

Stopping ‘fire and rehire’ and ‘fire and replace’ practices

Employers will be restricted from firing employees and rehiring them or hiring replacements on new terms and conditions.

Currently, employers must follow a process and statutory code of conduct when firing and rehiring, but the government has labelled the existing statutory code ‘inadequate’. The Bill would make it automatically unfair to fire an employee for reusing a change to their terms unless the employer can show financial difficulties or the change could not be reasonably avoided.

Requiring action on gender inequality

Companies with more than 250 employees will be required to take steps to address gender equality issues.

This may include measures such requiring employers to develop and publish equality action plans a well as addressing support for employees experiencing menopause.

Creating a new Fair Work Agency

A new ‘Fair Work Agency’ will be created to act as a Single Enforcement Body responsible for enforcing workplace rights.

The latest proposed amendments to the Employment Rights Bill

Extending protection from zero-hours contracts to agency workers

The protection from zero-hours contracts will also apply to agency workers, of which there are estimated to be around 900,000 in the UK.

This is intended to prevent companies from getting around zero-hour contract rules by hiring agency workers.

Expanding Statutory Sick Pay rights

All employees will be entitled to Statutory Sick Pay (SSP) from day one, removing the lower earnings threshold and current waiting period. Currently, around 1.3 million employees on low wages do not qualify for SSP as they earn less than the minimum requirement of £123 per week.

Under the proposed amendment, all employees would be entitled to Statutory Sick Pay at either 80% of their average weekly earnings or the current SSP rate (whichever is lower).

Extending employment rights and protections to workers engaged through umbrella companies

The rights and protections that apply to workers employed through recruitment agencies will also apply to those employed through umbrella companies.

This will ensure a level playing field for workers and avoid the use of umbrella companies to sidestep workers’ rights.

Increasing remedies for breaches of collective consultation rules

Currently, if an employer does not comply with collective redundancy consultation rules, an employment tribunal can award employees the equivalent of up to 90 days’ pay as a ‘protective award’.

The maximum protective award will be increased to 180 days’ pay under the proposed amendments.

When will the Employment Rights Bill become law?

As the Employment Rights Bill is still making its way through Parliament, there is no set date yet for when its terms might come into effect.

However, the government has said that “the majority of reforms will take effect no earlier than 2026” and that “reforms of unfair dismissal will take effect no sooner than autumn 2026”.

What employers need to do about the Employment Rights Bill

Given that the final form of the Employment Rights Bill is not yet known, employers do not need to rush to start updating their contracts and policies.

However, it is worth starting to think about what updates you may need to make, given that the Bill is almost certain to become law in some form close to the proposed provisions.

Speaking to an employment lawyer now can give you an idea of what contracts and policies you may need to update and what the likely costs might be.  It is also helpful to think about risk areas caused by the enhanced rights.  For example, the new unfair dismissal rights will require a different approach to issues arising in the early stages of employment.

This could potentially include updating employment contracts and key documents, such as employee handbooks, policies and procedures.

Getting ahead of this issue will ensure that you can make any necessary changes quickly and smoothly when the time comes.

What other changes might the government introduce to employment law?

The Labour government committed to introducing an Equality (Race and Disability) Bill in their first King’s Speech. This bill is intended to extend the existing equal pay and mandatory pay reporting rules for sex to cover race and disability as well.

Under current equal pay rules, employees of different sexes have a guaranteed right to equal pay and companies with more than 250 employees are subject to mandatory reporting requirements regarding pay for male and female employees.

It is proposed that the new Equality (Race and Disability) Bill would extend these rights and reporting requirements to cover employees’ ethnicities and disabilities.

As of yet, this Bill has not been introduced to Parliament and no time frame has been set for its introduction. However, as it was included in the King’s Speech, it can be expected that the Bill will be introduced during Labour’s current term in office.

How Longmores can help employers with changes to employment law

At Longmores, we regularly advise a wide range of employers on all aspects of Employment Law. We can advise on the impact of any new legislation and help employers update contracts of employment and workplace policies as required.

For expert support with all aspects of employment law, please contact Richard Gvero and Miranda Mulligan, who will be happy to advise.

Please note, the contents of this blog are given for information only and must not be relied upon. Legal advice should always be sought in relation to specific circumstances.