After months of anticipation, the Government has released the initial draft of its comprehensive Employment Rights Bill, set to significantly reform employment law over the next few years. As the Bill now begins its journey through Parliament, mywage provides an overview of the key elements from this first draft, aimed at HR professionals.
The primary provisions of the Employment Rights Bill, which was first published on October 10, 2024, will impact England, Wales and Scotland. However, most parts of the Bill will not apply to Northern Ireland due to its devolved authority over employment laws. If these changes are to be implemented in Northern Ireland, the Northern Ireland Assembly would need to introduce its own legislation.
Given the complexity of many of the proposed changes, the legislative process and the need for public consultation, most of these reforms are unlikely to take effect before 2026.
As is often the case with employment legislation, additional specifics for many policies outlined in the Employment Rights Bill will be provided through subsequent regulations following Royal Assent. The majority of these reforms are expected to take effect no earlier than 2026, with reforms specifically targeting unfair dismissal set for implementation by autumn 2026 at the earliest.
➡️ Two year service requirement for unfair dismissal claims.
Current rules:
- Currently, employees must complete two years of service to qualify for an unfair dismissal claim, except when the dismissal is due to specific “automatically unfair” reasons, such as pregnancy, making a protected disclosure, or asserting a statutory right.
- This rule has led some employers to assume they can terminate new hires who do not meet expectations without following a formal procedure, as these employees cannot bring an “ordinary” unfair dismissal claim under the current service requirement.
What will change:
- The Employment Rights Act 1996 will be amended to remove the two year service requirement, allowing employees to file an ordinary unfair dismissal claim from the first day of employment.
- This change raises questions for employers regarding the potential impact on probationary periods, a topic not directly addressed in the Bill.
- New hires will still be able to file claims for automatic unfair dismissal or discrimination from their first day on the job.
- To address concerns from employers, the Government has expressed an intention to consult on introducing a “statutory probation period” for new hires. This period aims to provide a structured timeframe for assessing employee suitability while ensuring that employees have rights from day one.
➡️ Reforms to flexible working laws.
Current rules:
- Under the previous Government, reforms to flexible working rights took effect for requests submitted from April 6, 2024.
- These reforms established flexible working as a day one employment right and introduced procedural changes to the request process.
- Employers currently have the right to refuse flexible working requests if they can justify the decision with one of the accepted business reasons outlined in the law. However, employers are advised to proceed cautiously when denying requests from individuals returning from maternity leave or from disabled employees seeking flexible arrangements as a reasonable adjustment.
What’s changing:
- The current Government considers the 2024 reforms insufficient and has introduced further amendments in the Employment Rights Bill to expand flexible working rights.
- The Bill shifts the onus onto employers, requiring them to accommodate flexible working requests to the extent that it is reasonable.
- While employers may still rely on the existing list of permissible business reasons to deny a request, they will now be required to provide a written response explaining the grounds for refusal and detailing why the decision is considered reasonable.
➡️ Action plan to address the gender pay gap.
Current rules:
- Employers with 250 or more employees are currently required to publish annual gender pay gap data.
- Employers must publish their figures within 12 months of the snapshot date, which is March 31 for the public sector and April 5 for the private and voluntary sectors. As a result, the reporting deadlines are March 30 for public sector employers and April 4 for private and voluntary sector employers.
- There is no current obligation for employers to provide a narrative or action plan alongside these figures. However, some companies voluntarily share this information to outline steps they are taking or intend to take, to reduce their gender pay gap.
What’s changing:
- Under the new Bill, organisations with 250 or more employees will be required to create and publish an action plan specifically to address any gender pay gap identified in their reporting.
- Additionally, these organisations must develop and publish an action plan outlining how they support employees through menopause.
- It is still unclear whether these action plans will need to follow specific minimum standards or frameworks or if employers will receive only guidance or recommendations on what to include.
➡️ Changes to statutory sick pay (SSP).
Current rules:
- To qualify for statutory sick pay (SSP), an individual must have average weekly earnings that meet or exceed the lower earnings limit for the eight weeks prior to going off sick.
- SSP is currently not paid for the first three days of illness, known as “waiting days,” during a period of incapacity.
What’s changing:
- The Bill proposes key changes to SSP entitlements and procedures, expanding eligibility to include more individuals.
- The eligibility requirement tied to the lower earnings limit will be removed, allowing individuals with lower earnings to qualify for SSP.
- Additionally, the three day waiting period will be eliminated, meaning SSP will be payable from the first day of illness.
➡️ Pregnant employees and employees returning from family-related leave.
Current rules:
- Employers can lawfully make employees redundant during pregnancy and following their return from maternity, adoption, or shared parental leave, provided there is a genuine redundancy situation.
- However, employees are entitled to a “protected period” during which they must be offered any suitable alternative vacancy in the event of redundancy. This protected period covers employees who have notified their employer of their pregnancy, are on maternity leave, or have recently returned from maternity leave.
- Similar protections apply to employees on adoption leave or shared parental leave, as well as those who have returned from adoption leave or a continuous shared parental leave period of six weeks or more.
What’s changing:
- The Bill will extend protections by prohibiting employers from dismissing employees during pregnancy, maternity leave, and for six months following their return to work, except in specific circumstances.
- This enhanced protection will also cover employees during and following adoption leave and shared parental leave.
- The specific exceptions under which an employer may dismiss an employee during these protected periods will be set out in secondary legislation, providing further guidance on permissible grounds for dismissal.
➡️ New statutory right to bereavement leave.
Current rules:
- Currently, employees do not have a statutory right to bereavement leave, except for parental bereavement leave.
- Parents who experience the death of a child or a stillbirth after 24 weeks of pregnancy are entitled to two weeks of parental bereavement leave.
What’s changing:
- The new Bill will establish a statutory right to bereavement leave, enabling employees to take time off work to mourn the loss of loved ones.
- This means that the entitlement to bereavement leave will expand beyond just parents who lose a child.
- Some employers may offer contractual bereavement or compassionate leave that exceeds the new statutory requirements, such as providing paid leave.
- If the statutory bereavement leave closely resembles parental bereavement leave, employees will also be eligible for statutory bereavement pay.
➡️ Paternity leave and ordinary parental leave.
Current rules:
- Currently, employees must meet qualifying periods to be eligible for paternity leave or ordinary parental leave.
- For paternity leave, a key requirement is that the employee has at least 26 weeks of continuous employment by the end of the 15th week before the expected childbirth week.
What’s changing:
- The new Bill will eliminate the qualifying periods for paternity leave and ordinary parental leave, making these rights available from day one of employment.
- The legislation will also be amended to allow employees to take paternity leave after shared parental leave without restrictions.
- Likewise, employees can only take ordinary (unpaid) parental leave after completing a minimum of one year of continuous service with their employer before the leave is taken.
➡️ Zero and low hours workers.
Current rules:
- Casual and zero hours contracts are commonly used in sectors where business is seasonal or demand fluctuates weekly, such as agriculture, hospitality, retail and tourism.
- Despite the growth of the gig economy, there is minimal specific regulation governing these types of contracts.
What’s changing:
- The new Bill will establish the right for workers to receive a guaranteed number of hours if they consistently work regular hours over a specified period.
- Additionally, it will introduce a new right to receive reasonable notice for shift schedules and for any changes or cancellations to shifts.
- Workers will also have the right to payment for shifts that are cancelled, rescheduled, or significantly shortened.
- Currently, there is no legal entitlement to a minimum number of hours, allowing employers to withdraw work offers with little or no notice.
➡️ Further reforms to prevent “fire and rehire”.
Current rules:
- The statutory code of practice on dismissal and re-engagement established by the previous Government took effect on July 18, 2024.
- This code applies when an employer raises the prospect of dismissal and re-engagement with an employee or their representative on or after this date.
- Its purpose is to ensure that employers act fairly and reasonably when dismissing employees and offering reengagement under new terms, particularly concerning staff consultation.
What’s changing:
- The current Government believes the existing statutory code does not sufficiently protect employees and is using the new Bill to introduce additional reforms to prevent “fire and rehire” practices.
- The Bill will revise unfair dismissal laws, stipulating that dismissals occurring because employees refuse to accept changes to their employment contracts will be considered automatically unfair.
- However, employers may defend themselves if they can provide evidence of financial hardship and demonstrate that the need for contractual changes was unavoidable.
➡️ Reforms to harassment laws.
Current rules:
- On October 26, 2024, the Worker Protection (Amendment of Equality Act 2010) Act 2023 will impose a new duty on employers to take reasonable steps to prevent sexual harassment of their workers “in the course of their employment.”
- Currently, employers cannot be held liable in an employment tribunal for failing to prevent third-party harassment, even though the Equality and Human Rights Commission can take enforcement action against those employers.
- Individuals experiencing third-party harassment currently have no legal recourse against such incidents.
What’s changing:
- The current Government believes that existing reforms are insufficient and is using the new Bill to introduce additional changes to anti harassment laws.
- The Bill will close the existing loophole in equality legislation, making employers fully liable for third-party harassment.
- It will also strengthen anti harassment laws by mandating that employers 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 Employment Rights Bill, the Government has issued a “Next Steps to Make Work Pay” policy paper, detailing several proposals that will be introduced separately:
- Two-Tier Employment Status: The Government plans to consult on a new framework that distinguishes between workers and genuinely self-employed individuals, replacing the current three-tier classification of employee, worker, and self-employed.
- Right to Disconnect: A statutory code of practice will be introduced to protect employees from being contacted outside working hours, except in exceptional cases.
- Review of Family-Friendly and Carer’s Leave: The Government will review the current family-friendly leave system to better support working parents. It will also evaluate statutory carer’s leave, including the potential introduction of statutory pay for carers.
- Mandatory Ethnicity and Disability Pay Gap Reporting: A separate Equality (Race and Disability) Bill will require large employers (250+ employees) to report on ethnicity and disability pay gaps. This Bill will also extend equal pay rights to include race and disability.
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