The Employment Rights Bill – Ten things employers need to know

The much-awaited Employment Rights Bill has now been published and will bring forward the most significant employment law reform seen in a long time.

The Bill is currently in draft form and will be subject to extensive consultation and debate in Parliament, with many of the key details to be worked out in secondary legislation.

Although there remains a great deal of uncertainty around the changes and exactly when they will be implemented, below is a roundup of the main changes as they stand:

Unfair dismissal

Currently, employees must have at least two years’ service to bring a claim for unfair dismissal claim (save for the exception of automatic unfair dismissal). The Bill removes the qualifying period for unfair dismissal, meaning that unfair dismissal will become a day one right.

Probationary periods

The government intends to introduce the concept of an “initial period of employment” during which dismissals may not be subject to the usual requirements of fair procedure and substantive fairness, provided that the reason for dismissal falls within familiar categories such as capability, conduct, or some other substantial reason. The government’s preference is for a nine-month period but the length of the statutory probationary period, as well as how this might interact with ACAS procedures, will be subject to consultation.

Zero hours and “low hours” contracts

Whilst the Bill does not completely ban zero hours contracts as initially proposed, it does require employers to offer guaranteed hours to both zero hours workers and workers on ‘low’ guaranteed hours who regularly work more than these hours. Guaranteed hours should reflect the hours that the worker works over a reference period (proposed to be 12 weeks) and employers should set out details of the days and times they will make work available. Review periods will provide the parties the opportunity to reflect changes over time. Shift workers will also have a right to reasonable notice if they are required to work a shift or if it is cancelled or changed. Compensation will be payable for shifts that are cancelled or changed at short notice.

Flexible working

The right to request flexible working became a day one right in April of this year. However, the Bill goes further by proposing that an employer will only be able to refuse an application on one of the statutory grounds if it is ‘reasonable’ to do so. When notifying the employee of a refusal of a request, the employer will need to state which of the eight statutory reasons it relies upon, as well as explaining why they consider it reasonable to refuse the application.

Fire and rehire

The Bill puts an end to the practice of “fire and rehire” by making it automatically unfair to dismiss an employee if the reason for the dismissal was that the employer sought, and the employee refused, a variation to the contract of employment. A dismissal will also be unfair if the employer replaces the employee with another person carrying out substantially the same duties who is willing to accept the varied terms.

An exception will be made in very limited circumstances where the employer can show that the reason for the variation was to significantly reduce or mitigate financial difficulties affecting the employer’s ability to carry on the business as a going concern, and the employer could not reasonably have avoided the need to make the variation.

Trade union rights

The Bill will amend the Trade Union Act 2016 and repeal the Strikes (Minimum Service Levels) Act 2023, significantly strengthening the power of trade unions. Protection against detriment for taking industrial action will also be introduced and employers will be required to give workers a written statement advising that they have the right to join a trade union at the same time as providing the section 1 statement. Access agreements will be introduced allowing trade unions the right of access to workplaces and amendments will be made to the conditions of trade union recognition to make the recognition process easier.

Harassment

The new requirement on employers to take reasonable steps to prevent sexual harassment of their employees, which came into force on 26 October 2024, will be amended to require employers to take “all reasonable steps”, therefore creating a higher threshold for employers to meet. The Bill also prohibits an employer from permitting a third party to harass an employee during the course of their employment by failing to take all reasonable steps to prevent the third party from doing so.

Statutory sick pay (SSP)

The Bill removes the three-day waiting period to claim SSP, as well as the earnings limit, so that all workers will be able to claim SSP from the first day of sickness. However, the Bill envisages a lower level of sick pay for lower earners. This will be consulted on and brought forward through an amendment to the Bill.

Parental and paternity leave, and enhanced maternity protection

The Bill removes the 26 weeks service requirement so that paternity leave and unpaid parental leave will become day one rights.

Regarding maternity leave, employers will not be able to dismiss a new mother for an extended protected period of six months following her return to work, except in specific circumstances.

Bereavement leave

Parental bereavement leave provisions will be replaced with wider provisions, applying to a wider group of persons than just parents. Details will be specified in future regulations. Where the deceased is a child, leave remains at two weeks. In all other cases, the leave will be limited to one week.

What happens next?

The Bill passed its second reading in the House of Commons on 21 October 2024 and has now been sent to a Public Bill Committee which will scrutinise the Bill line by line and is expected to report to the House by 21 January 2025. However, the government has already confirmed that the reforms around unfair dismissal will not take effect until at least Autumn 2026, meaning the current two-year qualifying period will continue to apply.

The government has also indicated that it expects to begin consulting on the Bill in 2025, and anticipates that the majority of reforms will take effect no earlier than 2026.

We’re here to help

We advise that employers take this time to review their current policies and procedures. If you need any further information or advice on the proposals, then our employment team is here to support you.