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Legal Update: All You Need to Know About the New Employment Rights Bill

Legal update: All you need to know about the new Employment Rights Bill

The long-awaited Employment Rights Bill was published on 10 October. First announced in the King’s Speech in July and hailed by the government as “the biggest upgrade to rights at work for a generation”, the published Bill is over 150 pages long and sets out 28 measures the government proposes to introduce.

Although they give considerable new rights to workers, the government views it as ‘pro-business, pro-worker’ as they believe it’ll help get the labour market moving again. You might be reassured to hear that the government says it views flexibility to be at the heart of the changes – we’ll learn more about what that flexibility looks like in practice when the consultations get started.

Let’s take a closer look at what the Bill covers (we’d recommend you grab a brew and sit down, because we’ve got a lot to go through!).

What does the Bill cover?

As there’s so much to cover, we’ve grouped the measures below:

Section one: Dismissal

Unfair dismissal and probation periods

As promised, the Bill will abolish the service requirement for unfair dismissal, making the right to claim unfair dismissal a day-one right (as long as the employee has actually started work – though starting work isn’t required in cases of automatic unfair dismissals which already have no service requirement).

Probation periods

The government has been clear that employers will still be able to have probation periods. In the Bill they use the phrase “initial period of employment” instead of probation period, but we’ll refer to them as “probation periods”.

The Bill gives the Secretary of State the power to make regulations to “modify” the test for a fair dismissal (we’re assuming this would be by relaxing the requirements in some way), but this will only apply when:

The effective date of termination is either during, or within three months immediately after the end of, the probation period (as long as you’ve given notice of termination during the probation period) and
The reason for the dismissal relates either to:

the employee’s conduct
their capability or qualifications for performing their role
that their continued employment would breach a statutory duty or restriction
some other substantial reason relating to the employee that justifies dismissal.

How long can the probation period be?

The Bill doesn’t say how long the probation period can be. Reports have suggested the government wants a maximum nine-month period, but this will be subject to consultation.

The government has also said they want to consult on appropriate compensation for unfair dismissals within the probation period and will consider introducing a lower cap on tribunal awards.

Right now, employees have the right to request written reasons for their dismissal if they have at least two years’ service. The Bill changes this by giving employees the right to request written reasons if they’re dismissed after their probation period ends.

NOTE: Employees will still have a day-one right to receive a written statement of reasons if they’re dismissed when they’re pregnant or during maternity or adoption leave.

Dismissal during pregnancy and following a period of statutory family leave

The Bill gives the Secretary of State powers to extend the protection pregnant employees currently have against being made redundant during their pregnancy to other forms of dismissal.

It would also allow the Secretary of State to extend protections like these to employees for a period after their return from statutory family leave (like shared parental leave).

This is very much an enabling provision, and we’ll have to wait for draft regulations to be published to get a full picture of these extended protections.

Dismissal for refusing a variation in terms (“fire and rehire”)

The Bill will make it automatically unfair to dismiss an employee for not agreeing to a variation of their contract of employment.

It’ll also be automatically unfair if you dismiss an employee but plan to re-engage them (or employ another person) on varied contractual terms to carry out substantially the same duties.

It won’t be an automatic unfair dismissal if you can demonstrate that:

a. the reason for the variation was to eliminate, prevent or significantly reduce, or mitigate the effect of, any financial difficulties that at the time of the dismissal were affecting, or were likely in the immediate future to affect, your ability to carry on the business as a going concern and

b. in all the circumstances, there was no reasonable way for you to avoid the need to make the variation.

If you manage to satisfy the tribunal that it falls into this exception, it won’t be an automatically unfair dismissal, but the tribunal will still have to go on to consider whether the dismissal was fair in all the circumstances. That means looking at factors like whether any consultation was carried out and whether you offered the employee anything in return for agreeing to the variation. More factors could be set out in regulations.

Section two: Changes for zero-hours workers

There are three elements to this:

1. Right to guaranteed hours

This is one of the most complex and far-reaching aspects of the Bill and it’s frustrating that we still don’t have a clear picture of how it’ll work. Several pieces of key information are missing, which we won’t know more about until sometime in the future when the regulations are published.

However, here’s what we know so far:

The Bill introduces a new duty on employers to offer a “guaranteed hours” contract to certain workers once they’ve completed a certain amount of work.

This right will apply to people who are working under either a zero-hours contract or under a contract with fewer working hours each week than the specified maximum (which is still to be decided).

We think this maximum will be a small amount of hours – this extra category has probably been added to make sure that employers don’t try to get round the rules by giving workers contracts with very low hours and then claiming they’re not a ‘zero-hours’ worker.

The right will apply where these workers undertake work for a certain number/pattern of hours in a “relevant period”. However, the Bill doesn’t explain what the number or pattern of hours would be or the length of the “relevant period”. We’ll have to wait until the Bill is passed and regulations are published.

However, the government may start consultation early which could give us more insight into their thoughts on these crucial details (in the King’s Speech, the period of 12 weeks was mentioned as the reference period, and this is reiterated in the government’s ‘Next Steps’ policy paper published alongside the Bill).

The Bill does helpfully clarify that whatever the length of the “relevant period”, it can only start once this part of the Act has come into force. That means hours worked now and up to the day before it becomes law aren’t going to be taken into account.

The offer of guaranteed hours

The Bill says that future regulations will set out:

the amount/pattern of work that has to be included in the guaranteed hours offer
how the offer has to be made to the worker
any other exclusions from this right.

However, the Bill does say that the offer must be made by either offering to vary the worker’s terms and conditions of employment (where they have an ongoing contract) or by offering a new contract.

In either case, the Bill specifically bans the use of including a ‘temporary’ clause (i.e. time-limiting the contract so that it ends on a certain date) unless it would be reasonable, such as where the worker was only needed to perform a specific task or where there was only a temporary need for the worker.

The offer shouldn’t vary any other terms and conditions that the worker had previously agreed, except in relation to hours, or (if they’re being given a new contract) their terms and conditions shouldn’t be less favourable as a whole.

Exceptions to the right to be offered guaranteed hours

There will be no requirement to offer guaranteed hours where:

the employee has ended the contract (unless they could because of how their employer behaved); or
the employer has ended the contract for a “qualifying reason” (i.e. a fair reason such as conduct or capability) and this was reasonable in all the circumstances; or
a temporary contract has reached its end date (where it was reasonable for the contract to be temporary).

Obviously, some workers are happy to work under a zero or minimal hours contract and the Bill is clear that it’ll be up to the worker whether they want to accept or reject the guaranteed hours offer.

2. Right to reasonable notice of shifts

The Bill introduces a duty on employers to give reasonable notice of a shift (including the number of hours/day/time) if the worker is under either a zero-hours contract or variable hours contract, and the shift hours fall outside of any usual hours or potential pattern of working hours set out in the contract (known as a “qualifying shift”).

Unfortunately, the Bill gives no clues as to how long reasonable notice will be, other than it’ll be no more than seven days (full details will be set out in the regulations).

This right won’t apply to agency workers.

3. Right to reasonable notice for cancelled, moved and shortened shifts

The Bill also introduces a right to reasonable notice of cancelled, moved or shortened agreed qualifying shifts. The same (currently unknown) definition of “reasonable notice” will apply here. This right also won’t apply to agency workers.

Compensation

If you don’t give reasonable notice, you’ll have to pay compensation. The amount will be set out in future regulations, but it won’t be more than:

for a cancellation, including shortened hours: the wages that the worker would have earned during the cancelled shift/part-shift;
where a shift has been completely moved: the wages the worker would have earned during the whole shift; or
where only part of the shift has been moved: the wages the worker would have earned during the hours that are different.

It’s expected that regulations will say that the more notice given, the less compensation will be due.

Because of the more generous provisions in this Bill, it’ll repeal the Workers (Predictable Terms and Conditions) Act 2023 (which hadn’t come into force yet anyway).

Section three: Flexible working

The Bill doesn’t change the existing grounds on which you can refuse flexible working, but it amends the Employment Rights Act 1996 to say that an employer can only refuse a request if:

1. They believe the application should be refused on one or more of the existing grounds and

2. It’s reasonable for them to do so.

It also introduces a requirement that, if you do refuse a request, you have to state the grounds for refusing the application and explain why you consider it’s reasonable to refuse the application on that or those grounds.

The Bill also introduces a right for the Secretary of State to make regulations to specify steps you need to follow to comply with the existing requirement to consult with an employee before refusing a request.

Section four: Statutory sick pay (SSP)

The Bill removes the three-day waiting period, making SSP payable from the first day of sickness absence. It also abolishes the requirement that earnings should be above the Lower Earnings Limit, meaning that all eligible employees will be entitled to SSP, regardless of their earnings.

However, the Bill also says the rate payable is the lower of the usual SSP rate or a prescribed percentage of the employee’s weekly earnings (the Secretary of State is given the power to set the percentage).

Section five: Leave entitlement

The Bill covers three aspects of leave:

Parental leave: Currently available to employees with one year’s service. The Bill will remove the service requirement, making it a day-one right.
Paternity leave: Currently available to employees with 26 weeks’ service by the qualifying week (the 15^th week before the baby is due). The Bill also makes this a day-one right and allows employees to take paternity leave after shared parental leave.
Bereavement leave: Currently, employees have a right to take up to two weeks’ parental bereavement leave if they have a child who dies under the age of 18. The Bill will extend this beyond parents to others who suffer a bereavement. The exact nature of the relationships covered by this will be set out in regulations, but the Bill says the period of entitlement will be at least one week. It also says that where a person is entitled to leave in respect of more than one person, they’re entitled to a period of leave for each of those people.

Section six: Harassment

The Bill sets out the following changes:

1. Changing the duty on employers to take “reasonable steps” to prevent sexual harassment to a requirement to take “all reasonable steps”; a bigger burden of responsibility.

2. Extending the current rules in relation to all types of harassment to include harassment by third parties.

3. Giving the Secretary of State the power to make regulations setting out specific detail on what would be viewed as “reasonable steps” to prevent sexual harassment. The measures could include:

Carrying out a risk assessment
Publishing plans or policies of a specified nature
Steps relating to reporting sexual harassment
Steps relating to the handling of complaints.

4. Making a disclosure that sexual harassment has occurred, is occurring or is likely to occur, a “protected disclosure” under the whistleblowing rules.

See our last legal update for information on your new duty to prevent sexual harassment, coming into force on 26 October with the Worker Protection Act.

Section seven: Tips

Labour had promised to put decisions on how tips are allocated into the hands of workers, but the Bill doesn’t go quite that far. It proposes making some changes to the tipping rules which came into force at the start of October, introducing:

1. A requirement that employers consult with recognised trade unions, worker representatives or, where none are in place, with workers who’ll be affected by the policy. This consultation must be carried out before they produce their written tipping policy.

2. A requirement to review their policy from time to time, with the first review within the first three years of the policy being implemented (even if this is before the Act comes into force) and then at least every three years.

3. A requirement to consult with workers as part of the review process. Employers who have carried out a consultation on their written policy would also need to make an anonymised written summary available to workers.

Section eight: Equality Action Plans

The Bill will introduce a new requirement for larger companies (over 250 employees) to produce an annual ‘Equality Action Plan’ demonstrating what actions they’ve taken to support and advance gender equality within their workforce.

There should be a focus on steps taken to address the gender pay gap and to support employees going through the menopause. More details of the exact format and content needed in the Equality Action Plans will be published later.

In their ‘Next Steps to Make Work Pay’ guidance, the government has added that the implementation of these plans will be backed up by a Regulatory Enforcement Unit for equal pay, and they also reiterated their commitment to requiring larger companies to issue ethnicity and disability pay gap reports in future.

Section nine: Redundancy

If you’re considering making 20 or more people redundant at one establishment within a 90-day period, you’re obliged to follow statutory collective consultation rules. The Bill would remove the “one establishment” requirement so the number of dismissals across the entire business would be taken into account – e.g. across multiple sites. This will widen the circumstances when collective consultation situations will arise.

Section ten: Trade union reform

In Labour’s Plan to Make Work Pay, they pledged to repeal or substantially amend all union-related legislation introduced under recent Conservative governments—in particular the Trade Union Act 2016—and introduce simplified and/or enhanced rights in areas like union recognition and balloting for strikes.

The Bill sets out the following changes:

Written statement of particulars

The Bill introduces a new requirement for employers to provide all workers with a written statement of their right to join a trade union. This must be given to new starters at the same time as their contract, or other statement of main terms, and reissued to longer-standing staff on a regular basis. The exact form of the statement, the information to be included and the intervals for reissuing it haven’t been confirmed.

Workers will be able to make a claim to the tribunal that their employer failed to provide this statement and could be awarded between two and four weeks’ pay.

Access to workplaces

Union officials will be granted the right to access workplaces for various purposes (not including organising strikes or industrial action). This will apply even if you don’t recognise the union, or your workers aren’t union members.

This right will be governed by “access agreements” negotiated between you and the union.

Amending existing rights and obligations

As well as introducing new rights and obligations, the Bill will also amend existing rights and obligations relating to unions.

Recognition: Firstly, when a union is applying for recognition, all that’ll be needed to qualify for holding a ballot is that union members form a certain percentage of the group the union wishes to represent. Currently, that’s set at 10% – but the Bill suggests this is likely to be amended to somewhere between 2% and 10%. If a ballot is then held, the union will only need a majority of the actual votes cast to be in favour (right now, they have to show that at least 40% of the whole group eligible to vote were in favour).

Ballots and strikes: Similarly, the rules on ballots for strikes and industrial action will be simplified. Current rules require that the ballot can only be successfully passed if at least 50% of the whole group eligible to vote cast a vote, and that of the votes cast the majority were in favour. The Bill removes the first requirement, so that only majority support from the actual votes cast will be needed. Ballots that are returned spoiled or invalid will no longer need to be included in the numbers counted as voting. If the ballot is successful, the notice required of the commencement of the industrial action will be reduced from 14 days to 7 days.

Right to time off: The existing right for union officials to have reasonable paid time off to perform their duties will be enhanced by a right to make a reasonable request that the employer provide a suitable room and facilities for the performance of those duties. The rights to time off and suitable facilities will be extended to employees who are official equality representatives of the union.

Earlier this year, the Supreme Court ruled that the existing legal position allowing union members to be potentially subjected to punishments and detriments (short of dismissal) by their employer for participating in industrial action was a breach of human rights.

The new Bill rectifies that situation so detriments for participating in industrial action (or proposing to) will be unlawful.

The existing complex rules on specific circumstances in which an employee could lawfully be dismissed for participating in strikes and industrial action will be simplified, so that these dismissals will now be unfair.

Section eleven: Labour market enforcement provisions

In its ‘Plan to Make Work Pay’, Labour promised to introduce a new single labour market enforcement body which would bring all labour market enforcement within one organisation. They subsequently confirmed that this would be called the Fair Work Agency.

The Bill sets out the legislative framework necessary to pave the way for the creation of this new body. It also states that the Secretary of State can require people to provide information and enforcement officers will have the authority to enter business premises and have access to, and retain, documents/computer files.

Section twelve: Creation of the Adult Social Care Negotiating Body

The Bill will also create a new Adult Social Care Negotiating Body (ASCNB) which will oversee pay and terms and conditions for social care workers in England and Wales.

Make up: The ASCNB members will be made up of employer and trade union representatives (different categories of members can be included in the future).

Role: The government will be able to direct the ASCNB to consider certain matters within its remit – including factors and information they must take into account – and reach an agreement which they will then submit back to the government.

Implementation of agreements: If the government isn’t satisfied with the agreement, they can refer it back to the ASCNB for further consideration. If they’re happy with it, the government can issue regulations implementing the terms agreed, which will then amend the pay or contractual terms of all social care workers covered by it – overriding any existing contradictory contractual terms. The government may also issue guidance or Codes of Practice on the interpretation and application of the ASCNB’s agreements, or the regulations.

Records: Employers within the care sector will be required to keep records of certain matters, and employees will have the right to request access to those records, similar to the existing right to view records for minimum wage purposes. Employees will also be able to rely on the National Minimum Wage Act to make a tribunal claim for a breach of an ASCNB pay agreement by their employer.

Unusually, the Bill allows for regulations in this area to have potentially a retrospective effect—e.g., requiring back pay for periods before the agreement/regulations came into effect—but only if that retrospective effect isn’t to the detriment of the affected employees, i.e., not imposing lower pay or worse terms than they already had before the agreement or regulations.

Section thirteen: Pay and conditions for school support staff

The Bill will also create a new body for regulating the employment of support staff in schools in England, called the School Support Staff Negotiating Body (SSSNB). The remit of the SSSNB will cover pay, terms & conditions, training and career progression of school support staff, who are defined as anyone working for an Academy or for a school maintained by a local education authority who isn’t a teacher.

The SSSNB will be made up of members representing:

school support staff, e.g. trade unions,
employers,
the government
none of the above, acting independently (and without voting powers).

The chair of the SSSNB will be drawn from the last category.

Role and implementation of agreements

The Secretary of State for Education can refer matters to the SSSNB for their consideration, and the SSSNB will then provide the Secretary of State with either an agreement (in relation to pay or terms & conditions) or a report with recommendations (in relation to training or career progression).

The SSSNB could also consider matters in its remit of its own accord without a referral and provide an agreement or report. The Secretary of State can pass the matter back for further consideration if they’re not satisfied, but if they are, they can issue regulations implementing it.

Those regulations will amend the employment contracts of any support staff covered by them, overriding any existing contradictory contract terms. Again, unusually, these regulations could potentially have a retrospective effect, but the Bill confirms that any retrospective effect can’t impose lower pay or worse contractual terms than the affected staff already had.

When new regulations are introduced, either the Secretary of State or SSSNB can issue guidance on their interpretation and application.

Timeline

Although the Bill will introduce some very significant changes, you’ll have time to prepare. The Bill isn’t expected to complete its passage through Parliament until at least Spring 2025. Even then, many of the changes will rely on regulations being published, and the government will be consulting on various elements of these reforms along the way.

So it is likely that the implementation date for most measures will be around April 2026, with the unfair dismissal changes coming in around October 2026.

Beyond the Bill: Other changes

The government has also published the next steps for its Make Work Pay plan. The next phase of changes include:

A Right to Switch Off: preventing employees from being contacted out of hours except in specific circumstances
Introducing an Equality (Race and Disability ) Bill: making it mandatory for large employers to report their ethnicity and disability pay gap.
Introducing a binary system of employment status: by establishing a single status of worker.
Reviews into the current parental leave and carers leave systems.

Questions? We’re here to help

As we’ve said, there’s a healthy timeline to get ready for these changes, so there’s no need to panic. But if you’d like to talk anything through at this stage, your 24/7 advice line is here for you on 0345 844 4848.