The Employment Rights Bill: Employer Guide

Labour met their stated goal of bringing in extended employment rights for workers within a year of the election.  It met the deadline by tabling the Employment Rights Bill on 10 October 2024, a bill that had its second reading on 21 October 2024. 

Whilst we’re awaiting a lot of the detail, and the outcome of various consultations, it’s already clear that when introduced the changes outlined in the Bill will bring about major changes in employment law, and additional cost and legal burden to employers.

Simply put, employees will have more rights and it will cost employers more to engage their staff.

Timescales and next steps:

The Bill was introduced in parliament on 11 October and the second reading took place on 21 October.  However, there are significant stages of the parliamentary process to complete before the bill is anticipated to be passed in the middle of 2025. Significant consultation with interested parties will mean that we’re unlikely to see many of the changes introduced before 2026. We’ve also been told now that the flagship changes to unfair dismissal – specifically it becoming a day one right – will not be effective until Autumn 2026 at the earliest.

Labour recognises that there is still plenty left to do if it is going to meet the manifesto pledges outlined in its Make Work Pay plan and they’ve effectively written a ‘still to do’ list in the form of their Next Steps to Make Work Pay document.

Because we’re still waiting for consultation, secondary legislation and yet-to-be-detailed guidance, it’s difficult for us to assess the impact of the proposals on employers with any granularity at this stage.

What we did in our recent webinar, and what we’ve replicated in this blog, is to summarise under each headline what was promised, what we know so far and what employers can be doing now to get prepared for the changes.

Employment status:

What was promised: ‘employees’ and ‘workers’ will fall into a single category of ‘worker’ implying significantly improved rights for ‘workers’, as well as better rights for the genuinely self-employed.

What we know now: separate consultation will take place with a view to ensuring that there is a distinction between workers and the genuinely self-employed and that all individuals will be clear as to their working rights.

What employers can do now: we have long advised that employers should review the employment status of their staff to ensure they are correctly classified as either ‘employees’, ‘workers’ or ‘self-employed’ and there is extra incentive to do so now, to ensure that they are prepared for these inevitable changes.

Zero-hour contracts:

What was promised: zero-hour contracts were to be outlawed and anti-avoidance measures introduced to remove one-sided flexibility and exploitation.

What we know now: perhaps in recognition of the essential flexibility which is offered by these contracts in sectors such as agriculture and hospitality, the proposals appear to have been watered down.  The key proposal now is that staff on zero- or low- hours contracts will gain the right to be offered guaranteed hours (either by providing guaranteed days and hours of work or by replicating an established work pattern) if they have worked a regular pattern over a defined period.

We also now know that where it is ‘reasonable’ to do so, employers will be able to use fixed term contracts in appropriate circumstances where ongoing employment cannot be guaranteed.  What ‘reasonableness’ will look like in this scenario awaits to be seen.

We also know that employers will be required to give reasonable notice to staff on zero hours contracts of their shift times, shift durations and the cancellation of a shirt.  Failure to do so will give the worker the right to receive a payment.

What employers can do now: if you use zero- or low- hours contracts, critically assess now whether are able to better predict working patterns so that you can ensure that staff have reasonable notice of when they can be required to work and/or when they may not be required. Consider whether you could move away from the zero- or low-hour contracts altogether towards regular-hours or fixed-term contracts instead, depending on the nature of demand for, and predictability of, the work.

National Minimum Wage (NMW):

What was promised: removal of the age bands and a clearer alignment to the cost of living

What we know now: the body which reviews NMW levels, the Low Pay Commission, recently announced the following increase in rates, which will come into force on 1 April 2025:

What employers can do now: we recommend that you audit staff currently in the lower age bracket and those at or near the full adult NMW rates to budget for increased salary (and salary related) costs.  When reviewing the impact of NMW changes it is always worth considering the knock-on effect of staff earning slightly more – you may need to think creatively about how best to reward slightly more senior staff to ensure a meaningful difference in benefits.

Statutory Sick Pay:

What was promised:  SSP to increase in value, apply to more people and for the waiting period to be removed.

What we know now:  SSP will be paid from the first day of sickness absence – meaning that the current arrangement of 3 unpaid waiting days will no longer apply.  Employees will no longer need to meet the minimum earnings threshold (currently £123/week) before they become eligible for payment – with the knock-on effect that, instead of always being paid at the set statutory rate, SSP will be paid at the lower of the SSP rate and 90% of employee earnings.

What employers can do now:  Employers who only pay SSP may find that there is an increase in the number of staff taking short term intermittent days of sickness.  To ensure consistency and fairness, it is sensible to review (or implement if not already in place) the trigger points (whether number of days sickness absence, number of instances absences or a combination of the two) which lead to a more formal review of attendance.  If you don’t have one, an Attendance Management Policy is always useful to provide a clear framework (which we can obviously help you prepare if required!).

Prevention of harassment:

What was promised: An extension to the legislation being introduced already later this week (26 October) which gives employers a positive duty to prevent sexual harassment of staff – meaning that employers would be required to take all reasonable steps to prevent harassment and that the duty would extend to employers being required to prevent harassment (on the basis of any protected characteristic, not just sexual) by co-workers and other third parties.

What we know now: This extension will place a very high burden on employers, meaning that employers will be required to take every possible reasonable step to prevent sexual harassment, or risk a compensation uplift or enforcement action by the EHRC. Helpfully, regulations are to be published which will specify the steps that are to be regarded as reasonable, both for the new duty to prevent sexual harassment and the existing reasonable steps defence. For now, the EHRC’s 8-step Guide is a good place to start.

In addition, the Bill will reintroduce employer’s liability for third party harassment, not just sexual harassment but all types of unlawful harassment.  This is particularly key for employers operating in sectors where staff frequently come into contact with third parties (e.g. hospitality, retail and transport sectors). Employers will be able to avoid this type of liability, where they can show they took all reasonable steps to prevent the third-party harassment.

What employers can do now:  Think widely and creatively to start building the strongest possible culture which discourages harassment, but also responds effectively and promptly to any complaints.  Review policies, procedures, risk assessments, communications, culture, training, updates, record keeping, etc. to ensure that your actions in preventing harassment are clear and do not overlook the risk posed by third parties.

Flexible working:

What was promised: A change in emphasis from a right to request flexible working to a right to work flexibly unless there are justifiable grounds for refusal.

What we know now: Flexible working requests will need to be granted unless the employer can refuse them on one or more of the statutory grounds (which will be the same as the current grounds for refusal).  In addition, an employer’s refusal will need to be reasonable.  This goes further than the current duty to deal with requests in a reasonable manner.  It is not currently clear how Tribunals will interpret this reasonableness, but it is likely that employers will need to show that they are meeting an objective test.

What employers can do now:  We have long encouraged employers to recognise the clear direction of travel in flexible working legislation by adopting a ‘why not’ approach to requests from staff, whether during recruitment or from the start of employment.

The right to disconnect:

What was promised:  A right to disconnect would be introduced to prevent routine after-hours contact.

What we know now:  Consultation will take place, but details were not provided in the Bill so we can expect this to come in later.

What employers can do now:  It is anticipated that contact outside core working hours will be permitted on an ‘as and when needed’ basis so it could be worth thinking about what would justify contact (and necessitate a response) outside normal working hours and introducing guidance accordingly.  Of course, if you offer a completely flexible approach to working hours, those ‘normal working hours’ may be hard to identify so you should start to think about how best to ensure an appropriate delineation between working and non-working time.

Family leave  

What was promised: a review of existing parental leave system to give working parents better support.

What we know now: qualifying periods of employment for paternity and unpaid parental leave will be scrapped with both becoming Day 1 rights for employees.  It will be possible for fathers to take paternity leave after a period of shared parental leave, and there is a planned expansion of the right to bereavement leave, beyond the current entitlement to parental bereavement leave.  A wider review of parental leave (encompassing all forms of paid family leave) is still promised and well as the potential introduction of paid carer’s leave.

What employers can do now: review Handbooks and consider removing any qualifying periods for paternity and unpaid parental leave, and introducing the ability to take paternity leave after shared parental leave.

Mandatory employer reporting

What was promised: stricter obligations on large employers (those with 250+ staff) to address gender pay disparities, beyond just reporting the pay gap annually, and extending their reporting obligations to disability and ethnicity related pay gaps.  Additionally, greater support was promised to support employees going through the menopause.

What we know now: large employers will have to develop and publish and implement an equality action plan covering their gender pay gap (and how this is reduced) and support offered to employees going through the menopause.  Further regulations are promised setting out precisely what form these action plans should take.

What employers can do now: large employers should ensure compliance with existing pay reporting obligations and look to capture and monitor pay disparities across abled/disabled and different ethnic groups in anticipation of the wider duty.  Employers (of all sizes) should introduce / review existing menopause policies, and devise action plans to provide support (both proactive and reactive) to perimenopausal and menopausal employees in the workplace.

Unfair dismissal

What was promised: all workers to be able to claim unfair dismissal from day 1 of their employment / engagement.

What we know now: there will be no qualifying period of service for employees to claim unfair dismissal; they can do so from the first day of their employment.  No proposed extension of this right to ‘workers’ yet.  Where the dismissal is for a reason other than redundancy, and takes place during the initial period of employment, a dismissal process must still be followed, but it will likely only need to consist of a meeting for the dismissal to be fair.

Government seems to be favouring a statutory probationary period of 9 months, a lengthier period of time than most employers currently deploy.  In theory, provided the employer has served notice during the initial period of employment, the effective date of termination can be three months later – in effect providing employers with a 12-month window to affect early terminations of employment, save in redundancy circumstances.  It seems likely that a full redundancy process will need to be followed for any ensuing dismissal to be fair, irrespective of service.

What employers can do now:  arguably nothing, as there will be no changes to the current legal framework until Autumn 2026 at the earliest.  In the meantime, employers may want to consider introducing their own 9-month probationary period to mirror the anticipated statutory framework.  Without question this change places additional importance on employers’ recruitment practices; planned investment (and training) in this area would not go amiss. 

Collective redundancies

What was promised: revised thresholds for triggering the statutory obligation to undertake collective consultation in redundancy scenarios.

What we know now:  the requirement for the proposed redundancy dismissals to be at one or the same establishment will be removed.  The other thresholds in terms of the number of affected employees (20 or more) and the relevant 90 day rolling window, will still apply, but the number of proposed dismissals is to be measured across the whole of the organisation. Government has also committed to consult on removing the cap on protective awards to make them even more penal.

What employers can do now: It is really important that employers look to introduce a central tracker to record redundancies across all sites and business units as a whole, to avoid inadvertent breaches of their legal obligations and responsibilities.  Managers need to be informed of their reporting obligations, and be given clear direction as to what constitutes a reportable redundancy dismissal (including voluntary redundancies).  Given the likely increase in the number of collective redundancies triggering a collective redundancy process, large employers may want to consider having a standing group of elected employee representatives with a specific mandate to act as employee representatives in collective redundancy exercises.

Employment Tribunal claims

What was promised: extension of the time limit to bring the Tribunal claims to allow more time for the parties to conciliate and reduce the number of claims clogging up the Tribunal system.

What we know now: the time limit for lodging most employment-related claims will be extended from 3 months to 6 months from the date of dismissal / act of discrimination etc.

What employers can do now: review current processes / protocols for dealing with grievances submitted at or close to an individual’s leave date – it would be sensible for any such grievance to be considered properly.  Consider investing in alternative dispute resolution mechanisms (e.g. training staff to become workplace mediators) as an alternative to formal grievance processes and, ultimately, Employment Tribunals.

Trade Unions

What was promised: enhanced role and voice for trade unions in the workplace and a simplified process for trade union recognition.

What we know now:  employers will be required to provide all workers with a written statement of their right to join a trade union prior to the commencement of their employment / engagement.  Financial penalties will apply if the employer fails to provide this statement.  Employers will be expected to enter into access agreements with trade unions to allow officials improved access to the workplace and staff, for various permitted purposes.  Unions will not be required to meet certain strict thresholds when making recognition requests, making recognition more likely.

What employers can do now: consider entering into voluntary agreements (both access and recognition) with active Unions to avoid being forced into accepting a worse deal

Torque Law will be monitoring the progress of these legal developments and will produce regular updates, to ensure Torque Law contacts remain appraised. If you are not currently signed up for our mailers and other e-briefings, but would like to receive them, or have a question about what the Bill means for your business, please get in touch: info@torquelaw.co.uk