Workers to get new rights and protections under Employment Rights Bill

Labour’s employment reforms will give employees unfair dismissal protection from their first day of work and make significant other changes to workplace rights and protections. We look at what is included in the Employment Rights Bill and what practical steps employers can take to prepare.

The Employment Rights Bill (the Bill) will bring forward 28 individual employment reforms, ranging from ‘ending “exploitative” zero hours contracts and fire and rehire practices’ to establishing day one rights to unfair dismissal protection and paternity, parental and bereavement leave for millions of workers. Statutory sick pay will also be strengthened, removing the lower earnings limit for all workers and removing the waiting period before sick pay kicks in. 

The plans are set out in the Employment Rights Bill, Press Release and Statement made on 10 October 2024. They give more detail on rights and workplace protections that have been trailed over recent months. The plans are significant for employers and employees alike and in many respects go further than anticipated.

Changes could still be made to these proposals before many of them come into effect in 2026, with some more immediate changes on the way. A range of further measures to come are outlined in the government’s Next Steps to Make Work Pay policy paper. 

Some of the headline plans in the Employment Rights Bill include:

Unfair dismissal protection from day one

Employees will have a right not to be unfairly dismissed from their first day of work – with the current two-year qualifying period being scrapped. Employers will be able to use probationary periods to assess the suitability of new hires, with a lighter touch dismissal process during this time. 

Regulations will set out how long the probationary period can be – the government’s preference is nine months - and what process employers will need to follow to dismiss an employee who is not right for the job during probation. We anticipate this will be a shorter-form process than would otherwise be needed. 

The government has said this will include a meeting with the employee to discuss performance concerns, with the employee being allowed a trade union representative or a colleague to accompany them. Employers may still face claims from employees dismissed during their probationary period.

Where employers decide not to keep a new hire on beyond the end of their probationary period, employers will have to either terminate the employment during the probationary period or give notice to do so before the end of the probationary period. The dismissal must take effect within three months of the end of the probationary period for the “lighter touch” dismissal process to apply. This means the lighter touch process can effectively apply during the employee’s first year of employment. 

The lighter touch process appears not to apply to redundancy dismissals though.

The government has committed to a full consultation on the detail of the proposals. This will include what compensation will be available for successful claims for unfair dismissal during the probation period, with consideration given to tribunals not being able to award the full compensatory damages currently available.

This major change, effective no earlier than Autumn 2026, will give many more people the right to claim unfair dismissal and could lead to a rise in Employment Tribunal claims. 

Practical point

This change may make employers, particularly small ones, more cautious about hiring (for example hiring those re-entering the job market or changing careers). 

Employers will need to review their contracts to ensure they have clear and flexible probationary periods in line with the new rules (when further details become available) and tighten up their recruitment and capability/performance management processes, particularly during and towards the end of probationary periods. Managers should also be trained on effective performance management during probationary periods.

Flexible working to be the ‘default where practicable’

Workers already have the right to ask for flexible working (such as compressed hours or working from home) from their first day of work, but employers do not have to agree to it.

The government aims to make flexible working the ‘default where practicable’ by putting a greater onus on employers to say yes to requests unless flexible working is not “reasonably practicable.”  

Under the plans, employers will only be able to refuse requests if it is reasonable to do so based on one or more of the eight specified grounds on which employers may refuse a request. They will have to explain why they believe their refusal is reasonable based on the ground(s) relied on in writing to an employee.

Rather than giving workers an absolute right to work flexibly, this is more of an evolution towards more flexible working. Employers will still have some discretion to assess requests based on business needs and operational feasibility. 

The eight grounds on which employers may refuse a request are to remain unchanged, providing a framework for legitimate reasons to reject requests while putting a greater onus on employers to agree to requests or explain why they believe their refusal of a request is reasonable.

There is no change to the penalty for breach of the flexible working rules though (a maximum of 8 weeks’ pay). Currently, the real risk for employers comes from the potential for discrimination claims where requests are turned down, rather than from claims for breaches of the technical rules around dealing with requests. This seems likely to remain the case for now. 

Practical point

Employers should prepare by updating internal policies, establishing clear decision-making processes and training managers on the new rules. 

Flexible working outcome letters will need to be updated to explain why the employer considers it is reasonable to refuse the application on the ground(s) relied on.

Strengthened harassment protections

The Bill introduces a significant new liability on employers for harassment on any ground (not just sexual harassment) of their employees during the course of their employment by third parties such as customers, suppliers or clients. It will be a defence to show that the employer has taken all reasonable steps to prevent the third party from doing so.  

Currently, employees have no actionable right against their employer for third-party harassment. However, the upcoming duty on employers to take “reasonable steps” to prevent sexual harassment (also known as “the Preventative Duty”) does, in practice, mean that employers must already take action to protect their employees from sexual harassment by third parties.  

The Bill also strengthens the upcoming Preventative Duty by requiring employers to take all reasonable steps to prevent sexual harassment (rather than just “reasonable steps”). This aligns the upcoming duty with the “all reasonable steps defence” which is currently open to employers when defending discrimination and harassment claims made by employees.  

The government will specify what constitutes "reasonable" steps through regulations, which is likely to include risk assessments, action plans, and complaint handling procedures. Additionally, reports of sexual harassment will be protected disclosures under the whistleblowing regime. 

Practical point 

The introduction of employer liability for third-party harassment is significant, covering all forms of harassment, including sexual and other protected characteristics such as race and disability. It was debated in parliament last year in relation to sexual harassment and removed from the Worker Protection Bill by the House of Lords due to concerns about free speech and regulatory burden. 

Strengthening the Preventative Duty to require all reasonable steps for sexual harassment may not change current practices much, as employers are already advised to take all reasonable steps to defend against discrimination and harassment claims. However, the EHRC might use this for extra leverage in enforcement, potentially leading to higher compensation awards. Specifying reasonable steps in regulations could increase the obligations on employers but may also provide more clarity for them. Any consultation on this will need to address concerns about the impact on smaller organisations with limited resources. 

Ending fire and re-hire

The government has committed to end the practice of "fire and rehire" as a lawful way to change an employee’s contractual terms. 

To do this, they plan to go much further than anticipated and introduce a new law to make it an automatically unfair dismissal to dismiss an employee for refusing to agree to a variation to their employment contract. It will also be automatically unfair to dismiss an employee to replace them with another person, or re-engage the employee, under a varied contract to carry out substantially the same duties. 

There will be an exception so that businesses can ‘restructure to remain viable’, but an employer would need to be able to show that they were in ‘financial difficulties’ that affected their ability to carry on the business to rely on it. The employer would also need to show that it could not reasonably have avoided the need to make the variation. This is a very narrow exception and is likely to be hard to satisfy in practice.

The government also says it will consult on lifting the cap on the protective award (currently 90 days’ pay) if an employer is found not to have properly followed the collective redundancy process, as well as what role interim relief could play in protecting workers in these situations. 

Practical point

These provisions go much further than was anticipated to essentially make fire and re-hire unlawful. They give employees a significant new right and will impact how employers approach restructuring in future. 

Employers should ensure that contracts for new starters are drafted with flexible provisions. They may also wish to look at incorporating variation clauses into their employment contracts to give more scope to vary contracts without seeking employees’ agreement, but we would recommend seeking advice on this.

Collective redundancy consultation

The rules around collective redundancy consultation will change requiring collective consultation where an employer plans to dismiss as redundant 20 or more employees across the entire business within 90 days or less. Currently, the number of dismissals is usually counted across individual sites.

Similarly, the duty to notify the Secretary of State on the HR1 form will also apply to dismissals of 20 or more employees across the entire business within 90 days or less, rather than at a particular site. Failure to do so is a criminal offence.

Practical point

Employers with multiple sites will need to monitor redundancies across all locations to ensure they meet the collective consultation and HR1 form requirements, which will now be triggered more frequently.

Enhanced rights to statutory sick pay

All workers will be entitled to statutory sick pay (SSP) from their first day of absence rather than their fourth as is currently the case. 

Currently, the lowest paid – those earning less than £123 per week – do not qualify for SSP. This limit will be removed, but SSP will be payable at a lower rate for these workers.

Practical point

Employers should prepare by reviewing and updating sickness absence policies.

Day 1 rights to paternity, parental and bereavement leave 

Workers will gain rights to paternity, unpaid parental and bereavement leave from day one of a job.

The current six-months service requirement for paternity leave will be removed.

Parental leave gives parents up to 18 weeks’ unpaid leave – at the rate of up to four weeks’ a year – for each child over their childhood. The one-year qualifying period for parental leave will be scrapped.

Unpaid bereavement leave will also become a new day-one right. This will extend the current right given to only bereaved parents, to all bereaved workers, at the rate of ‘at least one week’ for each bereavement.

The Bill also includes measures for strengthened protections for pregnant women and new mothers and others taking family leave to be introduced by regulations.

Practical point

Employers should prepare by updating internal policies and ensure managers are aware of the new rules and are equipped to manage workloads around people taking time off for family or bereavement leave.

Zero hours contracts

The government plans to ban exploitative zero hours contracts. Zero hours contracts, broadly speaking, are contracts where workers are engaged on an ad hoc basis with no guarantee of work. 

The proposal is for workers on zero hours or low guaranteed hours who regularly work more hours than their contracts indicate, to have a new right to a contract that reflects the number of hours they regularly work over a 12-week period.

If more hours become regular over time, subsequent reference review periods will provide workers with the opportunity to reflect this in their contracts. The government will consult over how these subsequent review periods will work.

The aim is to give these workers pay security while allowing them to remain on zero-hours contracts if they prefer.

Workers will also be entitled to reasonable notice of any changes in shift with proportionate compensation for any shifts cancelled or curtailed at short notice. The detail of what compensation will be payable will be set out in regulations.

These measures will extend to agency workers, with consultations planned on implementation and defining ‘low hours’. 

The planned right to request a predictable working pattern which was due to come into force in September 2024 has been dropped.

Practical point

A consultation will address the detail of these new rights and regulations and will set out more specifics. But businesses may hope the plans are re-thought altogether since the proposed new rules are complex and technical and are likely to put a significant burden on businesses that use zero-hours and low guaranteed hours workers.  

The government has said it will ensure that workers on full-time contracts who occasionally pick up overtime hours are not affected. Also, where work is genuinely temporary, there will be no expectation on employers to offer permanent contracts.

Other plans

The Bill also includes numerous other plans, including to:

• establish a new enforcement agency, the Fair Work Agency, which will bring together existing enforcement powers and also enforce rights such as holiday pay
• require large employers with over 250 employees to create action plans on addressing gender pay gaps and supporting employees through the menopause
• introduce a new requirement on employers to identify the providers/employers of contract workers when publishing their gender pay reports
• repeal the Minimum Service Levels legislation introduced by the previous government. The government has already announced the intention to repeal the Strikes (Minimum Service Levels) Act 2023 and said that following the High Court’s judgment on the Conduct of Employment Agencies and Employment Businesses (Amendment) Regulations 2022, employment businesses are prohibited from providing agency workers to cover the duties normally performed by a worker who is taking part in a strike or other industrial action
• make it easier for trade unions to gain access to workplaces, secure statutory recognition and take industrial action in the event of a dispute. The Bill also simplifies the recognition process. It also requires employers to inform workers of their right to join a trade union alongside the written statements of employment particulars that employers are required to provide to new joiners 
• improve pay and conditions through a Fair Pay Agreement in adult social care, re-establishing the School Support Staff Negotiating Body, and re-instating the 2-tier code for procurement
• introduce sector wide collective bargaining for school support staff and adult social care workers.

Further amendments to the Bill are expected during the Bill’s passage through parliament including:

• Measures to introduce powers to allow the UK to strengthen workers’ rights at sea and implement international conventions in relation to seafarer employment will be added to the Bill via amendment during the Bill’s passage  
• Measures to extend the time limit for bringing claims to Employment tribunal.

When will these changes take effect?

It is likely that the Bill will not receive Royal Assent for at least another year, perhaps longer. As is typical with employment legislation, further detail on many of the policies in the Bill will be provided through regulations after the Bill receives Royal Assent. The government expects to begin consulting on these reforms in 2025 and anticipates that the majority of reforms will take effect no earlier than 2026.

Reforms to unfair dismissal will take effect no sooner than Autumn 2026. 

Once the Bill receives Royal Assent, the provisions repealing minimum service levels in strikes will come into force. Most other union related provisions will come into force 2 months later. 

Which nations does the Bill apply to? 

Different parts of the Bill apply to different parts of the United Kingdom as follows: 

• Employment rights and Trade union and Industrial action - England and Wales and Scotland
• Pay and conditions in particular sectors (school support staff, adult social care) - England and Wales only
• Enforcement of labour market legislation and public sector outsourcing provisions - England and Wales, Scotland and Northern Ireland.

What is still to come?

This is just the first part of Labour’s plans. Alongside the proposed legislation, the government’s ‘Next Steps’ document outlines wider reforms that it plans to implement outside of the Employment Rights Bill.

Additional proposals using existing powers

From the Autumn 2024 onwards, there are a number of additional reforms which do not need to be included in the Employment Rights Bill because there already exist sufficient powers to bring them forward. With just a few exceptions as noted below, the “Next Steps” document gives no dates. The reforms are listed as follows:

• Tightening the ban on unpaid internships (expect a Call for Evidence by end of 2024)
• Allowing the use of modern and secure electronic balloting for trade union statutory ballots (a working group will be appointed by the end of 2024 with implementation expected following Royal Assent of the Employment Rights Bill)
• Strengthening protections for the self-employed by tackling late payments, and proposals for paid travel time.
• In September, the government announced proposals for a new Fair Payment Code and regulations to capture late payment information within large companies’ annual reports.
• Introducing the Right to Switch Off through a Statutory Code of Practice, to prevent employees from being contacted out of hours, except in exceptional circumstances. It has been reported that instead of a statutory “right to switch off,” businesses will be encouraged to draw up codes of conduct on when they will and will not contact staff out of hours. In preparation for this, employers may wish to review how staff are able to switch off currently. 
• Addressing low pay by accounting for the cost of living when setting minimum wage rates and removing age bands from the National Living Wage. Currently, the minimum wage bandings allow employers to pay those under 21 a lower hourly rate of pay. This could have a significant impact on employers who have large numbers of workers in the 18-20 age bracket (e.g. employers in the retail, leisure and hospitality sectors).
• Introducing a Dying to Work Charter to support workers with a terminal illness
• Modernising health and safety guidance
• Enacting the socioeconomic duty 
• Ensuring the Public Sector Equality duty provisions cover all parties exercising public functions
• Developing menopause guidance for employers and guidance on health and wellbeing.

Equality (Race and Disparity) Bill 

This additional Bill will be published during this parliamentary session (meaning presumably by July 2025), with proposals to:

• Make it mandatory for large employers with more than 250 staff to report their ethnicity and disability pay gap
• Extend equal pay rights to protect workers suffering discrimination on the basis of race or disability
• Ensure outsourcing of services cannot be used to avoid paying equal pay
• Implement a regulatory and enforcement unit for equal pay. 

Longer term proposals 

The “Next Steps” document provides that some reforms will take longer to undertake and implement. These include:

• Consulting on a move towards a single status of worker and a simpler two-part framework for employment status (worker and self-employed), to include proposals to strengthen protections for the self-employed through a right to a written contract 
• Reviewing of the parental leave and carers leave systems
• Consulting on workplace surveillance technologies
• Publishing a call for evidence to review the Transfer of Undertakings (protection of Employment) Regulations 2006 and how it operates in practice
• Reviewing health and safety guidance and regulations looking at neurodiversity, extreme temperature, long Covid and to ensure that it reflects the diversity of the workforce
• Consulting on raising collective grievances
• Reforming the procurement system
• Extending the Freedom of Information Act to private companies that hold public contracts and to publicly funded employers.

The government says it will consult on these proposals. We will publish further details on these measures when more information becomes available.

It’s fair to say there is a lot for employers to grapple with. This comes at a time when many employers are already preparing for a new and significant duty to take reasonable steps to prevent sexual harassment of their employees which comes into force on 26 October 2024. For more details on this, please see our flyer and article: EHRC publishes updated Sexual Harassment Guidance : Clyde & Co (clydeco.com)

For information about how we can help you prepare for these latest changes, please get in touch.