Plethora Of New Rules For Employers
The Employment Rights Bill – “the biggest upgrade to rights at work for a generation” – is due to receive its Second Reading in the Commons on Monday 21 October 2024.
World-weary employers are bracing themselves for this much-trailed torrent of employee-centric regulations. Here’s what the Bill currently contains in more detail…
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Unfair Dismissal As A ‘Right From Day One’
The current general position – save for notable exceptions such as whistleblowing and discriminatory dismissals – is that an employee cannot claim for unfair dismissal until they have notched up two years of service with their employer.
The Employment Rights Bill is set to remove this qualifying period: the right to claim for unfair dismissal would arise from day one – as long as the employee has actually started work. The government has estimated that this will provide unfair dismissal rights to an additional nine million people in the UK.
Conversely, there is to be a consultation on a new statutory probation period. It is suggested that a nine-month probation period may be initiated. The impact this will have on an employee’s day-one right to claim unfair dismissal is still unclear. But it acts as something of a counterbalance for employers in light of the increased power being given to employees.
And it follows that if an employee were dismissed within their nine-month probation period, the full process granted from one’s right to claim unfair dismissal might not have to be followed.
However, this comes with a caveat for employers: they will be expected to:
- inform employees within their probation period of specific expectations that they may
- have provide regular feedback on their performance.
So this discretion to terminate a contract of employment in the probation period is not unfettered. And if it isn’t exercised carefully, the employee will retain their right to claim for unfair dismissal.
More Power For Employees To Refuse Contract Variations
Currently, employers wishing to change the terms and conditions of an employment contract are able to terminate it, as long as they:
- comply with the requisite notice period
- offer immediate re-engagement to the affected employee on revised terms.
Under the terms of the new Bill, it would be automatically unfair to dismiss an employee for refusing a variation to their employment contract – effectively ending fire-and-rehire practices.
Furthermore, any dismissal would be automatically unfair if the principal reason were to enable the employer to recruit another person (or rehire the employee) under new terms but largely similar duties.
The sole caveat to this is when an employer is in dire financial straits, where the fire-and-rehire exercise becomes essential to prevent the total collapse of the business. However, this would be an extremely high threshold and a very difficult defence to run.
In fact, should an employer attempt to use this defence at tribunal, consideration must be given to:
- the extent of any consultation carried out by the employer with the employee and with any recognised trade union
- any incentives offered to the employee in return for agreeing to a variation of their employment contract.
In the circumstances, the latter may not be a financial incentive, but perhaps the terms of any new contract offered as part of the fire-and-rehire exercise.
To all intents and purposes, the Bill makes fire-and-rehire unlawful, providing employees with significantly increased power to defend the terms of their employment and their position generally.
The Bill does not make any allowances for the fact that employers may resort to fire-and-rehire practices for reasons that are not purely financial – such as to comply with new laws or regulations. For this reason, these changes to the law are likely to be contested by employers.
Ending ‘Exploitative’ Zero-Hour Contracts
Zero-hour contracts lack a minimum number of guaranteed working hours; they do not require a minimum commitment from the employee.
The ramification is that the working hours of an individual are unpredictable and may vary considerably on a weekly basis.
Furthermore, the only protections currently offered to an individual on a zero-hour contract are based on employment status…as opposed to the daily reality of how they are expected to work.
The Bill is set to change this.
Going forward, where an employee is working under a zero-hour contract, they would have a right to a contract reflecting the number of hours regularly worked (based on a 12-week reference period).
In practice, employers would be required to offer guaranteed hours to workers from the start of their employment and at the end of each reference period.
This provision also applies to minimum-hours contracts, effectively stopping employers from replacing zero-hour contracts with an arbitrarily low 30-minute or one-hour contract to sidestep this rule.
Failure to offer a guaranteed-hours contract would give the employee automatic recourse to an employment tribunal to recover any consequent financial losses. This would be subject to a cap to be determined in the future.
If an employee were to work under a contract in which shift patterns were not known in advance, the Bill would give such employees the right to:
- reasonable notice of a shift
- reasonable cancellation of a shift
- reasonable changes to a shift.
Protection From Sexual Harassment
Currently, employers owe a duty to their employees to take reasonable steps to prevent sexual harassment. This duty will be extended to cover third-party harassment.
From 26 October 2024, the Equality and Human Rights Commission (EHRC) is imposing an enforceable duty on employers to take reasonable steps to prevent third-party harassment (but the affected employee cannot personally sue their employers in respect of this).
This duty is coming in as part of the Worker Protection (Amendment of Equality Act 2010) Act 2023. Employers must take all reasonable steps to prevent sexual harassment of its staff by third parties.
This places the onus on employers to:
- review their policies pertaining to sexual harassment in the workplace
- ensure the necessary risk assessments are undertaken
- train supervisors to understand their role in considering such complaints.
Flexible Working Requests From Day One
In recent years, the approach to flexible working has changed somewhat.
Previously, employees had a statutory right under the Employment Rights Act 1996 to request certain changes to their employment contract. However, they must have had at least 26 weeks’ continuous service to qualify for this right.
Then, from 6 April 2024, requesting flexible working became a day-one right. And now, under the Employment Rights Bill, flexible working is set to become the default.
Employees are currently able to request changes to their working arrangements up to twice a year. Such requests must be dealt with in a reasonable manner, with the right of refusal arising from eight permissible grounds, such as extra costs or inability to meet customer demand.
The government has stated it will take steps to ensure that flexible working is the default for all, unless employers can prove this is unreasonable in a given circumstance.
Parental, Paternity And Bereavement Leave Changes
Currently, many employers offer parental leave either as a stated policy or an ad-hoc customary practice. This allows the employee up to 18 weeks’ leave to care for their child up to their 18th birthday. (This is unpaid and rarely implemented.)
The right is subject to the parents working continuously for their employer for at least one year, or they will not qualify.
Paternity leave gives an employee whose partner is having a baby two weeks’ leave, although qualification is currently subject to at least 26 weeks of continuous employment.
Employees are also currently entitled to parental bereavement leave following the death of a child. This is a day-one right but available only to parents.
The Bill would make both paternity and parental leave day-one rights, with bereavement leave extending to anyone who is bereaved – although details regarding the employee’s relationship with the deceased have yet to be clarified.
Bereavement leave for the loss of a child would remain at two weeks. Other bereavement leave is set to be one week.
The Bill contains no proposals regarding the amendment or clarification of shared parental leave.
Enhanced Protection For Pregnant And New Mothers
The law currently protects against the dismissal of employees on maternity leave, or for reasons relating to pregnancy, but there is minimal specific protection offered to new mothers.
The Bill proposes to enhance the protection offered to pregnant and returning mothers. The particulars of this protection are not yet clear and are subject to further consultation.
But it is broadly considered that new mothers would be provided protection from dismissal for six months after returning to work following maternity leave.
Proposed Changes To Statutory Sick Pay
Statutory Sick Pay is currently available to employees deemed too ill to undertake any work – but is not payable until the fourth consecutive day of sickness. Under proposed changes, payment would be from the first day of sickness.
Further, employees must earn above the lower earnings limit of £123 to qualify for Statutory Sick Pay in the first instance.
The Bill seeks to remove this in favour of a percentage replacement rate for those currently below the lower earnings limit, the rate of which would be subject to future consultation.
Equality Action Plans For Larger Employers
The Bill would increase the obligations for employers with more than 250 employees to:
- publish equality action plans to address their gender pay gap
- support employees going through menopause.
This would force employers to evidence the steps taken in addressing these issues, and to publish prescribed information relating to the plan.
Collective Redundancy Consultation
Where 20 or more employees are being made redundant across a period of 90 days at one establishment, this currently triggers an obligation for a collective consultancy process.
The Bill reverses this.
So if an employer were deciding on 20 or more proposed job losses, the number of redundancies across the entire business would be considered – rather than just at a single workplace.
While this may be more onerous on employers, it would give employees important safeguards that could previously be bypassed by the single establishment rule.
Strengthening Trade Unions' Rights
There is an existing requirement for at least 50% of those entitled to vote in a ballot for industrial action to vote.
The Bill would replace this with a requirement for a simple majority of those who vote. And the notice period for strike action is set to be reduced from at least 14 days to seven days.
The Bill would also introduce protection from detriment on the grounds of industrial action, but the extent of this is currently unknown.
Employers would also have to inform new employees – at the same time as providing their section 1 statement – of their right to join a trade union. This would need to include a written statement that the employee has the right to join a trade union.
Get Expert Legal Advice
Employment law is already a minefield for employers – and it’s about to get even more complex and onerous. So expert legal advice is essential, because it’s cold comfort being in the right if you’ve unwittingly undermined your case with a simple procedural error.
Coles Miller’s experienced employment law solicitors help clients with specialist legal advice on business re-organisations (redundancy packages), the effects of TUPE, unfair or wrongful dismissal claims, settlement agreements, discrimination claims (age, sex, race, disability, sexual orientation), ill health absences/dismissals, and restrictive covenants.
We can also assist with drafting and reviewing employment contracts, employee handbooks and other policies and procedures including equal opportunities, equal pay claims, share incentive and bonus schemes, disciplinary and grievance procedures, health and safety, data protection issues and maternity/paternity rights.
For more information, contact:
Managing Partner Neil Andrews, Head of the Commercial Department and Business Property Law – he qualified as a solicitor in 1995 and was made a Coles Miller Partner just four years later. Neil is a commercial litigator dealing with disputes in the County Court, High Court and employment tribunals.
Associate Solicitor Patrick Herklots was promoted this year after qualifying as a solicitor in September 2021. In 2020 Patrick won the national Law Society Essay Competition for his essay on the role of ESG considerations in the legal profession.
Solicitor Hugh Reid is a member of the Employment Lawyers Association (ELA), the voice of authority in this complex area of the law. Hugh qualified as a solicitor in April 2006. He has been specialising in employment law since September 2008.
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