Employment Law Changes coming soon - New Employment Rights Bill

The new Employment Rights Bill is a significant piece of legislation that is going to make some big change. Whilst it has a particular focus on reversing trade union reforms and improving collective bargaining, there are going to be key changes to individual rights that will impact businesses of all sizes including the creation of a new enforcement agency.

Although much of the Bill is still under consultation, and its implementation is expected by 2026, it introduces various provisions that all business owners need to be aware of. Here is a breakdown of the key individual employment rights provisions with a focus on those that will affect small businesses.

1. Unfair Dismissal from Day One

The Bill proposes a significant change in the rules governing unfair dismissal. Currently, employees need two years of service before they can claim unfair dismissal, except in cases involving whistleblowing or discrimination. Under the new Bill, this qualifying period will be scrapped, meaning that employees will be able to claim unfair dismissal from their first day of work.

This means that you will need to monitor performance during probationary periods more closely and take swift action if a new hire isn’t working out. There may be consultations regarding a new statutory probationary period, possibly set at nine months. Employers will need to stay updated on how this evolves.

This is the one that will have the biggest impact and we’ll be sharing more as more information is known as well as focusing on how employers can really make probation periods work.

2. End of ‘Fire and Rehire’

The Bill will make it automatically unfair to dismiss an employee for refusing changes to their employment contract (i.e., “fire and rehire”). This practice, where employers dismiss workers and offer them re-employment under less favourable conditions, will only be allowed in extreme financial situations where business survival is at stake.

This provision will be crucial for small businesses to understand, as it limits the flexibility employers might have when facing financial difficulties. Businesses will need to ensure any contractual changes are handled carefully, and consultations with employees or unions should be well documented.

3. Zero-Hour Contracts

The Bill introduces protections for workers on zero-hour contracts, requiring employers to offer a ‘guaranteed hours contract’ based on the number of hours worked during a reference period. Additionally, employers must provide reasonable notice of shift changes or cancellations.

For small businesses relying on flexible staffing, this could result in a need for more structured scheduling practices to avoid potential tribunal claims related to guaranteed hours or shift cancellations.

There are still many questions on what this really means, as those get answered we’ll be sharing with you exactly what steps you need to take.

4. Sexual Harassment

Employers will have a duty to take “all reasonable steps” to prevent sexual harassment, including third-party harassment, such as by customers or clients. Failing to do so could result in a compensation uplift of up to 25% in tribunal cases.

Employers should already be reviewing their harassment policies, ensuring staff are trained on reporting procedures, and conducting risk assessments to identify potential areas where harassment could occur. The duty to prevent sexual harassment is already in force, this Bill will create a higher threshold by including third-party harassment and adding the word “all” to reasonable steps.

5. Flexible Working

The Bill simplifies the flexible working process by making it the default option unless an employer can justify otherwise. Employers must handle requests more transparently, though the grounds for refusal (e.g., additional costs, customer demand) remain unchanged.

This change means businesses will need to assess whether they can accommodate flexible work arrangements while balancing operational demands, and they must communicate decisions clearly to avoid disputes.

6. Paternity, Parental, and Bereavement Leave

Paternity leave and parental leave will become a “Day One” right, meaning employees will be entitled to it immediately upon starting work. Additionally, bereavement leave will be extended beyond parents who lose a child, offering more inclusive support for grieving employees.

Leave policies will need to be updated to reflect these expanded entitlements, ensuring that employees are aware of their rights and the procedures to follow when requesting leave.

7. Enhanced Protections for Pregnancy and New Mothers

The Bill outlines enhanced protections for pregnant employees and new mothers, likely extending the protection against dismissal for up to six months after their return to work.

This could mean needing to take greater care when managing the return-to-work process, ensuring that returning mothers are treated fairly and that no adverse employment decisions are made during this protected period.

8. Statutory Sick Pay (SSP)

SSP will be paid from the first day of illness rather than after three waiting days, and the lower earnings threshold will be removed, meaning more employees will qualify for SSP. The Secretary of State will also have the authority to set SSP as a percentage of pay.

Employers should prepare for potential increased costs related to sick pay, as they will be required to pay SSP from day one and for all qualifying employees, regardless of earnings.

9. Gender Pay Gap and Menopause Support

The Bill imposes stricter obligations on businesses with over 250 employees to implement action plans for reducing the gender pay gap and supporting employees through menopause.

While smaller businesses aren’t directly impacted by this provision, it signals a growing expectation that all employers take gender equality and menopause-related support seriously.

10. Collective Redundancy Consultation

In a reversal of a past loophole, collective redundancy consultation will now be required when 20 or more redundancies are proposed across a business, not just at individual establishments.

For businesses with multiple locations, this means that collective consultation processes may need to be initiated sooner than previously required, adding another layer of compliance when making large-scale redundancies.

In conclusion, while the Employment Rights Bill is still under consultation and will take time to come into force, it brings significant changes for employers. From ending “fire and rehire” practices to offering greater protections for workers on zero-hour contracts, employers will need to adapt their HR practices. We’ll be working with our clients, updating policies and procedures, and preparing for these changes to ensure compliance once the Bill becomes law - join our advice service now to ensure you’re handheld through all the changes as they happen.

Article last updated: 17 October 2024