The Employment Rights Bill: what’s changing and how can employers prepare?

Tom Clarke, Associate, Employment Law & HR

The Employment Rights Bill was introduced before Parliament on 10th October 2024 as part of the Labour government’s commitment to a comprehensive employment law reform.

Although the majority of these changes will not be implemented until October 2026, there is plenty employers can do to begin preparing for them.

Unfair dismissal: Arguably the biggest change, the Bill plans to make protection from unfair dismissal a day-one right, subject to a statutory probationary period, meaning that employees with less than 2 years’ service will be entitled to bring an unfair dismissal claim in some circumstances.

Although the details are still unclear, employers will potentially be permitted to dismiss employees within a statutory probationary period without giving rise to an unfair dismissal claim although some formal process is likely to be required. However, employees will potentially still be entitled to bring an unfair dismissal claim in their probationary period if the reason for dismissal is redundancy. The length of the statutory probationary period is likely to be up to nine months, however this is subject to further government consultation. Although a substantial change to the law on unfair dismissal, there remains plenty of time until this is implemented.

Zero-hour contracts: The Bill introduces a right for zero-hour or “low-hour” contract workers to be offered guaranteed hours based on an average number of hours that they have worked over a certain reference period. In an acknowledgement that many workers enjoy the flexibility of zero-hour contracts, the worker is not obligated to accept these guaranteed hours.

The Bill also introduces an entitlement for workers to reasonable notice of a cancellation of or change to a shift, and importantly, a right to payment if a shift is cancelled, moved or curtailed at short notice.

Fire and re-hire: The Bill makes it automatically unfair to dismiss an employee for refusing to agree to a change in their contract of employment, with a very limited exception if the employer can show evidence of severe financial difficulties (likely to be near-collapse) and demonstrate that there was no reasonable way to avoid making this change. The fire and re-hire practice is becoming increasingly scrutinised, so this change comes as no surprise.

Flexible working: The Bill provides that flexible working will be the default “unless the employer can prove it is unreasonable”. This heavily caveated right only really requires the employer to state why the request is unreasonable, meaning that, in practice, there is no significant change in this area.
New day-one rights: Alongside protection from unfair dismissal, employees will gain the right to parental leave (unpaid), paternity leave, bereavement leave and statutory sick pay from day one of their employment.

Statutory sick pay: Employees will be entitled to statutory sick pay from the first day of their sick leave instead of the third, and the lower earnings limit to qualify will be removed.

Collective redundancies: Currently, employers only have an obligation to collectively consult their staff if they are proposing to make 20 or more employees in one establishment redundant. The Bill will abolish the requirement for all employees to be at one establishment, meaning that employers proposing to make 20 or more employees redundant across all establishments will be required to collectively consult.

Sexual harassment: The new, active duty on employers to take reasonable steps to prevent sexual harassment in the workplace will be amended by the Bill to require employers to take all reasonable steps and to extend the duty so that it applies in respect of third-party harassment. Regulations may be put in place to specify these reasonable steps.

Summary
While these are all certainly changes employers need to be aware of, the most impactful are likely to be the changes to the law on unfair dismissal and the reinforced protections for zero/low-hour workers. The Bill may still be subject to change as it goes through the consultation process, and further detail is still required in order to give a comprehensive overview of its impact.

For further information contact Tom Clarke, Employment Law & HR Associate.