Introduced on 10th October 2024, the Employment Rights Bill proposes significant and extensive changes to UK employment law.
Alongside this, the government released their ‘Next Steps to Make Work Pay’ document, which outlined their plans for future reform.
At the time of writing, the Bill is currently being debated in the House of Lords and is yet to become statute.
This means that whilst we are aware of the proposed changes, their implementation and practical implications are subject to further consultation between the government and regulatory/advisory bodies.
Zero-hour Contracts
Contrary to speculation, once the legislation comes into force, there won’t be a ban on zero-hour contracts. They will still be available for workers, but with added protection.
Qualifying workers on zero-hour contracts will be able to request a contract that reflects the hours they have worked during a prescribed period, provided the worker’s hours exceed the minimum number set out in their contract.
The Bill isn’t specific as to what this prescribed period is, but initial suggestions have mentioned a 12-week period. A qualifying worker is not solely someone working under a zero-hour contract, but also someone with a low number of guaranteed hours. What constitutes “low” is currently undefined, as are potential additional requirements regarding the number and regularity of those hours. This is likely to be cleared up through consultations and then set out in regulations.
The obligation to offer guaranteed hours will cease to apply if the worker resigns or has been fairly dismissed during the qualifying period.
A worker who is not offered hours on these terms following their request, can bring an employment tribunal claim, with the maximum award to be set out in regulations.
The bill does include exceptions for when temporary work is required and provides that reasonable fixed-term contracts can be provided if reasonable.
Employers will be required to give reasonable notice of shifts and shift changes. Notice includes the time, day and how many hours the worker is required to work. What is reasonable will depend on the circumstances and further details will be set out in the regulations. This applies to workers employed on zero-hour contracts as well as workers who do not have a set working pattern.
Employers will also be required to pay compensation for last-minute cancellations. This will be proportionate to the circumstances of the cancellation.
These provisions also apply to agency workers. It will be the responsibility of the agency and hirer to provide an agency worker with reasonable notice of shifts.
Fire & Re-Hire
Under the proposed legislation, if an employee is dismissed for refusing to agree to a variation of their contract, and their job is subsequently offered to someone else (or a role which is substantially the same), this will be an automatically unfair dismissal.
Companies will only be permitted to fire and re-hire if they experience significant financial difficulty and absolutely have to.
Therefore, fire and re-hire will only be allowed in very unusual circumstances, and the employee must be consulted first. The Code of Practice will be updated in due course.
Unfair Dismissal
Currently, the right to make a claim for unfair dismissal is reserved to employees with at least 2-years of service with their employer, unless they are dismissed for a reason which is automatically unfair.
This will be removed. Unfair dismissal rights will become a day-one employment right.
The government has expressed a preference for a 9-month probation period, although this is yet to be confirmed, during which a ‘lighter-touch’ dismissal procedure will be available to employers. It is unclear what this ‘lighter touch’ procedure involves, and lots of questions are still to be answered in regard to the new probationary period.
This measure has largely been introduced to address concerns that the removal of the 2-year qualifying service requirement will be a significant recruitment deterrent for employers. Without the need for 2 years of service, employees can claim for unfair dismissal from day one of their employment. Concerns have been expressed about the disproportionate effect the proposed change will have on small businesses without an in-house legal team or HR department. It has also been highlighted that there is a need for employers to have a period of time during which suitability for a role is assessed without the threat of an unfair dismissal claim. Criticisms have suggested that this change makes recruitment a less attractive prospect for employers.
The Bill does clarify that there is no right to claim for unfair dismissal if an employee has entered into an employment contract but has not actually started work.
Unfair dismissal rights have not been extended to workers. The rights remain with employees. However, under the government’s proposed changes, employment status may be changed to create one single status for workers and employees. This could significantly expand the group of people who are able to bring unfair dismissal claims against employers. Employment status changes are yet to be confirmed.
The practical implications are that employers are under a greater obligation to act fairly and that the correct procedures should be followed carefully when dismissing an employee.
Collective Redundancies
Currently, if 20 jobs or more are being made redundant at an establishment within a 90-day period, there is an obligation on the employer to seek a consultation with representatives. The term “establishment” is currently defined as the place where an employee works (if the employer operates across multiple locations).
Under the Bill, this will be changed so that the term “establishment” is defined as the organisation, not its individual locations. The government has confirmed that when an organisation plans to make employees redundant at more than one establishment, the trigger for consultation can be set at a higher number than 20 employees (although this will remain the trigger for redundancies at one establishment).
Practically, this means that employers may be required to seek collective consultation more frequently.
Worker Status
The government plans to create a single worker status for employees and workers. This is significant because it would establish rights and securities for all workers from the first day of their employment, most of which were only previously available to employees. These rights include Statutory Sick Pay, protection against unfair dismissal, holiday pay, paid parental leave etc.
Minimum Wage & Tips
The new national minimum wage increase came into effect on 1st April 2025. This saw the national minimum wage rise to £12.21 an hour for those aged 21 and over, £10.00 per hour for those aged 18-20, and £7.55 per hour for those aged under 18.
The government plans to remove the currently separate 18-20 and 21+ categories and introduce a single adult minimum wage to cover 18-21-year-olds.
New tipping legislation came into effect in October 2024, which required employers to give all qualifying tips and service charges to employees. The change also requires employers to write a policy to this effect.
The Employment Rights bill strengthens the existing law on tipping. It will require employers to consult with all employees affected by the policy and states that they must review the policy within a three-year period. The policy must include how the employer plans to deals with tips. This is to ensure that workers receive tips, gratuities and service charges in full, and that they are allocated in a fair and transparent way.
Statutory Sick Pay
The Bill plans to remove the initial qualifying condition which states that a period of incapacity for work must arise for an employer to be liable to pay statutory sick pay. Currently, there is a three-day waiting period before an individual receives their statutory sick pay. The period of incapacity for work will now begin from the first day of incapacity, rather than the fourth day.
There will no longer be a requirement for the employee’s earnings to not to be below the lower earnings limit to be eligible for SSP. All employees will now be eligible for SSP, regardless of what they earn.
The bill also states that an employee’s SSP will either be the prescribed weekly rate of SSP or the prescribed percentage of the employee’s normal weekly earnings (to be set at 80%), whichever is lower.
Parental, Paternal & Bereavement Leave
Unpaid parental leave will become a day-one right for eligible employees, with the current requirement of one-years’ service to be removed.
Paternity leave will also become a day-one right for eligible employees, with the 26-week qualifying period to be removed. Another change seeks to remove the current restriction on taking paternity leave after a period of shared parental leave.
Currently, the only right to statutory bereavement leave is if an employee’s child dies under the age of 18 or is stillborn after 24 weeks of pregnancy. The Bill proposes to extend the right to bereavement leave more generally. Bereavement leave will become a day-one right. In cases where the current bereavement provisions do not apply, bereavement leave would be one week and unpaid. If more than one person has died, an extra week will be added for every death.
Harassment
The Employment Rights Bill will amend the Equality Act 2010 to require employers to take “all reasonable steps” to prevent sexual harassment from occurring in the workplace. The term “reasonable steps” will be more stringent than the current standard. It is likely that regulations will be updated to specify what constitutes reasonable steps for an employer to take.
This preventative duty to prevent sexual harassment will also extend to third parties, such as customers and suppliers. This means, for example, that an employer has a duty to ensure that its customers don’t sexually harass its employees. An employer will be considered to have permitted such harassment if they fail to take all reasonable steps to prevent it.
The Bill also proposes to make it a protected disclosure for an employee to report that sexual harassment has occurred, is occurring, or is likely to occur. If an employee were to be dismissed for making such a disclosure, it would be an automatically unfair dismissal.
These changes will require employers to review their harassment-related policies to ensure they comply with their new preventative duties once the Bill comes into force.
Equality Action Plans
Organisations who employ 250 employees or more will be required to publish equality action plans outlining steps that the employer is taking to address any gender pay gaps they may have and the steps they are taking to support employees going through menopause. There will also be a requirement to publish a gender pay gap action plan and a menopause action plan.
Currently, the form and manner of the plans is unknown, as is the frequency of publication, although updated regulations are likely to provide further guidance.
Flexible Working
Flexible working is to become a default from day-one of employment. The term “flexible” refers to time, hours, place of work.
There is currently a list of reasons to reject flexible working. This list will be included in the new bill as well. The employer must act reasonably in identifying one of these reasons when coming to the decision that an employee cannot work flexibly.
Trade Unions
Employers will be required to inform their employees in writing that they can join a trade union at the same time as providing the Section 1 Statement.
Trade unions will be able to access a workplace to meet and talk with their members. Access arrangements are to be entered into by the trade union and the employer. If no agreement can be reached, then the Central Arbitration Committee will assist. This will allow trade unions to support their members in employment-related issues and potentially recruit new members.
Employers will now be required to give a reason when refusing trade union members time off for their trade unions duties.
Equality (Race and Disability) Bill
The government announced the draft Equality (Race and Disability) Bill in the King’s Speech on 17th July 2024.
Currently, legislation states that men and women should receive equal pay if they perform work of equal value. Since 2017, it has been a mandatory requirement for organisations with 250 employees or more to issue gender pay gap reports.
This Bill plans to extend the legal requirement of ‘equal pay for equal work’ to race and disability. Under the Bill, ethnic minorities and individuals with a recognised disability will be entitled to receive equal pay if they complete work of an equal value. Employers with 250 employers or more will now also be required to disclose ethnicity and disability pay gaps.
The government is currently undergoing a large-scale public consultation in support of the bill. The Bill has yet to be formally published.
