Employment Rights Bill: Amendments published
The Government has published a comprehensive set of amendments to the Employment Rights Bill (“ERB”) as it moves through Parliament. These amendments are outlined in the Government's responses to four consultations launched in October 2024, and they have been put forward ahead of the bill's report stage.
Here are the key points from the amendments and consultation responses:
Guaranteed hours offered to agency workers
The Government’s consultation response has confirmed that the zero-hours provisions will be extended to agency workers.
Agency workers will be given the right to be offered guaranteed hours if they are on a zero hour or “low hour” contract. The amendment will place this responsibility on the end user on the basis that they are best placed to forecast and manage the future workflow (although the legislation will maintain flexibility by allowing the obligation to be placed on agencies or other entities instead in certain scenarios).
Agency workers will also be included in the right to reasonable notice of shifts. Both the end user and agency will be responsible for providing an agency worker with reasonable notice of shifts, shift cancellations and changes to shifts. Agency workers will also be entitled to compensation if shifts are changed at short notice. Responsibility for paying this compensation is placed on the employment agency as the more “efficient” option (as the individual will be on the agency’s payroll). Agencies will have a temporary right to recoup this cost if it is the end user’s responsibility, but for any agreements reached more than two months after the ERB is passed, any recovery of costs needs to be dealt with in the relevant agreement between agency and end user.
There is also a new provision which allows a collective agreement to contract out from the rights to guaranteed hours and reasonable notice of shifts in their entirety, for both workers and agency workers. This means that the employer and an independent trade union can reach an agreement that excludes the new rights and replaces them with something else, so long as these new terms are incorporated into the contract.
Umbrella companies
The Government will introduce an amendment to the ERB to define umbrella companies, to allow for their regulation and to bring them within the scope of the Employment Agency Standards Inspectorate’s (and subsequently, the Fair Work Agency’s) remit.
As announced at Autumn Budget 2024, where an umbrella company is used in a labour supply chain to engage a worker, the Government will bring forward legislation to move the responsibility to account for PAYE from the umbrella company that employs the worker, to the recruitment agency that supplies the worker to the end user. Where there is no agency in a labour supply chain, this responsibility will sit with the end user. This will take effect from April 2026.
Statutory Sick Pay (SSP)
The ERB already proposed scrapping the four-day waiting period for SSP, so that it becomes payable from day one of sickness. The new amendment and related regulations will give those earning below the lower earnings limit a right to sick pay at 80% of average weekly earnings. This means that all employees will be entitled to the lower of the SSP weekly flat rate or 80% of average earnings as soon as they are off sick from work.
Collective redundancy consultation
The Government is amending when collective consultation will be triggered. It is currently triggered when an employer proposes to dismiss 20 or more employees as redundant within a 90-day window. Following changes in the ERB, dismissals will be calculated across the whole business, not just one establishment. However, the new amendments give the Government the power to increase the threshold trigger if redundancies occur in more than one establishment. In addition, the amendments clarify that consultation with appropriate representatives does not need to be carried out with all representatives together, or with a view to reaching the same agreement with everyone
Another amendment is a doubling of the maximum protective award for failure to collectively consult on redundancies, from 90 to 180 days. This will increase the risks associated with not handling collective redundancy processes correctly. The Government has described this as a “balanced approach”. The doubling of the penalty will potentially deter some employers from choosing not to comply with these obligations.
Fire and rehire
The ERB makes the practice of fire and rehire/replace automatically unfair except in situations where the business is in extreme financial distress. In those situations, an employer would need to comply with the Code of Practice on dismissal and re-engagement, which the Government has promised to update.
Fair Work Agency
The Government has tabled amendments to give the Secretary of State additional powers (presumably via the Fair Work Agency (FWA)), which it hopes will reduce the burden on the Employment Tribunal. This includes the ability to issue underpayment notices in respect of unpaid minimum wage, SSP or holiday pay. Employers will be required to pay the amount due plus a financial penalty, enforceable by a court order in the event of non-compliance.
The FWA will also be given powers to bring Employment Tribunal proceedings on behalf of workers who do not pursue a claim themselves and provide legal assistance to workers in employment proceedings (with costs to be recoverable from any costs awarded).
It is increasingly clear that the FWA is considered the future model of enforcement, given the extreme delays in the Employment Tribunal system. Although its effectiveness will depend on its funding, it will generate its own revenue to a certain extent through its power to impose penalties and recover enforcement costs.
What was not mentioned?
One of Labour’s Manifesto promises was a "right to switch off", giving employees a right to disconnect from work-related communication outside of working hours. This did not form part of the ERB, but the Government had indicated it would be introduced by a statutory Code of Practice. It aims to get the balance right between allowing flexibility and making it clear that people’s home lives should be respected.
The new right not to be unfairly dismissed from day one is subject to an “initial period” of employment, when a lighter touch procedure for dismissal can be used. Although the Government has expressed a preference for nine months, the period is not confirmed in the amendments and will be subject to consultation before being set.
What next?
The ERB will next move to the Reports stage of the House of Commons and will undergo extensive Parliamentary scrutiny before it can be passed. Consultations on most reforms are due later this year, and much of the detail will only be addressed in secondary legislation. This topic is therefore likely to continue evolving and be discussed for some time to come.
How we can help
If you would like any advice in this area, including a review of your current policies and procedures in light of the amendments to the ERB, please do not hesitate to contact a member of the Employment Department.
