By Chloe Baxter and James Watson at Howell-Jones LLP
The recently introduced Employment Rights Bill is being hailed as the most significant reform in UK employment law in over three decades, marking a pivotal moment for worker rights. However, with many of the recent proposed extensive reforms being either delayed or modified, it seems more like the beginning of a gradual evolution rather than a dramatic overhaul.
The government’s commitment to releasing this Bill within 100 days following its decisive election victory created considerable pressure, resulting in compromises and some incomplete measures.
Powerful employer groups influenced the scaling back of critical protections initially outlined in the government’s “Make Work Pay” manifesto, which aimed to improve pay, working conditions, and job security for workers.
Consequently, while some anticipated reforms have been included, many have been altered, and others are absent or require further discussions.
This is highlighted by the simultaneous release of a companion document called “Next Steps,” which details how Labour plans to fulfil the remaining election promises not yet addressed in the Bill.
Several of the proposed changes depend on secondary legislation, consultations, or codes of practice. Coupled with assurances that significant reforms, such as those regarding unfair dismissal, will not be implemented until 2026, this phased approach offers employers some breathing room, as they will not face abrupt changes.
The much-discussed provision for unfair dismissal rights from the outset now incorporates a probationary period, alleviating employer concerns while still providing immediate protections for employees.
Under the current law, unfair dismissal rights kick in only after two years of employment. The new Bill proposes eliminating this waiting period in favour of a streamlined dismissal process during a statutory probationary period, likely lasting nine months, pending further consultation.
One notable aspect mentioned in the “Next Steps” paper is the proposed right to disconnect, intended to safeguard employees’ off-work time, which was anticipated to be included in the Bill. Instead, the government has indicated it will be addressed through a new code of practice, with consultations set for next year.
Another longstanding Labour goal is to eliminate the existing three-tier employment framework in favour of a single worker status. This change aims to broaden the number of workers eligible for employment rights by merging the current categories of “worker” and “employee,” ultimately leading to just two classifications: “employed” and “self-employed.”
This significant proposal aims to reduce ambiguity but has sparked considerable debate regarding its potential effects on business flexibility. For now, this promise remains unresolved within the current timeframe, though the government has affirmed its ongoing commitment to a unified worker status model in the “Next Steps” document.
For pregnant women and new mothers, the Bill promises enhanced protections against dismissal, extending current safeguards. It will become illegal to dismiss a woman on maternity leave, as well as for six months following her return, except in specific cases.
However, there is no mention of changes to statutory maternity pay (SMP) regulations. There were unconfirmed reports suggesting adjustments to allow pregnant employees to qualify for SMP if they began a new job within the first six months of their pregnancy, but currently, eligibility only arises if pregnancy occurs after employment begins.
While the Bill outlines a range of proposed reforms and a timeline for the “Next Steps,” immediate action is lacking. Stakeholders will have to await Parliament’s deliberations to see how the Bill evolves. Interestingly, even before the Bill is finalized, the government has suggested potential amendments in the near future.
For now, employers should consider the possible implications of these changes in their planning and strategy, keeping an eye out for further legislative developments. As the Bill advances through Parliament and additional consultations occur, the practical impacts will become clearer.
Employers can take some comfort in the government’s commitment to a gradual implementation, with most major changes set for 2026.
Nevertheless, these reforms are substantial, and smaller businesses lacking dedicated support will need to allocate resources to navigate them effectively. Achieving positive outcomes for both employees and the business will require careful planning, ongoing support, and regular policy reviews.
Detailed Overview
The Employment Rights Bill introduces significant alterations to employment laws, emphasizing workers’ rights and flexibility. While subject to revisions as it moves through Parliament, here are key elements for employers to note:
- Unfair Dismissal Protection from Day One:
The new legislation replaces the two-year waiting period for unfair dismissal protection with immediate rights, paired with a statutory probationary period for new employees.
- Flexible Working as the Standard:
Any rejection of flexible working requests must meet a reasonableness test, making it easier for employees to challenge such refusals.
- Zero Hours Contracts Adjustments:
While zero hours contracts remain legal, workers will gain a right to a contract reflecting regularly worked hours over a specified reference period, likely 12 weeks. Additionally, provisions for reasonable shift notice and compensation for short-notice cancellations will be introduced.
- Stricter Regulations on Contractual Changes:
Employers will face increased difficulty in altering contractual terms without consent. Dismissing an employee for refusing such changes will be deemed automatically unfair.
- Expanded Parental Rights:
The Bill removes the 26-week qualifying period for paternity and parental leave, establishing these as day-one rights. Additionally, a new bereavement leave of at least one week will be introduced.
- Enhanced Protections for New Parents:
Pregnant employees and new mothers will receive strengthened redundancy protections.
- Revised Statutory Sick Pay (SSP) Entitlement:
SSP will be available from the first day of illness, eliminating the previous waiting period and minimum earnings requirement.
- Stronger Anti-Harassment Measures:
The Bill enhances existing requirements for preventing workplace harassment and expands employer liability for harassment by third parties during employment.
- Establishment of the Fair Work Agency:
This new agency will consolidate existing enforcement bodies to oversee rights such as holiday pay and provide guidance, potentially adopting a more proactive enforcement approach.
Howell Jones: Employment Rights Solicitors
Employment law is complicated, challenging and changes all the time. Different skills and expertise are required. Our employment rights solicitors handle a wide range of employee issues. Contact us today for more information.
Note: This overview does not constitute legal advice; it is intended to provide general information on current legal matters.
