The long-awaited Employment Rights Bill is now reaching its final stages in Parliament, with royal assent expected in late September or October.
This legislation represents one of the most significant overhauls of workplace rights in recent history, and employers should begin preparing now for the changes it will bring.
What are the key changes for employers
The Bill has been hotly debated, sent back and forth between the Lords and Commons, and is set to bring some significant changes including:
Unfair dismissal
The two-year qualifying period will be scrapped, making unfair dismissal protection a day-one right.
A statutory initial period of employment (probationary period) will apply, offering a more flexible framework for dismissals during this stage relating to capability, conduct, statutory restriction or some other substantial reason relating to the employee. It is thought that this will not apply to redundancy dismissals.
The details of the process that will be required during the initial period of employment have yet to be published, however it is expected that the initial period of employment will likely last around nine months as the government has already said its preference will be nine months. A consultation on this process is expected to be launched this, Autumn.
Employers will need to be preparing to update contracts to reflect these terms and ensure managers are trained to apply them fairly.
Harassment at work
Employers will be required to take all reasonable steps to prevent sexual harassment.
The new rules extend protections to whistleblowers and cover third-party harassment, while confidentiality clauses restricting employees from discussing harassment or discrimination will be banned.
Policies, contracts and risk assessments must be updated to ensure compliance. Employers will also need to carefully consider the content of any settlement agreements.
Flexible working
Employees will retain the right to request flexible working, but refusals on the existing permitted grounds must now be reasonable, explained and subject to consultation.
Managers will need training, and contracts should be reviewed to reduce the risk of tribunal claims.
Family rights
Paternity and unpaid parental leave will become available from day one. Although it should be noted that the government has not committed to making statutory paternity pay a day one right.
Dismissal during pregnancy, parental leave or within six months of returning to work will be unlawful except in limited circumstances. Regulations are awaited to define what these specific circumstances will be. A consultation is due to start in Autumn and it is expected these measures will come into force in 2027.
A new right to bereavement leave wider than the current parental bereavement leave, including for pregnancy loss, will also be introduced. Employers should review their handbooks and processes in line with these new rights.
“Fire and rehire”
The practice of dismissing staff to impose certain new terms will be classed as automatically unfair, except in circumstances of financial difficulty likely to affect the ability to carry on the business as a going concern.
There are also circumstances where dismissal to impose new terms which do not constitute a restricted variation will amount to unfair dismissal.
This change makes it vital for employers to build flexibility into contracts and consider any necessary changes carefully.
Collective redundancies
Thresholds will apply across the whole organisation, not just one site, as well as the trigger of 20 employees at one site. At present, it is not clear what the threshold number will be. Breaches of consultation duties could result in penalties of up to 180 days’ pay per employee which is double the current penalty.
Employers should review redundancy planning to ensure compliance.
Equality reporting
Large employers (250+ employees) will face new reporting obligations relating to the requirement to publish equality action plans showing what steps they are taking related to gender equality. These matters will include addressing the gender pay gap and supporting employees going through menopause. Regulations may make provision for the form and manner in which the plans are required to the published and the content of the plans.
The proposed Equality (Race and Disability) Bill includes a requirement for disability and ethnicity pay gap reporting but it is expected to be subject to significant consultation and will likely progress more slowly that the Employment Rights Bill.
Firms should prepare systems to gather and publish this data.
Zero-hours and irregular workers
Workers who consistently exceed their contracted hours for zero hours and low hours workers over a specified reference period, currently expected to be 12 weeks must be offered a contract reflecting those hours. This will apply for each reference period so it will keep needing to be offered. This places a significant burden on employers. there will be a consultation on what should amount to low hours for these purposes.
They will also gain rights to notice of shifts and compensation for cancellations. It is not clear currently what amount of notice or amount of compensation will be required.
Employers reliant on irregular hours contracts will need to adapt their rostering systems.
Statutory Sick Pay
Statutory sick pay will become a day-one right, with no earnings threshold. There will be a new system to provide fair earnings replacement for people earning below the current rate of SSP.
Preparing your business
The Bill has been met with concern across industry, with many employers highlighting the additional costs and administrative demands it will create. While some amendments have softened its impact, the reforms remain substantial.
If you would like tailored advice on how the Employment Rights Bill could affect your organisation, please contact our team.