A mix of measures have been suggested in the Employment Rights Bill which was recently published by the new Labour Government.
The majority of these measures, however, will not come into force for some time. The Bill is essentially an overview and much of the detail is not yet known. The majority of the provisions are either subject to consultation or require regulations to provide the detail.
As such there is only a limited amount of preparation for the new provisions coming into force that can be undertaken at present.
As expected, these provisions include the suggestion that unfair dismissal would become a day-one claim (a claim that you can bring without any specific qualifying period of service).
Currently, an employee must have 2 years’ continuous service to bring a claim for unfair dismissal, although this is reduced in some instances. The new day-one right will be subject to a probationary period. At present, there is no real detail of how this would work.
The Bill provides for details to be given by way of regulations (which have yet to be published). The Government has indicated that it is proposing a 9-month probationary period. It seems during this period a ‘lighter-touch process’ would apply. Although it appears that this will not apply in respect of redundancy dismissals and will be limited to capability or conduct-related dismissals.
In the Government’s publication Next Steps to Make Work Pay, it suggested that the process should include a meeting with the employee to discuss concerns about their performance. Although no further details have been given to date.
The Bill includes provisions to limit potential compensation for successful unfair dismissal claims during the probationary period. The government has committed to consulting on whether lower compensation should be awarded to claims brought in respect of unfair dismissal during the probationary period.
At present, it seems that these reforms are unlikely to take effect prior to Autumn 2026. As such, although employers need to be aware of the upcoming changes and will need to ensure their policies and systems are ready prior to the implementation, it will be a case of waiting for the regulations in order to be able to fully prepare for the change.
The Bill will introduce a right to guaranteed hours for zero-hours or low-hours workers reflecting the hours workers have worked during a reference period. It is thought that this period may be 12 weeks.
A right to reasonable notice of shifts and to payment for shifts cancelled or curtailed at short notice has also been included in the Bill.
A consultation seeking views on how to apply these measures to agency workers commenced on 21 October 2024. There is likely to be a further consultation on the more general implementation of these measures.
Employers should begin considering how these measures will impact their business if they utilise zero-hours or low-hours workers.
It may be that some of those workers, on review, should be classified as part-time workers rather than zero-hours workers. It seems likely that it will be some time before these measures come into force.
The Bill amends the thresholds for when the need to collectively consult arises. The Government has said that it remains ‘committed to consult on lifting the cap of the protective award if an employer is found to not have properly followed the collective redundancy process’.
The Bill includes provisions which make dismissals unfair where the principal reason for dismissal is that an individual did not agree to an employer’s requested variation of their contract of employment.
There is a limited exception where the employer is in financial difficulty which is affecting or likely in the immediate future to affect the employer’s ability to carry on the business.
As a result of this a further consultation commenced on 21 October 2024: ‘Making Work Pay: Consultation on strengthening remedies against abuse of rules on collective redundancy and fire and rehire’. Employers should review the terms of their contracts of employment currently as if there is the need to consider amendments to the contracts of employment, it may be wise to consider these before the new provisions come into force.
The Bill removes the current waiting period of 3 days in respect of statutory sick pay. It also removes the current qualifying periods of employment for paternity leave and parental leave.
It includes provisions which will make flexible working requests harder for employers to refuse as employers will only be permitted to refuse on specified grounds (which is the current position) but also only if it is reasonable to refuse on those grounds.
The employer will need to explain why it believes that reason applies and why it considers it reasonable to refuse the request.
There are also numerous provisions in respect of trade unions which strengthen their position.
The provisions regarding unfair dismissal are likely to have a significant impact on many employers, particularly those with employees who have shorter periods of service.
Currently, it is not clear what the process will be to dismiss someone during that period but it appears that there will be some form of process.
Presently, so long as the employee does not have the benefit of a claim for automatic unfair dismissal, a discrimination claim or a claim that does not require the standard period of continuous service for an unfair dismissal claim, an employer can dismiss an employee at any point before they reach the continuous service requirement, without reason and without following any form of process as long as the employee is given or paid in lieu of their notice period.
Employers may wish to look to strengthen their recruitment processes to ensure as far as possible the correct employee is employed initially.
They may also need to keep more detailed records of any concerns regarding employees during the probationary period and go through a more formal process in respect of any performance concerns, although it will be necessary to review the regulations regarding this when they are published to ascertain exactly what is required.
At present, employers cannot do much more to prepare than review their processes as the requirements for the ‘light-touch’ process to be used during the probationary period are not yet known.
The change to unfair dismissal and those changes impacting zero-hours workers are likely to be the ones that impact the largest number of employers.
The Government estimates that approximately 9 million additional employees will be entitled to bring claims for unfair dismissal under the new rules. At present, however, it is a case of ‘watch this space’!
