The Employment Rights Bill: the biggest change to rights at work in a generation?
HM Government has now published the Employment Rights Bill (‘the Bill’). At the same time, Ministers released a briefing note, which described the Bill as introducing landmark reforms.
“A number of wide-ranging reforms have been proposed. These include removing the qualifying period for unfair dismissal, introducing protection from third party harassment, and restricting fire and rehire” explains Sam Welham, an Associate Solicitor, in the Employment Team at Barker Gotelee. “If enacted, these changes shall significantly enhance employment rights at work.”
Sam Welham looks at the main provisions of the Bill and how, if they become law, they could affect your business.
Unfair Dismissal
The most high profile change proposed is to unfair dismissal. At present, with some limited exceptions, employees must have two years continuous employment to bring a claim. The “headline” is unfair dismissal is to become a day one right. However, that is not the end of the matter.
The Bill introduces a new concept of a statutory probationary period. During that probationary period, it is intended that a new light touch regime will apply. Unfortunately, there is no indication as to what this light touch regime will involve. Nor has there been any decision about the length of the probationary period, although the Government’s current preference is for 9 months.
Before robust advice can be given, further clarity is essential concerning how the probationary period will operate. However, the introduction of a new regime, for dismissal within the probationary period, could well create uncertainty and confusion.
Fire and Rehire
This is probably the biggest proposed change. Ministers say that the changes are being introduced, to deal with unscrupulous fire and rehire practices. Unlike the qualified change to unfair dismissal, if enacted the changes to fire and rehire, really shall make a big difference.
The Bill makes it automatically unfair to dismiss, if an employees does not agree changes to their employment contract, or if someone else is employed to replace the employee who carries out substantially the same role.
There is one very limited exception proposed. This is where employment contracts need to be changed for the employer to avoid financial difficulties. These financial difficulties must be so serious, that they are likely to affect the employer’s ability to carry on the business as a going concern. This exception is further qualified, so that it can only be relied upon if the employer could not reasonably have avoided the need to make the variation.
In practice, all this means it is going to be impossible to force changes to employment contracts. It would be a very brave employer who relies upon the financial difficulties defence at an Employment Tribunal hearing. A judge would need to be convinced that the business was in real difficulties, and that there was no choice but to change the contracts. Doing so could cause real reputational damage to the employer, making it much more difficult to hire new employees, retain existing staff, and obtain lines of credit from suppliers.
Harassment
The law on harassment changes on 26 October 2024, so that employers are obliged to take ‘reasonable steps’ to prevent sexual harassment. The Bill strengthens this obligation, requiring employers to take ‘all’ reasonable steps to prevent sexual harassment.
The Bill also introduces liability for employers to take all reasonable steps to prevent harassment caused by third parties, such as by customers, or suppliers.
What does ‘all reasonable steps’ mean in practice? As a first step, it’s likely to involve the employer undertaking comprehensive risk assessments. These will then need to be acted upon, and real consideration given on how to mitigate the risk. Also, employers will need to introduce detailed policies and procedures, upon which all staff will need to be trained.
Zero-hour contracts
The proposed rules oblige employers to offer guaranteed hours, at the end of every ‘reference period.’. This offer must reflect the hours worked during the ‘previous reference’ period.
The employer is also required to give reasonable notice of a shift, or its cancellation.
Regrettably, the Bill is thin on detail. It does not define either the ‘reference period’, or what constitutes reasonable notice. Both are to be defined at a later date.
Flexible Working
The Labour Party promised to make flexible working arrangements the default from day one, except where it is not reasonably feasible. The Bill does not actually go that far. It only requires that any refusal must be ‘reasonable’, and the statutory reasons to refuse flexible working remain unchanged.
In practice, this means employers only need to give clear reasons why the flexible working request will not work in practice, with reference to the statutory reasons for refusal. The only real change is going to be that employers must give flexible working requests more thought, before they are refused.
Overall
The Bill has not yet been scrutinised by Parliament. It is not expected to become law until 2026, and the wording could well change before then. The wording could be watered down. That means it is premature to recommend wholesale changes to contracts, policies and procedures.
Notwithstanding that, there is some preparatory work that employers could undertake. This would be to consider the impact of third party harassment. For example, by undertaking a risk assessment and acting upon it. Reducing the risk of third party harassment has the potential to have a positive impact upon staff retention and morale.
For further information and to discuss any specific issues or concerns, please contact Sam Welham in the Employment Team on 01473 617 348 or email [email protected]. Barker Gotelee has offices at 41 Barrack Square, Martlesham Heath, Ipswich, IP5 3RF.