Employment Rights Bill 2024 | Key Changes
Labour confirmed their intention to introduce a number of significant changes to employment law within the King’s Speech earlier this year. These changes have since been contextualised in the Employment Rights Bill 2024 (the ‘Bill’) published on 10 October 2024 and an amendment paper which was published on 27 November 2024.
It is important that employers are aware of the key changes, the majority of which will take effect in Autumn 2026.
Headline points under the Employment Rights Bill 2024
We have set out below a summary of the headline points under the Bill.
Day 1 Unfair Dismissal
The Bill will remove the current 2-year qualifying period to bring a claim for ordinary unfair dismissal. This means that unfair dismissal will become a day 1 right. This is a significant change for employers, ultimately giving employees greater protection.
There are two limitations to this right. Firstly, the right will only be applicable once the individual has started work with the organisation. Secondly, the Bill introduces the idea of an ‘initial period of employment’ akin to a probationary period. During this initial period employers are expected to be given greater flexibility to dismiss for potentially fair reasons such as performance or conduct. Any compensation for unfair dismissal claims during this period is also likely to be reduced. We are awaiting further details on this and how it may work in practice.
When the original bill was produced the length of this “initial period of employment” was subject to consultation, but it was proposed it would be 9 months and it was subject to consultation. The amendment paper published in November confirms that the “initial period of employment” will be between 3 and 9 months.
Whilst implementation is not expected until Autumn 2026, employers should have this right on their radar and will need to review their policies in relation to recruitment probationary periods to ensure that they can comply with the new rules.
Collective Redundancy
The Employment Rights Bill 2024 also extends the obligation to carry out collective consultation in redundancy situations by removing the requirement for redundancies to be at a ‘single establishment’ when evaluating whether the obligation to collectively consult applies. The proposals will mean that if an organisation has 20 or more redundancies across the business as a whole the obligation to carry out collective consultation will be triggered. This means more employers will face an obligation to collectively consult with employees as they can no longer look at separate establishments individually.
Fire and Re-Hire
The principle of ‘fire and re-hire’ – using dismissal and re-engagement to allow employers to implement changes to employee terms has increasingly been in the spotlight. To combat this, the Bill introduces a new ground of automatically unfair dismissals where:
- the employer sought and the employee refused a variation to their contract of employment; or
- the employer dismissed the employee in order to replace them in substantially the same role under a varied contract.
The Bill provides a limited exception where the variation is required to eliminate financial difficulties affecting the employer’s ability to operate as a going concern and where there is genuinely no other alternative. However, as it stands this defence is limited to severe financial difficulties and will be difficult for employers to establish. Employers in this circumstance would still need to demonstrate that the dismissal was fair under the normal unfair dismissal test.
As currently drafted the Bill will to all intents and purposes make fire and re-hire unlawful, and place a greater emphasis on employers needing to reach agreement with employees to vary terms, with no clear fallback position.
Zero Hours Contracts
Zero hours workers have equally recently been in the spotlight, with the Conservatives already due to introduce the right to request predictable terms under the Workers (Predictable Terms and Conditions) Act 2023.
This Act will now not take effect. Instead, the Bill introduces more significant protections for zero hour workers. Under the Bill whilst zero hours arrangements will still be permitted, an employee on a zero hours (or low hours) contract will have a right to a contract that reflects the number of hours they regularly work. This may include having to offer the employee the same days/times/working patterns, although this is yet to be confirmed. The right will only be triggered where the hours worked satisfy the conditions as to the “number, regularity and otherwise”.
The Bill also provides zero hours workers with the right to reasonable notice of shifts and changes to shifts (expected to be no more than 7 days’ notice) and proportionate compensation for shifts cancelled or curtailed at short notice.
The conditions workers will need to meet to benefit from the right to guarantee hours, the thresholds for low hour workers, and the compensation limits are not yet defined in the Bill. These will be set out in secondary legislation in due course and will be key for employers to assess which zero hours workers will benefit from this protection.
Trade Unions
The Bill also significantly strengthens the power of trade unions. The changes include requiring a statement of trade union rights to be included in Section 1 employment statements, placing employers under a duty to take reasonable steps to facilitate unions access to workplaces and bolstering the rights to time off for trade union activities. The required period of notice for industrial action will be reduced from 14 to 7 days. A number of the changes made by the Conservative government to increase the requirements for strike action and formal recognition will also be reversed, for example, the Bill provides for the removal of turnout requirements and a return to a simple majority requirement for strike action, and a reduction in the thresholds for formal recognition. The formal requirements for ballot papers will also be simplified, removing some of the technicalities that can currently result in strike action being delayed.
Sickness Absence
As expected the current waiting period of 3 days for Statutory Sick Pay (SSP) will be removed granting employees the right to claim SSP from day one of their illness. The lower earnings threshold for calculating SSP will also be removed, with lower earners receiving a percentage of pay (with the level to be confirmed) as SSP.
Flexible Working
The Bill introduces an enhanced right to flexible working, adding a new requirement that in addition to identifying one of the specified business grounds to reject a request, the employer must also demonstrate that refusal on this ground is reasonable. If the request is refused the employer must explain the grounds for the refusal, including why the decision is reasonable, in writing to the employee. The remedies continue to be limited to 8 weeks pay.
Parental Leave
Parental and paternity leave will become a day one right. Parental bereavement leave (2 weeks) will be extended to cover anyone who is bereaved (expected to be 1 week unpaid).
Additionally, the Bill proposes to increase the protection for pregnant employees, employees on maternity leave and returning mothers, with details to be confirmed.
Enforcement
The Bill proposes the creation of a new ‘Fair Work Agency’ which will have the power to inspect workplaces and take direct action in relation to working time, holidays, pay (including sick pay), agency rules and discriminatory practices against migrant workers.
Action Plans
More specifically to larger organisations, the Bill introduces a requirement for organisations with 250 employees or more to introduce action plans to address Gender Pay Gap reporting and supporting employees through the menopause.
The amendment paper published in November also added menstrual problems/disorders to the definition of ‘matters related to gender equality’ which will be covered by this. This is due to be set out in separate Regulations and we will continue to keep you updated.
Time limit for bringing Tribunal claims
When the original bill was published, it didn’t comment on the time period to bring a tribunal claim. The next steps guidance published alongside it (see more below), however, referred to increasing the time to bring a claim from 3 to 6 months. We were expecting this to be dealt with separately in the future.
However, the amendment paper on 27 November 2024 added this to the original Employment Rights Bill. So the legislation now proposes to extend the time limit for bringing all tribunal claims from the current 3 months to a new 6 months’ time limit.
This is a significant change and will likely impact commercial decisions taken by businesses and their approach to managing risks. It will give employees longer to bring a claim and mean businesses must wait longer to find out whether claims will be lodged against them.
Presuming the ACAS process will remain the same, if you add the time for the ACAS conciliation process to take place and the time for the tribunal to process the claim, an ET1 may not arrive with an employer until over 9 months after the events it is complaining about.
Tips
For those working in the service sector, new legislation on tips came into effect on 1 October 2024. This requires employers to ensure all tips, gratuities and service charges are allocated fairly and transparently between workers. The Bill will create a new obligation for employers to consult trade union/employee representatives before producing a written policy.
Future changes
Alongside the Employment Rights Bill 2024, the Government has published a next steps document, setting out additional changes that we can expect to see over the coming years. These include:
- changes to status, creating a single status of worker covering employees and workers;
- changes to the National Living Wage;
- a review of TUPE;
- equal pay and pay gap reporting to be extended to ethnicity and disability;
- parental leave and carer’s leave review;
- surveillance technologies review; and
- right to switch off.
In other words, watch this space!
What does this mean for employers?
Whilst the changes are significant, the Employment Rights Bill 2024 will require full progress through Parliament and the majority of the reforms will not take effect until 2026. A number of the changes are subject to secondary legislation and further consultation and therefore further changes and clarifications are expected in due course. We will continue to provide updates as and when information is released.
If you have any questions about this blog, or any other employment matters, please do not hesitate to contact a member of the Employment team. Please also visit the Employment and Immigration sections of our website to see a full range of services we can assist you with.
We publish blogs and social media posts to give a general overview of legal and commercial issues, relevant at the time of publication, which we hope you will find interesting. Please note that legal rules often change depending on the specific facts of a situation. The law also changes over time following changes in legislation or new court cases. We do not actively update our blogs or posts once they are published to reflect changes in the law.
As such, our blogs and posts are not intended to advise you on the law and must not be relied upon as legal advice. If you require advice on a particular issue then please contact us and we will be pleased to help.
