The Employment Rights Bill: What Employers Need to Know (Pt 1)
This is a guest post written by Amy White, Employment Law Solicitor, mediator, trainer and facilitator, who heads up the Training and Wellbeing Division of Loch Associates Group.
The landscape of employment law in England and Wales is set to undergo a period of significant upheaval following the Government’s tabling, on 10 October 2024, of the Employment Rights Bill. The Bill has not yet passed into legislation, and timeframes are still uncertain, but changes are coming, and organisations would be well advised to start making preparations now, to ensure they’re ready when the proposals inevitably become a reality.
The Bill is a pivotal step in Labour’s Plan to Make Work Pay, aimed at enhancing employee protections, expanding flexible working and extending workplace support, all with the intention of improving workers’ rights and protecting the vulnerable.
Any employer, but particularly those committed to diversity, equity, and inclusion, should consider how these changes may impact their workforce, and how they can improve their practices and processes to support them.
Key Changes in the Employment Rights Bill
1. Protection from Unfair Dismissal from Day One
The Bill removes the two-year qualifying period where unfair dismissal claims are concerned. In essence, this means that, once the Bill becomes law, all employees, regardless of tenure, will be protected from dismissal without a ‘fair’ reason or process.
- Benefits for Employees: Removing the two-year qualifying period will provide employees with increased job security, ensuring new starters can’t be dismissed without a good reason and a degree of process. This, in turn, should help reduce anxiety for those in the early stages of their employment and create steadier, more stable workplaces. This is particularly significant for vulnerable workers, including those in low-paid positions, who are often at increased risk of unjustified dismissal during the early stages of their employment.
- Potential Risks: The risks associated with making a ‘bad hire’ will be multiplied once this change comes into effect. This could mean employers adopt a more restrictive approach to their hiring practices, resulting in a reluctance to engage those with ‘atypical’ backgrounds. On the other side of the coin, the greater sense of empowerment employees are likely to feel as a result of their enhanced job security during the early stages of their employment could lead to higher turnover and increased recruitment costs for employers.
Action for employers: Much detail still needs to be ironed out as to how this change will work in practice. The Government has indicated there will be an ‘Initial Period of Employment’ during which a ‘light touch’ dismissal procedure will be available to employers, but the finer detail has not yet been clarified. In the meantime, consider reviewing your recruitment practices to ensure they’re both robust and fair, as well as providing training to your managers in connection with fair hiring practices that adhere to the Equality Act 2010 and effective performance management procedures that nip issues in the bud.
2. Restriction on the use of Zero-Hour Contracts
Under the Bill, employers will have to periodically offer guaranteed hours to those staff engaged on a zero-hours contract, based on their typical working patterns.
- Benefits for Employees: Young people, women and people of colour are disproportionately employed on zero-hours contracts. For example, black workers are 2.7 times more likely to be on a zero-hours contract than white workers. This proposed reform encourages stable income and scheduling predictability for those engaged via the zero-hours route which should, in turn, benefit marginalised workers.
- Potential Risks: Employers may seek to avoid having to get to grips with the new restrictions by ceasing to engage zero hours staff altogether and instead outsourcing the work to self-employed contractors. Not only would this be problematic for those who benefit from a zero-hours contract (and the flexibility the same can provide), it would also increase risks for employers who may label a contractor ‘self employed’ when, in reality, they might well satisfy the legal definition of a ‘worker’ or even an ‘employee’. This, in turn, could lead to claims in relation to ‘employment status’ of which we’ve seen many high-profile examples over recent year.
Action for Employers: Audit your employment practices to identify whether zero hours contracts are being used in your workplace and, if they are, ask yourself why. Check and challenge your approach – is that type of engagement actually required or could an alternative work just as well or even better? Go even further and ask yourself some difficult questions – is this type of contract being used in an exploitative way and, if so, how can we address that problem?
3. Enhanced Sick Pay
At present, employees who are only entitled to statutory sick pay (SSP), as opposed to enhanced contractual sick pay, are not paid anything for the first three days of a period of sick leave. Labour has promised to make SSP payable from day one, as well as removing the existing requirement for an employee to earn above the lower earnings limit to qualify for SSP at all.
- Benefits for Employees: Aside from the overall financial benefit of receiving SSP from day one instead of day four, it is believed the waiting-days rule has a disproportionate impact on women. Research from the TUC and Centre for Progressive Change found that 69% of those who currently have to wait until the fourth day of illness before receiving any support are women. Making SSP payable from day one would, therefore, be a small step towards greater gender equality in the workplace.
- Potential Problems: As a result of a higher number of employees being entitled to SSP, from an earlier stage in their absence, employers will face increased costs. The Government’s SSP consultation paper notes that small and micro businesses are responsible for paying around 60% of the annual SSP cost to employers (despite only making up 47% of businesses). This reform is therefore likely to have a disproportionate impact on small and micro businesses.
Action for Employers: Audit your practices to determine how sick leave is paid (namely at SSP rate from day four only or via an enhanced contractual approach) and get to grips with the financial impact of this area of reform on your organisation.
4. Menopause in the Workplace
Currently, an organisation’s approach to supporting people going through menopause at work is largely down to their discretion (save that discriminatory practices will fall foul of the Equality Act 2010). The Government is proposing to require large employers (those employing more than 250 employees) to prepare and publish Menopause Action Plans summarising the support they provide to staff going through menopause.
- Benefits to Employees: According to CIPD research, around 1 in 6 people (17%) have considered leaving work due to a lack of support in relation to their menopause symptoms and a further 6% have actually left work. Requiring employers to demonstrate the support they actually provide to employees going through menopause will encourage them to devote time, attention and resource to this topic or risk being held to account if they don’t.
- Potential Problems: It’s arguable this requirement should apply to all employers, regardless of size, given most women in the UK work for small and medium-sized companies and menopause can be tough for anyone, regardless of where they work.
Action for Employers: Whatever your size, it’s worth critically considering the support you provide to employees going through menopause with a view to retaining experienced talent, creating an inclusive workplace and avoiding legal claims. Summarising the support you provide in an action plan or policy demonstrates how seriously you take this subject and your commitment to being a supportive employer.
This is the first in a series of three blogs on The Employment Rights by, written by Amy White of Loch Associates Group. Part 2 will look at flexible working, family leave rights and protections, and further changes to anti-harassment legislation.
Amy White is an Employment Law Solicitor, mediator and experienced trainer and facilitator, who heads up the Training and Wellbeing Division of Loch Associates Group. Amy uses her experience, expertise and passion for people management to design and deliver interactive and engaging training interventions on a range of people management topics including management and leadership development, workplace wellbeing and employment law and HR best practice. You can contact Amy at amy.white@lochassociates.co.uk.