Background
The government previously set out wide ranging plans to reform employment law in its manifesto and its Plan to Make Work Pay.
On 10 October 2024, it introduced the Employment Rights Bill 2024-25 (Bill) into Parliament, meeting its commitment to introduce the Bill within 100 days of entering office.
The Employment Rights Bill 2024 introduces several landmark changes set out below.
Currently, we do not know the commencement date for the new legislation. It is likely to be no earlier than October 2025, and the BBC stated today October 2026, but there is no official confirmation.
1. Day-One Rights
A key reform in the bill is the provision of several rights that apply from the first day of employment. These include:
- Unfair dismissal protection: The previous two-year requirement before an employee could claim unfair dismissal will be removed. Employees will have the right to bring unfair dismissal claims from the first day of employment. Protection against dismissal will also be strengthened for pregnant women and those returning from maternity leave (clauses 20 and 21). The government intends to make it unlawful to dismiss them within six months of their return to work except for in specific circumstances.
- Parental leave: Workers will have immediate access to parental leave from the first day of employment. This addresses the need for more flexible working arrangements for new parents and ensures that employees with family responsibilities are not at a disadvantage.
- Paternity leave: Fathers and partners are entitled to paternity leave from day one, without needing to meet prior length-of-service requirements.
- Bereavement leave: The bill also introduces broader rights to bereavement leave, extending it beyond the death of a child. Employees who suffer the loss of a close family member will be entitled to up to one week of unpaid leave from the first day
2. Probation Periods
The bill proposes the introduction of a statutory maximum probation period of nine months.
- During this period, businesses would be able to assess an employee’s performance and suitability for the role, but the day-one rights for unfair dismissal still apply, meaning any dismissal during the probation period must be fair and justified.
- There is currently a debate regarding the length of the probation period, with some trade unions advocating for a shorter statutory period, while businesses push for a longer timeframe. The nine-month limit remains under consultation and could be subject to change.
3. Flexible Working
The new bill makes flexible working the default position for all workers unless an employer can provide reasonable justification to deny such a request.
4. Statutory Sick Pay
The reforms aim to make statutory sick pay (SSP) more accessible to all employees:
- First-day eligibility: The bill eliminates the current three-day waiting period for SSP. Employees will be eligible for sick pay from the first day of their illness.
- Removal of the lower earnings limit: The bill removes the lower earnings threshold that previously excluded low-income workers from qualifying for SSP. This ensures that even part-time and low-paid workers are eligible for this benefit.
5. Ban on the practice of ‘fire and rehire’.
- The bill significantly restricts employers’ ability to dismiss staff only to offer them reemployment on worse terms.
- Requirement for negotiations: Employers will now be required to engage in good-faith negotiations with employees or their representatives (such as unions) when contemplating changes to employment terms, rather than resorting to dismissal and rehire as a quick solution.
- Any dismissal will be automatically unfair (therefore another day on right): if the reason for the dismissal is either:-
- the employee refused to agree to a variation of contract sought by the employee or
- to enable the employer to recruit another person (or rehire the employee) on new terms but with substantially the same duties
- Exception: there is a very limited exception which would allow an employer to make a change if their business was in dire financial straits.
6. Zero-Hours Contracts
The bill tackles exploitative zero-hours contracts, which have been widely criticised for their lack of job security and predictability:
- Ban on exploitative practices: The bill introduces a ban on zero-hours contracts that do not guarantee any hours of work, addressing the issue of “one-sided flexibility.” Workers will now have the right to a contract that reflects their regular working hours, giving them more financial security.
- Shift notice requirements: Employers will need to provide reasonable notice for shifts, and workers will be entitled to compensation if shifts are cancelled or cut on short notice.
7. Sexual Harassment
The new section 40A of the Equality Act 2010 introducing the requirement on employers to take reasonable steps to prevent sexual harassment of their employees, which is due to come into force on 26 October 2024 will be amended to require employers to take “all reasonable steps.”
8. Third Party Harassment
Employer liability for third-party harassment in relation to all relevant protected characteristics will be reintroduced into section 40 of the Equality Act 2010.
9. Equality and Diversity Action Plans
Larger employers will be required to take concrete steps to address pay disparities:
- Gender pay gap reporting: Companies will need to produce and publish annual equality action plans aimed at reducing the gender pay gap. The reforms also introduce new measures to support employees experiencing menopause.
10. Establishment of a Fair Work Agency
The bill proposes the creation of a Fair Work Agency, which will consolidate and strengthen enforcement mechanisms to ensure compliance with employment rights, such as:
- Enforcing rights related to holiday pay and ensuring workers receive the entitlements they are due.
- Providing guidance to employers on how to comply with the law and tougher penalties for those who violate workers’ rights.
