After months of anticipation and speculation, the government has now tabled its Employment Rights Bill in what many have described as the greatest overhaul in workers’ rights for a generation.
The Bill contains a raft of measures aimed at delivering improved rights and stronger protections for millions of workers as well as levelling out the “uneven balance of power” between employers and employees. Most of the planned changes will not come into force until the Autumn of 2026 after a period of consultation.
Whilst the strengthening of workers’ rights is a positive step in the right direction, there are concerns that many businesses, particularly in the SME space will be negatively impacted. The government hope that a long consultation period will help to bed these changes in and allow organisations the time and space to adjust.
So, what are the changes and how will they impact both employees and their employers? Philip Richardson, Partner and head of employment law at Stephensons takes a closer look.
New day one rights
Under the Bill, parental leave, sick pay and protection from unfair dismissal will all be available from an employee’s first day in the job. It is to be expected that employers will retain the right to place new hires on a maximum 9-month probation period, however this still represents a significant shift away from the current rules around unfair dismissal.
As it stands, the qualifying period for all employees, regardless of when they commenced employment is two years. If businesses are forced to make decisions in that 9 month window it will result in businesses having to change their current disciplinary polices and make water-tight probationary period reviews. This can often be difficult for smaller businesses to manage as they will need to periodically review new starters’ performance on a regular basis.
Also, employees are often on their best behaviour within that period and when the cost for having to go through recruitment can be so high, are employers faced with an employee who has been performing at a satisfactory level for nine months (albeit not performing exceptionally) going to be a rush to dismiss? Probably not. It therefore leaves open a 15month window for conduct/capability to slip but with employees who then have protection.
An end to ‘exploitative’ zero-hour contracts
New measures would ban what have been deemed “exploitative” zero-hour contracts, employers will have to offer workers a guaranteed-hours contract based on the hours they have clocked up during a 12-week period. Workers will be compensated for any changes in shifts that are made without reasonable notice.
From a business perspective, genuine zero hours contracts can often work well, offering both parties’ flexibility. The devil is in the detail here as to what would be deemed “exploitative”. This is likely to be difficult to define and it is likely this will need to be arbitrated at Tribunal which will be a further additional cost to businesses.
Fire and rehire outlawed
‘Fire and rehire’ practices, where an employer fires one or more employees to then offer them a new contract under different, often less favourable, terms will be outlawed. In its manifesto, the government pledged that they will “reform the law to provide effective remedies against abuse and replace the inadequate statutory code brought in by the government with a strengthened code of practice.”
The suggestion is that there will be a clause still allowing organisations to use these practiced when there is a “genuine” reason for doing so. This is in our view however likely to be exceptional and will give little scope to dismiss and re-hire.
Right to disconnect
This measure would give workers the right to ignore their bosses’ calls and emails outside of their regular working hours. Rather than a statutory right, this will now be introduced through a ‘code of practice’ that employers can introduce at their discretion. This has been criticised in some quarters as a watered-down version of what was originally promised but hopefully recognises that in some sectors a level of work outside standard hours is reasonable expected
Whilst this measure is likely to be introduced at a much later point, once again the devil will be in the detail.
The Fair Work Agency
The Fair Work Agency will be created in tandem with the introduction of the Employment Rights Bill.
Under their role, officers will have inspection powers with the ability to enforce penalties for those who breach employee rights. Whistleblowers will also be encouraged to report bad behaviour to the new body.
Its powers will not be limited to the new rights contained in the Employment Rights Bill, but it will also enforce a range of current rights including the national minimum wage and certain aspects of the Modern Slavery Act.
Over the next 18 months businesses of all sizes will need to take the time to absorb what these changes mean for them and look at making the necessary adjustments to ensure they comply with this new legislation. For some, that will be a daunting prospect and the impact of these changes may force businesses to reevaluate their hiring plans. Many smaller firms may be much more cautious in their recruitment of new hires for example. It will also involve a overhaul of current policies and procedures in place.
If you are concerned about these changes and ensuring compliance over the coming weeks and months, Stephensons can help. Our comprehensive Workplace Plus package, is designed to alleviate the burden of navigating the complex landscape of employment legislation. Whether you're a small to medium-sized enterprise or a larger corporation with an in-house HR department, staying up to date with ever-evolving employment laws can be a daunting task. That's where we come in. Find out more about Workplace Plus.