On 10 October 2024, the Labour Government introduced the Employment Rights Bill 2024 (‘the Bill’) following its pledge to pass the landmark reforms within 100 days of being in power. The Bill is over 150 pages long and introduces a raft of new rights for workers as part of the Labour Government’s plan to ‘Make Work Pay’.

The Bill has introduced measures representing significant change in employment rights which include changes to day-one rights, sick pay, the probationary period, zero-hours contracts, fire and rehire practices, flexible working and more. We set out below the headline reforms.

Zero-hours contracts

The Bill sets out a “Right to Guaranteed Hours” under which workers on zero-hours contracts (or a low number of guaranteed hours) must be offered a guaranteed-hours contract at the end of every “reference period”. The Government Guidance says that the guaranteed-hours contract should reflect the hours they regularly work over a 12-week reference period. In addition, if the number of regular hours worked increases over time the subsequent reference review periods allow for this to be reflected in workers’ contracts. There is, however, no obligation on a worker to accept the offer of a guaranteed-hours contract.

The Bill provides grounds for workers to bring complaints to employment tribunals if they are entitled to a guaranteed-hours contract offer but haven’t received one.

Further protection has been provided for workers on zero or low-hour contracts in the form of a requirement to be given reasonable notice of changes in shifts. The Bill provides that if an employer cancels shifts on short notice, they must provide proportionate compensation to the worker.

Day-one rights

Unfair Dismissal

Workers will be protected against unfair dismissal from the first day of their employment.

Under the current law, workers must have been at their place of work for at least two years to qualify for unfair dismissal rights. A day-one right to unfair dismissal is therefore a significant change and will mean an increased onus on employers to ensure that dismissals are fair regardless of the length of time the employee has been employed. The impact of this change may however be limited by the new statutory probationary period also introduced by the Bill.

The Government Guidance sets out that the probationary period will provide employers with a “lighter-touch process” to dismiss an employee who is “not right for the job”. The length of the probationary period and the details of the “lighter-touch process” will be consulted over. However, the Government’s current preference is a 9-month probationary period.

Leave

The Bill provides day-one rights for paternity, parental and bereavement leave. Paternity leave can currently only be taken after 26 weeks of employment, the new Bill allows for a father to take paternity leave from the first day of their employment.

Pregnancy and family leave

The Bill strengthens protections for pregnant women and new mothers at work by making it unlawful to dismiss them within 6 months of their return to work except for in specified circumstances.

Sick Pay

The Bill removes the current three-day waiting period before a worker is entitled to sick pay. Under the Bill sick pay will be payable from the first day of sickness. In addition, the Government is proposing to remove the current Lower Earnings Limit in order to qualify for sick leave (currently £123 per week).

Fire and rehire

The practice of fire and rehire is where, following failure to agree a contract change, an employer dismisses an employee and then rehires them on new terms.

The Bill provides that a dismissal will be unfair if the principal reason for dismissal is either that the employee refused to agree to a variation to the terms of their contract or to enable the employer to recruit another person under new terms but with substantially the same duties.

There are only limited circumstances where fire and rehire practices will be acceptable and that is if businesses need to restructure to remain viable and there is genuinely no alternative other than to fire and rehire. Put simply, the fire and rehire process will only be able to be used to prevent total business collapse.

Flexible working

The Bill introduces an automatic right for workers to work flexibly. An employer will only be able to refuse an application for flexible working where the employer considers that the application can be reasonably refused on one of the existing statutory grounds.

At face value, this would appear to require an employer to provide clear reasons for the refusal, but may not be such a significant shift from the current position relating to flexible working.

Protection from Harassment

The Bill provides for further amendments to the Equality Act 2010 on top of those already coming into force at the end of October in the Worker Protection (Amendment of Equality Act 2010) Act 2023.

The Bill amends the duty on employers to prevent sexual harassment by changing the requirement for employers to take “reasonable steps” to “all reasonable steps”. This increases the duty of employers with respect to measures to prevent sexual harassment.

The Bill does set out that regulations can specify the steps that are to be regarded as reasonable for the purposes of determining whether an employer has taken all reasonable steps to prevent sexual harassment. This should therefore provide some reassurance to employers that provided they meet the requirements set out in the regulations; they may satisfy the high bar of taking “all reasonable steps”.

The Bill also introduces a duty on employers to take all reasonable steps to prevent harassment of an employee by third parties.

Collective Redundancy Consultation

The Bill removes the requirement for 20 or more redundancies to be at one establishment for the collective consultation obligations to apply. This means that when deciding whether there are 20 or more proposed redundancies, the number of redundancies across the whole business and not at one location should be considered.

Implementation

The Government has confirmed that they expect to begin consulting on the reforms in 2025, where they will seek input from all stakeholders. The Government expects that the majority of the reforms will not take effect any earlier than Autumn 2026. As such, employers have time to come to terms with the reforms and prepare accordingly.

If you have any questions in relation to the proposed reforms, please do not hesitate to contact the Employment Team below.