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Employment Rights Bill

Labour’s Employment Rights Bill was published on 10 October 2024 and is expected to receive Royal Assent this autumn.

The proposed reforms mark significant progress in improving trade union and worker rights, particularly in extending protections from day one, enhancing sick pay, limiting the use of zero-hours contracts, and expanding flexible working options.

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Zero Hours and ‘Low Hours’ contracts

Between April and June 2024, ONS estimated that 1.3 million people in the UK relied on zero-hours contracts as a means to secure some form of employment. The Bill contains measures which the government says are designed to end these ‘exploitative’ zero-hours contracts. Many of the legal details required to enact the Bill continue to be subject to consultation, but the Bill sets out a regime that has the potential to offer much-needed certainty and increased rights to those currently working in sectors where such contracts are commonplace.

Workers on zero-hour contracts or ‘low hours’ contracts will have the right to be offered a ‘guaranteed hours’ contract if they have worked regular hours over the reference period and those hours exceed the minimum number stipulated in their contract. The details of what qualifies as a ‘low hours’ contract, regular hours, and the length of the reference period will be determined by Regulations following consultation. However, it is likely that the reference period will be 12 weeks long, mirroring reference periods already established by the Employment Rights Act. The offer of guaranteed hours must reflect the hours worked over the reference period.

The guaranteed hours contract must be on no less favourable terms than the previous working arrangement. If the worker has had variable terms over the reference period, the least favourable of these terms can only be offered if this can be shown by the employer to be a ‘proportionate means of achieving a legitimate aim’.

The guaranteed hours contract can be for a fixed term if this is reasonable and, for example, relates to a specific event or task, or the employer can show a genuine temporary need for workers.

The Bill sets out rights for workers to be given reasonable notice of their shifts and of the cancellation of work in specified circumstances. “Reasonable notice” will be clarified in the regulations.

The Bill also outlines the remedies available where the legislation is breached. The maximum award will be set out in further regulations.

For a detailed analysis of Zero and Low Hours Contracts, click here.

Addressing Fire & Rehire

The Employment Rights Bill introduces new protections against ‘fire and rehire’ practices, aiming to prevent employers from dismissing employees simply to re-engage them on less favourable terms. These are the key points:

The Bill creates a new automatic unfair dismissal right to address fire and rehire dismissals, which will be inserted into the Employment Rights Act. This right will sit alongside existing provisions that provide protection for employees by making it automatically unfair to be dismissed for asserting a statutory right.

The new right will be engaged and create an automatically unfair dismissal where an employee is dismissed by their employer for not agreeing to vary certain prescribed terms of their contract, or the employer dismisses the employee and replaces them with other workers (including agency workers and self-employed contractors) to undertake substantially the same role but with at least one prescribed term varied.

The clause, therefore, addresses both a conventional fire and rehire exercise and the sort of dismissal tactics deployed by P&O in 2021 when they dismissed their existing workforce and engaged an entirely new workforce via an agency on less favourable terms and conditions.

The prescribed variations include variations to pay, pensions, hours, shift duration and time off. Employers are also restricted from using fire and rehire to introduce unilateral variation clauses into employment contracts. The Secretary of State may introduce further restricted variations.

An in-scope fire-and-rehire dismissal will only not be automatically unfair if the employer can show they fall within a prescribed exemption. To fall within a prescribed exemption, the employer will need to be able to demonstrate the variation “was to eliminate, prevent, significantly reduce or significantly mitigate the effects of financial difficulties which, at the time of the dismissal, were affecting the employer’s ability to carry on the business as a going concern” and the employer could not avoid making the variation. There is a parallel test specifically for public-sector employers whereby they have to show the reason for the variation “was to eliminate, prevent, significantly reduce or significantly mitigate the effects of financial difficulties which, at the time of the dismissal, were affecting or likely in the immediate future to affect the financial stability of carrying out the employer’s statutory functions”. There is also a specific exemption for Local Authorities that are subject to “relevant intervention directions”.

Even where an employer falls within an exemption, an employment tribunal will still need to consider whether the dismissal was fair in all circumstances. To assess that, it will consider several factors, including whether there has been consultation and whether the employer offered anything to the employees concerned in return for agreeing to the variation. Similar considerations will also apply where the employer varies a term that is not restricted (e.g. a variation to a workplace clause).

The government will hold a further consultation on fire and rehire in autumn 2025 and the new provisions are expected to come into force on 1 October 2026.

For a detailed analysis of Fire and Rehire, click here.

Flexible Working and Family-Friendly Rights

The Employment rights Bill has proposed some enhancements to family friendly rights. Firstly, the right to request flexible working under s. 80G of the ERA 1996 is strengthened as a result of shifting the burden on to employers to justify the reason for refusing the request.

Employers will be required to set out which prescribed reason they are relying on to refuse any request and explain why it was reasonable to refuse the application on that ground.

There is the introduction of day one rights to unpaid parental leave and paternity leave, as well as a new right to bereavement leave to grieve for the loss of a loved one.

Existing bereavement leave provisions will also now apply to mothers and partners who experience pregnancy loss within the first 24 weeks of the pregnancy as opposed to only after that period has elapsed.

For a detailed analysis of Family-Friendly Rights, click here.

eqaulity

Under the Employment Rights Bill, the existing protection from harassment provisions are amended so that the duty on employers will be to take all reasonable steps to prevent harassment in the workplace.

Regulations will set out what steps it is reasonable for an employer to take, including steps relating to the reporting and handling of complaints.

The Bill also provides workers with protection from all forms of harassment by third parties such as by clients or customers and not just sexual harassment. Section 43B of the ERA 1996 is amended to provide that the disclosure of sexual harassment in the workplace is a protected disclosure.

Regulations will also detail the right for pregnant employees not to be dismissed during pregnancy and for a six-month period following their return from maternity leave. Additionally, employers with 250 or more employees will be required to publish equality action plans along with gender pay gap information.

For a detailed analysis of Equality, click here.

Fair Pay and Trade Union Rights

The Bill represents an important first step in upgrading trade union rights by reversing much of the Trade Union Act 2016, abolishing Minimum Service Levels and making it unlawful to subject workers to a detriment for participating in balloted industrial action. Key provisions include:

Removing some of the burdens on trade unions introduced by the Trade Union Act 2016 (additional Certification Officer powers, industrial action notice and voting paper requirements, ballot thresholds and restrictions on collecting subscriptions by check-off in the public sector) and reversing the ‘opt-in’ for contributions to political funds;
Repealing the Strikes (Minimum Service Levels) Act 2023; Introducing a new right not to be subjected to a detriment for taking part in balloted industrial action;
Re-establishing a School Support Staff Negotiating Body and power to establish an Adult Social Care Negotiating Body;

In relation to statutory recognition, introducing a power to relax the 10% admissibility test, and requiring the CAC to issue a declaration of recognition where a majority vote in favour in the ballot; and

A new procedure for negotiating access agreement to workplaces.

For a detailed analysis of Fair Pay and Trade Union Rights, click here.

Right to Claim Unfair Dismissal from Day One

As anticipated, the Employment Rights Bill will introduce the right for all employees not to be unfairly dismissed from day one in employment by repealing s. 108 of the Employment Rights Act 1996. Workers are not protected by this day one right and only employees are covered.

The right for employees not to be unfairly dismissed is modified for those in the “initial period of employment” which will clarified in further regulations, with the government expected to introduce a statutory probationary period of 9 months. The day one right will not take effect until 2027.

For a detailed analysis of the Right to Claim Unfair Dismissal From Day One, click here

Other Individual Rights

The Bill establishes the power to introduce secondary legislation to protect public sector workers from less favourable treatment after being outsourced. The same power allows for the levelling-up of the supplier’s existing staff (where appropriate), thereby addressing the issue of the 2-tier workforce.

The Bill requires new starters to be given a written statement saying that they can join a trade union. Separate regulations can be made to set out other information about trade union rights, which must be included in the written statement.

There will be a single enforcement body for various workplace obligations such as those relating to employment agencies, working time regulations, national minimum wage, modern slavery and gangmasters. It will have important investigative powers, such as the ability to enter premises to search and seize documents. An enforcement regime of ‘Labour Market Enforcement Undertakings’ is to be introduced with criminal law consequences for breach. An advisory board will be established to direct these activities and report on its activities.

For a detailed analysis of Individual Rights within the Employment Rights Bill, click here.

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Employment Rights Bill

In the articles below, our employment law experts examine the Bill and give their detailed analysis of key provisions, outlining their potential impact on unions and their members. We aim to continue providing in-depth updates as the Bill progresses.

Zero Hours and ‘Low Hours’ contracts

Addressing Fire & Rehire

Flexible Working and Family-Friendly Rights

eqaulity

Fair Pay and Trade Union Rights

Right to Claim Unfair Dismissal from Day One

Other Individual Rights

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