Employment Rights Bill – can employers breathe a collective sigh of relief?

The Employment Rights Bill was published on 10 October, 98 days after Labour entered government. Hailed as the biggest upgrade to workers’ rights in a generation, did the bill actually live up to expectations and deliver all of the things that Labour promised in its election campaign?

The Labour Party made its “New Deal for Working People” a core part of its election manifesto promising to make employment laws “fit for the modern economy and ready for the future of work” and committed to introducing new legislation within 100 days of entering office. However, the newly published Employment Rights Bill suggests that they may have bitten off more than they could chew resulting in many manifesto commitments being kicked down the road.

So, what has made it into the bill and what hasn’t?

In

The most significant rights and restrictions introduced by the bill are:

The right not to be unfairly dismissed from day one of employment

The bill removes the current two-year qualifying period for unfair dismissal claims. However, employers will be able to carry out a “light touch” procedure for dismissals during an ‘initial period’ i.e. a probationary period, which are shown to be for poor performance, misconduct, capability or some other substantial reason. We don’t yet have any details about what a “light touch” procedure will look like; however, it could consist of simply holding a meeting with the employee.

The length of the ‘initial period’ will only be decided after further consultation but is likely to be nine months.

There may also be a lower compensation regime for unfair dismissals in the initial period.

The Government has committed not to introduce the change before the autumn of 2026.

Changes to the trigger for collective redundancy consultation

Currently the requirement for employers to collectively consult on redundancies is triggered when 20 or more employees are dismissed within a 90-day period at one establishment, not across an entire undertaking.

The bill changes this. This means that, when deciding whether there are more than 20 or more redundancies within the requisite period, employers will be required to include those from across their business. Separate establishments will not be treated separately.

Trade unions and collective rights

The bill introduces a multitude of changes effectively reversing legislation that the Conservative government introduced. Unions will be able to access workplaces more easily. In addition, the bar for union recognition will be lowered and unions will be able to raise funds and take action more easily.

Greater restrictions on the practice of “firing and re-hiring”

This is the process adopted by some employers to fire employees on good terms and re-hire them on less favourable terms. At present employers only need to show that they have a “sound business reason” for doing this.

The bill introduces a much higher standard so that this practice will only be permitted where the reason for varying the employee’s contract was to eliminate, prevent or significantly reduce an employer’s financial difficulties or was essential to allow the business to continue as a going concern and there was no other option available to the employer.

To avoid such a dismissal being automatically unfair, an employer will also need to have carried out a thorough consultation with employees before taking action to dismiss and re-engage.

Requirement to offer guaranteed hours contracts to zero hours workers

Employers will have to offer workers on zero hours contracts a guaranteed hours contract at the end of every reference period which specifies either the days of the week and the hours and/or the working pattern that will be offered.

We do not yet know what reflects the hours in a reference period. This will be defined later by regulations.

If an employer doesn’t tell employees the date/time that their work is or if they are on a zero hours contract, then they will need to be given reasonable notice of the time and duration of their shift as well as reasonable notice of the cancellation of a shift.

Parental, paternity and bereavement leave

Paternity leave and parental leave will become day one rights. In addition, the right to take bereavement leave will be extended.

Unfortunately, the bill doesn’t introduce any changes to the extremely complex rules in relation to shared parental leave.

Flexible working

Employers will only be able to refuse employees’ flexible working requests if (i) one of eight specific business grounds applies and (ii) the employer’s refusal is reasonable.

The key change to the current law is that an employer’s reliance on one of the eight business grounds must be reasonable. Currently employers only have to deal with requests in a reasonable manner.

Statutory sick pay reforms

Statutory sick pay will be paid from the first day of sickness absence (as opposed to on day four as is currently the case). In addition, the lower earnings threshold will be removed.

Stronger laws against third party harassment

Employers will have a duty to take all reasonable steps to prevent the harassment of their workforce by third parties such as contractors, suppliers and customers.

Pregnancy discrimination

The bill contains proposals to strengthen protections for pregnant employees and new mothers returning to work. Very few details are provided about the length of new mother protection, but many expect this to extend to six months after their return to work.

Out (for now)

The following were mentioned in the government’s election manifesto but are missing from the bill:

• a ‘right to switch off’, preventing employees from being contacted out of hours, except in exceptional circumstances.
• a requirement for large employers to report their ethnicity and disability pay gap
• a move towards a single status of worker and transition towards a simpler two-part framework for employment status
• reviews into the parental leave and carers leave systems

However, the government has committed to progressing these matters in the future.

Next steps

The bill’s publication makes it clear that the government has been forced to back track on some of their original promises and make concessions in light of both the speed in which the bill has been drafted and a desire not to deter businesses from hiring staff at a critical time for the economy.

The bill will now start a journey through parliament and is likely to be subject to various amendments. The majority of reforms are anticipated to take effect from 2026, and consultations are expected to begin in 2025.

Whilst many employers will undoubtedly be breathing a sigh of relief at this news, there are various measures that a prudent employer could take now to prepare for these changes, such as reviewing contracts, policies and budget/cost implications.

Please get in touch with the employment team if you have any questions or need advice about how best to prepare for these changes.