On the 10th October the Government published the Employment Rights Bill (ERB), promised as part of their manifesto and the plan to make work pay. The 28 measures included in the Bill are set to overhaul employment laws. However, notably absent is the path to a single worker status (more on that below), and the proposals in the Bill aren't the final product. Labour have confirmed further consultation on many of the proposals will continue into 2025. Almost all of the changes to legislation won’t come in to force until 2026. But what are the key elements of the Bill, and what are the potential implications for the recruitment industry and wider labour market?
Zero Hours Contracts
Zero Hours are central to the ERB and Labour are keen to deliver on its long-standing commitment to ban exploitative zero-hours contracts. The Government has made explicit reference to agency workers, with confirmation that specific consultation will take place to ensure the Bill’s provisions on zero-hours contracts are effectively and appropriately applied to agency workers.
The proposal in the Bill is to give workers on zero and low-hours contracts a right to move to a contract that reflects their regular hours across a 12-week reference period. Additionally, workers will be entitled to reasonable notice of changes in their shifts, with compensation for shifts canceled at short notice. In these proposals, the specifics of what counts as low hours, what constitutes a worker's regular hours, and how much notice is reasonable remain unclear. These are areas that the government has said it will consult with businesses. The Government has also acknowledged that some zero-hours workers may genuinely prefer to work in this manner and has stated in the Bill that workers can choose to remain on zero-hours contracts if they wish to.
The Government has also made explicit reference to agency workers, with confirmation that specific consultation will take place to ensure the Bill’s provisions on zero-hours contracts are effectively and appropriately applied to agency workers. The Bill does not include agency workers in the new rules – but takes powers to do this.
Protection from Unfair Dismissal from Day One
Labour's original proposal was to introduce protection against unfair dismissal from day one, compared to the two-year qualification that is currently in place. The ERB introduces protection from day one, but also introduces a proposed 9-month probation period where employer's will be able to dismiss workers without a full dismissal process if dismissal is related to their performance.
The detail remains to be seen on how much lighter the pre-9-month process is compared to the full dismissal process, and this will form part of the consultation with business. The Government's current proposal would require at least one performance review meeting is held with the employee.
Statutory Sick Pay
The Government is removing the lower earnings limit to qualify for Statutory Sick Pay (SSP) as well as the 3-day qualifying period to become eligible to receive the payment.
Flexible Working
In the ERB and the supporting documents, Labour set out that flexible working will become the default for all workers, unless the employer can prove it is an unreasonable request. There are eight business reasons listed in the Bill which count as unreasonable, these are the same as the reasons currently in place to reject a flexible working request.
It is unclear currently what the process an employer would need to go through to demonstrate this is, and this detail will be set out in subsequent regulations. The process for this needs to be developed in consultation with businesses, trade unions and third sector bodies.
Maintaining consistency with the current reasons that exist for employers to reject a requests will help to deliver the clarity employers need to handle the proposed changes.
Enforcement Agency
The introduction of a new Fair Work Agency (a rebadged version of the Single Enforcement Body originally proposed by Matthew Taylor in his 2018 report) has been set out in the Bill as expected. Enforcement does need an overhaul in the labour market, to make it more efficient for workers to protect their rights, but questions remain about the resourcing and structure of the FWA.
Combining the remits of the Employment Agency Standards Inspectorate, the Gangmasters Labour Abuse Authority and HMRC's National Minimum Wage enforcement team makes sense, so workers get a one-stop shop for enforcement.
Fire & Rehire
The Government has been clear about its intention to end fire and rehire practices. To do this they will reform the law to allow workers to claim compensation in such circumstances – hoping this will act as a deterrent to employers.
The Government will consult on removing the cap on awards to workers who have been dismissed without a proper redundancy process as part of this. However, the Bill also sets out that businesses will still be able to restructure their organisation and workforce to remain viable where no other alternative is available.
Parental and Bereavement Leave
The ERB amends legislation to remove the qualifying period for parental and paternity leave for all workers, making both of these a day-one right. This will be followed by a wider consultation on the parental leave system to ensure it is accessible and works for all working parents.
Making work more family-friendly is a welcome change, and the opportunity to consult on this to make changes as effective as possible is welcome. Similarly, leave for carers will also be reviewed through consultation. Additionally, a new right to bereavement leave is established in the Bill, expanding the current entitlement from only applying to parents.
Social Care
Under the proposals in the ERB, the Government is able to introduce a Fair Pay Agreement for the Adult Social Care Sector. The ERB also allows for the creation of an Adult Social Care Negotiating Body to handle issues related to pay and other terms and conditions in the sector.
Given the importance of the sector it is good to see the Government taking pay for care workers seriously. Of course the public sector is the largest employer of carers in the UK so this will require significant investment from central Government, and Local Authorities may need more support on how to get best value for money when it comes to staffing.
Trade Union Legislation
The ERB repeals the legislation put in place by the previous Government such as the Minimum Service Levels (Strikes) Act. Alongside this the Government will also seek to modernise the wider framework for Union representation in employment, aiming to ensure industrial relations are based on good faith negotiations.
What's not been included in the Employment Rights Bill?
Single Status of Worker
The proposal to merge the current employment statuses of employee and worker into a single category of "worker" is not included in the Bill. This does not mean that this is off the table permanently. It remains part of the Government’s long-term plan, but by not rushing through a proposal in this Bill they have demonstrated an understanding of how complex and difficult a proposal this will be to implement.
Right to Switch Off
Part of the Plan to Make Work Pay was a commitment to introducing a Right to Switch Off, preventing employees from being contacted out of hours, except in exceptional circumstances. This right is not in the ERB and the Government has instead confirmed that this will not be legislated for.
There will instead be a statutory code of practice improving rights around work life balance. It is important that the code of practice allows businesses and their employees to exercise a degree of discretion and common sense over what is appropriate.
What are the next steps for the Government?
The majority of proposals in the ERB are not quick fixes, and the Government has set out a realistic timeframe for consultation and implementation of these changes with the bulk of consultations begining in 2025. Given the detail and number of responses expected, it is unlikely that the majority of these reforms will be introduced before 2026.
In the meantime, the ERB itself will continue to progress through Parliament. The second reading for the Bill is currently scheduled for the 21st October and the Bill is expected to receive Royal Assent and become law in summer of 2025, with the implementation of the new legislation following through 2026.
Source: Recruitment and Employment Confederation (REC)
