Government steadies the path on worker reforms

Unveiled Employment Rights Bill paces change for employers and workers

By Jon Dunkley, Partner – Head of Regulatory Team at Wollens Solicitors

Heralded as the greatest shake up in UK employment law for more than 30 years, and the biggest upgrade to worker rights in a generation, the much-anticipated Employment Rights Bill has finally landed.  But with many of the sweeping reforms postponed or diluted, it feels more like the start of a steady transition than a seismic shift. 

Fulfilling the government’s election promise to publish the Bill within 100 days of its landslide election victory generated a time pressure that has led to unfinished business and inevitable compromises.  

Alongside, powerful voices from the employer side forced a rowing back on some of the most impactful employee protections proposed in the government’s Make Work Pay manifesto plan to tackle low pay, poor working conditions and poor job security to help more people to stay in work.  

As a result, while some of the expected reforms make it through, many are modified, and others are noticeably absent or subject to further consultation and refinement.  

That is evident in the simultaneous publication of a companion paper to the Bill, called the Next Steps.  This outlines how Labour intends to meet the election promises not yet covered by the Bill.  

Many of the requirements also depend on secondary legislation, the outcome of consultation, or codes of practice. Taken together with an assurance that significant changes, such as those around unfair dismissal, will not take effect until 2026, this staged approach should offer some relief to employers, knowing that there will be no overnight change of regime.  

The much-trailed provision for unfair dismissal rights from day one now includes a probationary period to ease employer concerns, though details are yet to be finalised. This compromise allows employers time to assess employee suitability for a role, while reassuring employees about immediate protections.

Currently, unfair dismissal rights apply only after two years of employment. The Bill removes this qualifying period, proposing instead a streamlined dismissal process during a statutory probationary period, likely set at nine months, though this will be subject to consultation.

One of the issues covered by the Next Steps paper is the right to disconnect — a provision aimed at protecting employees’ time away from work — which was widely expected to be contained within the Bill.  Instead, the government has promised to address it via a new code of practice, with consultation expected next year.

Another long-standing Labour commitment is the abolition of the UK’s three-tier employment framework, towards a single worker status.  This aims to expand the range of workers who qualify for employment rights, a fundamental change that could reshape the employer-employee dynamic, by merging the existing categories of ‘worker’ and ‘employee’, leaving only the status of ‘employed’ or ‘self-employed’.  

A significant proposal, designed to reduce ambiguity, this has provoked loud debate over its potential impact on business flexibility and for now, this promise has proven too complex to address within the timeframe.  But the government has confirmed its continued commitment to a single worker status model with consultation plans in the Next Steps paper.

For pregnant women and new mothers, further details are awaited, but the Bill strengthens protections against dismissal in a significant extension of current safeguards.  It will be unlawful to dismiss a woman on maternity leave, as well as for six months after her return, except in specific circumstances. 

However, the Bill does not make any mention of changes to statutory maternity pay (SMP) rules. Off-record rumours had suggested these would be adjusted to allow pregnant employees to qualify for SMP if they began a job during the first six months of their pregnancy.  Currently, they will only be eligible for SMP if they become pregnant after starting their job. 

While a raft of sweeping changes has been outlined in the Bill, and a timeline indicated for those in the Next Steps, there’s little in the way of immediate action. Instead, it’s a case of waiting to see how Parliament will shape the final version of the Bill. Notably, before the ink is even dry on this initial working, the government has hinted that it might amend its own draft in the coming months. 

For now, employers should take account of the potential changes in their thinking and future strategy and keep their ear to the ground for further legislative changes. As the Bill moves through Parliament and consultation documents are released, the practical implications will become clearer.  

Employers can breathe a little easier, with the government promise of a gradual implementation, and most major changes not coming into effect until 2026.

But the changes are substantial, and smaller businesses without dedicated specialist support will need to devote time and resources to navigate them effectively.  Ensuring positive outcomes for both employees and the business will require careful planning and support together with regular review of policies.

Drilling down into the detail: 

The government’s new Employment Rights Bill outlines significant changes to employment laws, with its focus on workers’ rights and flexibility.  The draft legislation is subject to revision as it makes its passage through Parliament, but the key elements employers should be aware of are:

Protection against unfair dismissal from day one:    

Day one protection, combined with a new statutory probationary period for new hires, replaces the current two year qualifying period for unfair dismissal protection. 

Making flexible working the norm where practical:  

Under the new Bill, any refusal of a flexible working request must satisfy a test of reasonableness.  Although the eight permissible business reasons for refusal remain unchanged, this is likely to make it easier for employees to challenge refusals.  

Flexibility on both sides of zero hours contracts: 

Zero hours contracts have not been banned, but there will be a new right for workers to be entitled to a contract which reflects the number of hours regularly worked over a specified reference period, which is expected to be 12 weeks, once confirmed.  Also outlined are new provisions to give workers reasonable notice of shifts and to proportionately compensate them when shifts or working times are cancelled or cut short by an employer without reasonable notice.

Greater protection from ‘fire and hire’:

Employers will find it harder to change contractual terms without the employee’s consent.  It will be automatically unfair to dismiss an employee for refusing a change to their terms of employment or for replacing them with another employee on altered terms to perform essentially the same role.  

Rights to bereavement, paternity and parental leave from day one:

As expected, the Bill removes the qualifying period of 26 weeks for paternity and parental leave, making these into day one rights. There will be a new right to at least one week’s bereavement leave, with details of which relatives this applies to covered by regulations to follow.  

Extended protection from redundancy for new parents: 

Pregnant employees and new mothers will receive extended protection from redundancy.

Extended entitlement to statutory sick pay:  

Currently, statutory sick pay (SSP) is only available from the fourth day of sickness for employees earning over £123 per week. The Bill removes the waiting period, making SSP payable from the first day of illness, and eliminates the minimum earnings threshold. These reforms are expected to take effect fairly quickly.

Stronger laws against harassment:

The Bill strengthens existing requirements to guard against sexual workplace harassment, due to come into force later this month, by raising the bar from a duty to take ‘reasonable steps’ into a duty to take ‘all reasonable steps’.   The Bill also makes employers liable for harassment by third parties on any grounds, not just sexual harassment, if it happens in the course of employment.

A new approach to enforcement and policing – Fair Work Agency:

The Fair Work Agency will be established to bring together existing enforcement bodies to oversee rights such as holiday pay and to provide general guidance.  The approach has yet to be set out, but could be more interventionist than presently, in enforcing employees’ rights against employers.

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