The government this month tabled amendments to the Employment Right Bill (ERB), following consultation with business, trade unions and wider civil society.

In a statement, Business Secretary Jonathan Reynolds said the government’s mission to grow the economy as part of its Plan for Change is based on putting more money in working people’s pockets by making wages fairer and work more secure.

“Many businesses already have worker-friendly practices in place and can attest to the positive impact they have on retention, productivity and job satisfaction. We want to go further and untap the UK’s full potential by attracting the best talent and giving business the confidence to hire to help the economy grow.”

The Bill’s impact assessment published last year concluded that the package could have a positive but small direct impact on economic growth and would help to raise living standards across the country. 

However, employment law experts warn that the complexity of the changes should not be underestimated. In addition to the vast scope of the legislation – covering 28 distinct areas of employment law – some of the statutory changes will come in via secondary legislation such as regulations or codes of practice still to be designed. Therefore, it will take some time before the comprehensive details of this employment reform package are clear.

The main changes at a glance

Day-one rights for unfair dismissal

Currently, employees need to have worked for a company for at least two years to qualify for unfair dismissal protection. The ERB is proposing the introduction of day-one rights for unfair dismissal. It means employers will not be able to circumvent a fair reason or fair process to dismiss staff with short service once this provision is in force.

However, the Bill does allow for regulations to be made relaxing the requirements for a fair dismissal during an initial period of employment in order to allow employers to carry out a proper assessment of an employee’s suitability to a role. How long such a ‘statutory probation period’ for new hires will be, and to what degree a ‘lighter touch’ process will be allowed is likely to be the subject of consultation.

Application of zero-hours contracts measures to agency workers

As current drafted, the Bill will ensure that all workers – including up to 900,000 agency workers in the UK – have a guaranteed minimum number of hours, have a right to a contract that reflects the number of hours regularly worked, and provides workers with reasonable notice of change in shifts with proportionate compensation available for cancelled or shortened shifts, providing them with more predictable income and better working conditions. The proposals appear to spell the end of zero-hours contracts altogether unless the employee indicates that they want to keep theirs.

Rules on collective redundancy

The Bill will remove ‘one establishment’ from the trigger for collective consultation. The government is proposing that collective consultation will now be required if there are 20 or more redundancies at one establishment or a ‘different threshold’ is met, with those threshold details to be set out in further regulations. The alternative threshold could be based on redundancies across the employing entity as a whole and could be a percentage, or a higher number.

Protective award maximum period increase

The government will increase the maximum period of the protective award from 90 days to 180 days and issue further guidance for employers on consultation processes for collective redundancies. 

Increasing the maximum value of the award means an employment tribunal will be able to grant larger awards to employees for an employer’s failure to meet consultation requirements. The government says it wants to enhance the deterrent against employers deliberately ignoring their collective consultation obligations and ensure it is not financially beneficial to do so. 

Strengthening statutory sick pay

The ERB will scrap the lower earnings threshold for statutory sick pay and make employees eligible to claim sick pay from day one of falling ill, bringing many more employees into the scope of statutory sick pay. Up to 1.3 million employees on low wages who find themselves unable to work due to sickness will either receive 80% of their average weekly earnings or the current rate of statutory sick pay, whichever is lower. 

Tackling non-compliance in the umbrella company market

The government will act to ensure that workers can access comparable rights and protections when working through a so-called umbrella company as they would when taken on directly by a recruitment agency. Enforcement action can be taken against any umbrella companies that do not comply.

Parental leave from day one

The right to parental leave and paternity leave will become a day-one right and the ability to take paternity leave following a period of shared parental leave will be introduced, along with a statutory right to a week’s bereavement leave.

Maternity dismissal and gender pay gaps

The Bill allows for regulations to make it unlawful to dismiss a woman during or after a protected period (likely to be six months) of pregnancy, maternity, adoption or shared parental leave, other than for reasons of redundancy.

Large employers will also be required to create action plans on addressing gender pay gaps and supporting employees through the menopause, and regulations may be made to include outsourced workers in gender pay gap reports.

Strengthening duty to prevent harassment

The Bill also seeks to strengthen the duty on employers to prevent sexual harassment by requiring employers to take “all reasonable steps”, rather than just “reasonable steps”, with regulations expected setting out what those steps should be. In addition, the Bill will introduce liability on employers for third-party harassment of their staff.

A new framework for industrial relations

The government will reduce the notice period unions have to provide ahead of strike action from 14 to 10 days. It is also planning to extend the mandate for industrial action after a ballot from six months to 12 months. 

Amendments will also be tabled specifying that the repeal of the 50% industrial action ballot turnout threshold will be subject to commencement on a date to be specified in regulations. Meanwhile, trade union access provisions will cover digital access and introduce a fast-track route for achieving an ‘off-the-shelf’ access agreement where certain conditions are met, alongside a mechanism to ensure there are robust penalties in place for non-compliance.

Establishment of the Fair Work Agency

To enforce these new rights and ensure compliance, the Bill proposes the creation of a new single enforcement body called the Fair Work Agency. This agency will have the authority to investigate breaches of employment law, impose penalties and support workers in disputes with their employers.