Day 1 Rights
The Proposal:
Before their election, the Labour party promised the introduction of day one employment rights in the following areas: the right to parental leave, sick pay and protection from unfair dismissal.
What we know now:
The Bill seems to accord with these promises. The length of service requirements for parental and paternity leave have been abolished and there will no longer be a waiting period to qualify for Statutory Sick Pay. Further regulations will clarify when these changes to family rights will become law. The SSP reforms will be introduced by amendment and following government consultation.
As to unfair dismissal rights, this is slightly more complex. Whilst it is proposed that employees will have protection against unfair dismissal from “Day 1”, the Bill reduces the impact this might otherwise have by introducing a “light touch” dismissal process during an “initial period of employment”. It is not yet certain exactly what the “light touch” procedure will entail, or how long the “initial period” would be: albeit something akin to a 9 month probationary period has been suggested. During the initial period, employers will be able to avoid unfair dismissal claims by demonstrating the dismissal is for a reason related to the employee’s conduct, capability, statutory restriction or some other substantial reason “related to the employee” (e.g. a breakdown in trust and confidence). Note redundancy is excluded from this list.
This reasonableness requirement does not preclude dismissing an employee for various reasons including illegality, performance, or suitability during the initial statutory probation, but employers must have proper objective evidence and justification for the dismissal. At a minimum, a meeting with the employee will be necessary to explain the performance issues, and we wait to find out exactly what else will be required.
Employers may also make employees redundant during the initial period in the usual way, but it seems employers will need to follow the full unfair dismissal procedure from the outset with all employees.
It is also possible that any unfair dismissals claims arising out of this new legislation may be subject to a lower compensation regime. There remains a significant amount to be consulted over and so it is believed that any unfair dismissal reforms won’t actually take effect until at least Autumn 2026.
Zero Hour Contracts
The Proposal:
Originally Labour proposed banning zero hours contracts and ensuring everyone has the right to a contract that reflects their regular working hours (based on 12-week reference period).
What we know now:
The Bill doesn’t seem to have captured the full scope of this pledge. It seems to suggest that those on zero hours contracts will have the right to be offered guaranteed hours by their employer at the end of a relevant “reference period”. Where this rule applies, the employer must specify the days of the week/hours and/or the working pattern to be used moving forwards and must reflect hours worked during the reference period. How long a “reference period” actually is, is however yet to be determined.
It is additionally proposed that employees will have a right to be given reasonable notice of shifts (specifying the day, time and hours to be worked). As a rule of thumb, notice should be at least as long as the shift length, and account for travel time. The right is also for payment for shifts cancelled or curtailed at short notice.
We anticipate this proposal will present challenges in the hospitality and leisure sectors, where demand fluctuates with the seasons and busier periods.
Ending Fire and Rehire Practices
The Proposal:
Ending fire and rehire practices by replacing the existing statutory code with a strengthened code of practice and by introducing laws to provide effective remedies against abuse in this area.
What we know now:
The Bill changes the threshold for fire and rehire practices. It will be harder for employers experiencing a business downturn to reduce the costs of staff.
Employers will need to properly evidence that the practice was grounded in a “sound business reason” needed to eliminate, prevent or mitigate the effect of financial difficulties that were threatening the ability to continue the business; show that they could not have reasonably avoided the need to make the variation; and have properly considered collective consultation.
However this is not a blanket ban. It will still be possible to vary employees’ terms and conditions using this method, there may just be more scrutiny over their decisions and reasoning. Employers should be aware of the risk that dismissals may be automatically unfair if the employee did not agree to the employer’s attempt to vary their terms, or if it can be shown the employer intended to employ another person on different terms to carry out substantially the same role.
The Government will consult on the Code of Practice implemented in July 2024.
You can find more detail about these practices in our recent article, here.
Changes to National Minimum Wage
The Proposal:
Introducing a national minimum wage that is linked to the cost of living and removing the existing age brackets so all adults are entitled to the same rate of pay.
What we know now:
There is nothing on this in the Bill. The Low Pay Commission will soon make recommendations to the government for the April 2025 rates. The Commission has been directed to concentrate on the cost of living and the gap between the national living wage and the 18-20 year old minimum wage.
Note that The Living Wage rates for 2024-25 have recently been released, and must be implemented by 1 May 2025. Employees aged 21 and over are currently entitled to The National Living Wage, now £11.44 an hour. The Real Living Wage in the rest of the UK has increased 60p to £12.60. The London Living Wage is increasing by 70p to £13.85 an hour.
Redundancy Consultation Requirements
The Proposal:
Providing greater protection to those affected by redundancy (with consultation requirements being set by the number of people affected across the workforce (rather than at the relevant establishment)) and to those affected by the Transfer of Undertakings (Protection of Employment) Act 2006.
What we know now:
As promised, Labour have changed the trigger for a process of collective consultation by removing references to “one establishment” in the Trade Union and Labour Relations (Consolidation) Act 1992.
This means employers must now count redundancies across all sites/workplaces when determining whether the collective consultation obligations are triggered. Simply put, businesses will no longer be able to argue that each workplace is a separate “establishment” which will therefore increase the number occasions on which the collective consultation obligations will apply. It is however not clear when this proposed change will take effect or whether further consultation will take place before the measure is introduced.
Right to Disconnect
The Proposal:
Introducing the right to “switch off” by following models already in place in Ireland and Belgium, giving workers and employers the opportunity to have constructive conversations and bespoke workplace policies that benefit both parties.
What we know now:
There are yet to be any proposals about this manifesto promise. The Government have however agreed to consult over what the right to disconnect might look like with a stated intention to draft a Code of Practice about this in 2025.
Trade Union Legislation Reform
The Proposal:
Modernising legislation in relation to trade union activity with a view to driving partnerships between businesses and trade unions including (but not limited to) the simplification of the statutory recognition process, allowing trade unions rights of access, informing employees of their right to join a union, introducing rights for trade union representatives to undertake their work (and strengthening the existing protections against unfair dismissal) and updating the laws relating to blacklisting.
What we know now:
The Bill brings a raft of changes in respect of trade union activity. Employers should be aware that:
- Trade union officials will be given a right to access workplaces for various purposes. Unions would have a right to request access, and can appeal against a refused decision to the Central Arbitration Committee.
- Employers will have an obligation to notify workers of their right to join a trade union.
- There will be new protections for workers against detriments short of dismissal for taking part in protected industrial action, and against blacklisting; the Bill introduces a role for “union equality representatives” in workplaces.
Amending Equal Pay Legislation
The Proposal:
To amend equal pay legislation so that outsourcing cannot be used to avoid paying equal pay, to create a requirement for large firms (i.e. those with more than 250 employees) to develop, publish and implement action plans to close their gender pay gaps and also to introduce a mandatory requirement for large employers to publish ethnicity and disability pay gaps.
What we know now:
Employers’ reporting obligations on the gender pay gap will increase: it will be necessary to publish sex-based equal pay audits as Equality Action Plans.
The Government have created an “Office for Equality and Opportunity” to manage these reforms. The Equality (Race and Disparity) Bill will place an obligation on employers to report on pay gaps.
The regulations will include an obligation on employers to identify providers/employers of contract workers.
Menopause Action Plans
The Proposal:
It was proposed that obligations would be introduced compelling large employers to produce menopause action plans setting out how they will support employees through the menopause.
What we know now:
This is something upon which the Government seems to have delivered in the Bill. Employers with over 250 employees will have to publish menopause action plans, with penalties for non-compliance. It is not yet known how frequently employers will have to publish their action plans but it does seem as though Government anticipates consulting on the reforms with them taking effect no earlier than 2026.
Sexual Harassment
The Proposal:
Strengthening the protection afforded to whistle-blowers including updating protections for women who report sexual harassment at work.
What we know now:
Disclosing sexual harassment will be added into the remit of the whistleblowing legislation so that it is clear that this can amount to a qualifying disclosure. Employers should also specifically exclude disclosures about harassment from NDAs.
It is also proposed that employers will also have a duty to take “all reasonable steps” to prevent harassment in respect of all type of harassment (not just sexual harassment). This could therefore make employers liable for harassment of an employee by a third party if “all reasonable steps” are not taken. As yet, what this actually means is not defined. The changes are therefore not likely to come into effect until at least 2026 after a period of consultation, although we note that the last time introducing liability for third party harassment was mooted as a change, it ended up being scrapped – so it will be interesting to see if this time, it gains any traction.
In the meantime, there has already been a slight change in the employers’ duty to prevent sexual harassment, as they are now expressly required to take “reasonable steps” to prevent sexual harassment before it happens. This duty was introduced on 26 October 2024.
Employment Tribunal Time Limits
The Proposal:
Increasing the current time limit to bring most employment-related claims before the Employment Tribunal from 3 months to 6 months (subject to the existing rules regarding extending this time period by participating in ACAS Early Conciliation).
What we know now:
The Bill does not deal with this. Any measures to extend the time limit will be added by amendment, and it remains uncertain if and when this might happen.
Conclusion
The current Bill is in draft, and the changes are far from a done deal. A significant amount of consultation needs to be undertaken before any of the proposals can be formalised. It is also worth noting that there are many more proposal within the Bill which are not listed above and so it is yet to be seen how much Parliamentary time will be devoted to each of these many proposed changes.
If you would like to discuss any of the above proposals, or how to prepare for the potential changes, please do not hesitate to get in touch.
This article was written for our quarterly Employment law newsletter, IN CASE. Click here to be added to the mailing list, or click here to read the Summer 2024 issue.
