The Government has made some significant amendments to its Employment Rights Bill in response to consultations.
The Employment Rights Bill was first presented in the House of Commons on 10 October 2024 and we discussed the key proposed changes under the new Bill in a previous article and webinar. Since then, the Bill has been subject to a lengthy consultation process and the Government has now published its response to those consultations. We have summarised the most important amendments to the Bill set out in the Government’s response below.
Sick pay: Low earners will be entitled to either the flat rate of statutory sick pay or 80% of their normal weekly earnings (whichever is lowest).
Fire and rehire: The Government has confirmed that the Bill will make it automatically unfair for an employee to be dismissed for refusing to agree to a change in their contractual terms of employment, but that no interim relief will be available in respect of fire and rehire-related unfair dismissal claims.
Unions: The notice that a union must provide ahead of strike action will be reduced from 14 to 10 days; however, the mandate for industrial action after ballot will be increased from 6 to 12 months.
Zero hour contracts: The Government has confirmed that “guaranteed hours” over a 12-week reference period will apply to agency workers, as well as to workers, if they are on a zero hour or low hour contract. This means that employers will not be able to hire agency workers to avoid the new guaranteed hours rule.
Agency workers will have the same right as employees to reasonable notice of shifts, cancellation of shifts and changes to shifts and they will also be entitled to compensation if the shifts are changed at short notice. The agency and the end user will be mutually responsible for providing reasonable notice to agency workers, but the agency will be responsible for making any payment as a result of short notice. The agency worker and the agency will be able to agree in their contract to recover costs from the hirer where the hirer was responsible for a shift change at short notice.
Redundancy rights: Collective consultation will be required where 20 or more redundancies are being made at one establishment, or where another threshold is met. The original Bill envisaged the removal of the “establishment test” which would have meant redundancies across an entire organisation would be counted. This will now be retained, but the additional threshold for triggering additional redundancies is currently unknown.
The Bill confirms that employers do not need to consult all employees at the same time during a collective consultation, nor do they need to attempt to reach the same agreement with each employee. However, the maximum protective award has been increased from 90 to 180 days so employers are at a greater risk should they fail to comply with their obligations.
The Fair Work Agency: The Fair Work Agency (FWA) will be established to deal with enforcement of employment rights such as holiday pay, National Minimum Wage and statutory sick pay under a single body. The recently published amendments outline and increase the FWA’s remit. For example, the FWA will be able to:
- enforce the requirement to keep records of holiday leave and pay with potentially unlimited fines;
- bring employment tribunal claims on a worker’s behalf;
- provide legal assistance to employees for employment proceedings; and
- recover costs of enforcement incurred by the Secretary of State from employers who have been found not to have complied with the law.
Early pregnancy bereavement leave: Currently, mothers and their partners are entitled to 2 weeks’ parental bereavement leave if they have a stillbirth or suffer a pregnancy loss after 24 weeks of pregnancy. Following an amendment to the Employment Rights Bill, mothers and their partners who suffer a pregnancy loss before 24 weeks will be entitled to 2 weeks of miscarriage bereavement leave. The leave is set to be unpaid.
Dismissals during and after pregnancy: Employers will need to give employees specific notices, produce certain evidence and follow specific procedures if they want to dismiss an employee who is pregnant or on maternity leave or in the following six months of the employee returning to work. Dismissals during and after pregnancy will be banned unless specific circumstances apply.
Umbrella companies: Umbrella companies (companies that act as intermediaries between a contractor and an end client or recruitment agency) will be defined under the Bill so that they come within the definition of employment businesses. This means that they will be regulated in the same way as agencies supplying temporary workers to address concerns about umbrella companies exploiting workers’ employment rights, affecting competition and causing tax loss.
The Right to Disconnect: This is still not included in the Bill leading to speculation that it may not be taken forward currently.
There are still several areas of the Bill that require further clarification, including the highly anticipated day one unfair dismissal rights. We expect these to be addressed as the Bill continues its journey through Parliament. The Bill is expected to come into force sometime next year, with day one unfair dismissal rights not expected to come into force until the Autumn of 2026.
If you have any questions regarding the above amendments to the Bill and you would like advice on how they might affect your business, please get in touch at [email protected].
