Monthly Highlights – UK Employment Law – October 2024

In this month’s instalment, our team summarises the main changes proposed under the Government’s recently published Employment Rights Bill and their wider implications.

ALL CHANGE…?

The Labour government has unveiled the much-anticipated Employment Rights Bill, representing what they describe as the “biggest shake up in UK employment law for over 30 years” but while some of the proposed changes are really quite radical, overall the Bill is not as revolutionary as was initially feared/hoped (depending on which side of the fence you’re on).  Some of the changes are more of a codification of current best practice and with the really material changes, the devil will be in the detail…which we’re still largely awaiting and may need to wait a while longer yet.  

Crucially, the government has indicated that it is unlikely the reforms will take effect before (the latter part of) 2026, with many provisions requiring additional legislation to come into effect and the key changes being subject to consultation before they can be implemented.  

The Bill will now be subject to the usual parliamentary process before it is enacted and this in itself may bring further changes and/or clarification, particularly to the more contentious provisions.

Here are the key takeaways for employers from what we know about the Bill in its current state:

Accelerated Protection from Unfair Dismissal

• This is probably the most clearly sign-posted and anticipated change. Employees will qualify for unfair dismissal protection as a “day-one right” (as with discrimination and whistleblowing), rather than needing to accrue two years’ service before they can claim – this means that employers must have a potentially fair dismissal reason and follow an appropriate fair process before dismissal any time from the commencement of employment. 
• However, the proposal clarifies that employers will be able to dismiss employees more easily (but subject to fair reasons) during or at the end of a probationary period – though with no meaningful details yet as to how this will work in practice. The length and details of the probationary period will be a focus of consultation, but the government has stated its preference is for a period of nine months, compared to the initially anticipated six month period and the standard market practice of three to six months’ probation. The right will not apply before the employee has started work, with very limited trade union-related exceptions.
• This change is not expected to take effect until autumn 2026 at the earliest, but we recommend that employers should reflect on and strengthen their probationary practices in the meantime.

Fire (and Rehire) Prevention

• This is a big one and needs some additional explanation.
• The proposals will give employees new automatic unfair dismissal rights if their employment is terminated for a refusal to agree to a contractual variation, unless the employer:
  • can point to significant financial difficulties affecting its ability to continue operating as a going concern (e.g. potentially at an insolvency level, not just a regular need for cost efficiencies); and
  • could not reasonably have avoided the need to make the contractual variation; and
  • can show that the dismissal was otherwise fair, with regard to a series of factors including the level of consultation undertaken and any ‘sweetener’ offered to the employee for agreeing to the variation. 
• The Labour party’s original (pre-election) aim here was to end ‘bullying threats’ from ‘unscrupulous’ employers. However, the unintentional consequence of this proposal might be to prevent perfectly reasonable employers from making perfectly reasonable changes, even after consultation.
• Business circumstances change and it is quite common for employers to need to adjust certain terms and benefits of the contract some years down the line, whether to address the changing requirements of a role, a new bonus or incentive structure, or the need to reduce costs across the business or in a particular area in response to market or client circumstances.  
• Under current rules, employees are protected by existing constructive dismissal and redundancy rules against enforced changes to material terms but if the employer has a fair reason for the proposed changes and has followed a fair and reasonable consultation process in advance, a resulting termination and offer of re-engagement on new terms (or a replacement with another recruit where the offer is rejected) may be justified.  
• Under the new rules, the only circumstances in which this will be possible will be if the employee consents voluntarily to the change and otherwise it will be unlawful either to force through an offer of new terms or to replace the employee with a new hire on those new terms, if in either case the duties of the role will be ‘substantially the same’ as those carried out by the employee before dismissal. 
• This effectively means that the employer will be forced to stick to the original contract terms indefinitely, or to make the role redundant without replacement (if that is fair and justified in the circumstances), except in the most dire business circumstances. 
• Given the reference to ‘substantially the same duties’, there is a real concern that this new provision may also prevent the potential redundancy situation where an employer is ‘down-skilling’ a particular role, with a consequential reduction in salary and/or grading level.  Again, this is a common situation where the business no longer needs an employee’s role at its current seniority level, although the core duties of the role would still exist but at a lower or reduced level and the employee in question is offered the reduced role as potential alternative employment.  In that event, if ethe employee does not wish to accept, they would be redundant and the role filled by an alternative more junior recruit.  At present this would be a potentially genuine and fair redundancy situation (subject to the usual tests) but depending on the interpretation of ‘substantially the same duties’, this may fall foul of these new ‘fire and rehire’ provisions, which also include a ‘fire and replace’ prohibition.
• This protection applies both to collective and individual changes to terms, which again seems at odds with the origins of the proposal and is a significant limit on an employer’s flexibility.  It may also lead to a greater likelihood of compulsory redundancies (without replacement) in cases where the employer would otherwise would have sought to reduce benefit terms in order to avoid having to lose jobs..
• Further details will no doubt be discussed through the consultation process and we can but hope for some additional exceptions or clarification on how this will apply in ‘scrupulous employer’ cases - but in the meantime, we recommend that employers ensure they include in all employment contracts a clear and express right to vary terms according to business circumstances, without employee consent, and at the employer’s sole discretion.  While there may still be questions of rights established by ‘custom and practice’, a clearly worded variation clause will at least provide the best starting point unless and until further limits are placed on that practice through consultation or future case law.

Expanded Protection from Harassment

• As employers are still getting to grips with the new positive duty to prevent sexual harassment (which only came into force on 26 October 2024), the Bill is set to enhance that duty by requiring an employer to take the more onerous “all” reasonable steps to prevent harassment (currently it is just “reasonable steps”). The inclusion of “all” was removed from the original Worker Protection legislation following consultation but the Bill seeks to reintroduce it through another route, together with proposing regulations about what the reasonable steps will comprise. It remains to be seen whether this proposal will make it through this round of consultation and how much clarity will be provided by the proposed accompanying regulations.
• The Bill also introduces a new obligation on employers to prevent third party harassment and an employer will be liable if they fail to take all reasonable steps to prevent this.  This provision will be particularly important for employers with customer-facing employees and employees who deal with the general public as part of their duties but will also cover interactions with, for example, suppliers, consultants and agency workers and any terms of business with those third parties should include specific provisions to address this duty.  

Collective Consultation

• The Bill removes the concept of a single 'establishment' from the current collective redundancy legislation. This means that collective consultation obligations will apply where 20 or more dismissals are proposed across an entire business, rather than the current site-specific approach. This simplifies the requirement after years of case law-driven uncertainty and reflects the reality that many workforces are now remote across the UK.

‘Default’ Flexible Working

• Press reports and ministerial soundbites prior to publication of the Bill seemed to indicate that there would be radical changes to the flexible working regime (see the ‘right to a four day week’ articles which briefly flooded the press, as perhaps the most misleading example…) but in fact there may be little difference to the current practical position for employees.  
• This proposal will require employers to agree to flexible working requests as a default position, unless they:
  • have a prescribed reason for refusal, based on one of the current fixed statutory grounds; and 
  • can show that it is 'reasonable' to refuse the request on those grounds. 
• Although the new rules require employers to justify and explain their prescribed reason for refusal (rather than just citing one of the statutory refusal grounds without further explanation), in reality many employers will already include that explanation in any refusal already, both as a matter of best practice and in order to mitigate against a sex or disability discrimination claim arising from the refusal.
• Further, there is no change to the penalty for failing to comply with these requirements (i.e. employees who are successful in tribunal claims for breach of the flexible working rules will still be entitled to a maximum of eight weeks’ pay) so the real risk of refusing such a request will still be in any associated discrimination claim, rather than through a breach of the statutory procedure.
• And there is still no ‘right to a four day week’!

Maternity Leave

• The most significant of a number of family friendly changes in the Bill is the proposal that pregnant women and new mothers returning to work will be subject to an extended protection period from dismissal: whilst pregnant, on maternity leave, and for a defined period (expected to be six months) of returning to work.  
• Under existing legislation, pregnant employees and those on maternity leave (and other statutory family leave) have a degree of protection from dismissal in the event of redundancy (i.e. they have a priority right to a suitable alternative vacancy, where one exists) but this new right is set to strengthen protections for those employees more generally, although again the detail of how this will operate in practice is still to come.

Unpaid Parental Leave

• This will become a “day-one right.” Currently, only parents with at least one years’ service are able to take up to 18 weeks of unpaid leave for each child until the child is 18.

Paternity Leave

• Fathers or other applicable partners will be eligible to statutory paternity leave as a “day-one right” instead of from 26 weeks’ service.

General Bereavement Leave

• The current provisions relating to parental bereavement leave will be extended to apply to any bereavement, as a “day-one right”, although general bereavement leave will only be one week as compared to the two weeks of parental bereavement leave.

‘Ban’ on Zero-Hours Contracts…?

• This provision has been much trumpeted in advance but the final proposal is not actually as radical as the advertised complete ban on ‘exploitative zero hours contracts’.  
• Workers on zero and low hours contracts will gain the right to be offered a guaranteed and set hours contract reflecting their actual working practices, if they work regular hours over a reference period (possibly 12 weeks but to be confirmed). They can choose to accept or refuse this offer and if refused, will be entitled to a fresh offer at the end of every applicable reference period. 
• On the face of it, this proposal could enable zero hours workers to benefit from the highest level of their worked hours during any applicable reference period but these proposals are subject to conditions and caveats which will be set by secondary legislation. 
• Breach of these provisions will lead to a compensation claim, capped at an as yet undetermined limit, but there is no remedy proposed which would force the employer actually to make the offer or to enforce the terms of that offer.
• Additionally, new provisions seek to give workers reasonable notice of shifts and proportionately compensate them when an employer cancels or curtails shifts or working times without reasonable notice. Regulations will specify what will constitute "reasonable notice," as well as the amount to be paid after a shift cancellation. 

Statutory Sick Pay (SSP) 

• A relatively minor change but still notable is that employees will be eligible for SSP from the first day of illness, without the current three day waiting period.  The lower earnings limit will also be removed.

WHAT NEXT….?

Some of the more contentious anticipated legislation has not made it into the Bill but the government has published a ‘Next Steps’ document that outlines additional reforms it will look to implement in the future, some of which were originally headlined as key changes for a Labour Government in the first 100 days in office. These will all be subject to consultation and include the following proposals:

• A ‘Right to Switch Off’, preventing employees from being contacted out of hours, except in exceptional circumstances. 
• A strong commitment to end pay discrimination by expanding the Equality (Race and Disparity) Bill to make it mandatory for large employers to report their ethnicity and disability pay gap.  
• A move towards a single status of worker and transition towards a simpler two-part framework for employment status.