In October 2024, the newly elected Labour government introduced the Employment Rights Bill, its first significant piece of legislation. Everyone involved in employment law knows that these changes are significant, and there are many excellent breakdowns of the changes that will occur.
In this article, Invicta Law Solicitor, Raphael Royo-Reece sets out the areas of major change (and there are a few!), explains the impact the change is expected to have, and outlines the steps employers can take right now to prepare for the future.
Unfair Dismissal
The changes: A new concept of an “initial period of employment” will be introduced, likely nine months. After this, dismissals must be for potentially fair reasons. Redundancy is not on this timeline and is instead a true day-one right. The definition of “some other substantial reason” will be narrowed to reasons specifically relating to the employee.
The impact: It will become more difficult to dismiss employees after nine months and in general. Employers relying on “some other substantial reason” will need to ensure that the reason justifies the dismissal of the employee. There will be more claims at the Employment Tribunal so the system will slow down unless capacity is raised in line with demand.
How to prepare: Employers should ensure they have smooth onboarding processes that include probationary periods of less than nine months with robust checks. Any employees who need to be dismissed should be dismissed before the nine-month deadline, as this significantly weakens a resulting unfair dismissal claim.
Flexible Working
The changes: The right to request flexible working will be strengthened. Employers will only be able to refuse requests if it is reasonable to do so, and they must provide an explanation.
The impact: It will be harder for employers to justify why employees cannot work flexibly. As there are no cases that define when it is reasonable to refuse a flexible working request, there will be uncertainty as to what can be refused.
How to prepare: Employers can start thinking now about which departments, teams or projects require staff to attend in person or require staff to work their current hours. This should be updated regularly as things change. If and when a flexible working request comes, employers will have a ready-made and up-to-date list of reasons to refer to.
Tips
The changes: Employers will need to consult on their tips policy when making or revising it and must review this policy every three years.
The impact: This is another policy that will need to be kept updated. Employers must set up a schedule for reviewing their tips policy and ensure employees are properly consulted whenever amendments are made to it.
How to prepare: Diarise the dates to review the policy and add clear notes to the policy to ensure that you meet the legal requirements for consultation before finalising any changes.
Fire and Rehire
The changes: Dismissing employees in order to vary their contract will be automatically unfair, as will dismissals to enable an employer to replace the employee or re-engage the same employee to carry out the same duties. Redundancies that allow employees to re-apply will be caught by this but there is an exception where the employer can show that the variation was required for the business to keep trading, and the employer could not reasonably avoid this need. This is however a very high bar.
The impact: Employers will now find it very difficult to change the terms and conditions of employment without agreement from the relevant employees or dire financial situations.
How to prepare: Where the need for change is foreseen, employment contracts that allow the employer to make those changes under specific circumstances will help employers avoid this issue. Where changes are unforeseen or relate to contracts without these provisions, employers should take all measures to obtain employee agreement to changes and proceed without this only where the costs of losing at the Tribunal have been thoroughly accounted for.
Protection from Sexual Harassment
The changes: It is likely that employers will be liable when a third party sexually harasses its employees, unless they can show that they have taken every reasonable step to prevent this.
The impact: Employers must assess what steps they can put into place to prevent sexual harassment and work out which of these are reasonable. Without this and even with such steps in place, employers are significantly more likely to face claims at the Tribunal in relation to sexual harassment.
How to prepare: Employers should think now about the sexual harassment risks for their employees and the steps they can take to mitigate these. From here employers should determine which steps are reasonable and which aren’t, justifying these as best possible. Finally, employers should put the steps judged as reasonable in place and would be wise to have a process for employees to suggest further steps.
Gender Pay Gap Reporting
The changes: Employers are likely to be required to publish an equality action plan, which sets out the steps they are taking to address gender equality.
The impact: Further need to produce policy and take actions in line with the gender equality policy drafted.
How to prepare: Employers can get ahead of the requirement by drafting an equality action plan now, ensuring that they get relevant information and feedback early instead of this process being rushed. As this will be published information, a well-written policy could be an asset to employers while a badly written one could be a liability.
Zero-Hour Contracts and Guaranteed Hours
The changes: Employers will need to offer guaranteed hours to workers who regularly work over their minimal hours over a reference period.
The impact: There will be a duty on employers to check how many hours their workers are working and to make offers of guaranteed hours every reference period if required. This will be a burden on employers, particularly small businesses that rely on many such workers.
How to prepare: Employers should ensure they are aware of how many zero and low-hour workers they have, how the hours worked are monitored and be aware of how much additional information they will need to track. Employers can then consider reducing the number of such workers, perhaps through the amalgamation of work and/or creating a robust procedure to check hours worked within a certain period. Employers should also ensure that offers of guaranteed hours are made when they should be.
Shifts: Notice & Compensation
The changes: Employees will have the right to reasonable notice of shifts and compensation for cancelled or moved shifts. What counts as reasonable notice and the level of compensation is to be confirmed, though we know the compensation will not exceed the amount that would have been paid for the shift.
The impact: This change protects workers but requires employers to manage scheduling more carefully, lest employers suffer additional expenses. Approximately 8.3% of the UK’s workforce will be affected by this change.
How to prepare: Employers should consider how shifts are drawn up and altered. If the system can be altered now to give employees greater notice, this will allow the employer to fix teething problems before the bill goes live instead of when there are cash consequences for any such problems.
Trade Unions, Industrial Action, and Collective Rights
The changes: Several restrictions on industrial action will be removed, making it easier for unions to strike and requiring unions to give less notice of strikes. Employers will also be required to provide information on the union to new employees, at the same time as they give details of their employment. Employees will also receive greater protection if they do strike, preventing employers from treating them differently for striking (although not paying for hours not worked or the loss of a bonus is probably still permitted).
The impact: Union voices will be louder and there are likely to be more unions and union members. The balance of power will shift.
How to prepare: Employers should ensure procedures are updated so that they comply with requirements to inform new employees about unions. Good relations with unions and effective communication can mitigate the risk of disagreements arising.
There is no doubt that these measures will place a burden on the employer to begin with. However, this burden will fall on all employers and those that prepare now will gain an edge against those that don’t. Failing to prepare is preparing to fail – don’t let it happen to you.
