Employment Rights Bill 2024 – What Does it Mean for Your Business?

On the 5^th July 2024, the Labour government rose to power after winning the general election by a vast majority. This put the party in a position to pass new laws, as well as make changes to existing ones.

In delivering his speech on Wednesday 17^th July 2024, King Charles III outlined the Labour government’s proposals, and it became clear that there were plans for quite the ‘shake up’ to many well-established employment laws. The plans proposed, promised to deliver the biggest update to workers’ rights in a generation. The Employment Rights Bill 20204, announced today, sets out many of the measures detailed by Labour in its ‘Plan to Make Work Pay’, which was detailed prior to the General Election.

The Labour Party’s proposed employment law changes were to be fully detailed in the Employment Rights Bill 2024, and after much anticipation, the  Bill has been announced today. It is also expected that further plans for employment legislation will be published. These are not detailed in the Bill but may be implemented later, such as the right to ‘switch off’, or a review of the parental leave and carers leave system, amongst other things.

The Bill will affect employees and workers. As defined by the Government, on Employment status: Worker – GOV.UK (www.gov.uk), a person is generally classed as a ‘worker’ if:

• they have a contract or other arrangement to do work or services personally for a reward(a contract can be written or unwritten)
• their reward is for money or a benefit in kind, for example, the promise of a contract or future work
• they only have a limited right to send someone else to do the work (subcontract)
• their employer has to have work for them to do as long as the contract or arrangement lasts
• they are not doing the work as part of their own limited company in an arrangement where the ‘employer’ is actually a customer or client.

An employee is someone employed under an employment contract (Employment status: Employee – GOV.UK (www.gov.uk),). An employment contract is an agreement that sets out an employee’s:

• employment conditions
• rights
• responsibilities
• duties

Labour Government’s Employment Law Changes – What Changes Does the Employment Rights Bill 2024 Announce?

Day one rights’ for Employees – As the law currently stands, employees are entitled to parental leave after one year of continuous service; to not be unfairly dismissed after two years of continuous service; and to statutory sick pay once they have been off of work for at least four days in a row. The Bill proposes a fundamental change to this, in that parental leave, sick pay, and unfair dismissal protection will become an employee’s right from the day that they commence employment. Not only this, these rights will be available for “all workers”. This will significantly expand workers’ rights, as currently only employees are entitled to parental leave and unfair dismissal protection. Whilst providing further employee protection than the current law, this proposal will not prevent employers from dismissing an employee fairly, for reasons such as capability, conduct or redundancy.

Probationary Periods to Remain – Despite the introduction of ‘day one rights’, the Bill makes it clear that employers will still be able to operate probationary periods to assess new hires, but only where there are fair and transparent rules and processes involved. This provides that new hires cannot be dismissed without good reason or cause.

Banning Exploitative Zero-Hour Contracts – Zero-hour contracts are commonly used by employers; however, they pose the risk of one-sided flexibility which has little benefit to an employee. Zero-hour contracts do not provide an employee with any certainty of work and so the Bill proposes that such contracts, which, can when used inappropriately, exploit an employee shall no longer be permitted. The Bill proposes that an employment contract should reflect the number of hours that an employee regularly works and that if there is to be a change to the shifts or working time, reasonable notice must be given to the employee. It also proposes that compensation must also be given for cancelled shifts. The intention is not an outright ban on zero-hour contracts; as mentioned the ban will affect those that are ‘exploitative’. The aim of the change is for all jobs to provide a minimum level of security and predictability in working patterns. There will also be the option for an employee to opt to stay on a zero-hour contract.

Fire and Rehire – Fire and rehire is the practice of an employer dismissing an employee in order to re-engage them on new contractual terms. Under existing law, a fire and rehire termination is still a dismissal; therefore, it could give rise to an unfair dismissal claim, but only if an employee has 2 years’ service. The Bill states that The Employment Rights Act 1996 will be amended so that if an employee refuses to accept new contractual terms where the alternative is dismissal, it would be automatically unfair to dismiss an employee for that reason. Dismissal and re-engagement will however be permitted where there is genuinely no alternative. This change provides an employee with protection in a situation where they do not wish to accept new contractual terms.

Employment status – Currently, there is a three-tier system for employment status, where people are classified as either an employee; worker; or self-employed. Out of the three, an employee benefits from the widest range of employment rights. The Bill states that there will be a move towards a two-tier framework for employment status which will comprise only ‘workers’ and those who are genuinely self-employed. This means that certain rights, currently only benefitting employees, will become relevant to workers. This change hopes to provide clarity for workers and businesses as there will be a clearer picture of where employees sit and what protections they are entitled to. The Bill also states that there will be further protection for self-employed workers who will be entitled to written contracts.

Flexible Working – The Bill proposes that flexible working will be the default from day one of employment for all workers, not just employees. and employers will be required to accommodate flexible working from day one as far as is practical. Although the right to request flexible working is already a day one right, the Bill proposes to make this a default right. The change to flexible working aims to ensure that both workers and the economy benefit.

Statutory Sick Pay – Under existing law, employees who earn at least £123 per week and have been ill for more than three days in a row are entitled to statutory sick pay for a maximum of 28 weeks. Employees can be paid for all of the days they are off sick, that they would have normally worked, except for the first three. The Employment Rights Bill has announced that a threshold of £123 will be removed along with the 3-day waiting period. The Bill also proposes to increase the amount of statutory sick pay that employers will be required to pay. This change hopes to provide employees with better financial security through periods of illness.

Extensions of Employment Tribunal Time Limits – The Bill states that the time limit to bring an Employment Tribunal claim will be extended from three to six months. This change hopes to improve the enforcement process in an Employment Tribunal so that matters can be resolved more efficiently.

Protection for New Mothers – The Bill proposes that it will become unlawful to dismiss a new mother for a period of six months after her return to work, except in certain circumstances. This is being introduced to afford stronger protection to new mothers and ensure that they have financial certainty when returning to work after maternity leave.

Fair and Equal Pay – The Bill goes further than just providing for a National Minimum Wage. It proposes that for the first time, the minimum wage shall take into account the cost of living. The Bill also proposes to remove the age bands in minimum wage laws so that all adult workers benefit in the same way. The Labour Party has said that it will “finish the business of ending pay discrimination at work.” The Bill therefore introduces measures to ensure that outsourcing of services cannot be used by employers to avoid paying equal pay. The Bill requires large employers to create action plans on addressing gender pay gaps and supporting employees through menopause.

We will publish more from the Bill when it becomes available. We expect further details to include:

Extra Protection Against Harassment – The Bill strengthens the legal duty for employers to take reasonable steps to stop sexual harassment before it starts. Employers would be liable if they were informed of any sexual harassment and did not take appropriate steps or had not taken measures to prevent it in the first place. The Bill also covers harassment by third parties.

Redundancy rights and TUPE – The Bill has introduced further rights and protections for an employee in a redundancy or TUPE situation.

Trade Union Laws – The Bill has announced that Trade Union legislation will be updated to fit the modern economy. Labour plan to repeal The Trade Union Act 2016, which introduced a number of restrictions on the organisation of lawful industrial action. Trade Unions will be given a reasonable right to access workplaces. The Bill also announces that employers will have a duty to inform new employees of their right to join a trade union and to also remind existing staff of this right regularly.

Adult Social Care – The Labour Party stated that there is a recruitment and retention crisis in the adult social care sector. The Bill therefore addresses the vital issues in this area. The Bill introduces measures to ensure that social care workers are treated with dignity and respect and that they are provided with better working conditions, adequate training and progression opportunities. The Bill outlines a new ‘Fair Pay Agreement’ in the sector so that social care workers are receiving fair pay for the work that they do.

The School Workforce – Similarly, the school workforce also faces recruitment and retention challenges. Labour announced that it had plans to better value and recognise the professionalism of the workforce. The Bill announces that it will reinstate the ‘School Support Staff Negotiating Body’ which will be responsible for creating a national terms and conditions handbook to outline training, career progression and fair pay rates for support staff. Labour says that this reform will ensure that schools can deliver a high-quality education service by recruiting the best candidates and retaining staff.

When Will the Changes Proposed by the Bill Come into Effect?

As the Employment Rights Bill 2024 fulfils a general election manifesto commitment, the House of Lords will have to pass it, although they will be entitled to amend it. This means that although the changes outlined above will not come into effect immediately, they will come into effect at some point in the near future and it is just a matter of when and in what exact form. The Bill being introduced in Parliament does not mean that the changes outlined in it will take legal effect straight away, as the Bill will now need to go through the parliamentary process and receive royal assent in order to be passed. It is however possible that some of the changes outlined could have legal effect as early as April 2025.

What Does the Bill Mean for Your Business?

The Bill announces fundamental changes to a wide range of employment laws. This means that the ways in which businesses have previously operated with regard to their employees will be subject to change. Employers will need to be mindful of the changes outlined in the Employment Rights Bill 2024 so that they can be proactive when the changes come into force legally. By understanding the changes and being alert to when they will take effect, employers will be able to ensure that they are acting within the remit of the law when it comes to employment issues within their business.

How Can We Help? – Tollers HR

At Tollers, we are on hand to assist your business will all of its employment law needs and challenges. We are able to provide expert employment law advice and guide your business through all of the changes that will come into force once the Employment Rights Bill 2024 has been passed as law.

Our Employment team offers a bespoke ‘HR Package’ designed to help you manage the HR side of your business. We offer a dedicated service, providing you with specialist HR advice and assistance, as and when you require it. You’ll have legal advice on hand and will be able to speak with us directly, whenever you have a query or an issue that needs dealing with.

We will keep track of how the legal changes will affect your business so that the pressure is taken off of you. In turn, we can ensure that your business is complying with all of the new and updated laws when employment issues arise.

Tollers HR protects your business by ensuring that it is not exposed to risk. We can help you manage and eliminate risk from the outset by ensuring that each time an employment issue arises, your business deals with it in accordance with the law, being guided by our experts.

The changes outlined in the Bill mean that protection against employment law claims is more important than ever. Therefore, our Tollers HR package offers indemnity to your business by partnering with a leading specialist insurance provider to cover tribunal costs.

More information regarding Tollers HR can be found here.

Talk to Tollers

If you would like more information on how the Employment Rights Bill 2024 could affect you as an employer and your employees…Talk to Tollers on 01604 258558.  Our highly experienced Employment law and HR specialists are here to ensure you remain up to date as we await the new legislation to be passed into Law and advise you on what you need to do once it comes into force.

More information on the new Bill can be found here.