New employment rights but at what cost?

The long-awaited Employment Rights Bill, which forms part of the new Labour government’s pledge to shake up worker’s rights, was finally published on 10 October.

The government in its press release promised that the new bill would be both pro-worker and pro-business, by helping to ‘deliver economic security and growth to businesses, workers and communities across the UK’.

‘A Next Steps to Make Work Pay’ paper also has now been published and contains the details of how government intends to deliver on its plans.

A number of new measures are being brought forward, including:

• New rights for new hires from day 1 of employment, including:
  – protection from unfair dismissal, by extending it to employees from the first day of employment, and removing the two-year qualifying period introduced 12 years ago. – Employers will however still be able to operate a statutory probationary period. The details of this will be set out in secondary legislation.
  – a right to request flexible working
  – entitlement to paternity leave, and unpaid parental leave
• A clampdown on zero-hours contracts
• Changes to statutory sick pay (SSP) to make it effective immediately by removing the waiting period and making it available from day 1 of a sickness absence. In addition, the prohibition on employees earning below the Lower Earnings Limit being entitled to SSP will be removed.

Other highlights include strengthening the duty to take ‘all reasonable steps’ to prevent harassment, which will expand upon the new obligation on employers to take ‘reasonable steps’ to prevent sexual harassment, outlined in our last article [link here]) as well as liability for harassment by third parties on any protected ground. 

Whistleblowing protections are also proposed to be extended to apply to disclosures relating to sexual harassment and in relation to dismissal.

The Bill also contains powers for the government to introduce stronger protections against dismissal for pregnant women and those returning to work after maternity leave as well as greater rights for trade unions, end ‘unscrupulous’ fire and re-hire practices, extend equal pay to cover ethnicity and disability and the creation of a new enforcement agency.

Will the Bill work?

While the Bill’s intent is to strengthen employees’ rights, the danger is that it may in fact inhibit the ability to find work in the first place and have a reductive effect on flexibility and diversity in the workplace. 

The concern is that the day 1 unfair dismissal rights will mean that there will be less impromptu hiring, and more employees being removed during their probationary period. 

More tribunal claims are also likely, both in terms of challenging the probationary process and more people being within the scope of the protection.

Data published by His Majesty’s Courts and Tribunal Service (HMCTS) earlier in October showed that the open caseload of Employment Tribunals has increased by 20% in the past year, and cases are being disposed of at the lowest rate since the pandemic. It is not unusual for unfair dismissal claims in the London region to take between 18 months to 2 years to be heard from the date of dismissal. 

The increased volume of cases will impact not only employees but will also affect businesses’, and in particular SME’s, willingness to hire. 

In addition, day 1 flexible working rights may lead to jobs being structured so that attributes such as physical presence with colleagues, geographic and/or travel requirements, specified hours, for example, are given heightened prominence in job descriptions.  At the very least Interview processes are likely to become much more rigorous and whether this will deter, by intention or design, those who genuinely require more flexibility must be a concern.  

This, coupled with a potential increase in national insurance contributions by employers, further regulation of freelance or consultancy structures (which are often a god-send for highly skilled individuals looking to re-enter the market after a career break) will further impact speculative and non-traditional hiring.

What now?

The second reading of the Bill Is due to take place on 21 October, however not all the changes will come into effect following this second reading.

Consultations will seek views on several areas including the Bill’s zero-hours contracts provisions to ensure that these are accurately applied to agency workers.

Much of the detail of the legislation will come through regulations and codes of practices.

Consultations are likely to begin in 2025, with most reforms not due to come into effect until 2026. 

We would therefore encourage any employers concerned about the implications of the Bill to engage in the consultation process and make their views known, especially as many of these proposals remain crucially light on detail.