Big changes on the way in Employment Rights Bill

On 10th October, the government presented its new Employment Rights Bill to Parliament, aiming to “modernise our employment rights framework and respond to the changing world of work.” This blog will outline key proposals affecting SMEs and the broader workforce.

Key proposals include:

• Unfair dismissal rights: Employees will have the right to claim unfair dismissal from their first day of work.
• Zero hours contracts: Workers on zero-hour contracts will automatically receive a fixed-hours contract after 12 weeks, unless they choose otherwise.
• Statutory Sick Pay: Entitlement to statutory sick pay (SSP) will begin on the first day of sickness absence, extended to lower-paid workers.
• Family-related leave: Rights to paternity leave and unpaid parental leave will apply from the first day of employment.
• Bereavement leave: A new right to up to one week of bereavement leave for all employees.
• Fire and rehire restrictions: This practice will be effectively banned unless necessary for business solvency.
• Strengthened sexual harassment laws: Employers will be held liable for harassment of their workers by third parties, such as customers.
• Flexible working requests: Employees’ rights to request flexible working will be reinforced.
• Creation of a fair work agency: This agency will consolidate enforcement powers, including those related to minimum wage and holiday rights.

Detailed breakdown of key proposals

Unfair dismissal rights from “Day one”

From the first day of employment, employees will gain certain statutory rights, including the right not to be unfairly dismissed. This new right is expected to come into effect in Autumn 2026, alongside a proposed statutory probation period of up to nine months for new hires. During this period, employers may dismiss employees for poor performance but must follow a specific procedure, details of which are yet to be finalised.

Zero hours contracts

Zero-hour workers will be entitled to an automatic offer of a fixed-hours contract after 12 weeks. Employers will also need to provide reasonable notice if shifts are canceled or cut short, with compensation owed for failure to do so. The government will ensure that genuinely temporary contracts are excluded and that workers can choose to remain on zero-hour contracts if they wish.

Statutory Sick Pay (SSP)

Two significant proposals for SSP include removing the three “waiting days” so that SSP begins on the first day of sickness and extending SSP to low-paid workers who currently do not qualify. A consultation will determine the appropriate percentage rate for SSP for low earners.

“Day one” family-related leave

The Bill will extend paternity leave and unpaid parental leave rights to all employees from their first day of employment. These changes are expected to come into effect in 2026, with a longer-term consultation planned for more fundamental updates to parental leave.

Bereavement leave

A new right to bereavement leave will be introduced, extending the current parental bereavement leave. However, this will be limited to one week of paid leave for each bereavement.

Restrictions on “Fire and rehire”

The practice of “fire and rehire,” where employers dismiss staff to impose detrimental contract changes, will be severely restricted. Dismissals for this reason will be deemed automatically unfair, allowing employees to claim compensation. The only exception will be if the employer can prove that changes were necessary to maintain business viability.

Strengthened sexual harassment laws

From 26th October 2024, employers will be required to take “all reasonable steps” to prevent sexual harassment of workers, including by third parties. Workers will be able to claim against employers who do not actively prevent such harassment.

Flexible working requests

While the government has pledged to make flexible working the default, the proposals retain the current “right to request” system with a minor change: employers must now demonstrate that it is reasonable to refuse a request.

Summary

The proposals outlined in the Employment Rights Bill detail commitments made in the Labour manifesto during the general election. Although the Bill meets a manifesto commitment for action within the first 100 days of the new government, most, if not all, changes are expected to come into force in 2026, following further consultation on the details.