On the 10th of October, the Labour Party introduced its highly anticipated Employment Rights Bill to Parliament, achieving its goal of introducing the bill within 100 days of assuming office. This comprehensive bill outlines 28 key reforms to UK employment law, designed to offer workers increased stability and predictability in their working conditions, particularly amid the current economic uncertainty. Furthermore, it looks to address workplace inequalities by extending protections and benefits to all employees from day one of employment.
Key Provisions
Day-One Employment Rights
One of the bill’s most impactful proposals is the introduction of unfair dismissal protections as a day-one right. This change grants employees an immediate right to challenge unfair dismissals, a significant shift from the current requirement of two years’ service before being eligible to claim unfair dismissal at an Employment Tribunal. This provision will likely provide much-needed security for employees, but it may also increase the burden on businesses, which could face a rise in claims and associated legal liabilities.
The bill also proposes to make the following benefits available from day one:
- Statutory Sick Pay: Available from the first sick day, rather than the current rule requiring four days sickness absence have occurred (Clause 8)
- Paternity Leave: Currently, paternity leave requires 26 weeks of service, but this would now be available immediately.
- Unpaid Parental Leave: Available without the need for one year of service.
- Bereavement Leave: The current parental bereavement leave rules under the Employment Rights Act 1996 will be expanded, allowing employees to take leave for the loss of a broader group of loved ones.
Zero-Hours and Low-Hours Contracts
Clauses 1 to 6 address zero-hours and low-hours contracts, introducing a new right to guaranteed hours. Employees’ contracted hours must reflect the average number of hours they have worked over a reference period. Workers will also benefit from reasonable notice of changes to their schedules and receive compensation if shifts are cancelled or cut short. Importantly, while employers are obligated to offer a guaranteed contract after the reference period, employees can choose whether or not to accept it
“Fire and Rehire” Practices
The bill aims to restrict the controversial practice of “fire and rehire,” where employers dismiss workers and rehire them under less favourable terms. Under the new rules, it will be automatically unfair to dismiss an employee solely for refusing to accept changes to their contract, unless the employer can demonstrate genuine financial difficulty or a valid business reason for the change (Clause 22). This could reduce the use of such tactics, improving job security for employees
Probationary Periods
Schedule 2 of the bill includes provisions for regulating probationary periods. It specifies that certain dismissal protections under Section 98(4) of the Employment Rights Act 1996—requiring employers to act reasonably when dismissing an employee—would not apply during probation for dismissals related to conduct, capability, or statutory restrictions. However, protections in cases of redundancy would remain. The government has also indicated plans to introduce a statutory probation period of nine months, following consultations.
Conclusion
This landmark bill signals a shift towards a more protective and equitable employment framework, but if enacted in its current form, would also place significant new demands on employers, requiring them to carefully review their policies and practices and consider their ongoing employment practices.
The bill passed its second reading on the 21st of October after a lengthy debate which involved over 70 speeches. A common theme throughout the debate was the potential impact on small businesses and how this might be mitigated. The bill has now been sent to a Public Bill Committee which is expected to report to the House of Commons by the 21st of January 2025. It will be interesting to see how the bill develops on its journey through the UK Parliament. The commencement date for the changes is currently unclear, but the Labour Government have committed to allowing a period of transition once any changes are enacted.