Labour Government unveils Employment Rights Bill

The Labour Government published their Employment Rights Bill on 10 October 2024. The bill, as introduced, spans near 150 pages and contains numerous provisions updating individuals’ employment rights.

Although the Bill is very much in the early stage of its journey through Parliament, there are several key takeaways from the Bill’s current drafting that we have summarised below.

Unfair Dismissal

As expected, the Bill proposes to remove the two-year qualifying period on Unfair Dismissal claims.

The Bill’s current wording indicates that Unfair Dismissal will be a “day one” employment right, however the current draft also provides the Secretary of State with the power to modify an individual’s right to bring an Unfair Dismissal claim if they are still within an “initial period of employment.”

We understand this “initial period of employment” will effectively be a “statutory probation period” which is undefined but will be consulted on in the near future.

There are suggestions that this period is likely to be around nine months, but there is no official confirmation on this yet.

Third Party Harassment

It may be surprising for many employers to see that the current wording of the Bill proposes that an employer will now have a duty to take all reasonable steps to prevent third parties from harassing their employees in the course of their employment.

This is an additional claim that had previously been set to be introduced in the Worker Protection (Amendment of Equality Act 2010) Act 2023, an act known predominantly for the recent reform of sexual harassment laws. Despite passing its third reading in the House of Commons unopposed, due to the significant opposition that act faced at the House of Lords, the government conceded and reneged on introducing Third Party Harassment at that time.

Fire and Re-hire

Less surprisingly, the Bill proposes to limit the practice of employers varying employment contracts by dismissing employees and then re-engaging them on different terms, known colloquially as “fire and re-hire”.

Under this proposal, should the reason (or principal reason) for dismissing an employee be to vary the employee’s contract of employment (and where the employee has not agreed to this variation), the dismissal will be deemed automatically unfair.

As currently drafted, employers will have a limited defence. An employer would need to evidence that:

• the reason for the variation is to eliminate, prevent or reduce significant financial difficulty;
• such financial difficulty was affecting, or would likely affect in the immediate future, the employer’s ability to carry on their business; and
• in all the circumstances the employer could not reasonably have avoided the need to make the variation.

Zero Hours Contracts

The Bill proposes steps to limit the practice of Zero Hours Contracts. Employees who prefer having zero-hours contract will be able to remain on those terms, however the control is in the employee’s hands.

Under the Bill’s proposals, employers will be required to offer a zero-hours worker a guaranteed-hours contract based on the hours they have clocked up during a 12-week period.

Should any changes be made to a zero-hours worker’s shift, or if a shift is cancelled, the worker will also be entitled to “reasonable” notice. Should an employer fail to provide “reasonable notice”, then the worker has the right to present a claim to an Employment Tribunal and, if successful, would be entitled to compensation for any financial losses that the Employment Tribunal deems “just and equitable”. Both the concept of “reasonableness” and what level of award is “just and equitable” are currently undefined.

Flexible Working

Further to the update on 6 April 2024 that gave employees the right to make a flexible working request on day one, the Bill proposes to limit an employer’s right to refuse a flexible working request.

Although the grounds of refusal that an employer can rely on remain the same, an employer will now only be able to rely on those grounds if they can evidence that it is reasonable to refuse the application on such grounds. An employer must also explain why they consider that their grounds are reasonable in their outcome letter to the employee.

Protected Disclosure

Another less publicised amendment is the proposed addition of a disclosure that an act of sexual harassment has occurred, or is likely to occur, to the list of “Qualifying Disclosures” under section 43B of the Employment Rights Act 1996.

This would mean that should an employee be dismissed, or put to a detriment, for the reason of disclosing that sexual harassment had occurred (or was likely to occur), then they will be entitled to bring a claim to an Employment Tribunal.

Statutory Sick Pay

Both the waiting period and lower earnings limit for Statutory Sick Pay will be removed. Employees, regardless of earnings, will now be entitled to Statutory Sick Pay from the first day that they are ill.

The Bill is set for a second reading on 21 October 2024 in the House of Commons. This is the next of many stages the Bill will have to pass through before receiving Royal Assent. Although there is no commencement date yet, it is currently rumoured that this will be around October 2026.

There are a notable number of aspects missing from the Bill that had been promised by the Labour Government. These include:

• the “right to switch off” – prohibiting employers from contacting their employees out of hours, except in exceptional circumstances;
• a reporting requirement for large employers on their ethnicity and disability pay gap;
• the single status of a worker; and
• reviews into the parental leave and carers leave system.

The Government have included these in a “Next Steps” document, indicating that they intend to legislate on these matters in the future but have not yet committed to any dates as to when these future reforms will be implemented.