Overview

The Employment Rights Bill as introduced to Parliament will deliver some of the key legislative reforms set out in the Government's Plan to Make Work Pay. The Bill will update and enhance existing employment rights and make provision for new rights; make provision regarding pay and conditions in particular sectors; and make reforms in relation to trade union matters and industrial action.

At this point, the Bill is “skeleton legislation” with many of the most significant reforms requiring the Government to undertake consultations and secondary legislation. It will likely take more than two years to consult and implement. The Bill is also subject to amendment as it progresses through Parliament.

The document itself runs to 157 pages, covering diverse areas of employment law. Some of the headline provisions include:

·       Right to guaranteed hours for those on zero-hours contracts.

·       Removal of the current two-year qualification period for making a claim of unfair dismissal.

·       Right to request flexible working as a default option.

·       Curtailing of so-called “fire and rehire” practices with some important exceptions.

·       Removal of the waiting period and lower earnings limit to receive Statutory Sick Pay.

·       Right to unpaid parental and bereavement leave from day one.

·       Establishment of a new Fair Work Agency with new powers to enforce regulation.

Changes to collective consultation requirements

Of relevance to the insolvency and restructuring sector are changes to the collective consultation and notification requirements for employers making more than 20 employees redundant at one time. At present, employers are only required to undertake a collective consultation if they are making 20 or more employees redundant at “one establishment”. The Bill strengthens protections for employees against collective redundancy by amending current legislation to ensure that these obligations apply regardless of whether the redundancies are taking place at one establishment or not.

Changes to fire and rehire

The Bill will restrict employers’ ability to use fire and rehire by amending the law on unfair dismissal so that, where employees are dismissed for failing to agree to a change in their contract of employment, those dismissals will be treated as automatically unfair. However, this provision does not apply if the employer can show evidence of financial difficulties and demonstrate that the need to make the change in contractual terms was unavoidable.

Part 1 - Employment Rights

Zero-hours contracts

The first three clauses of the Bill amend the Employment Rights Act 1996 and relate to zero-hours contracts. Clause 1 introduces a right for qualifying workers to be offered guaranteed hours. Qualifying workers include those employed under zero-hours contracts. The offer must set out the days of the week and the times on those days when the employer will make work available to the qualifying worker. The contract must reflect the hours worked regularly (to be defined in regulations) during the reference period (anticipated to be 12 weeks). That contract should, in most cases, be permanent.

Clause 2 outlines rights to reasonable notice of shifts, i.e. how many hours are to be worked and from what time on which day, as well as if the shift is cancelled or changed by the employer. This affects individuals on zero-hours contracts, zero-hours arrangements and other specific contracts. Clause 3 states that an employer must make a payment of a specific amount to a worker each time the employer cancels, moves or curtails at short notice a qualifying shift under a zero-hours contract.

Flexible working

Clause 7 amends Sections 80G and 80H of the Employment Rights Act 1996 to set out the right to request flexible working. The employer may refuse the application on several grounds, including additional costs, inability to meet customer demand, or a detrimental impact on performance.

Statutory sick pay

Clauses 8 and 9 remove the waiting period for statuary sick pay (SSP), making SSP payable for the first three qualifying days and removes the prohibition period for entitlement for SSP where a person earns below the lower-earning limit.

Tips and gratuities

Outlining new requirements for allocating tips, clause 10 requires employers to maintain a written tipping policy. Employers must consult with the representatives of recognised trade unions or worker representatives before writing the policy.

Entitlement to leave

Clauses 11 and 12 remove the qualifying period of employment. Clause 13 removes the restriction on employees taking paternity leave and pay following shared parental leave and pay. Clause 14 amends section 80EA of Part 8 of the Employment Rights Act 1996 (parental bereavement leave) to provide an entitlement to bereavement leave.

Protection from harassment

Clauses 15 through 17 make amendments to the Equality Act 2010 to strengthen regulations around employer’s responsibility to ensure they take all reasonable steps to prevent sexual harassment.

Clause 18 adds to the whistleblowing framework which is already a function of the Employment Rights Act 1996 to expressly confirm the position that sexual harassment can be the subject of a protected whistleblowing disclosure. The policy intention is that this will make it easier for workers to speak up about sexual harassment that they experience or are aware of.

Dismissal

Clause 19 introduces Schedule 2 into the Bill, which removes the current 2 year qualification period for bringing most claims for unfair dismissal.

Clauses 20 through to 22 outline amendments regarding dismissal during pregnancy, dismissal following a period of statutory family leave and dismissal for failing to agree to a variation of contract.

Clause 22 introduces a new unfair dismissal right to limit the use of “fire and rehire” or “fire and replace” by employers. It makes it automatically unfair to dismiss an employee where they have refused to agree to a variation in contractual terms or to dismiss an employee with a view to replacing or re-engaging them on varied contractual terms.

However, Section 104I Subsection 4 states that – “this does not apply in relation to an employee if the employer shows that the reason for the variation was to eliminate, prevent or significantly reduce, or significantly mitigate the effect of, any financial difficulties which at the time of the dismissal were affecting, or were likely in the immediate future to affect, the employer’s ability to carry on the business as a going concern or otherwise to carry on the activities constituting the business, and in all the circumstances the employer could not reasonably have avoided the need to make the variation.”

Part 2 - Other Matters Relating to Employment

Procedure for collective redundancies and consultation requirements

Clause 23 changes the existing requirements for employers to consult appropriate representatives of affected employees, and to notify the Government, where an employer is proposing redundancies. It removes references to “one establishment” so employers are required to collectively consult when proposing to make 20 or more employees redundant regardless of where they are employed.

These changes also apply when a transfer is taking place under the Transfer of Undertakings (Protection of Employment) Regulations 2006 such that transferees may collectively consult representatives of affected transferring individuals where the transferee is proposing to dismiss as redundant 20 or more employees.

Public sector outsourcing: protection of workers

The following chapter makes amendments to the Procurement Act 2023 to create powers for a Minister of the Crown to make regulations and to impose a duty to publish a statutory code of practice. These powers are to be used to set out measures to avoid the emergence of a “two-tier workforce”, which is described as a workforce consisting of ex-public sector employees and private sector employees with each group on different terms and conditions.

Duties of employers relating to equality

This chapter allows amendments to be made to the Equality Act 2010 to enable obligations to be imposed on employers in relation to equality action plans. New regulations would require employers to develop and publish an action plan showing the steps they are taking in relation to gender and equality. This includes addressing the gender pay gap and supporting employees going through the menopause.

Part 3 - Pay and Conditions in Particular Sectors

School support staff

Clause 28 establishes the School Support Staff Negotiation Body and provides a statutory framework for the negotiation of school support staff terms and conditions by that body. The Education Secretary must prescribe school support staff organisation and school support staff employer organisation members of the SSSNB through secondary legislation.

Adult social care

Clauses 29, 30, 32 and 33 outline the Adult Social Care Negotiating Body, which should include officials of one or more trade unions and representatives of social care employers. Its remit relates to pay and terms and conditions, alongside provisions made by the Health Secretary. According to the explanatory notes, the clauses aim to address the “unsustainable recruitment and retention crisis in the adult social care sector” by establishing a mechanism for the Health Secretary to implement improved terms and conditions for social care workers that have been agreed by representatives of the sector.

Part 4 - Trade Unions and Industrial Action

Right to statement of trade union rights

Employers must give the worker a written statement that the worker has the right to join a trade union.

Right of trade unions to access workplaces

Clause 46 inserts new sections 70ZA to 70ZL into the Trade Union and Labour Relations (Consolidation) Act 1992 to make provision for access agreements. An access agreement between a trade union and an employer will provide access (meaning physical entry) to a workplace by union officials for the purpose of meeting, representing, recruiting or organising workers as well as facilitating collective bargaining.

 Access should not unreasonably interfere with the employer’s business and employers should take reasonable steps to facilitate access.

Trade union recognition

Clause 47 amends the Trade Union and Labour Relations (Consolidation) Act 1992 so that if a union is supported by a majority of the workers voting, it must be recognised as entitled to conduct collective bargaining.

Facilities provided to trade union representatives and members

Clauses 50 and 51 strengthen the existing rights of employees who are trade union officials or trade union learning representatives to take time off to undertake their duties, and to access facilities.

Subsection 2 within Clause 50 states that an employer must provide the employee with facilities to carry out union duties. An employee may present a complaint to a tribunal if the employer has failed to permit the employee to take time or provide facilities.

Blacklists

Clause 53 amends the Employment Relations Act 1999 to prohibit the use of lists which contain details of members of trade unions for the purposes of discrimination.

Industrial action ballots: turnout and support thresholds

Clause 54 removes the requirement that in ballots for industrial action, at least 50% of the trade union members entitled to vote must do so in order for the ballot to be valid.

Strikes: minimum service levels

Clause 61 repeals the Strikes (Minimum Service Levels) Act 2023. Clause 67 amends the Trade Union and Labour Relations (Consolidation) Act 1992 to remove the power to impose financial penalties.

Part 5 - Enforcement of Labour Market Legislation

Clauses 72 to 112 outline the enforcement of labour market legislation by the “Secretary of State,” who we can assume to be the Business Secretary Jonathon Reynolds, although the legislation is not explicit. These enforcement functions will be performed by a new body, the Fair Work Agency. As an Executive Agency, enforcement powers will be conferred on the Secretary of State directly and/or on enforcement officers.

The Fair Work Agency’s functions will incorporate existing enforcement powers currently exercised by public bodies relating to the National Minimum Wage, employment agencies, unpaid employment tribunal awards, sick pay, gangmaster licensing and offences in Parts 1 and 2 of the Modern Slavery Act 2015.

General

The Bill provides for a new, consolidated suite of investigatory powers to be exercised by the Government or by enforcement officers.

Advisory board

To support the Government to do so, Clause 75 outlines that an Advisory Board must be appointed that consists of at least nine members.

Strategies and reports

Clause 76 states that every three years the Government must publish a labour market enforcement strategy that assesses non-compliance. The Government must also publish an annual report that assesses the extent to which enforcement functions were exercised and to which the applicable strategy had an effect on the scale and nature of non-compliance.

In both cases, the Advisory Board must be consulted, and the strategy or report must be laid before Parliament.

Powers to obtain documents or information

Powers outlined by Clause 78 allows the Secretary of State to require “a person” to provide specified documents or information, as well as attending at a specified time and place to answer questions. It states that an enforcement officer may enter any business premises and examine documents.

The powers in clause 78 are subject to certain safeguards. For instance, the powers may only be exercised by notice and a notice may only be given if certain conditions are met. Personal data will also be subject to the data protection regime.

Labour market enforcement undertakings

According to Clause 84, should a person commit a labour market offence, an enforcement may include “a prohibition, restriction or requirement” for a maximum of two years.

Offences

Failing to comply with a labour market enforcement order or providing false information may result in a conviction to imprisonment. Clause 109 abolishes the Gangmasters and Labour Abuse Authority and the Director of Labour Market Enforcement.

Part 6 - General

Clauses 113 to 119 set out the general provisions necessary for the implementation and enforcement of the legislation. This part covers topics such as the Secretary of State's power to make consequential amendments and transitional provisions, the procedures for making regulations, financial provisions, the territorial extent of the Bill, and the commencement dates for different provisions.