Employment Rights Bill explained

In the nick of time before the expiry of its first 100 days, the government yesterday unveiled its long-awaited Employment Rights Bill. In summary, the Bill (in addition to the accompanying policy paper) contains considerable detail on reforms to employment law, some of which have been watered down from Labour’s initial policies, but we will likely have to wait up to two years for many of the proposed new rights to kick in. Many of the key reforms will be the subject of secondary legislation and consultations. The most eye-catching reform – day 1 protection from unfair dismissal – will come in no sooner than Autumn 2026. In this blog post we take a closer initial look at the changes.   

Day 1 rights

• In potentially the most significantly anticipated reform, protection against unfair dismissal will apply from the first day of employment. This will most likely come into force from Autumn 2026.
• The government will consult on a statutory probationary period, during which there will be a lighter-touch process for employers to follow if they want to dismiss an employee. The government’s preferred probationary period is nine months (three months higher than expected). Crucially, however, employers will still need a fair reason to dismiss during the probationary period and will need to follow some form of process. It seems likely that this will be an area that leads to more litigation. 
• There will be a prohibition on dismissing an employee during, or after a protected period of pregnancy or statutory family leave (redundancy appears like it will be an exception).
• The qualifying period to access the following rights has now been removed, making them day 1 employment rights: 1) parental leave; 2) paternity leave; 3) statutory sick pay (available from the first day of sickness rather than waiting for three days in a row) and 4) bereavement leave.

Fire and rehire

• It will be automatically unfair for an employer to dismiss an employee where the employer wants to re-engage the employee on varied terms and the employee refuses to agree to that variation (so-called ‘fire and rehire’). 
• There is a limited exception where employers need to mitigate or prevent financial difficulties that may threaten the business. 

Flexible working 

• Labour had initially proposed allowing workers the right to flexible working, which could then be refused in certain circumstances (rather than the existing right to request flexible working). This is not reflected in the Bill. Workers therefore retain only a right to request, which can be refused for one of the eight existing statutory grounds. But an employer must now also show that it is reasonable to refuse the application on the specified statutory ground. This overarching reasonableness test is new. 
• The Bill also states that any refusal must state the grounds for refusal and explain why the employer considers that it is reasonable to refuse the application on those grounds. 

Duty to prevent sexual harassment in the workplace

• The Bill further increases protection against sexual harassment beyond the legal changes that were already due to come in force at the end of this month (see our blog post on this here). The further changes include a requirement that employers must ‘not permit’ third parties to harass their employees (for example, customers or clients). An employer will ‘permit’ harassment if they fail to take ‘all reasonable steps to prevent’ it from happening. 
• Whilst regulations will give further detail, the Bill includes a specified list of steps that would define what ‘reasonable’ steps will look like. Echoing the final EHRC guidance, this includes: carrying out assessments, publishing plans or policies, taking steps relating to the reporting of sexual harassment and the handling of complaints.
• A disclosure “that sexual harassment has occurred, is occurring or is likely to occur” will now also become a protected disclosure for whistleblowing purposes – meaning that any employee who raises this sort of concern will be protected against suffering a detriment or dismissal for having done so. This would probably be the case under the existing whistleblowing legislation anyway, but the change shows the clear desire to continue to shine a light on allegations of sexual harassment.

Collective redundancies

• The Bill has made an unexpected change to collective redundancy consultation obligations. The obligation to carry out collective consultation (and to notify the government of proposed redundancies using the form ‘HR1’) will now apply where there is a proposal to dismiss as redundant 20 or more employees within a period of 90 days or less, regardless of whether these 20 are at the same establishment or different establishment. This will increase the circumstances in which employers will need to consult for 30 or 45 days. 

Zero hours workers 

• Employers that engage zero hours workers (or workers on a “low” number of guaranteed hours) must give such workers the right to move to a guaranteed hours contract reflecting the hours they regularly work over a 12-week reference period.
• The guaranteed hours offer must include the days and times when the employer is required to make work available or a working pattern of days and times when work will be available. 
• The Bill includes the right to reasonable notice of a shift, and payment for any shifts that are cancelled on short notice. 

Trade union reforms 

• Employers will have to give workers a written statement that the worker has the right to join a trade union.
• Unions will have the right to request access to an employer’s premises for the purposes of meeting, representing, recruiting or organising workers, or facilitating collective bargaining. Employers do appear to have the right to refuse access.
• Changes have been made to lower the thresholds for unions to become recognised and for industrial action ballots to be considered valid (meaning that low turnout figures may no longer act as a blocker to a successful industrial action ballot).

Employment watchdog

• There will be a new labour market enforcement agency to enforce certain employment rights such as sick pay and national minimum wage.
• The agency will have the power to obtain documents and information from employers, enter business premises in order to obtain such documents, conduct investigations and issue undertakings and orders in relation to non-compliance.

Equality at work

• The Bill envisages regulations to require employers with more than 250 employees to develop an equality action plan to address gender pay gaps and to document how they will support employees through the menopause.

Notable absences from the Bill 

Despite being trailed in advance, there were some surprising absences: 

• The creation of a single status of worker (rather than the current employee and worker statuses) is not in the Bill. This appears to be because more significant consultation is needed to figure out how this would work in practice. 
• The right to disconnect does not appear, although we expect that guidance will be released on this topic in due course. 
• Despite a mention in the accompanying policy paper, there is no new requirement for employers to report their ethnicity or disability pay gaps. The policy paper does however reiterate the desire to extend the right to equal pay to those of ethnic minority backgrounds and disabled employees, with those rights being enforced by a Regulatory Enforcement Unit (claims for equal pay on the basis of sex have been significant in the public and private sector). 

If you would like to discuss in further detail any of the points raised in this blog post, please get in touch with your usual Freshfields contact.