What to Expect From Labour’s New Employment Rights Bill
The Labour government has committed to changing key aspects of employment law with a new Employment Rights Bill, published on October 10 2024 and originally set out in the government’s first King’s Speech. If enacted, these changes would significantly strengthen employees’ rights and place new restrictions and oversight on employers. It is therefore critical for employers to familiarise themselves with the proposed changes and what steps they would need to take should they become law.
In this article, we cover some of the key proposed changes, including new day one rights for employees, the end of exploitative zero-hour contracts, banning ‘fire and rehire’ practices, addressing gender inequality and strengthened oversight of employment rights from a new enforcement agency and unions, as well as proposed changes to equal pay rules and what employers need to do to prepare for any changes to employment law.
Need help with employment law? Please contact Richard Gvero or Miranda Mulligan who will be happy to advise.
Key points for employers to know about the proposed employment law changes
- Employees will be given key rights from their first day of employment, including protection from unfair dismissal and flexible working as a default
- Exploitative zero-hour contracts will be banned
- The option to ‘fire and rehire’ or ‘fire and replace’ will be restricted
- Large companies will be required to take action to address gender equality issues, including around protecting pregnant workers and those returning from maternity
- A new ‘Fair Work Agency’ will be created to enforce employee rights
- Labour also plans to introduce an Equality (Race and Disability) Bill to extend the equal pay and mandatory pay reporting rules to cover race and disability as well as sex
- To meet any new employment law requirements, employers will likely need to update employment contracts and their policies
Day one employment rights
The Employment Rights Bill sets out that employees should have the right to parental leave, sick pay, bereavement pay and protection from unfair dismissal from the first day of their employment.
Currently, employees must be with a company for at least a year to qualify for parental leave and two years to be protected from unfair dismissal, so these would be a very significant changes.
An important point to note is that companies will still be able to operate probationary periods for new employees during which time unfair dismissal rights will continue to apply but it will be easier to dismiss. The probationary period is currently expected to be 9 months, subject to consultation.
Banning zero-hour contracts
The Bill aims to ban exploitative zero-hour contracts (zero-hour contracts are where a worker does not have guaranteed hours). The Bill proposes a right to request contracted hours reflective of the average number of hours they typically work with workers retaining the right to have a zero-hours contract if they would prefer this.
Additionally, workers would be entitled to reasonable notice of any changes to their normal shift pattern and compensation for any shifts that are cancelled or reduced in length.
An end to ‘fire and rehire’
Under the proposed new rules, employers would no longer be able to fire employees and then offer to rehire them on new terms and conditions. Similarly, they would not be able to fire employees and hire replacements on new terms and conditions (i.e. ‘fire and replace’) unless there is no alternative.
As things stand, employers can fire and rehire or replace employees, but they must follow a process and statutory code of conduct in order to do so. The new Labour government have labelled the existing statutory code ‘inadequate’ and stated that it will be reformed.
Requiring action on gender inequality
Large employers will have to take action to address gender equality issues. Specific proposed measures include protecting pregnant workers and those returning from maternity leave from dismissal, as well as providing support for employees experiencing menopause.
A new Fair Work Agency
To provide stronger oversight of employment law, a new state ‘Fair Work Agency’ will be created. This will be a Single Enforcement Body responsible for enforcing workplace rights.
Extending equal pay rights
Separately to the Employment Rights Bill, the new Labour government has committed to extending equal pay rules to include ethnicity and disability. This will be handled through the introduction of a separate Equality (Race and Disability) Bill.
Current equal pay rules guarantee rights to equal pay for employees of different sexes and there are mandatory reporting requirements around pay for male and female employees for companies with more than 250 employees. The new Bill would extend this right to equal pay and the reporting requirements so that they cover employees’ ethnicities and disabilities.
What employers need to do to prepare for the new employment law rules
There is no certainty around the final form the new employment legislation might take by the time it has made its way through Parliament as any bill is subject to amendment by both the House of Commons and the House of Lords. However, given the Labour government’s strong majority, it is reasonable to assume that the key proposals set out in the King’s Speech are likely to become law in some form.
Exactly when this might happen is hard to say but, given the government’s strong commitment to improving worker rights it is expected that getting the new Bill through Parliament will be prioritised.
For this reason, it would be sensible for employers to begin thinking about what changes they would need to make to comply with the new rules. Speaking to an employment lawyer now could help employers to understand the scope of the work involved, which is likely to include updating employment contracts and other key documents, such as employee handbooks, as well as revising policies and procedures, for example, around parental leave and dismissals.
How Longmores can help employers with employment law
At Longmores, we regularly advise a wide range of employers on all aspects of Employment Law. We can advise on the impact of any new legislation and help employers to implement any changes introduced, so they can be confident that they can continue effectively managing their workforces while maintaining full legal compliance.
For expert support with all aspects of employment law, please contact Richard Gvero or Miranda Mulligan who will be happy to advise.
Please note, the contents of this blog are given for information only and must not be relied upon. Legal advice should always be sought in relation to specific circumstances.
