Amendments to the Employment Rights Bill: implications for employers

In October 2024, the Government published its Employment Rights Bill (the Bill), paving the way for significant employment reforms. Full details about the Bill can be found our blog. 

Last week, the Government announced over 200 pages of amendments to the Bill in response to early consultations on topics including collective consultation, Statutory Sick Pay and guaranteed contracts for agency workers. In this blog we highlight the main implications for employers.

Collective consultation

One of the Government’s central proposals is to end fire and rehire by making it unfair to dismiss employees who refuse contract changes and by strengthening the collective redundancy framework. As part of this, the Government consulted on increasing the maximum protective award and introducing interim relief as a remedy for breach. In its consultation response, the Government confirmed:

• It will increase the maximum protective award from 90 days to 180 days. By doubling the penalty, the Government aims to stop it being financially beneficial for employers to "buy-out" employees’ rights. This change means that the Employment Tribunal’s power to uplift compensation by up to 25% if an employer fails to comply with the Code of Practice on Dismissal and Reengagement could be worth up to an additional 45 days’ pay.
• It will not introduce interim relief as a remedy where an employer breaches their collective redundancy or fire and rehire obligations.

The Government is also amending when collective consultation will be triggered. It is currently triggered when an employer proposes to dismiss 20 or more employees as redundant. Following changes in the Bill, dismissals will be calculated across the whole business, not just one establishment. However, the new amendments give the Government the power to increase the threshold trigger if redundancies occur in more than one establishment. In addition, the amendments clarify that consultation with appropriate representatives does not need to be carried out with all representatives together, or with a view to reaching the same agreement with everyone. 

Further consultation about strengthening collective consultation, as well as guidance for employers, is expected in due course.

Zero-hours contracts and agency workers

The Bill will require employers to offer guaranteed hours to zero-hours workers and low-hours workers, provide reasonable notice for shifts and compensation for short-notice cancellations or changes.

Initially, the Bill excluded agency workers from these provisions, which trade unions criticised as a loophole employers could exploit to evade the new rights. The Government’s consultation response has confirmed that the zero-hours provisions will be extended to agency workers. 

The Government acknowledges that it will be necessary to apply measures differently to agency workers due to the temporary and tripartite nature of their working relationships. Much of the detail will be left to secondary legislation and further consultation. However, the Government has confirmed the following:

• Offer of guaranteed hours: the end hirer must make the offer of guaranteed hours to qualifying agency workers.
• Shift notices: both the employment agency and the end hirer are responsible for providing reasonable notice of shifts.
• Short notice payments: employment agencies must pay for short notice cancellations or curtailments
• Recouping costs: for agency arrangements made more than two months before the Bill is passed, agencies will be able to recover certain costs from the end hirer. For arrangements made later, the agency and end hirer can negotiate what costs can be recovered.

Significantly, the Government has also tabled an amendment allowing parties to contract out of guaranteed hours in a collective agreement. The consultation also confirmed that businesses will be able to offer temporary contacts where there is a “genuine temporary work need” (though what this constitutes will be confirmed in secondary regulations).

Statutory Sick Pay

The Bill will make Statutory Sick Pay (SSP) a day one right for all workers, removing the SSP waiting period and the lower earnings limit. 

The consultation outcome on strengthening SSP confirmed that for individuals earning less than the Lower Earnings Limit, SSP will be calculated at 80% of their normal weekly earnings, instead of the flat weekly rate. This rate will apply where 80% of a worker’s normal weekly earnings is less than the flat rate.

Trade union reform

In its consultation response on creating a modern framework for industrial relations, the Government reiterated its commitment to remove unnecessary restrictions on trade union activity. The main ways it intends to do this are by:

• Simplifying information requirements for industrial action ballots and reducing the notice period for strikes to 10 days (rather than seven days as initially planned).
• Introducing e-balloting.
• Extending the expiry of mandates for industrial action from six to 12 months.
• Streamlining the trade union recognition process, including strengthening protections against unfair practices.
• Abolishing the 10-year requirement for unions to ballot members on political funds.
• Providing for digital right of access to the workplace for collective bargaining purposes.

Fair Work Agency

The Government has tabled amendments to give the Secretary of State additional powers (presumably via the Fair Work Agency (FWA)), which it hopes will reduce the burden on the Employment Tribunal. This includes the ability to issue underpayment notices in respect of unpaid minimum wage, SSP or holiday pay. Employers will be required to pay the amount due plus a financial penalty, enforceable by a court order in the event of non-compliance. 

The FWA will also be given powers to bring Employment Tribunal proceedings on behalf of workers who do not pursue a claim themselves and provide legal assistance to workers in employment proceedings (with costs to be recoverable from any costs awarded).

What was not mentioned?

One of Labour’s Manifesto promises was a "right to switch off", giving employees a right to disconnect from work-related communication outside of working hours. This did not form part of the Bill, but the Government had indicated it would be introduced by a statutory Code of Practice. Last week, a flurry of press articles suggested the Government was poised to scrap these plans. In fact, no formal announcement was made; instead, it was reported that Deputy Prime Minister Angela Rayner remained supportive of the proposal.

Speculation that the Government would soften its plan to make unfair dismissal a day one right has also not materialised.

What next?

Although it may seem like Labour’s employment proposals have been a topic of discussion for a while now, we are still in the early stages of the process. The Bill will next move to the Reports stage of the House of Commons and will undergo extensive Parliamentary scrutiny before it can be passed. Consultations on most reforms are due later this year, and much of the detail will only be addressed in secondary legislation. This topic is therefore likely to continue evolving and being discussed for some time to come. Watch this space for developments as and when they are announced.

The amendments tabled by the Government can be found here and the consultation outcomes here. 

This publication is a general summary of the law. It should not replace legal advice tailored to your specific circumstances.

© Farrer & Co LLP, March 2025