Further insights into the Employment Rights Bill

On 10 October 2024, the Government published its much-anticipated Employment Rights Bill (the Bill). Full details about what it covers can be found in our blog Employment Rights Bill – Labour’s plans for employment law.

Since then, the Government has launched its first consultations on various measures in the Bill, alongside factsheets which consolidate details about some of the reforms proposed. In this blog, we highlight key elements of both.

Consultations

When the Bill was published, the Government indicated it would start consulting on it in 2025. However, it has just published four early consultations covering a limited range of issues, the outcomes of which may inform changes to the Bill. The consultations close in early December 2024 and brief details are as follows:

1. Collective redundancy and fire and rehire – the Government is seeking views on:
   
   
   • Strengthening the collective redundancy framework by increasing the maximum protective award a tribunal can award, either from 90 to 180 days, or by removing the cap entirely.
   • Whether interim relief should be available for employees who bring a claim for a protective award and/or an unfair dismissal claim under the new fire and rehire provisions. Interim relief is a significant remedy which continues the employment contract pending a full hearing and/or entitles the employee to salary and benefits for that period.

The Government intends to consult further about strengthening collective consultation in 2025, including on doubling the minimum consultation period from 45 to 90 days if an employer proposes to dismiss 100 or more employees.

2. Zero hours contracts – the Government proposes to require employers to offer qualifying workers guaranteed hours reflecting the hours worked during a reference period. The consultation asks whether these rights should be extended to agency workers.
3. Industrial Relations – the Government is consulting on changes to the industrial relations framework. This includes seeking views on industrial action ballots and notice, extending the expiry of strike mandates, the recognition process and the enforcement of rights of access etc.
4. Statutory Sick Pay (SSP) – the Bill will mean that the rate of SSP for some lower earners will be calculated as a percentage of their earnings, rather than the flat weekly rate. This consultation asks for views on what this percentage should be.

Factsheets

The Government has published ten factsheets on the Bill to help employers and employees understand its measures and impact. One factsheet provides an overview, while the other nine address specific measures, such as unfair dismissal, trade union reform, zero hours contracts, and fire and rehire.

Each factsheet outlines the current legal framework, the Government’s policy intentions and how it sees it working, and key statistics. Although much of this information was previously covered in the Government’s Next Steps to Make Work Pay document, some points of interest include:

• Unfair dismissal: The Government plans to repeal the current two-year qualifying period for unfair dismissal protection and establish ‘statutory probationary periods’ with a lighter-touch dismissal process. Employees will have the right to request written reasons for dismissal after this period (rather than the current two years). The factsheet confirms that employers can still set separate contractual probation periods of any length, during which they can choose what benefits will be available to employees. There is a strong suggestion in the factsheet that employers should set clear performance expectations from the outset to ensure employees understand the standards required of them.
• Zero hours contracts: The factsheet indicates the reference period for calculating what hours should be offered to qualifying workers will be 12 weeks (the Bill is silent on this point). It also confirms that workers will be able to reject an offer of guaranteed hours and remain on their current contract (though it appears employers will still need to make them an offer, even if they anticipate it being rejected). Further details about who will be in scope and the process to be followed will be set out in regulations.
• Flexible working: Although there is no separate factsheet on flexible working, the overview document mentions that existing flexible working rights will be strengthened “by requiring employers to explain the grounds on which they’ve denied a request”. There is no reference to making flexible work ‘the default’, suggesting the Government may have quietly dropped that proposal.
• Fair Work Agency: The factsheets elaborate on the creation of the Fair Work Agency (FWA), which will consolidate existing enforcement functions and act as a single body to enforce employment rights, including holiday pay, sick pay, and minimum wage. The Bill will grant the FWA powers to investigate and take action against non-compliant businesses.

Cost of the reforms

The Government has published its economic analysis and impact assessments of the Bill, estimating the cost to employers to be up to £5 billion annually. Much of this is attributed to one-off upfront costs, which should reduce over time as employers adapt to the changes. The Government acknowledges that the Bill will predominantly impact employers in low-paying sectors, such as hospitality, retail and health and social care.  

The Government also predicts that the volume of individual Employment Tribunal cases could increase by around 15% as a result of the Bill, albeit with some offset provided by the new FWA.

Next steps

On 21 October, the Bill passed its second reading in the House of Commons. Next it will be scrutinised, line by line, by the Public Bill Committee, before reporting back to the House of Commons in January 2025.

Most reforms will take effect no earlier than 2026, though the factsheets state that where more time is needed for businesses to prepare, this will be taken into consideration.

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

© Farrer & Co LLP, October 2024