Is Your Business Ready for the Proposed Employment Law Reforms?
On Thursday, 10th Oct 2024, the Labour Government introduced their Employment Rights Bill into Parliament. The Bill is designed to provide better protections for vulnerable workers who suffer from situations politely referred to as 'one-sided flexibility' - or, in other words, where firms can dictate unfavourable terms because the workers have very little bargaining power to negotiate fairer terms.
This Bill is still very much a ‘Framework Bill.’ While a few important changes impacting businesses have been outlined, most decisions will come after further consultation. Many of the critical specifics will only be confirmed once secondary legislation is drafted.
So what are the proposed changes and what do they mean for your business?
Key Upcoming Changes:
Reforming Employment Status
Some measures originally proposed by Labour did not make it into the Bill, such as the concept of a Single Worker Status. In employment law, there are currently three types of status: self-employed, Worker, and Employee. Labour has stated it will launch a consultation on Single Worker Status. There have been many status consultations, which have not resulted in changes due to the complexity of merging worker and employee.
The Introduction of a Fair Work Agency
This has been set out in the Bill as expected. Enforcement does need an overhaul in the labour market, to make it more efficient for workers to protect their rights, but questions remain about the resourcing and structure of the FWA. The remit of the new body is not likely to be fully clear until all the measures in the bill have been consulted on or enacted.
Zero-Hours Contracts
More than 1 million people on zero-hours contracts will gain guaranteed working hours if they want them. Those workers, along with those on low-hours contracts, will have the right to a guaranteed-hours contract if they work regular hours over a defined period, which Labour’s original proposal said would be 12 weeks. Employees can also request to remain on zero-hours contracts if that is what they would prefer. The government has also committed to limiting the proposed restrictions on zero-hour contracts to workers with ‘low’ hours, which is a significant shift. This means that temporary workers on full-time contracts who occasionally take on extra hours won’t be impacted—a concern raised by recruitment agencies.
Ending Fire and Re-Hire Practices
Fire and rehire practices will be banned in all but the most extreme circumstances, meaning employers cannot sack employees and rehire them on worse terms and conditions. There will be carve-outs, however – a move that has caused consternation from unions. Businesses at risk of complete collapse may be able to alter terms and conditions if it is the difference between going bust.
Right to Disconnect
While this was not laid out on the 10th October, guidance – but not legislation – on the right to switch off, preventing employees from being contacted out of hours, except in exceptional circumstances is expected to follow. The Government have confirmed this will not be legislated for. There will instead be a statutory code of practice.
Minimum Wage
The government plans to change the remit of the Low Pay Commission so it must take into account the cost of living when setting the minimum wage and remove all the age bands that set lower minimum wage for younger staff. It will mean a pay rise for hundreds of thousands of young workers.
New Bereavement Leave Rights
There are plans to extend unpaid bereavement leave beyond the current provisions for parents, ensuring broader support for employees in times of loss.
Pay Gap Reporting and Equal Pay Rights
It’s thought that larger businesses will need to report on ethnicity and disability pay gaps, with new statutory rights aiming to close these gaps across the workforce. This was not referenced on the 10th October but is expected to follow separately.
Stronger Protection Against Sexual Harassment
The new Worker Protection Bill will strengthen employer duties to prevent harassment in the workplace, with Tribunals empowered to increase compensation for non-compliance.
New “Day 1” Rights
Workers will qualify for protection against unfair dismissal from day one – a benefit for 9 million people, this is likely to come into force from autumn 2026. The government will consult on a statutory probation period for new hires; employees will still be able to claim for unfair dismissal. The probation period will be consulted on and introduced in autumn 2026 to coincide with the enforcement of the new rights. The government now favours a limit of nine months– lengthened after pressure from businesses – which caused some disquiet among trade unions which had asked for a limit of six months.
Other Day 1 Right Impacts:
Parental Leave
There will also be day-one rights for paternity leave and unpaid parental leave. Maternity leave is already a day-one right. A full review of all parental-leave rights is promised alongside the bill. As many as an extra 30,000 fathers or partners may be brought into scope for paternity leave, while an estimated additional 1.5 million parents will gain flexibility, with unpaid parental leave becoming a right from day one. There will also be a requirement for employers to establish a policy for bereavement leave.
Sick Pay
There will be a universal entitlement to sick pay from the first day of illness for employees. Workers will get rights to sick pay from day one, rather than from day four. Statutory sick pay is £116.75 a week and can be paid for up to 28 weeks, as long as the employee is earning an average of at least £123 a week. The government says this will be “strengthened” by removing the lower earnings limit for all workers; though the rate could be lower for workers who aren’t eligible for sick pay at all.
Flexible Working as a Default Right
The law will change to make flexible working the default “where practical”, and action plans must be drawn up to address gender pay gaps and to support female employees through menopause There will also be stronger protections against dismissal during pregnancy and after returning to work from maternity leave.
How Can We Help?
These changes bring both challenges and opportunities for businesses. While the full roadmap and deadlines are yet to be confirmed, we’ll be updating this page with the latest information, practical tools, and case studies as the rollouts unfold. Our goal is to help you stay informed, prepared, and fully compliant, while protecting your workforce throughout the transition.
Download our resources below:
Resources
Download the Employment Rights Bill and Explanatory Notes for more information as it's been introduced: