Gowling WLG | Jonathan Chamberlain | Anna Fletcher | Connie Cliff
Employment Rights Bill
Zero-hour contracts
Policy
A ban on ‘exploitative’ zero-hour contracts ensuring workers have a right to a contract that reflects the number of hours they regularly work. The policy also includes giving workers “reasonable notice” of any shift changes and compensation for any cancelled or curtailed shifts. This will provide more stability for workers, while maintaining the flexibility that some employees find beneficial.
Comment
This aligns with our previous understanding that workers engaged on zero-hours contracts will be entitled to receive the number of hours regularly worked during a preceding reference period, which is understood to be 12 weeks.
Under the previous Conservative Government, the Workers (Predictable Terms and Conditions) Act 2023 was passed and had been expected to come into force in September 2024. The 2023 Act introduces a new statutory right for workers to request a more predictable working pattern where:
- There is a lack of predictability as regards any part of their work pattern (for example the hours or times they work). Fixed-term contracts of 12 months or less are presumed to lack predictability.
- The change relates to their work pattern.
- Their purpose in applying for the change is to get a more predictable work pattern.
By using the 2023 Act, the right to request predictable hours could come into force very quickly
As for compensation for cancellation or curtailment of shifts, this is aimed at late/no notice being given and likely to have a sliding scale proportionate to the shortness of the notice provided. This change will need to await the passage of the Employment Rights Bill in Parliament.
Fair pay agreement in the adult social care sector
Policy
A new fair pay agreement in the adult social care sector will help to establish national terms and conditions and fair pay rates, as well as a “genuine” national living wage which removes “discriminatory” age bands.
Comment
The Labour Government originally committed to establishing sector-wide collective bargaining through which unions would negotiate fair pay agreements with employers across an entire industry (instead of merely a single employer or workplace). The planned introduction of fair pay agreements has been limited to the adult social care sector where Labour has identified issues relating to relatively high turnover and vacancy rates.
However, note that the King’s Speech in July 2024 referred to “assess[ing] how and to what extent such agreements could benefit other sectors” indicating that the Labour Government has long-term plans to expand the ambit of collective bargaining to other sectors.
Dismissal and re-engagement or “fire and re-hire”
Policy
A new statutory Code of Practice on dismissal and re-engagement, or fire and rehire, is now in force.
The new Code aims to protect workers from unreasonable dismissal or the threatening of dismissal by an employer. It also provides guidance for employers to “explore alternatives to dismissal and engage in meaningful consultation with a view to reaching an agreed outcome”.
Comment
Remember, the Code of Practice on dismissal and re-engagement devised under the previous Conservative Government did in fact come into force post the general election on 18 July 2024 . The existing Code requires employers to consult employees and explore alternative options, without raising the prospect of dismissal unreasonably early or using the threat of dismissal as a negotiating tactic to put undue pressure on employees in circumstances where the employer is not envisaging dismissal.
Notably, it states that “the employer should contact Acas for advice before raising the prospect of dismissal and re-engagement”. Failure to follow the Code could result in a 25% uplift to compensation awards in relevant cases.
We are yet to understand the extent of the Labour Government’s further planned restrictions and the nature of the remedies that will be introduced.
We do understand from the ‘Plan to Make Work Pay‘ that the strengthening of the Code will fall short of an absolute ban; offering to re-engage workers on new terms – or replacing those workers will only be permitted as part of a restructuring for a business to ensure its viability and preserve its workforce when there’s genuinely no alternative.
As for strengthening penalties, as a minimum we expect additional types of tribunal claims to be added to the list of claims to which the 25% uplift may attached – in particular protective awards for failure to collectively consult.
Day-one employment rights: Parental leave, sick pay and unfair dismissal
Policy
Introduction of “day-one” employment rights, namely parental leave, sick pay and protection from unfair dismissal (subject to probationary periods to assess new hires).
Comment
Note that employers will not be precluded from dismissing employees for the usual fair reasons such as capability, conduct or redundancy and will have the ability to dismiss an employee for failing their probation provided a fair and transparent process has been followed.
What a fair and transparent process would require and how that would compare with our understanding of the usual processes employers follow to conduct a fair dismissal is yet to be fleshed out.
The removal of the two-year qualifying period for unfair dismissal rights alone will be very significant and result in a notable increase in claims. But this goes further in stating unfair dismissal will be a day-one right for “all workers” and so involve a significant expansion of worker rights, as currently only employees are entitled to unfair dismissal protection. If that is intended (it may be that the Labour Government has used “worker” in a layman rather than a legal sense) rather than a big change, this will be a massive change.
As for making parental leave a day-one right, for employees – currently maternity leave and adoption leave are already a day-one right though it will impact other forms of leave, such as paternity leave, shared parental leave and unpaid parental leave.
There is no indication that qualifying periods for parental leave statutory pay will also be made a day-one right. Like the case for unfair dismissal, the King’s Speech states it will make parental leave (in a generic sense), available from day one on the job for all workers. Currently, only employees are entitled to parental leave, as such if extended to all workers a very significant extension of parental leave.
It is not clear whether the reference to “workers” implies that the Labour Government’s intention is to move towards a single status of worker is part of the Employment Rights Bill, though doubtful.
While not part of the King’s Speech, the ‘Plan to Make Work Pay‘ includes a commitment to consult on a framework that brings about a move towards a single status of worker and transition towards a simpler two-part framework for employment status that differentiates between workers and the genuinely self-employed. This will be no easy task. It is unclear if the Labour Government intends to make parental leave, unfair dismissal and sick pay (some workers are already entitled to statutory sick pay, depending on their earnings) a day-one right for “all workers” rather than “all employees” at an early stage before any single status consultation takes place. If it does, that would make a single status consultation largely redundant so perhaps indicating a two-stage approach will be needed, or a use of “worker” in a non-legal sense.
Statutory sick pay
Policy
Strengthening statutory sick pay (SSP) by removing the lower earnings limit to make it available to all workers, as well as by removing the waiting period.
Comment
The removal of the waiting period (the first three days of sickness) was previously done as a temporary measure during the COVID-19 pandemic to simplify the SSP system and get help to those in need more quickly.
The removal of the lower earnings limit (LEL) (currently £123) will help low-paid casual workers. The move to “all workers” will have less impact as for the purposes of SSP, “employee” includes all those whose earnings are liable for Class 1 National Insurance contributions – so already includes many “workers”.
Flexible working
Policy
Making flexible working a day-one right for all workers.
Comment
While employers will still have a discretion to refuse flexible working where it is not feasible, we understand that such discretion is likely to be limited. We may see statutory minimum process requirements introduced on 6 April 2024 – that an employer must consult with an employee, as a means of exploring the available options, before refusing a flexible working request. Currently there is no legislative de minimis requirement of what that ‘consultation’ needs to include). The new legislation may also further empower employment tribunals to scrutinise employers’ decisions.
Maternity
Policy
Strengthening protections for new mothers by making it unlawful to dismiss a woman who has had a baby for six months after her return to work, except in specific circumstances
Comment
We await details of how this will differ from the rights which came into force on 6 April 2024 under the Protection from Redundancy (Pregnancy and Family Leave) Act 2023 and the corresponding Maternity Leave, Adoption Leave and Shared Parental Leave (Amendment) Regulations 2024 which extend the existing redundancy protections (priority for suitable alternative employment) while on maternity, adoption or shared parental leave to additionally cover the pregnancy period until 18 months beginning with the first day of the expected week of childbirth or date placed for adoption (essentially an additional six-month period). Perhaps protection beyond priority for suitable alternative employment? We wait to see.
Single enforcement body
Policy
Establishing a new single enforcement body, also known as a Fair Work Agency, to strengthen enforcement of workplace rights.
Comment
The impact this will have will largely depend on its resourcing.
School Support Staff Negotiating Body
Policy
Reinstating the School Support Staff Negotiating Body, to establish national terms and conditions, career progression routes, and fair pay rates.
Comment
Abolished back in 2010, the Labour Government plans to reinstate the body to “ensure a proper voice for the staff who power our schools, bringing consistency to terms and conditions.”
Trade unions
Policy
Strengthening trade union legislation and simplifying the process of statutory recognition.
Comment
The King’s Speech refers to “removing unnecessary restrictions on trade union activity… including minimum service levels…and ensuring industrial relations are based around good faith negotiation and bargaining.”
The Bill will simplify the route to statutory recognition by revising the relevant voting thresholds and will introduce rights for unions to access workplaces for recruitment and organisation purposes.
The changes will include the repeal of the:
- The Trade Union Act 2016 (increased ballot thresholds, introduced information and timing requirements in relation to industrial action and imposed legal requirements on unions for the supervision of picketing).
- The Minimum Service Levels (Strikes) Act 2023; and
- The Conduct of Employment Agencies and Employment Businesses (Amendment) Regulations 2022 (allowed the use of agency workers to cover for striking workers).
In addition, the ‘Plan to Make Work Pay’ has stated it will:
- Update the balloting requirements to allow for electronic balloting
- Simplify the union recognition process and reduce thresholds
- Introduce rights for trade unions to access workplaces in a regulated and responsible manner for recruitment
- Introduce a new duty on employers to regularly inform all employees of the right to join a union. To become a s1 Written Statement of Particulars of Employment requirement
- Increase protection for trade union reps
- Modernise rules on blacklisting
Draft Equality (Race and Disability) Bill
Policy
This new Bill proposes to implement the full right to equal pay for ethnic minorities and disabled people to enable claimants to bring equal pay claims on the grounds of race and disability (not just sex).
There are also plans to introduce mandatory ethnicity and disability pay gap reporting for those employers with more than 250 employees.
Comment
The detail is awaited. Note, only four of the 40 bills listed in the King’s Speech are referred to as “draft” indicating that this Bill is at a more formative stage.
As it regards pay gap reporting, finding a methodology resulting in meaningful data is no easy task. Simply cutting and pasting the methodology used in gender pay gap reporting is unlikely to be suitable due to small statistical group issues and issues around classification of those of differing ethnicities/disabilities.
Other proposals
While many of the key policy proposals under the ‘Plan to Make Work Pay‘ proposals are included in the Employment Rights Bill and the draft Equality (Race and Disability) Bill, there are some parts that are absent.
Their absence does not mean that they have been abandoned. Some of these things may not require primary legislation to progress. Some may be parked momentarily awaiting future parliamentary time.
Tribunal procedure
Policy
The time limits within which employees are able to make an employment claim is to be increased from three to six months. It will also enable employees to collectively raise grievances through ACAS about conduct at work.
Comment
Likely to lead to an increase in tribunal claims.
National minimum wage
Policy
Making the minimum wage a genuine living wage and ensuring all adults are entitled to the same minimum wage regardless of age.
Comment
On 30 July, the Department for Business and Trade published the Low Pay Commission Remit 2024, stating:
- The National Living Wage (NLW) rate does not drop below two-thirds of UK median earnings for workers aged 21 and over.
- The National Minimum Wage (NMW) rate for 18 to 20 year olds to remain from April 2025 but “to narrow the gap with the NLW taking steps year by year in order to achieve a single adult rate”.
- Set the under 18 rates and apprentice rates “as high as possible without damaging the employment prospects of each group”.
This is a slower transition to a single adult rate (for those aged 18 plus) than originally expected. As expected (and has always been the case), there are no plans to merge the youth and apprentice rates with the adult rates (despite what is mis-reported in some sections of the press).
Equal pay
Policy
Strengthening working women’s rights to equal pay by ensuring outsourcing of services cannot be used by employers to avoid paying equal pay and strengthening equality impact assessments for public bodies.
Comment
Details are awaited.
Fair tips
Policy
Strengthening the law to ensure hospitality workers receive their tips in full and workers decide how tips are allocated.
Comment
This is being done via the pre-existing Employment (Allocation of Tips) Act 2023. On 26 and 29 July, the Labour Government made the commencement regulations to bring into force the remaining provisions of the 2023 Act, together with the statutory Code of Practice on Fair and Transparent Distribution of Tips with both to come into force on 1 October 2024.
The 2023 Act regulates how employers allocate tips among workers by introducing obligations to ensure that workers receive “tips, gratuities and service charges” in full, and that those tips are allocated in a fair and transparent way. In addition, workers will receive a new right to request more information about an employer’s tipping record with employers being required to have a written policy on how tips are allocated. It will still be possible for employees to pool tips and for tronc systems to be operated independently of the employer. However, unlike the headline policy stated in the ‘Plan to Make Work Pay’ this does not go so far as to provide that “workers decide how tips are allocated”.
Discrimination and harassment
Policy
Strengthening working women’s protections from maternity and menopause discrimination and sexual harassment.
Comment
Under the ‘Plan to Make Work Pay’, large employers with more than 250 employees will be required to produce menopause action plans, setting out how they will support employees through the menopause – it appears this may be done via the gender pay gap reporting provisions. Alternatively, this may mean the implementation of the s41 Equality Act dual discrimination provisions – we wait to see.
As for strengthening the sexual harassment provisions, presumably this will be via the provisions of the pre-existing Worker Protection (Amendment of Equality Act 2010) Act 2023, which are due to come into force on 26 October 2024. The Act introduces (1) a new positive legal obligation on employers to take reasonable steps to protect their workers from sexual harassment, and; (2) If an employer breaches the preventative duty, the European Convention on Human Rights (ECHR) will have the power to take enforcement action against the employer. Employment tribunals will also have the power to increase compensation for sexual harassment by up to 25%.
During a difficult passage through Parliament, the originally proposed provisions were very significantly diluted:
- The original provisions for the re-introducing employer liability for the harassment of employees by third parties in the course of employment were removed.
- In relation to the preventative duty carrying a potential 25% compensation uplift in sexual harassment cases, employers will only be required to take “reasonable steps” rather than “all reasonable steps” to protect employees from sexual harassment in the course of their employment.
The ‘Plan to Make Work Pay‘ indicates the existing provisions due to come into force soon may later be strengthen by reinserting all reasonable steps to stop sexual harassment before it starts, including by third parties, but that will require primary legislation – we wait to see.
Redundancy
Policy
Strengthening redundancy rights and protections, including the trigger for collective redundancy consultation being determined by the number of people impacted across the business.
Comment
This will remove a single establishment requirement for collective consultation trigger.
TUPE
Policy
Strengthen existing TUPE protections.
Comment
We await details.
Whistleblowing
Policy
Strengthen whistleblowing protections (including those related to sexual harassment).
Comment
We await details.
Public sector equality duty
Policy
The socio-economic duty under s1 Equality Act 2010 to be enacted and apply to public bodies in England and Wales.
Comment
This will require public bodies to pay due regard to reducing inequalities because of socio-economic disadvantage.
Right to switch off
Policy
A right to disconnect refers to an employee’s right to switch off from work outside of normal working hours , meaning that working from home does not mean homes turn into 24/7 offices in order to promote a positive work-life balance for all workers.
Comment
We await details, but expected to be similar to position as exists in the Republic of Ireland.
Artificial intelligence
Policy
Safeguard against discriminatory algorithmic decision-making and invasion of privacy in new technologies, including automation and AI.
Comment
We await details.
Parental leave
Policy
Review the current parental leave (generic sense) system within the first year of a Labour Government.
Comment
Review of the unpaid Carer’s Leave regime (to include consideration of making it paid leave).
Bereavement leave
Policy
Introduction of the right to bereavement leave for all workers (which is currently only available for the death of a child under the age of 18).
Internships
Policy
Unpaid internships to be banned except when part of an education or training course.
Currently off the table
Unlike the previous green paper, there is no longer mention in the ‘New Deal‘ or the King’s Speech of removing the cap on compensation for unfair dismissal.
This is favourable news for private equity backed businesses who rely on carefully crafted good and bad leaver provisions to adequately incentivise its key employees and discourage them from leaving through the back door. Perhaps an unwelcome reversal for senior executives, though, who’ve one less string to their bow when it comes negotiating favourable exit packages.
Given that the overwhelming beneficiaries of capless compensation would not be the Labour Government’s prime votership, the absence of this policy is not overly surprising.
The first 100 days: UK employment law reforms
The King’s Speech refers to the Employment Rights Bill being “introduced” within 100 days of the new Parliament, which takes us to 12 October 2024.
Following its introduction, the Bill must undergo a five-step process through both Houses of Parliament and will likely be subject to amendments along the way before it is fully enshrined in law. Even once the Bill becomes law, it may require the introduction of delegated legislation to being certain of its laws into force which may further prolong the timeline. It is likely that much of the new legislation will not be effective until the second half of 2025 at the earliest.
The Labour Government has not made a time commitment to the draft Equality (Race & Disability Bill), which suggests that it is lower down in its list of legislative priorities.
This article first appeared on Lexology. You can find the original version here.
