On 10 October 2024, The Labour Government published its ambitious Employment Rights Bill (the Bill), fulfilling a key promise from their election campaign to deliver ‘a New Deal for Working People’ within 100 days in office. The Bill introduces 28 employment law reforms designed to strengthen workers’ rights and address critical issues such as job security, sick pay, zero-hours contracts, and flexible working. We highlight some of the key proposals and its implications for employers, while noting that much of the detail will be shaped through further consultations and secondary legislation.
Unfair dismissal
Under the existing UK framework, employees must complete a ‘two-year qualifying period’ before they can bring an unfair dismissal claim, meaning that they must have worked for their employer for two full years. The Bill seeks to abolish this two-year qualifying period (with the change expected no earlier than Autumn 2026) by allowing employees to file for an unfair dismissal from the first day of employment in their aim to avoid workers waiting years for basic rights.
According to the government’s ‘Next Steps to Make Work Pay’ paper, the Bill plans to introduce a statutory ‘probationary period,’ during which employers can follow a less formal and ‘lighter-touch’ dismissal process. A further consultation is expected to determine the length of the probationary period (although the government has expressed that a period of nine months is preferred) as well as how this process will align with the ACAS Code on Disciplinary and Grievance Procedures.
The consultation will examine safeguards aimed at ensuring job security for workers while providing flexibility for employers during probationary periods, including whether compensation for successful claims should be capped. Once additional guidance is released, employers should review their contracts and management processes to establish well-defined and flexible probationary periods that comply with the forthcoming legislation.
Zero-hours contracts
Over one million UK workers are employed under zero-hours contracts, which often leaves employees with no guaranteed hours and results in unpredictable income. The government addressed this issue in the Bill, though it stops short of abolishing zero-hours contracts altogether, as many had anticipated.
Under the proposed legislation, workers who have been regularly employed on a zero-hours contract for a set period—suggested as 12 weeks—will have the right to request a contract that guarantees their working hours. For those who prefer the flexibility of zero-hours contracts, the option to remain on them will still be available. The bill places responsibility on employers; employers must provide reasonable notice for any shift changes and will be required to compensate workers if they cancel or cut hours at short notice.
These reforms will most likely impact businesses that rely on flexible workforces, and therefore employers will need to understand how the new rules will impact their operations.
Fire and Rehire/Replace
The controversial practice of ‘fire and rehire’ where employers dismiss staff only to rehire them (or replace them) on less favourable terms, has drawn widespread criticism in recent years, particularly during the pandemic. While some employers have engaged in this tactic as a last resort, it has previously sparked outrage for exploiting loopholes in the system.
The Bill aims to end what the government has called ‘unscrupulous practices’ of fire and rehire and fire and replace. Employers will no longer be able to force workers into accepting poorer conditions unless they can prove that it is absolutely necessary for example, if they were avoiding financial hardship that threatens the company’s survival. If there is no good reason for partaking in fire and rehire or fire and replace, it will be considered automatically unfair in most cases.
While some employers may view these changes as limiting their ability to make restructuring decisions, the reforms signal a clear commitment to greater fairness and transparency in the workplace. These measures aim to balance business needs with stronger protections for employees, closing loopholes that have allowed unfair practices to persist.
Statutory sick pay
Under the existing UK framework, statutory sick pay (SSP) is only available after an employee has been absent for more than three consecutive days due to illness. Workers must earn a minimum of £123 per week to be eligible. The pandemic exacerbated the inadequacies of this system, particularly for low-income and part-time workers who found themselves without any financial support when they were unable to work due to illness.
The Bill eliminates the three-day waiting period, allowing SSP to be paid from the very first day of absence. It also removes the earnings threshold, making SSP accessible to all employees, regardless of their income. These changes are anticipated to take effect relatively soon. Once these reforms are implemented, employers may need to update their sick pay policies, contractual agreements, and procedures to ensure compliance with the new regulations.
Flexible working
Since 6 April 2024, employees have had the right to request flexible working from the first day of employment, irrespective of their length of service. Despite this legislation being progressive, it is only a right to request, rather than a default. Nevertheless, if an employer refused a request for flexible working, they are obligated to provide the employee with a reason for the refusal in line with the ACAS code on Flexible Working.
The Bill now encourages employers to ‘respond to the changing world of work’ by making flexible working a default from the start of employment, rather than requiring an employee to request this arrangement. While employers can still decline requests for specific, prescribed reasons, they are now required to provide a clear and written explanation for any refusal, promoting transparency and fairness. The government places particular focus on developing this right for bereavement leave, paternity and parental leave, and strengthening protections for pregnant women and new mothers returning to work
The government aims to develop the detail of the approach in consultation, but it is expected to come into force relatively quickly.
We encourage employers to review the full Employment Rights Bill here which contains further significant proposals.
Comments
The proposals outlined in the Bill represent one of the most significant overhauls of UK employment laws in decades. While we anticipate that the government will take considerable time to consult with businesses, workers, and civil society before the Bill is passed, it sets the stage for a fairer and more inclusive workplace for millions of British workers.
There is considerable support among workers for this Bill, as many share the government’s vision of improved employment standards. However, we are particularly concerned about the impact on small businesses that may lack the resources and personnel to effectively navigate these complex changes. Without proper guidance and support, these businesses could struggle to implement the new requirements and face an increased risk of litigation if they do not comply.
As employers brace for the implications of the Employment Rights Bill, it is crucial that they remain fully informed about upcoming changes. Otherwise, we risk a rise in employment disputes in the future.
W Legal are able to provide any assistance and or training in this area and would love to answer any questions employers may have about what this new change in legislation means.
If you would like to have a confidential discussion with our friendly employment department, please get in touch with Charlotte Turnbull at charlotte.turnbull@wlegal.co.uk.
