Employment Rights Bill

The wide ranging Employment measures represent a significant transformation in the regulatory landscape for employers and their workforce.

Further consultation and secondary legislation will be required for a number of these measures before they can be enacted but we expect to see a number of these changes being introduced in 2025 and 2026.

Making work pay and addressing fairness

Creation of a ‘Genuine Living Wage’ - The Government changed the remit of the Low Pay Commission (LPC) to include consideration of the cost of living to create a “Genuine Living Wage”. Following the change in remit, the LPC has revised its forecast, increasing the rate that will apply from April 2025. We are expecting further details on the rate in the coming weeks.

Fair Work Agency (FWA) Enforcement - There has been confirmation of the introduction of a new enforcement body for employment rights, the Fair Work Agency (FWA). This will consolidate existing agencies who will have inspection powers and the ability to enforce penalties for non-compliance.

The remit of the Fair Work Agency will include, but not be limited to:

• National Minimum Wage (NMW),
• Holiday Pay,
• Statuatory Sick Pay, and
• Labour exploitation and modern slavery.

This agency will give workers a central platform to raise concerns regarding their employment rights.

Addressing Fairness - Employers will need to ensure workers receive reasonable notice of any change in shifts or working time, with proportionate compensation for any shifts cancelled, moved, or curtailed at short notice. Compensation will be limited to the payment for hours due to be worked.

The Government will introduce a Fair Pay Agreement process in the Adult Social Care sector, empowering workers, trade unions, and employers to negotiate fair pay, terms and conditions, and training standards.

Pay gap reporting - Large employers (those with 250 or more employees) will be required to publish action plans to address their gender pay gaps.

While not in the Bill, the Government has reconfirmed its commitment to introduce further measures around the extension of pay gap reporting to cover ethnicity and disability and the establishment of a Regulatory Enforcement Unit for equal pay. These measures and their effective timeline will be announced in the Equality (Race and Disability) Bill later this year.

Increasing employment rights

The Government envisages a ‘step change’ in how working people exercise control over their working lives and proposes a wide range of new employment law measures to achieve this.

Working arrangements - Zero hour contract use will be curtailed, with employees having the right to a guaranteed hours contract that reflects their regular working pattern. Flexible working will be the default position for employees from day one (unless the employer has sufficient rationale for refusal).

Day one rights - From day one, employees will benefit from immediate access to rights such as protection against unfair dismissal, and paternity and parental leave, without the need for a qualifying period. The Government intends to introduce a statutory probation period (proposed to be nine months), enabling employers to dismiss within that period with lower risk.

Fire and rehire ban - The Bill also bans the practice of ‘fire and rehire, by strengthening unfair dismissal protections. The legislation limits this more controversial practice to circumstances where business viability is at stake.

Collective consultation - The trigger point of the employer’s duty to collectively consult will be amended, removing single establishment criteria. This is a significant change to the consultation process and strategy, as the collective consultation is more detailed and carries additional sanctions where there are failures to consult.

Sexual harassment - There will also be an increased duty on employers to take ‘reasonable steps’ to prevent sexual harassment in the workplace and employers will in the future also have to ensure that they have taken reasonable steps to prevent third party harassment against employees.

Wider reforms - There are a number of additional measures that are set to be introduced as part of the “Next Steps” including:

1. Consulting on moving towards a single status of worker which will impact workforce models.
2. A wholesale review of the parental leave system.
3. The introduction of the ‘right to switch off’ with additional worker protections.
4. Proposal for stronger enforcement mechanisms, including extending the time limits for Employee Tribunal claims and making it easier for employees to raise collective grievances.

Trade Union representation

Another key area for the Government is strengthening collective bargaining and increased unionisation across the UK workforce.

A number of changes are being introduced, including:

• employers regularly informing workers of their right to join a Union,
• enabling the reduction of the current thresholds needed for statutory recognition,
• simplifying the procedures, and
• repealing recent legislation which increased the thresholds required for industrial action and set certain minimum service levels.

The Government also introduced a requirement on employers to provide employees with a written statement which sets out their right to join a Trade Union. Unions will have the right to access the workplace to ‘meet, represent and organise’ workers.

A new right is being introduced to protect workers from detriment relating to industrial action.

The Government is also seeking to modernise balloting arrangements with a view to increasing participation and allowing for electronic ballots.