The long awaiting (100 days of waiting to be precise!) bill has today been released. There is a lot of concern about businesses over the lack of consultation that has taken place prior to its publication. We are therefore expecting consultation to take place POST draft bill and will continue to keep all clients updated as the bill progresses.

28 individual employment reforms have been announced. Here is our summary on the key introductions – analysing what we expected, what has been included in the draft bill, and what the sticking points for employers may be moving forwards.

The biggest subject in the bill that has been the talking point since it was first announced as part of Labours overhaul of worker’s rights.

What we expected: an introduction of day 1 rights for parental leave, sick pay and protection from unfair dismissal for all workers (whilst ensuring employers can operate probationary periods to assess new hires).

What was published: Several rights will now be day one rights (but there will be no unfair dismissal enforcement rights until autumn 2026!)

• The right not to be unfairly dismissed (subject to a probationary period -expected to be for a duration of 9 months – and the effective termination date itself falls within a further three month period. In effect, this means that suitability must be assessed within 9 months, but they MUST be within this period, therefore giving a likely period of 6-8 months to evaluate suitability);
• Paternity, and (unpaid) parental and bereavement leave will all now be day one right (maternity leave is already a day one right); and
• Sick pay will no longer be subject to the minimum earnings limit or 3 day waiting period – again effectively making this a day one right.

Our thoughts:
The delay until autumn 2026 in relation to the enforcement of the new day one right not to be unfairly dismissed has resulted in businesses breathing a sigh of relief all around the country! However, this time should be spent carefully in order to ensure organisations upskill their staff.

We said it before….bringing in a 1-year qualifying period for unfair dismissal rights would be much simpler! If the expected 9-month probation period comes into force, the draft legislation effectively creates a 12-month period before the right to be unfairly dismissed materialises – provided full notice is provided in good time before that date.

It is, however, all about the probationary period! Outside of the probationary period, employers will need to establish one of the five fair reasons for dismissal (conduct, capability (performance or medical), redundancy, statutory restriction or some other substantial reason). We have repeatedly seen that line managers fail to grapple with performance issues that have been obvious since an employee started work. How the probationary period will operate in practice will form part of a formal consultation – which is welcome news! The aim is to ensure that employers will be afforded the opportunity to properly assess an employee’s suitability for a role (therefore, implying that probationary periods won’t be limited to purely assessing performance), whilst balancing job security and the confidence for people to move jobs without losing their employment rights.

It is abundantly clear that managers will need to ensure they actively manage their teams and utilise probationary periods effectively. Therefore, if these are not adequately addressed during the special period of probationary – employers will be required to comply with a full formal performance improvement process before being able to dismiss employees. Companies will no longer have a safety cushion of being able to dismiss under an “employment review” for two years, and will now be forced to address any issues (conduct, performance, potential redundancies) fully and fairly for all.

There has also been a clear move towards ensuring employee rights in relation to family-friendly leave and sick leave are not curtailed or subject to disproportionate, arbitrary qualification periods. The right to SSP from day one, without a 3-day waiting period, may raise higher levels of short-term absence – however, organisations can balance any abuse of this type of leave by ensuring they carry out effective reviews of sickness absence, including return to work interviews and having clear effective policies for when levels of absence will trigger a warning.

The proposals appear to strike a balance between parental and bereavement leaves being a right from day one, but not imposing any cost on businesses as a result. Many employers already offer paid bereavement leave, and therefore, although this will stop any unscrupulous employers from forcing employees to work during these difficult periods in their lives, for many – this will be no change.

This is the biggest change to employee rights since 1970, and the importance of ensuring your team of managers is effectively trained to follow due processes and understand the law should not be underestimated.

BANNING ZERO HOURS CONTRACTS

The use of zero-hours contracts has long been a hot, disputed and contentious subject. Labour is tackling their misuse head-on following research that 85% of zero-hours workers would prefer guaranteed hours.

What we expected: curtailing the abuse of zero-hours contracts by ensuring all workers have a right to a contract that reflects the number of hours they regularly work and that all workers get reasonable notice of any changes in shift with proportionate compensation for any shifts cancelled or curtailed;

What was published: Again, as expected. Zero-hours workers will now have the right to a guaranteed hours contract if they work regular hours over a reference period in relation to that worker and employer. This is initially deemed to be the date they started work with the employer under the relevant contracts, and ending with a “specified day”.

This applies to both umbrella contracts, series of contracts, and those contracts that set a minimum number of hours to be offered.

The offer must set out the days, times and/or working patterns that are being offered and this must reflect the days, times and/or working patterns in the reference period.

New offers should be made after subsequent reference periods as relevant (i.e. if work patterns/volumes change again).

The right is subject to a three-month limitation date, and an employment tribunal will have the ability to make a declaration that an offer has not been made and to award pay to the worker as appropriate.

Employees also have the right not to be subjected to detriment for rejecting an offer of work or guaranteed hours. They will also be deemed to have been unfairly dismissed should the reason for their dismissal be their acceptance or refusal of an offer of guaranteed hours.

Our thoughts:  This is some complex, unclear legislation that will no doubt be the subject of much scrutiny.

There is a lack of clarity over how employers should calculate a reference period. It essentially requires employers to review working hours and patterns for those under these types of contracts on a regular basis. It should, however, also give employers the right to reduce hours following subsequent reference periods if work levels reduce (which will be welcome news industries which have peaks and troughs in workloads throughout the year).

Zero hours contracts do of course carry benefits, however, it is seen all too often that employers use their flexibility in a one-way fashion – benefiting from not being obliged to offer work in quiet periods, yet being frustrated and subjecting individuals to detriment by not offering future work if an individual utilises their right not to accept work. This change should ensure that those under zero hours are truly zero-hours workers. The contracts have never been intended to be used as a permanent arrangement for ongoing work. The change to the law should bring clarity for both employers and employees over their status, work levels and costs/pay.

Employers utilising these contracts should, therefore, start undertaking an audit of their staff and who will be entitled to guaranteed hours moving forward so that the impact can be fully costed, budgeted and communicated to staff in good time.

RIGHT TO REASONABLE NOTICE OF (AND CANCELLATION OF) SHIFTS

Late notice of offers of shifts has affected causal workers ability to accept work. Does this strike the right balance?

What we expected? The right to reasonable notice of a shift.

What was published? Reasonable notice of a shift must be provided to an individual if it is not set out in a relevant contract. This applies if an individual would be an employee when working the shift or if the arrangement is as a result of a zero-hours contract with the employer. This must be given by a specified period of time prior to the start of the shift (the specified period of time is not legislated). The right to reasonable notice of a shift applies when an employer has given reasonable notice and the employer has offered the shift to an individual. Again, the specified time period is not legislated.

An employer also must make payment to a worker for short notice of a curtailed or cancelled shift – whether this is a regular or irregular shift.

The worker can bring a claim for failure to comply with these obligations within 3 months, and a tribunal can make a declaration and award compensation as is fair in the circumstances (this is likely to be, in reality, payment for the shift(s) in dispute).

Our thoughts: This appears to give workers more protection, but does not appear to provide reciprocal protection for employers over reasonable notice of acceptance of shifts or cancellation of shifts by workers. In practice, this is therefore likely to further reinforce the obligation on employers to only rely on zero-hours, ad hoc workers when really required – and not use them as standard practice for regular, expected ongoing work.

RESTRICTING FIRE AND REHIRE/REPLACE

The practice of fire and re-hire has been under the spotlight since the high-profile P&O terminations. Has there been a significant change to the current protections against this practice being used unreasonably?

What we expected? A new statutory code to replace the current “ineffective code” ensures effective remedies for its breach.

What was published: A new specific protection has been legislated for to provide protection against dismissal for refusing to agree to a change in employment terms and conditions. This is limited to the situation where the purpose for the dismissal is to re-hire or replace the individual.

It is made clear in the legislation that this protection does NOT apply when the reason for the request, and subsequent dismissal is to reduce and mitigate the effect of financial difficulties which would in turn risk the employer being able to continue trading as a solvent business, and where in all the circumstance the employer could not reasonably have avoided the need to make the variation.

It is clear that full consultation must be carried out (with trade unions where appropriate), considering anything the employee has offered in return for agreeing to the variation and any other matters which may be specified by secondary legislation.

Our thoughts: As expected, this significantly limits the situations where employers can use the practice of fire and re-hire/replace. It sets out clear parameters for the exceptions (essentially limiting it to a genuine “last option”). Employers may be frustrated by the limitations this places moving forward – however, the legislation sets out to do exactly what the government promised.

FLEXIBLE WORKING

This has become a hot topic in the post-COVID era, particularly where employers have tried to enforce a return to the office. Has flexible working now become a right?

What we expected? For flexible working to be the default from day one for all workers.

What was published: This will not be an automatic right as we were lead to believe. An employee can make a request for flexible working and an employer can refuse it on one of the specified grounds (which have been expanded to include any other grounds specified in regulations). This, therefore, implies that there will likely be secondary legislation expanding the grounds on which an employer can refuse requests.

However, as well as explaining the grounds on which it relies in refusing the request, an employer must now also set out reasons as to why they believe it is reasonable to do so. It cannot simply state the reason without fully applying it to the role and facts/situation of the specific employer.

Our thoughts: This will require employers to fully think about whether a role can be undertaken flexibly (whether that is by way of flexible hours or flexible location). Good practice will be to consider this from the start of a recruitment practice so that the likely amount of flexibility that will apply to a role will be clear from the start of the working relationship. If this is undertaken, it will be simpler (unless facts and circumstances have changed) to refuse requests that fall within the parameters set at the start of the relationship.

PREVENTION OF SEXUAL HARASSMENT – AN EXPANSION ON THE DUTY

This has been debated and the duty changed and watered down in previous draft legislation. What has changed?

What we expected? We did not particularly expect any changes to be included in this draft legislation, although it was suspected an expansion would take place in coming years.

What was published? The duty to take ALL reasonable steps – not just reasonable steps. In addition, it will now overtly be in the legislation that the duty expands to preventing sexual harassment by third parties (although this was included in the recently published EHRC statutory guidance as being required….). This will, however, give employees the right to bring action against an employer for third-party harassment – a big change and one that was unexpected! There is also protection from detriment for having made a disclosure relating to sexual harassment is also in the legislation.

Our thoughts: This will place an even higher proactive obligation on employers. Provision has been made that secondary legislation will have the ability to stipulate what all reasonable steps should be. This secondary legislation will provide the required guidance as to what is expected of employers – which should address the concerns that lead to the word “all” being dropped from previous legislation on the matter.

STRENGTHENED FAMILY RIGHTS – PARTICULARLY FOR MOTHERS

The UK is often viewed as having some “below par” family-friendly rights when compared to other countries (although – we are by far not the country with the least rights in this respect!). The Labour government (not unexpectedly) wants to increase these to ensure all workers do not have to compromise family life in order to work.

What we expected? Increased rights for mothers not to be dismissed following maternity leave.

What was published: More than expected! As well as the day-one rights outlined above:

• fathers will be able to take paternity leave at the end of Shared Parental Leave;
• pregnant women will be protected from dismissal, on maternity leave and for six months upon their return to work; and
• all workers will enjoy protection from dismissal following a period of statutory family leave.

Our thoughts: Although mother’s protection in a redundancy situation was introduced in recent years – this legislation will expand their protection. Employers will need to ensure that they respect a mother’s right to leave and that it takes time upon their return to “get up to speed”. Smaller organisations struggle to absorb the costs of long-term absences (for whatever reason). However, the law makes it clear that cost will not justify dismissal.

A NEW SINGLE ENFORCEMENT BODY – THE FAIR WORK AGENCY

The Employment Tribunal system is overloaded, under funded and it takes a long time for claimants to have their cases heard. Does this strengthen employee rights?

What we expected? A Fair Work Agency that would hold employers to account and enforce rights, rather than employees being required to raise grievances (particularly where they may not do so due to short tenure or fear or reprisal).

What was published? What we expected – the body Fair Work Agency will have the right to enforce employment legislation and to support employers looking for guidance on how to comply with the law.

The body will have the right to request information and documentation from an employer. It will also have the right to enter business premises to obtain documents, to inspect them, and to require any person on the premises to produce any documents it reasonably believes are within that person’s power or control. These rights will extend to be able to access any electronic equipment. The agency must give reasonable notice of their attendance unless there are grounds for suspecting that the notice may frustrate the purpose of the visit. Documents subject to legal professional privilege will not be required to be disclosed. Nor will such documents that are “communications” between a professional legal adviser and their client, or made in contemplation of legal proceedings. Other exclusions also apply, including documents which would self-incriminate a person in a crime.

The legislation provides that every three years (starting with 1 April), the Secretary of State must prepare and publish a labour market enforcement strategy for that period. This must assess the scale and nature of any non-compliance with labour market legislation, and the likely scale and nature of the same during the future strategy period. It should also contain a proposal as to how the enforcement functions will be exercised and details of any other matters which the Secretary of State considers appropriate. This strategy can be updated and revised at any time during each three-year period. Reports should also be provided at the end of each financial year on the enforcement functions and actions taken.

Failure to comply with employment laws may result in an order being made which places restrictions, prohibitions or a proactive requirement to be placed upon an employer. These can be in place for a maximum period of two years, and employers may be released from them at any time in that period and MUST be released if it is deemed no longer necessary (i.e. that the employer has taken the required action to right their non-compliance). Employers will have the right to appeal against any restrictions imposed upon them. Failure to comply with an order without reasonable reason may result in a prison sentence of between 6 months and 2 years (depending on the nature of the offence) and a fine (or both!)

Individuals can be taken to court and prison sentences can be imposed for serious instances of non-compliance.

Their enforcement powers will focus on certain rights in the first instance (among which are the Working Time Regulations and the National Minimum Wage), but there are powers to expand this – particularly if the 3 yearly reports highlight high levels of non-compliance in relation to other pieces of legislation.

Our thoughts: The legislation in relation to the new agency and its powers formed a large part of the draft legislation. The above is only a short summary of the main enforcement powers it possesses. The proposal for a single enforcement body is a shift towards pro-active enforcement of correct practices in line with rights rather than after-the-event compensation for employees. Their powers have been clearly thought about in detail, and it is clear that the purpose is to focus on ensuring employer compliance with all labour law legislation before any fines and prison sentences are considered. In other words – compliance before punishment. This is largely the same approach as the Information Commissioners Office in relation to data protection laws. Ensuring your workplace practices are up to modern scrutiny will be more important than ever.

EQUALITY ACTION PLANS

Current measures to tackle these issues in workplaces have been viewed as ineffective. Will the proposed legislation change this?

What we expected? This was not a key message in the King’s Speech.

What was published? A proactive duty for large employers to create action plans to tackle any gender pay gaps and to support women in the menopause. This will only apply to organisations with more than 250 employees (it also doesn’t apply to public authorities….) There will be secondary legislation to set out the content, form, manner and frequency of review of the plans (among others). It is likely to be required that these plans are updated at least annually and contain information relating to outsourced workers.

Our thoughts: The devil will be in the detail here. Although plans must be produced – it is unclear what the consequences will be for failure to implement the plans.

REDUNDANCY RIGHTS

Although no employer wants to make individuals redundant, it, unfortunately, is forced upon them from time to time. Has any flexibility to select the lowest performing individuals been reduced?

What we expected? Establishments are to be aggregated if they are in one business so that more employees will be able to claim awards for 90 days rather than 45 days for failure to collectively consult.

What was published? No surprises here – the wording of “at one establishment” will be removed from legislation moving forwards. Therefore, more redundancy situations will trigger the obligation to collectively consult, and the increased compensation limits for failure to do so.

Our thoughts: Although, on the face of it, this places a large burden on employers – in reality it makes the consultation obligations much clearer. Woolworths anyone? That is now banished to a bad memory….

THE STRENGTHENING OF UNIONS

Unions have always been present in certain industries. It has been discussed that over time, they have lost their power and effectiveness.

What we expected? For trade union recognition to be made simpler and amendments to trade union legislation to be made to ensure that industrial relations are based around good faith negotiation and bargaining.

What was published? Employers must provide workers with a written statement of their right to join a trade union – this must be provided at the same time as their section 1 employment terms statement. Again, secondary legislation will set out what must be included in this statement. Access agreements should be agreed to make it clear when union representatives have the right to physically access a workplace – this will be:

• to meet, represent, recruit or organise workers (whether or not those workers are members of a trade union); and
• to facilitate collective bargaining.

Unions will need to submit access requests, and employers will be obliged to provide a response notice. Secondary legislation will set out what form these will be in and what information must be provided.

Trade union recognition will take place where a required percentage of voters are union members (this will be set by secondary legislation and will be more than 2% but not more than 10%).

Employees will be protected from any detriment for taking part in the industrial reaction, and employers must not subject an individual to any mal-treatment or detriment designed to stop them from taking part in protected industrial action.

Our thoughts: This will mean more employers have to formally recognise trade unions and, therefore, engage in discussions with them in certain situations (e.g. change of terms and conditions, redundancies). However, it will make it clear when union representatives are allowed to attend the site – ending disputes around this.

COLLECTIVE STRIKE RIGHTS

Many public services have taken part in strikes over the recent years in relation to pay disputes. Some were criticised for disrupting key services, and therefore, minimum service levels were introduced – does the legislation strike the correct balance between the right to strike and protecting key services?

What we expected? trade union legislation is to be updated by removing the requirement for minimum service levels.

What was published? The Minimum Services Levels (Strikes) Act legislation will be repealed.

Our thoughts: Although this has predominately affected the public sector, in reality, the legislation being repealed did not prevent a single strike action. The debate around whether it undermines the power of striking has, therefore, disappeared. It is clear that the right to strike and union action will be strengthened under this government.

And finally….what was not included….it has been confirmed that there is more to come!!

It has been confirmed that the “Make Work Pay Plan” does not stop with this bill.

A “Next Steps” document has also been published today which confirms that certain issues require further consultation prior to being included in a draft bill, and future reforms will look to implement:

• THE RIGHT TO SWITCH OFF – this will prevent employees from being contacted out of hours, except in exceptional circumstances, to allow them to rest in order to be able to give 100% while working
• A MOVE TOWARDS A SINGLE STATUS OF WORKER – it has been confirmed that the previous announcement to merge the status of workers and employees has not been scrapped. Merging the rights of employees and workers is extremely complex. This will also vastly increase income tax for the treasury but should also make status issues a lot simpler for organisations to grasp.
• REVIEWS OF THE PARENTAL LEAVE AND CARE LEAVE SYSTEMS – in order to ensure they are delivering for everyone.
• SEX, ETHNICITY AND DISABILITY EQUAL PAY – the expected bill to impose pay reporting for these minority groups has not been published. It has, however, been made clear that this will be introduced moving forward in order to address the disadvantages these groups still experience at work.

Although we have been awaiting the legislation with some anticipation in order to receive clarity on what the new worker’s rights will entail – there is much detail still to be developed. We do not expect the bill to become law until at least June or July next year. New rights to challenge unfair dismissal will not come into effect until autumn 2026. The next reading (aka debate) on the draft bill will take place on 21 October 2024. However, it is clear that the details of the biggest changes will be discussed over – and therefore, we can expect secondary legislation to be published, which seeks to balance the rights with feedback from businesses. Businesses, however, should not sit back and wait – given the vast number of changes, any steps that can be taken to prepare for the overhaul should be taken in the coming months.