The Employment Rights Bill 2024 – What’s in, What’s out, and What’s next
Louise Singh, Suzanne Nulty and Ben Daniel break down the key points from Labour's flagship Employment Rights Bill.
Sir Keir Starmer’s Labour Government promised to bring forward transformative employment law changes within 100 days of taking office and have delivered on that pledge this month (10 October) with the presentation to Parliament of the Employment Rights Bill 2024.
Running to over 150 pages and containing 28 individual reforms, this highly anticipated piece of new legislation is ambitious, far-reaching and contains detail far beyond the ‘skeleton’ bill many commentators had anticipated.
Published alongside the draft Bill is the Next Steps to Make Work Pay policy paper which provides some context and explains the ‘vision and objectives’ driving the proposed changes.
The majority of the proposals will be subject to parliamentary debate and various public consultations. As outlined in more detail below, some of these are expected to start very soon, with others following throughout 2025 and into 2026.
We will examine the detail of these myriad proposals in the coming weeks. However, as we all get to grips with this shake-up of the employment law landscape, we start by considering which elements of Labour’s ‘Making Work Pay’ agenda have made it through to this seminal bill, which may follow later and which, if any, may have fallen away.
What's out?
The Bill is so packed with content that it’s simplest to start with what’s missing.
A notable omission is the much-discussed ‘right to disconnect’. The proposal to restrict employers from contacting staff ‘out of hours’ will now be progressed via a statutory Code of Practice rather than legislation.
The Employment Rights Bill does not touch on equal pay issues, or the reporting of workplace pay-gaps. Labour’s plans to extend the existing equal pay regime to include disability and race will likely be taken forward separately by the, yet to be published, Equality (Race and Disability) Bill, which may also introduce mandatory reporting of pay disparities relating to these characteristics.
Also ‘saved for later’ is the proposed reconfiguration of the rules around employment status. The Government recognises that it’s proposal to scrap the current legal distinction between ‘employees’ and ‘workers’ and move to a two tier system with individuals being either employed ‘workers’ or ‘self-employed’ will require extensive time-consuming consultation. Therefore, this proposal is omitted from this first wave of policy changes.
Reviews of Parental Leave, Carers Leave and TUPE are also all floated in the Next Steps policy paper but are outside the scope of the Employment Rights Bill.
Our top 5 picks
1. The Day 1 right to claim unfair dismissal
As anticipated, this high-profile election promise is included in the Employment Rights Bill. The Bill seeks to remove the 2-year qualifying period for unfair dismissal, so employees will be able to bring an employment tribunal claim from the first day of their employment. The ‘Next Steps’ paper states that a statutory ‘probationary period’ will be introduced, during which employers may apply a ‘light touch’ dismissal procedure (which could be as simple as holding a meeting with the employee). Consultation will follow on the nature of the ‘light touch’ process and its interaction with the current ACAS Code on Disciplinary and Grievance Procedures; the length of the statutory probationary period (the Government’s preference is 9 months); and whether compensation should be limited for successful claims during the probationary period.
There will be much more to say once the detail of the proposals become apparent in the consultation paper.
2. Zero-Hours Contracts referring
The Bill’s provisions on zero-hours contracts are lengthy and complex. They seek to give workers on zero-hours contracts (and workers on a low number of guaranteed hours, who regularly work more than those hours) the right to move to a guaranteed hours contract that reflects the hours they actually work, as calculated over a 12-week reference period. It is envisaged that, if more hours become regular over time, subsequent 12-week reference periods can be used to increase the worker’s contractual guaranteed hours. ‘Reasonable notice’ will be required from the employer of any changes in shifts or working time, with ‘proportionate compensation’ payable for any shifts cancelled or curtailed at short notice.
These measures are intended to give employees ‘a baseline level of security and predictability’ and to deliver Labour’s pledge to ‘end one-sided flexibility’ in the workplace. The inclusion of ‘low hours’ in the policy is an anti-avoidance measure, designed to prevent unscrupulous employers from circumventing the rules by moving workers from Zero-Hours contracts to contracts guaranteeing an artificially small number of minimum hours. This right to receive guaranteed hours goes further than the previous government’s legislation, which created a lesser ‘right to request’ predictable terms and conditions, and will be repealed by the Employment Rights Bill.
Consultation will follow on the detail of the proposal including the meaning of ‘low hours’, and how the new rules might be applied effectively to agency workers.
3. Fire and Rehire/Fire and Replace
Strikingly, the Employment Rights Bill places very tight restrictions on when ‘fire and rehire’ or ‘fire and replace’ processes can be used to implement changes in terms and conditions. In most cases, it will become automatically unfair to dismiss an employee for refusing to agree to a contract variation. Dismissal and re-engagement will only be permitted in very limited circumstances where ‘there is a genuine need to avoid serious financial issues that may threaten the business’. This is one of the measures more likely to be controversial with business leaders who may not want to be fettered in making significant business changes for reasons which are not necessarily financial and / or before their business faces an existential threat.
The Bill will also make changes to redundancy rules, which mean that collective consultation obligations will be engaged more of often. It is envisaged that the obligation to collectively consult will now be triggered by 20 proposed redundancies across a whole organisation, rather at the particular site or ‘establishment’ where the employee works. The Government also proposes to lift the cap on the protective award if collective consultation procedures are not properly followed (currently capped at 90 days gross pay per employee).
Again, the Government will shortly seek views on these proposals through public consultation.
4. Trade Union Rights
As anticipated, the Employment Rights Bill sets out a suite of enhanced Trade Union rights intended to ‘modernise and update Trade Union laws’ and ‘repeal legislation that has led to an overly conflictual approach to industrial relations’. Detailed consultation on these measures is expected.
Employees will be entitled to receive information about Trade Union rights when they commence employment as part of their ‘Section 1 statement’ (a statement required by the Employment Rights Act setting out the basics of the employment relationship, usually contained with other terms within in a contract or letter of engagement). Also, Trade Union representatives will be granted a new ‘right of access to workplaces’ and the statutory recognition process for Trade Unions, as well as the statutory requirements for strike ballots and picketing, will be simplified.
Currently, employees are only legally protected against dismissal for taking part in strike action. The draft Bill seeks to extend this protection to any detriment imposed on the grounds that the employee has taken part in industrial action, even if the employee is not dismissed. This change will plug a gap in UK law identified by the Supreme Court in Secretary of State for Business and Trade v Mercer, earlier this year.
The previous government’s legislation requiring ‘Minimum Service Levels’ for public services, which enabled some employers to require workers not to engage in strike action in certain circumstances, will be repealed by the Employment Rights Bill.
5. Flexible Working
The Employment Rights Bill introduces a small but crucial change to current flexible working rules. The right to request flexible working has been a ‘Day 1’ entitlement since 6 April 2024. However, the Bill goes further and makes flexible working the ‘default’ position from the first day of employment. Employers may still refuse a request, for a number of prescribed reasons set out in the legislation. However, there is a new requirement that any such refusal must be ‘reasonable’ and employers must explain in writing to the employee why this is the case. The penalty for breaching the flexible working rules will not change and remains at 8 weeks’ pay.
What’s in? Other key policy developments
- Other Day 1 Rights: The Employment Rights Bill proposes that unpaid parental leave, paternity leave, and sick pay will all be available from Day 1 of employment.
- Sick Pay Changes: Statutory Sick Pay will be payable from Day 1 of absence (currently Day 4) and the Lower Earnings Limit will be removed, so very low earners will now also qualify for SSP.
- Bereavement Leave: The Employment Rights Bill outlines a new statutory bereavement leave scheme which, it appears, will apply to all employees. Currently, the right to bereavement leave is limited and only applies to parents who have lost a child.
- Protection against sexual harassment: Various measures are introduced in the Employment Rights Bill to complement and bolster the new duty to prevent sexual harassment introduced by the Worker Protection (Amendment of Equality Act 2010) Act 2023, which comes into force on 26 October 2024. The Employment Rights Bill proposes that an allegation of sexual harassment will be a ‘protected disclosure’ for the purposes of whistleblowing legislation, and also appears to reintroduce full employee protection against harassment by third parties (at least in sexual harassment cases). More detailed analysis of these provisions will follow shortly.
- Extension of Maternity Protections: Enhanced maternity protections in the Employment Rights Bill include an entitlement to maternity pay from Day 1 of employment (removing the current six-month wait) , and a proposed prohibition on dismissing new mothers for an extended protected period of six months following their return to work.
- Equality ‘Action Plans’: Future Regulations may require employers with more than 250 employees to produce ‘Equality Action plans’ on gender (including the gender pay gap) and menopause.
- The Fair Work Agency: A huge chunk of the Employment Rights Bill is dedicated to the establishment of a new single agency for the enforcement of statutory employment law rights including NMW and SSP enforcement, and modern slavery issues. More detail will follow shortly.
- Fair Pay Agreements: The Employment Rights Bill includes provisions for introducing sector-wide collective bargaining for school support staff and workers in adult social care. Our sector experts will report on the detail of these proposals soon.
What happens next?
It is important to remember that, before becoming law, the Employment Right Bill will need to be considered and passed by both the House of Commons and the House of Lords. It has already been confirmed that the Bill’s ‘second reading’ in the House of Commons will take place on 21 October 2024, which will be Parliament’s first opportunity to scrutinise the Bill and debate its contents. Some provisions may be amended, scaled back or even removed during the Bill’s passage through both houses.
The Government continues to affirm its commitment to consulting on many of the measures proposed, with some consultation exercises kicking off shortly and others deferred until next year.
Consultation is expected to begin imminently on zero hours contracts; changes to sick pay; fair pay agreements and trade union rights.
We are unlikely to see moves to consult on Day 1 Unfair Dismissal Rights, or Fire and Rehire practices until 2025.
When will these changes take effect?
The good news for employers is that timescales for change are long. The Bill does not specify a ‘commencement date’ when it’s provisions will come into force, and it is likely that implementation will be ‘staggered’ with various aspects being brought into effect at different times.
Consultation on the Bill’s diverse measures will necessarily be time-consuming and complex and is likely to eat up much of next year. It is generally anticipated that the Bill’s flagship policies will not reach the statute book until 2026.
Indeed, there is a specific commitment in the ‘Next Steps’ paper that the Day 1 right to claim unfair dismissal will not come into effect until Autumn 2026.
Comments and reactions
There is much digest and analyse in this sprawling Bill. Even though we had some advance warning (both pre-election and post-election) of Labour’s employment law agenda, it will still take time for the dust to settle on the Bill’s unveiling, and for stakeholders to establish their positions on the Bill’s more controversial proposals.
From a business perspective, the Bill as a whole has been greeted with caution and some concern, as the regulatory load on employers, and the risk of exposure to litigation, will inevitably increase. By contrast, employee groups have praised the new legislation for restoring balance, following many years of employer-focussed Conservative government.
A key area of concern from all sides is the impact these changes may have on ACAS and the employment tribunal service; both already overburdened and likely to struggle to absorb any significant increase in workload.
Busy, challenging times lie ahead for employment lawyers, HR professionals and employers in all sectors.
Louise Singh and Suzanne Nulty are Principal Associates and Ben Daniel is a partner at Weightmans.
