The Government's New Deal for Working People and its associated Employment Rights Bill due by 12th October 2024, bring about significant reforms in UK employment law. Here we outline what we know about the proposals so far, their likely impact, and how HR professionals can prepare for these changes.
Key components of the Employment Rights Bill
The focus is on strengthening workers' rights across a number of areas, the key components are detailed below:
Day one employment rights
One of the most significant aspects of the bill is the introduction of day-one employment rights, particularly the day one right not to be unfairly dismissed. Details are unclear, but the suggestion is that employers will be allowed to keep new hires on probation for up to six months. We don’t yet know the detail of how this will work in practice. It may be that there is a minimum process that must be followed to dismiss an employee during this probationary period. Whilst details are still to be clarified we can expect that the changes will undoubtedly lead to a rethink of probationary periods and potentially additional training for line managers to ensure that dismissals during probation are handled carefully.
The importance of onboarding and induction will increase. We are likely to see a rise in tribunal claims, and being able to demonstrate a fair process has been followed will be essential. HR professionals may wish to increase the rigor of their hiring processes to avoid employing candidates who might not meet performance expectations. This could involve extended interview processes, additional assessments, or more in-depth reference checks. Managers may also be more hesitant to dismiss underperforming new hires, as the legal risks increase.
People professionals may wish to consider implementing clearer performance evaluation systems during probation and ensure dismissals are well-documented to justify decisions. It will be critical to define performance expectations and fit from day one.
Fire and rehire
The government has made clear its belief that the new code of practice on ‘fire and rehire’ is inadequate and will be replaced. “Fire and rehire,” has been increasingly used by companies to change employees' contracts during difficult times. Under the new law, employers will only be allowed to dismiss and rehire workers in exceptional circumstances where the survival of the business is at risk. Under the existing legal framework, an employer can justify fire and rehire practices if there is a "substantial reason" that warrants the change. This will be significantly tightened under the proposed reforms, likely restricting employers to using fire and rehire only as a last resort, in cases where business survival is at stake. This may require employers to adopt more transparent and fair negotiation practices, engaging in more thorough consultations before making contractual changes. HR professionals will need to be prepared for more stringent regulations and possibly increased scrutiny from employees and unions.
Zero-hours contracts
A cornerstone of the government’s reform is banning zero-hour contracts. Workers will be entitled to predictable contracts that reflect their actual working hours, and they will receive compensation if shifts are cancelled without reasonable notice. This is a shift from the proposed ‘Predictable Terms Act’ introduced under the previous government which will not now be introduced in the Autumn.
Instead, the legislation will introduce the right to a contract that reflects hours regularly worked, aiming to ensure greater predictability and job security. The proposal is that reasonable notice be given for any shift changes and compensation is paid if shifts are cancelled without sufficient warning.
The detail is still to be clarified, but HR may need to assess their reliance on zero-hour contracts and develop plans to transition workers to more secure forms of employment. This may involve converting zero-hour workers to fixed-term or part-time contracts with guaranteed hours. Managers may need to be trained on the new laws regarding shift scheduling, employee rights, and contract management.
Trade union legislation
The Bill is also expected to make significant reforms to trade union legislation, including simplifying the recognition process and making it easier for unions to gain access to workplaces and recruit members. The proposed reforms may also include provisions allowing unions access to workplaces for the purpose of recruiting members and simplifying the statutory recognition process, making it easier for workers to unionise.
The proposal is to simplify the statutory recognition process and lower the threshold for union recognition, which could significantly increase union activity. Unions will also have more powers to negotiate terms on behalf of employees. HR professionals should anticipate an increase in union activity and the likelihood of more collective bargaining. Establishing strong relationships with unions and developing negotiation strategies will be crucial for smooth workplace relations.
The proposed changes aim to promote greater workplace representation and strengthen collective bargaining power, as well as ensuring that workers are fully aware of their rights to unionise from the outset of their employment. The written statement of employment particulars will need to clearly state this right.
Redundancy situations
The government has made clear its aim to strengthen protection for those employees experiencing redundancy situations. Currently redundancy consultation requirements are triggered when an employer proposes to make 20 or more employees redundant at a single site or establishment within a 90-day period. This means that if redundancies are spread across multiple locations, the threshold of 20 employees per site must be met before collective consultation is required. The new legislation is expected to reform this by making the redundancy consultation threshold to apply across the whole organisation, rather than at individual sites. This change would significantly expand the scope of when redundancy consultations are triggered, making it harder for multi-site employers to avoid collective consultation by spreading redundancies across multiple locations. HR departments will need to prepare for these more stringent requirements and adjust their redundancy planning and consultation processes accordingly.
Pregnant workers and new mothers
The expectation is that the legislation will strengthen protections for pregnant workers and new mothers, making it unlawful to dismiss a woman who has recently given birth within six months of her return to work, except under specific circumstances. This is a major extension of current protections, but again we await the detail. The proposal doesn’t outline every "specific circumstance", but we can expect that dismissals would only be allowed in exceptional cases where the employer can demonstrate a valid and non-discriminatory reason. Employers would face legal consequences for breaching this law, similar to how dismissals related to maternity leave are currently handled. HR can ensure that managers are complying with these rules by maintaining comprehensive records of performance and other business-related factors leading to dismissal decisions. Reviewing redundancy and dismissal polices to ensure they comply with these new protections is recommended.
Equality (Race and Disability) Bill
The draft Equality (Race and Disability) Bill will make ethnicity and disability pay gap reporting compulsory for businesses with 250 plus employees. HR will need to ensure accurate record keeping and creating mechanisms for gathering and storing this information in a sensitive and compliant manner. Simply reporting on pay gaps will not be enough. HR teams will also need to develop action plans to address disparities revealed by the data. This could involve revisiting recruitment policies, promotions, and pay structures to ensure they are inclusive and non-discriminatory.
Other reforms to expect
A great many other reforms should be expected. These include:
Strengthened protections for workers transferred under TUPE
Flexible working by default
The ‘right to disconnect’
Strengthened sexual harassment and whistleblowing legislation.
We await further details on these proposals, but there is much for HR to do to ensure compliance. There are longer-term plans too as the government has stated its intention to abolish the current three-tier system for employment status, providing workers and the self-employed greater protections. These proposals will be subject to a great deal of consultation, but the intention is to implement a simpler framework where people are either self-employed or employees. This is one to follow closely.
Fair Work Agency
Finally, Labour plans to establish a Fair Work Agency to monitor and enforce compliance with the new employment laws. This agency will oversee issues such as working time, holiday pay, and discriminatory practices. This could result in increased scrutiny on companies' HR policies and practices, and it will be important for HR teams to ensure that all documentation related to employment conditions, contracts, and pay is up to date and in compliance with the new regulations. For HR professionals, the upcoming reforms will require substantial preparation.
Dr Amanda Harris is a Chartered Fellow of the CIPD and one of our most experienced tutors. She has lectured on CIPD-accredited and Masters courses since 2006 and as well as supporting students at Reed Learning, she leads on a number of our webinars including employment law, performance management and resourcing and talent management.
For further information on CIPD, CMI or Accountancy professional qualifications and apprenticeships contact our specialist team today
