Earlier this month, the Employment Rights Bill was introduced, setting out significant reforms to strengthen employee protections. This article explores the Bill’s main provisions, what they mean for both employers and employees and steps businesses can take now to be prepared.

 

Fire and Rehire: New Limits

The Bill targets “fire and rehire” practices, where contracts are terminated, and employees rehired under altered terms. Following high-profile cases, such as P&O Ferries in 2022, fire and rehire has faced heavy scrutiny. While the Bill stops short of a complete ban, it limits the practice to situations of severe financial distress, such as insolvency. Employers who don’t comply could face a 25% increase in compensation for related claims like unfair dismissal.

Under the Bill, terminating an employee for resisting contractual changes will be deemed automatically unfair. Replacing employees under new terms after dismissal can also trigger unfair dismissal claims. Employers have limited defence unless changes are critical for business survival.

There are still important questions around how these new rules will affect the public sector. If an employer requests contract changes and an employee resigns, citing constructive dismissal, it may create additional challenges. In these cases, much will depend on how reasonable the proposed changes are and whether the employee’s decision to leave is justifiable.

 

Extended Unfair Dismissal Rights

Proposed significant updates will establish unfair dismissal protections as a day-one right for employees. This change would allow employees to claim unfair dismissal from their very first day, following an initial period anticipated to last nine months. With implementation expected by Autumn 2026, employers have some time to prepare.

A key element of this proposal is the repeal of Section 108 of the Employment Rights Act 1996, which currently requires two years of continuous service for ordinary unfair dismissal claims. Instead, a probationary period of up to nine months will be introduced, during which certain fair dismissal standards may not fully apply.

 

Changes to Collective Redundancy Obligations

The Bill updates obligations surrounding collective redundancies, expanding them beyond single locations. Employers planning layoffs across multiple sites will now need to consult employee representatives and notify the Secretary of State, which may add to the administrative burden and necessitate a more coordinated approach.

 

Gender Equality Audits

While not yet mandatory, the Bill introduces gender equality action plans, encouraging employers to report on efforts around gender equity, including support for menopausal employees. Proactively developing these plans now can enhance inclusivity and show a commitment to gender balance.

 

Parental and Paternity Leave

Parental and paternity leave will become day-one rights, enabling employees to access these benefits immediately from their start date. Additionally, fathers and partners will be able to take paternity leave alongside shared parental leave, giving families more flexibility. Policies should clearly communicate these changes, ensuring all employees are aware.

 

Bereavement Leave

The Bill expands the Parental Bereavement Leave into a general Bereavement Leave, allowing all employees time off in the event of a close personal loss. Specific entitlements include two weeks’ leave for the loss of a child and one week for other close relations. Multiple losses entitle employees to individual leave periods, acknowledging the need for flexibility during such difficult times.

 

Statutory Sick Pay (SSP)

Updates to SSP mean employees will receive pay starting from their first day of illness rather than day four and the removal of the minimum earnings threshold will broaden employee eligibility. Reviewing your SSP policies for compliance is advisable to ensure alignment with these changes and clarify employee entitlements.

 

Flexible Working from Day One

Building on previous flexible working rights, the Bill allows employees to request flexible working from their first day, though employers may refuse with a reasonable explanation. Employers are encouraged to refine flexible working policies now, ensuring they meet new expectations and providing clear communication on refusal grounds.

 

Zero-Hours Contracts: New Safeguards

The Bill introduces safeguards for zero-hours workers, requiring minimum guaranteed hours based on recent work. Future regulations will specify notice periods for shift changes, and employers may need to compensate for last-minute cancellations. These updates call for revised workforce planning and shift management.

 

Duty to Prevent Sexual Harassment

A new duty will require employers to take all reasonable steps to prevent workplace sexual harassment, including liability for third-party harassment. This duty emphasises proactive risk assessments and policies to nurture a safe environment. A key update is the introduction of a new category of protected disclosure related to sexual harassment. While specifics of how this will expand existing protections under whistleblowing legislation are unclear, it emphasises the importance of cultivating a culture where employees feel safe reporting harassment without fear.

 

Fair Tip Allocation

Employers must ensure that they allocate tips fairly among workers, as mandated by the Allocation of Tips Act 2023. Compliance is primarily based on having a written policy and adhering to a Code of Practice. The Bill expands this duty by introducing a new obligation to consult with trade unions and representatives before setting policies on tip distribution and review these policies every three years. Transparency and fair practices in tip allocation will be essential moving forward.

 

Preparing for the New Employment Rights Bill

The Bill will gradually implement changes, mostly by 2026. Key areas for employers to focus on include:

• Reviewing employment contracts to build in flexibility now to avoid the need to use ‘fire and rehire’ practices.
• Reviewing the number of employees on zero-hour contracts and assessing if other options might suit the business better/
• Conducting risk assessments for harassment prevention and support inclusivity
• Modelling costs for SSP and expanded leave options
• Developing gender pay gap action plans
• Reviewing policies and start planning training to upskill managers
• Reviewing and adjusting recruitment practices to mitigate against the need to follow the procedure to dismiss.

By preparing early, businesses can foster a supportive workplace, ensuring compliance and positioning themselves to meet the new standards.

Need support? For guidance on aligning your practices with the new Employment Rights Bill to ensure your business is compliant with a robust system in place, we can help you source and connect you to a HRi accredited consultants to work with your business.

Author: Charlotte Allfrey | HRi