The UK government recently published the Employment Rights Bill (the “Bill”) which proposes 28 individual reforms to reshape the employment law landscape. Key proposals include making certain employment rights available from the first day of employment (such as protection from unfair dismissal, family leave and statutory sick pay) and making flexible working the default where practical.
The Bill is currently in the early stages as government consultations for the proposed reforms are still ongoing, and it is not certain when the Bill will be passed. If passed, most reforms will not actually take effect until 2026.
Background
The Bill was introduced along with a ‘Next Steps to Make Work Pay’ paper (the “Next Steps Paper”) explaining the proposed reforms and outlining plans for future reforms.
Key details
Day one rights on unfair dismissal
Currently, employees must complete at least two years of service with their employer before they have the right to claim unfair dismissal. Under the Bill, employees will have a new right to claim unfair dismissal from day one of employment.
However, the Bill also proposes the introduction of an ‘initial statutory probationary period’ of nine months, during which a ‘lighter touch’ and less onerous dismissal process will apply. During this initial period, employers may dismiss an employee for a substantial reason, such as the employee’s poor performance or misconduct. The ‘lighter touch’ process appears not to apply to dismissals due to redundancy, for which a full and fair redundancy process will still need to be followed. How the ‘lighter touch’ dismissal process will operate in practice is still to be defined through the Bill’s consultation process, but the Next Steps Paper states that it could consist of simply holding a meeting with the employee to explain the concerns about their performance.
The Next Steps Paper also makes clear that these changes will not take effect until fall of 2026 and, until then, the current two-year qualifying period remains in place.
Day one family rights on paternity and unpaid parental leave
Currently, an employee must work for their employer for 26 weeks before they are eligible for two weeks’ government-funded paternity leave, and for one year before they are eligible for 18 weeks of unpaid parental leave per child or adopted child, up to the child’s 18th birthday. The Bill removes the existing service requirements for paternity and parental leave, making these into day one rights.
The Bill also proposes to remove the restriction for paternity leave to be taken before shared parental leave. Under the current law, if shared parental leave has been taken, employees lose their right to take any paternity leave they have not already taken. By removing the restriction, employees will have more flexibility to take advantage of both types of leave.
Bereavement leave
There is currently no statutory bereavement leave, except for parents who lose a child aged under 18, who are entitled to two weeks of government-funded parental bereavement leave.
The Bill introduces a new right to at least one week’s bereavement leave. Potential details, such as eligibility, the exact length of leave, or entitlement to pay, are expected to follow in regulations.
Statutory sick pay from day one of sickness
Currently, statutory sick pay (“SSP”) is payable from day four of sickness, and employees need to be earning above GBP 123 per week to qualify. The Bill scraps the waiting period so that SSP will become payable from day one of sickness and removes the lower earnings limit.
Maternity and statutory family leave protections against dismissal
The Bill also contains a provision granting the government powers to make regulations for stronger protections against dismissal for pregnant employees and employees returning from statutory family leave, but the details are left for further regulations.
Stronger flexible working rules
Currently, there are eight permitted business reasons for refusing a flexible working request (which can be found on the UK government’s website here (opens a new window)). The Bill introduces an additional requirement stating that any refusal of a flexible working request must be reasonable. This aims to make it easier for employees to challenge refusals of flexible working requests.
Menopause support action plans
The Bill also introduces the requirement for employers with 250 or more employees to create action plans to support employees going through menopause.
Details of such action plans, such as the content, publication, and frequency, are expected to be set out in future regulations.
Collective redundancy consultation trigger change
Under the current law, employers proposing 20 or more redundancies ‘at one establishment’ within a period of 90 days must go through a process of collective consultation before making any redundancies. The Bill removes references to ‘at one establishment,’ meaning that employers would need to count redundancies across all sites/workplaces.
Fire and rehire possible in only very limited circumstances
The Bill makes it automatically unfair to dismiss an employee for refusing to agree to a change in terms, or to replace them with another employee on varied terms to carry out substantially the same role. There will be a very limited exception where the business is in financial distress (the details will be consulted on) but it is clear that the Bill will severely restrict an employer’s ability to change contractual terms without employee agreement.
No outright ban on zero hours contracts, but tough rules on guaranteed hours
Zero hours contracts are a type of contract where an employer does not guarantee a minimum number of working hours for the employee. Workers on zero hours contracts are typically called in to work only when there is a need, and they are paid only for the hours they work. These are commonly used in casual, gig or ‘on call’ work.
The Bill does not seek to completely ban zero hours contracts but introduces a key new requirement that employers must offer guaranteed hours to:
A worker who has regularly worked for a number of hours on a zero hours contract; or
A worker on a ‘low hours’ contract who has regularly worked more than the minimum number of hours specified in the contract.
The guaranteed hours offer will need to reflect the hours the worker regularly works over a 12-week reference period, and the offer must be made after the end of each 12-week reference period. Operational details are expected to be set out in further regulations.
The Bill also introduces a right to reasonable notice of a shift an employee is required to work, including the time, day and how many hours are to be worked. This duty will apply to workers employed on a zero hours or minimum hours basis, as well as workers who do not have a set working pattern. There is also a right to reasonable notice of any change or cancelled shift. What is ‘reasonable’ notice will depend on the circumstances, but regulations will set out a specific minimum time.
Gender pay gap reporting tweaks
Currently, employers with 250 or more employees are required to report annually on their gender pay gaps, but there is no legal obligation for employers to create or publish an action plan to address such gaps (though many employers already do, and employers are encouraged by the government to do so).
The Bill introduces a new requirement that employers with 250 or more employees must publish action plans for closing their gender pay gaps.
It also introduces a new requirement for employers which use outsourced contract workers, to identify the suppliers or employers of these workers (e.g. staffing company, employment agency, etc.) when publishing their gender pay reports, though they will not need to go as far as to include contract workers in their pay gap calculations.
Employer action: PREPARE TO ACT
The Bill represents a balance between employer and employee interests. Many of the most-publicized measures aim to improve the position for people on casual and low paid contracts, and others will be important for people looking to change jobs while starting a family. The bigger changes detailed above for most employers, however, are around unfair dismissal, flexible working, fire and re-hire and zero hours contracts.
The government expects to begin detailed consultations in 2025, seeking significant input from all stakeholders, and the Bill may be subject to various amendments. This means that most reforms will not happen until 2026. The Next Steps Paper makes clear that the unfair dismissal reform will not take effect sooner than fall of 2026.
In terms of practical steps to prepare, employers should monitor the Bill’s progress and the release of any related proposed regulations. If the Bill passes, employers should then review the changes with their legal counsel to ascertain potential impact on their internal policies and procedures, as well as employees’ employment agreements.
Written in collaboration with Colin Leckey, Lucy Lewis, Sally Hulston and Tarun Tawakley of Lewis Silkin
Employment Rights Bill - UK Parliament (opens a new window)
Employment Rights Bill: factsheets - GOV.UK (opens a new window)
