The Employment Rights Bill was introduced into Parliament on October 10th in a flurry of press activity. Angela Rayner, the Deputy Prime Minister, described the Bill as ‘the biggest upgrade to workers’ rights in a generation’ and, with 28 separate proposed reforms, that seems an apt description.  But, before employers become overwhelmed by the press hype on the Bill’s proposals, let’s look at the reality of the situation.

Reality Check 1: Timing of the reforms

In its supporting document, ‘Next Steps to Make Work Pay’, the Government has stated its intention to consult widely with employers, industry bodies and unions before finalising the wording of the Bill. Consultation is not due to start until early 2025, and, as a result, the Government states that the majority of the proposed reforms will take effect no earlier than 2026. Specifically, the day one right to claim unfair dismissal will take effect no earlier than Autumn 2026. So, there is time to review current practices and start planning.

Reality Check 2: Too risky to take on new staff

The proposal for employees to have unfair dismissal rights from day one has led a number of commentators to state that this makes it too risky to recruit new employees. It is also not clear how the proposed 9-month statutory probation period will fit with the day one right.

However, the Government has stated that it intends to ensure it is still possible for employers to dismiss an employee who is simply unsuitable for the role during the proposed statutory probation period; the focus will be on following a fair process when doing so. This is likely to involve meeting with an underperforming employee to tell them where they need to improve. If no improvement is seen, invite them to a meeting (with the right to be accompanied by a work colleague or trade union representative) and explain the reason for the dismissal, then follow up on the reason(s) for dismissal in writing. Arguably, these are steps a good employer would be taking now anyway, where there are performance concerns with an individual, so the process itself should not be too onerous.

In reality, there are already a number of situations in current employment law where an employee can bring a claim for unfair dismissal without having the normal two years’ service (discrimination or whistleblowing, for example), so the new provision is perhaps not as great a change to existing law as some commentators are suggesting.

Reality Check 3: Significant increase in employment costs

Several of the proposed reforms in the Bill will lead to increased costs for a number of businesses. One proposal is for entitlement to Statutory Sick Pay to start from day one of a period of sickness absence (instead of the current 3 waiting days before SSP starts), as well as the proposed removal of the Lower Earning Limit requirements. This will bring many more employees into the scope of the right to SSP and will undoubtedly increase costs for some employers. However, many employers already offer sick pay schemes, which are more generous than the statutory basic, and this can benefit the employer through improved employee engagement and retention, so the increased costs will not affect all employers.

The same applies to other proposals to increase paid entitlements, such as introducing the right to paid time off into existing legislation covering people with caring responsibilities – many employers are already providing a degree of paid time off in these circumstances, so again, the new proposals won’t affect all employers.

Reality Check 4: Zero-hours workers gain the right to guaranteed hours.

The government has pledged to ban ‘exploitative’ zero-hours contracts, which, for many employers with genuinely variable labour requirements, are an appropriate way of resourcing their businesses. The proposed new right will entitle zero-hours workers who regularly work more than their ‘guaranteed hours’ to a zero-hours contract reflecting the actual hours worked. The process will involve the employer using a 12-week average of the hours regularly worked, and the government is to consult on the process to use another reference period if the average changes.  One key point here is that the government has also stated that there will be no expectation for employers to offer permanent contracts to zero-hours workers, so a degree of flexibility will be retained.

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So, given the two-year timeline, what can employers be doing to prepare for the changes?

1. Unfair dismissal rights from day one.

Review the effectiveness of your recruitment process – how can you attract the best candidates in the first place so you don’t end up having to dismiss someone because they’re a poor fit for the role or the company? Does your interview process ensure you can assess candidates accurately and make informed recruitment decisions?  When did line managers last have any training in recruitment interviewing?

2. Management of probation periods

Review how probation periods are working in your organisation currently: how clear are the standards and expectations you set for new employees? How often do line managers meet with their new recruits during the probation period to review performance and give feedback? How good a paper trail do you have of these reviews, especially where someone isn’t meeting your requirements in some way? How recently did you review your induction process to see how effective it is at enabling new joiners to settle quickly and start performing?

3. SSP from Day 1

Review the effectiveness of your absence management processes and ensure managers have the tools and knowledge to deal with sickness absence cases effectively, thereby reducing the incidence of sickness absence in the workplace.

A pattern of intermittent sickness absence can sometimes arise more from a lack of employee engagement and motivation or, worse still, incidents of bullying and harassment at work than from actual health issues. Do you know how engaged your employees are? Does your business culture promote employee wellbeing, and are your line managers leading people in a way that promotes motivation and a positive, inclusive working environment? An employee engagement survey can draw out issues around motivation, leadership, and communication, but it is important to ensure that any follow-up demonstrates that the business has genuinely listened to employee concerns and is actively working to address them.

4. Zero-hours workers – guaranteed hours

If you haven’t done this already, start analysing how many hours your zero-hours workers are actually putting in on a regular basis across a 12-week averaging period in comparison with the hours they are normally promised. This will give you an indication of the hours you’re likely to have to budget for once the right to guaranteed hours comes in. Remember that these workers will also accrue annual leave entitlement and holiday pay pro rata to the guaranteed hours, which will be an additional cost for the business.

This is just a summary of some of the key points in the Employment Bill. Rest assured that MAD-HR will monitor the consultation process for the Bill and will continue to provide updates and blogs as soon as we know more.

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