Employment Rights Bill: how it could transform the UK

The UK’s new Employment Rights Bill, labelled as “the biggest upgrade to workers’ rights in a generation”, was unveiled in October 2024. The Bill represents a transformative shift in labour legislation, aimed at modernising employment practices and offering enhanced protections for employees. It forms part of the Labour Government's broader agenda to ensure fairer working conditions and economic growth, however, the reforms have broad implications, both positive and challenging, for employees, employers, and the broader UK economy.  Here’s an overview of some of the key changes and what they mean.

Day-One Rights

One of the most significant changes is the introduction of day-one employment rights, providing workers with immediate access to benefits and protections which traditionally apply after a certain period of continuous employment. These include:

• Protection against unfair dismissal: Employees currently have to be employed for at least two years before they are protected from unfair dismissal. Under the new Bill, this right will apply from the first day of employment.  Employers will, however, be able to apply a statutory probationary period, details of which are yet to be determined.
• Parental leave and paternity leave: Workers will have the right to both from day one.
• Statutory Sick Pay (SSP): The Bill provides day-one access to SSP by removing the three-day waiting period and also removes the existing lower earnings threshold for SSP.

The introduction of day-one rights represents a substantial improvement in job security and worker protections. The reforms could contribute to higher levels of workforce participation by encouraging individuals with caregiving responsibilities or health issues to seek employment, knowing they will have access to employment protection rights from day one. 

For employers, day-one rights introduce new challenges, particularly around the management of dismissal procedures. Traditionally, the qualifying period of service for unfair dismissal rights allowed businesses some flexibility in assessing new hires. With the removal of this period, employers will need to develop more robust recruitment and probationary management practices to avoid legal disputes over dismissals. 

The enhancements to SSP could be particularly challenging for SMEs which may have limited resources to cover the additional costs. Supporters of the Bill, however, argue that the reforms could lead to long-term benefits for employers, increasing workers productivity and engagement in work.

Industrial relations

A major element of the Bill are the changes to trade union laws, including the repeal of restrictions to industrial action introduced by the previous government. These are supposed to represent a cultural shift in industrial relations. 

The Bill enhances union organising rights, making it easier for workers to join unions and for unions to operate effectively within workplaces. The Government has included provisions that allow for easier access to workplaces for union representatives, even in non-unionised environments. This change aims to reduce barriers to union membership, which could lead to an increase in union participation and organising efforts​. With the enhanced legal framework, unions are expected to play a larger role in shaping workplace policies and ensuring that the new rights provided by the Bill are enforced.

While the enhanced role of unions will likely result in better protections for employees, it also increases the need for businesses to invest in better communication channels with workers and unions and engage in meaningful dialogue to manage the changes brought about by the Bill.

Fire and rehire 

A highly debated provision of the Bill is the significant limitation of fire and rehire practices (also known as dismissal and re-engagement), a tactic that has gained increasing attention in recent years. 

The new legislation amends the law on unfair dismissal so that any dismissal resulting from an employee's refusal to agree to a change in their employment contract will be considered automatically unfair, unless the employer can provide evidence of financial hardship and prove that altering the contractual terms was essential and unavoidable.

The Government has also launched a consultation on increasing or lifting the cap of the protective award if an employer is found to have failed to follow the relevant collective redundancy consultation process (the requirements for which may be triggered in fire and re-hire situations) when implementing a fire and rehire practice.

Zero-hours contracts

Zero-hours contracts are one of the most controversial aspects of modern employment in the UK. They have become increasingly common in sectors like hospitality, retail, care services and gig economy jobs, where demand for labour fluctuates. For many workers, these contracts create financial uncertainty, as there is no guaranteed income from week to week.

The Bill tackles the issue by introducing the requirement to offer guaranteed hours contracts for zero-hours or low hours workers who have a regular working pattern over a reference period; and provide zero-hours workers reasonable notice of their shifts, or of any cancellation or changes to a shift with payment owed to workers if changes to shifts are made at short notice. 

These reforms represent a middle ground between flexibility and stability. Workers who prefer the flexibility of zero-hours contracts can still opt to remain on them (there is no obligation to accept a guaranteed hours contract once it has been offered), but those seeking more regularity will have the right to that if and when they meet the relevant qualifying criteria. 

Employers will need to develop more sophisticated workforce planning strategies to avoid the financial risks associated with cancelling shifts at short notice or guaranteeing hours during periods of lower demand.  It also remains to be seen how these changes will impact employers with seasonal labour requirements.

Flexible working

Flexible working includes working from home, job-sharing, compressed hours, part-time work, or flexi-time. 

Since April 2024, employees have had a day one right to request flexible working and employers have to consult with employees before refusing a request. The Bill seeks to shift the balance of power in this respect from the employers to employees. 

The right to request flexible working is retained, as are the existing eight statutory grounds employers can rely on to refuse such a request.  However, under the Bill, employers will have to show that it is reasonable for them to rely on the ground they cite in refusing a flexible working request.  The “reasonableness” criterion will therefore apply not only to the manner in which the employer considers the request (which is currently the case) but also to the reason for refusal. 

While the Bill does not guarantee the automatic approval of flexible working requests, it does makes flexible working more accessible by requiring employers to properly consider such requests in good-faith.

These changes reflect growing recognition of the need for workplace policies that accommodate the diverse needs of workers, particularly mothers and those in caregiving roles who have historically faced greater pressure to balance work with domestic duties. However, the fact that this has not been made an automatic right also recognises that particular working requests will not always be practicable.  It is a matter for businesses to decide based on their requirements, but with an open mind.

Fair Work Agency

The UK Government intends to establish a Fair Work Agency (FWA) to enforce employment rights. 

This new regulatory body will combine the existing HMRC function in relation to national minimum wage enforcement, the Employment Agency Standards Inspectorate and the Gangmasters and Labour Abuse Authority.  It will also be responsible for monitoring the payment of SSP and holiday pay. 

The FWA will have broad powers to monitor compliance with the provisions within its remit, investigate breaches and take enforcement action against employers.  It will also provide mediation and dispute resolution services to encourage the resolution of workplace disputes outside of an employment tribunal, as well as promoting an awareness of workers’ rights by running educational campaigns and providing guidance to businesses on how to comply with the new legislation. 

The establishment of the FWA demonstrates a significant increase in the level of scrutiny employers may face regarding their treatment of employees.  It may prove to be an effective way of enforcing the employment rights within its remit, compared to enforcement through individuals bringing claims.

Conclusion

The Bill represents a bold step in reshaping the UK labour market. For employees, the reforms promise greater stability, security, and work-life balance. For employers, the Bill brings challenges in adapting to new regulations, managing costs, and finding new approaches to workforce management. 

The Bill’s intent is to fundamentally shift the landscape of English employment law, making negotiations at workplace and sector levels central to the employment relationship. To this end, the Bill strengthens unions’ rights – because for negotiations to take place, employers need employee representatives to negotiate with. This may then result in less claims to the Employment Tribunals, as the Government must be hoping, rather than more claims as is feared. What is clear is that the current tribunal system could not cope with increases of claims without additional resourcing. The Government has allowed extensive time for consultation on the Bill and it is important for employers, employees and unions to engage with the consultation to make legislation of this magnitude a success.