In October last year, the Employment Rights Bill (the Bill) was published by the Labour government, signalling the biggest overhaul of employment legislation in a generation. The Bill is currently making its way through the Parliamentary process and is expected to receive Royal Assent (when it will become law) in July this year. You can read our earlier articles that discuss the key aspects of the Bill here.
Given the significance of some of the reforms proposed under the Bill, the government has been undertaking consultations with individuals, businesses, trade unions, and other stakeholders. The initial consultations have now closed and changes have been made to the Bill as a result. We discuss the most significant of those changes below.
Statutory sick pay
Under the current law, to qualify for statutory sick pay employees must have average weekly earnings of more than £123. The Bill proposes to remove this lower earnings limit.
The government has now stated its intention that employees earning less than the lower earnings limit will be entitled to 80% of their average weekly earnings as statutory sick pay (SSP). SSP is not currently payable within the first three qualifying days of absence – this waiting time will be scrapped and SSP will become payable from the first day of absence.
While this will be a welcome change for employees, it may mean that employers see a rise in short-term absences. For employers, it is important that absence-monitoring policies are updated to reflect a fair and practical process.
Collective redundancy
Where 20 or more employees are being made redundant “at one establishment” within a period of 90 days or less, an employer is obliged to “collectively consult”, i.e. consult with representatives of the impacted employees. Failure to do so can result in protective awards – a form of financial penalty applied to the employer.
When the Bill was first published, it proposed to remove the requirement for the redundancies to be at one establishment. This would have had very significant implications, particularly for large employers with multiple sites. However, the government has now ditched these plans following consultation and confirmed that the “at one establishment” wording will remain. This is good news for employers.
What may be received less positively by employers is an increase to the maximum protective award. Currently the award is capped at 90 days’ pay, but the government proposes to increase this to 180 days’ pay.
With a higher penalty for employers, it is important that redundancy processes are managed carefully.
Trade unions
One of the most significant aspects of the Bill is the introduction of a right for trade unions to gain direct access to the workforce of any employer to recruit workers to join their union, with a view to gaining recognition by the employer.
This was originally understood to relate to a physical right of access only, but the government has now confirmed that this will include a right of digital access. It is likely to mean that employers must permit union representatives to join the company digital and online platforms to have discussions with employees. The government will issue regulations setting out a framework for the Central Arbitration Committee in respect of issuing fines for non-compliance with the right of access.
The government has introduced amendments to the Bill in relation to industrial action. Currently, if a trade union secures sufficient support for a strike or other industrial action, their mandate will remain live for six months. This will be increased to 12 months under the Bill.
It is also proposed that trade unions must give notice to the employer 10 days prior to any industrial action. This is less than the 14 days’ notice currently required, but higher than the seven days’ notice originally proposed by the Bill.
Zero hours workers – guaranteed hours to be extended to agency workers
The Bill originally proposed to oblige employers to provide guaranteed hours to “zero hours” workers. To block the potential loophole of hiring agency workers, the employer’s obligation to guarantee hours will extend to include both zero hours workers and agency workers.
It will be the responsibility of the end hirer (i.e. the company for which the worker is completing their work) to offer guaranteed hours to a qualifying worker. Agency workers must also be provided with reasonable notice of shifts (this responsibility falling on both the employment agency and end hirer). Furthermore, agencies will bear the responsibility to pay for any short-notice cancellation payments to agency workers. However, where pre-existing arrangements are in place, agencies can recoup their costs. The contractual documentation between the hirer and agencies will therefore be important in documenting where costs lie.
It is important to note that workers don’t need to accept guaranteed hours if they otherwise enjoy flexibility in their working hours.
Employment Tribunal time limits
Finally, on Employment Tribunal claims, the government is proposing to extend the time limit to bring a claim to the Employment Tribunal from three months to six months in most cases.
With early conciliation via the Advisory, Conciliation, and Arbitration Service already extending the time limit for bringing claims, these further changes mean that claims could end up being brought in the Employment Tribunal almost nine months after the event giving rise to the claim.
Further details expected
While the Bill is expected to become law in July 2025, many of the most significant changes (e.g. unfair dismissal becoming a day one right) are unlikely to be introduced until the autumn of 2026.
Much of the detail is still awaited and will be introduced via regulations that supplement the Bill. The overall message is therefore still very much ‘watch this space’ and continue to participate in the government’s consultations.
Other updates to be aware of
As if preparing for the drastic changes introduced by the Bill wasn’t enough for businesses, this week the government commenced a consultation on how proposed measures on mandatory ethnicity and disability pay gap reporting for large employers (those with 250 or more employees) could be implemented.
The consultation seeks views on whether these measures should be introduced at all and, if so, to what extent they should mirror the reporting regime for gender pay gap.