Get ready for upcoming employment law changes

Following July’s general election, the new government outlined its legislative plans in the King’s Speech on July 17th. A central element of this agenda is an Employment Rights Bill, which, according to the King’s Speech, aims to “introduce a new deal for working people, banning exploitative practices and enhancing employment rights.”

As of now, the Employment Bill has yet to be published, but it is expected within the first 100 days of the new administration, meaning we should have full details by mid-October. However, the first changes are unlikely to take effect until next spring.

What we do know is that the Employment Bill will be wide-ranging, with a focus on improving workers’ rights—particularly in the early days and weeks of employment—enhancing protections for those on casual and “zero hours” contracts and making “fire and rehire” practices more difficult for employers.

Here’s our summary of the likely changes that are particularly relevant to smaller businesses.

1.  Improved day-one employee rights

This change is perhaps the most significant. Currently, employees typically need to have been continuously employed for two years before they can claim unfair dismissal rights. However, under the new legislation, employees are expected to gain unfair dismissal rights from day one of employment, subject to any probationary period with “fair and transparent rules and processes.”

Additionally, employees will qualify for certain family-friendly rights from day one, though it hasn’t been specified exactly which rights these are. This includes making flexible working “the default from day one.”

While the specifics of how and when these changes will be implemented remain unclear, our advice to employers is to prepare by ensuring clear probationary periods are outlined in employment contracts for new staff and to always consider flexible working options when requested by applicants.

2.  Better sick pay rights

The pandemic highlighted flaws in the current Statutory Sick Pay (SSP) scheme, including its potential to deter sick workers from taking necessary time off and its exclusion of low-paid workers from SSP. Proposed changes include removing the three-day waiting period before sick workers can claim SSP and lowering the earnings threshold so that the lowest-paid workers will qualify for SSP.

3.  Banning exploitative zero-hours contracts

The proposed changes aim to end the “one-sided flexibility” of zero-hours contracts (ZHCs) and ensure that all jobs offer a baseline level of security and predictability.

The proposals do not seek to ban ZHCs outright. Instead, they will grant workers on ZHCs the right to a contract that reflects the hours they regularly work, provide “reasonable notice” of any shift changes, and offer “proportionate compensation” when planned shifts are cancelled by employers.

These changes exceed the previous government’s plans, which were limited to a “right to request a predictable work pattern” and allowed employers to refuse for specific business reasons.

Under the new proposals, if a worker on a ZHC has a regular work pattern, they will have the right to a contract reflecting that pattern. For workers with very sporadic or unpredictable work patterns who remain on ZHCs, they will gain rights to compensation for late shift changes and cancellations.

Employers using ZHCs will need to assess whether this type of contract is appropriate or if a contract with fixed hours would be more suitable. If they choose to continue using ZHCs, they must understand the implications of cancelling or changing planned shifts.

4.  Ending ‘fire and rehire’ and ‘fire and replace’ practices

“Fire and rehire” is a tactic employers sometimes use to impose new terms and conditions on staff when agreements cannot be reached. In the P&O Ferries case, this involved dismissing the entire workforce and hiring replacement workers on significantly worse terms.

A new Code of Practice on “fire and rehire,” introduced by the previous government, came into effect earlier in July. However, the Employment Bill promises to provide “effective remedies” for workers subjected to this practice.

Although the details are not yet available, the government may be considering a measure similar to the “protective award”—a penalty that employers must pay to employees if they fail to consult properly during redundancy situations.

5.  Raising the minimum wage

Separately from the Employment Bill, the government has promised to increase minimum wage rates to reflect the “cost of living” and to establish a single adult rate for workers aged 18 and over.

At the end of July, the government issued a new remit to the Low Pay Commission—the body responsible for recommending minimum wage rates—to consider the cost of living in its recommendations and to “work towards” increasing the young person’s rate. Any changes to minimum wage rates will take effect in April 2025, with notice of these changes being provided this October.

6.  Introducing a new single enforcement body

There are plans to establish a “Fair Work Agency” to oversee the enforcement of workplace rights, which are currently managed by various bodies.

7.  More rights for trade unions

Unions will gain greater rights to access workers within a workplace, and the process for employers to grant statutory recognition to a trade union will be simplified.

Conclusion

There’s a full list of everything that’s promised, and although we don’t know full details yet, there’s no doubt that they’re the most significant employment law changes in a long time. The changes will impact SME employers significantly, particularly around hiring decisions and probationary periods and engaging casual and zero hours workers.

At SafeHR, we’re proud to bring over 30 years of experience supporting businesses with their HR needs. You can count on us to offer friendly and knowledgeable insights that will help drive your business forward.