29 November, 2024
Get ready for employment changes
Significant change is coming for employers with the government proposing the biggest shake-up to employment law for more than a generation. But, while the proposals in the Employment Rights Bill will boost employees’ rights, they should also increase productivity and make it easier for good employers to attract and retain talent.
Although most of the reforms are unlikely to come into effect before 2026 – and additional tweaks are expected during the consultation process – the scale of change means it’s sensible to start preparing now.
What proposals are in the bill?
The Bill covers 28 individual employment reforms but the 10 most significant for employers are as follows:
1. Day one rights for unfair dismissal
The government proposes removing the two-year qualifying period for unfair dismissal, making the right not to be unfairly dismissed a day one right.
A statutory probation period of nine months is proposed in the Bill but this is likely to be subject to consultation.
2. Statutory sick pay from first day of absence
Under the proposals, the three-day qualifying will be scrapped, making SSP payable from day one of absence. The Bill also seeks to remove the lower earnings limit for qualifying for SSP – currently £123 a week – which makes a further 1.3 million workers eligible.
3. Zero-hours contract restrictions
In a step back from its zero-hours ban, the Bill introduces a new right to a guaranteed-hours contract for those who work regular hours over a reference period (12 weeks is proposed). Employers must also provide reasonable notice of shifts or cancellation of shifts and provide compensation for last minute cancellations – failure to do so could result in an employment tribunal claim.
4. Fire and rehire ban
The Bill proposes that fire and rehire become an automatic reason for unfair dismissal unless the employer can prove it was unavoidable due to financial difficulties that would have affected the business’s viability.
5. Sexual harassment prevention
The government seeks to strengthen existing duties by switching from ‘taking reasonable steps’ to ‘taking ALL reasonable steps’ to prevent sexual harassment. It also proposes that employers will be liable for any harassment to employees and workers by third parties.
6. Right to flexible working
The Bill strengthens the day one right to request flexible working, proposing that flexible working will be the default for all employees who request it. Under the proposals, employers will be able to refuse a request but, if they do, they will need to state the ground or grounds for refusing the application (from the eight listed in the Bill), and explain why the request is unreasonable.
7. Trade union enhancements
As well as repealing the Strikes (Minimum Service Levels) Act 2023 and the Trade Union Act 2016, the Bill seeks to strengthen trade union rights. For employers, this includes a duty to inform workers of their right to join a trade union.
8. Pregnancy protections
Stronger protection is proposed for pregnant workers and new mums returning to work. The Bill proposes protection from any type of dismissal while pregnant, on maternity leave and for six months after returning to work. This is an increase from current protections, which only apply to redundancy.
9. Family friendly rights
Several family friendly rights are proposed to improve workers’ work life balance. These include paid carer’s leave, a right to unpaid bereavement leave, greater support for menopause and day one rights for paternity leave and unpaid parental leave.
10. Social care worker support
The government is seeking to create an Adult Social Care Negotiating Body to establish a fair pay agreements process for workers in the sector. Agreements would be binding on adult social care employers and could be enforced by the Fair Work Agency, a new enforcement body proposed in the Bill.
What the proposals mean for employers?
The Bill is far-reaching, both in its scope and its implications for employers.
Introducing new rights for workers inevitably has a cost to employers. As an example, the government’s estimated cost to business of extending SSP eligibility is £428m a year *. Without the scale of a larger organisation, SMEs are likely to be adversely affected by this change.
Further costs could also be borne by employers through increased administration, record keeping and training to meet the new requirements. For instance, complying with the sexual harassment protection legislation will require steps including regular risk assessments, an anti-harassment policy and training to ensure it’s embedded in the workplace culture.
Enhanced employee rights, especially around areas such as unfair dismissal from day one and pregnancy protection, also increase the risk of employment tribunals. Again, this has a cost to business, both financially and reputationally, with smaller employers hit the hardest.
There are positives. Enhanced rights, greater security, and more flexibility to balance work and life commitments should lead to happier, more productive employees. A study by the University of Warwick** found that happiness makes employees around 12% more productive. In turn, this should make it easier for good employers to attract and retain talent.
Role of commercial legal expenses insurance
With so much change on the cards, getting it right is important. Failing to comply with the new legislation could have serious implications including disgruntled employees, legal action, and reputational damage.
A Commercial Legal Expenses insurance policy can be an invaluable tool. As well as responding to a wide range of legal actions, including employee disputes, the range of support and information included within a policy can help a business reduce risk.
As an example, Allianz’s Commercial Legal Expenses products include unlimited 24/7 access to a legal helpline, a document review service and more than a hundred legal and business policy templates. This provides reassurance but also makes it easy to comply with any changes to employment legislation.
Support to get ahead of the game
Although it may feel like a long time until 2026 – especially as the finer details are yet to be determined – the scale of change means it’s never too early to start preparing for the new legislation.
Speaking to your broker and legal expenses insurer will help you understand the new requirements and how they will affect your business and its employees. Starting early will help to mitigate risks, prevent legal disputes and ensure compliance when the new legislation comes into effect.
