Employers’ guide to upcoming employment law changes

Several weeks have passed since the publication of the Employment Rights Bill, marking the first significant step in Labour’s plan to ‘make work pay’. As we step into 2025, the process of consulting, fine-tuning and formalising the Bill into law is underway. This leaves employers wondering what the Bill will mean for their businesses and how they should prepare.

Some changes introduced in the last parliament have already come into effect. From October 2024, new laws require employees and workers to receive all tips and place a positive duty on employers to prevent sexual harassment. These shifts are already impacting workplaces. However, many proposals in the Employment Rights Bill remain a long way from becoming law.

With so many unknowns as the Government works through the details, businesses are not yet in a position to implement new processes or adjust their workplace policies. That said, now is the time for employers to familiarise themselves with the key proposals, so they are better prepared for the changes ahead.

Employment lawyer Thomas Corcoran runs through some of the key aspects of the Employment Rights Bill, under current proposals. These include:

‘Baseline’ job security

• Day-one protection for employees from unfair dismissal, replacing the current two-year qualifying period. An apparently ‘lighter touch’ dismissal process will apply during statutory probation periods. The detail of the probationary element is yet to be released and, while there are likely to be concerns that it could dilute the protection afforded to employees, some employers may be keen for this to be a less restrictive regime.
• A ban on “exploitative” zero-hours contracts. Workers will have the right to guaranteed hours at the end of reference periods; reasonable notice of shifts; and compensation for short-notice cancellation of shifts. This will mean employers that rely on a wholly or partially flexible hours workforce (those in the hospitality sector, for example) will likely need to adjust the way in which they engage and manage workers.
• A dismissal for refusing to agree to a variation of their terms and conditions of employment, or because an employer intended to employ another person on varied terms to carry out substantially the same role, will be automatically unfair. There will be an exemption from this provision where employers can show that: (1) the reason for the variation was a response to financial difficulties that are affecting or likely to affect the employer’s ability to carry on the business as a going concern, or otherwise to carry on the activities constituting the business; and (2) in all the circumstances, the employer could not reasonably have avoided the need to make the variation. This is intended to bring an end to controversial ‘fire and rehire’ and ‘fire and replace’ practices and will make it significantly more difficult for employers to engage in such practices.
• An employer’s duty to collectively consult will apply where it proposes 20 or more redundancies across all sites/workplaces. This is a significant change to the current position, where collective consultation applies only where an employer is proposing 20 or more proposed redundancies in a single establishment (i.e. at a single site/workplace). This means far more redundancy situations are likely to trigger collective consultation obligations and employers would need to be aware of redundancy numbers across their entire business when considering whether they had met the relevant thresholds.

Family-friendly rights

• Employees will have a right to flexible working as the default position that can be refused for certain reasons, rather than a right just to request flexible working, as currently. This will increase the likelihood that flexible working requests are agreed. This is an obvious positive for workers but may be a challenge for employers with more limited resources to manage different working patterns and arrangements across their business. We will have to wait for more detail about how flexible working as the default position will work in practice, but, while an employer’s potential grounds for refusing a request remain the same, it may be that the Bill’s new requirement that an employer’s refusal of a request must be “reasonable” (and that the employer must state why it is reasonable to refuse the application) represents a significant departure from the existing position and significantly strengthens employees’ rights in this area.
• A new, day-one right to bereavement leave.
• A right to paternity and parental leave from the first day of employment. The Government has acknowledged that the current system doesn’t support working parents and, as well as making these day-one rights, it will introduce the right to take paternity leave/pay after employees have already taken shared parental leave/pay, which is not possible under the current rules.
• Better protection for pregnant women and new mothers returning to work. It will be unlawful to dismiss within six months of their return to work, except in specific circumstances. It is currently unclear if this will be extended to other forms of family leave.

Fair pay

• Removal of “discriminatory” age bands, so adults of all ages will be entitled to the same minimum wage
• Removing the lower earnings limit relating to Statutory Sick Pay (SSP) and making SSP available from the first day of absence (rather than the fourth, as currently).
• Introducing a Fair Pay Agreement process in the adult social care sector.

Equality at work

• Large employers (those with more than 250 employees) will have to produce action plans on addressing gender pay gaps and supporting employees through the menopause.

A new Regulatory Enforcement Unit for equal pay to be established.

• Larger companies will have to publish information on their ethnicity and disability pay gaps.

Enforcing rights at work

• A Fair Work Agency will be established to deal with (among some other things): (a) minimum wage and SSP enforcement; (b) the employment tribunal penalty scheme; and (c) labour exploitation and modern slavery.

There is a great deal of flesh to be added to the bones of the Bill, so it’s a case of waiting to see what emerges. The Government has said most of the reforms are unlikely to be implemented before 2026 and it will take into consideration the time needed for businesses to prepare for the changes.

In the meantime, employers should carry on as they are, but they should stay alert to the changes and be ready to diarise implementation dates of the new rules coming into force as these become known. Our employment law team will be keeping a close eye on developments and will be ready to provide updates and advice when the picture becomes clearer.