Estimated reading time: 12 minutes

What does the Employment Rights Bill mean for Employers & HRs? In the King’s speech in July 2024, Labour announced its Employment Rights Bill, which it terms a “once in a generation overhaul of workers’ rights”. The Bill will significantly enhance workers’ rights and bring substantial changes for employers. 

Labour had pledged to introduce the Employment Rights Bill within the first 100 days of entering Government. This means that the Bill should be laid before Parliament by 10th October 2024.

The Government has also committed to consult fully with businesses and unions on the changes and how they will work in practice. Negotiations with businesses and unions on the details of the proposals will delay the formal introduction of the legislation, meaning significant changes are unlikely to happen soon. It is likely the new laws will be phased in at the usual April and October junctures, in 2025 and into 2026.

The King’s speech confirmed that the Employment Rights Bill will deliver on proposals set out in Labour’s plan to  “Make Work Pay” (MWP) which it published at the start of the general election campaign.

In short, the Bill imposes considerable new responsibilities on all employers, with small and medium-sized enterprises (SMEs) and seasonal, retail and hospitality sectors likely to be the most affected. 

This article outlines what we know so far about the changes, and the potential impact on UK businesses.

Key features of the Employment Rights Bill

The Employment Rights Bill includes the following new laws:

Day 1 rights to: protection from unfair dismissal, parental leave, sick pay and earlier right to take paid maternity leave

This proposal has the potential to cause the biggest impact on employers and on day-to-day HR practice.
It includes providing enhanced individual rights from day 1 for all workers.

As its drafted in the MWP, (Make Work Pay) the proposal to award day 1 one rights would not only remove the qualifying periods for employees but would also extend these basic employment rights to a broader category of workers, which would be a monumental change.

Even if the removal of qualifying periods is, for now, limited to rights for employees, it is still a big shift.  

Employees are expected to have a day 1 right not to be unfairly dismissed but employers will ‘still be able to use probationary periods to assess new hires’. What this means in practice is not yet clear, but it will lead to employers extending the use of probationary periods, more vigorously evaluating new hires during those periods, stricter monitoring of hiring practices, and using more temporary fixed term contracts to ‘test out’ the employee prior to offering a permanent contract, which is common practice in Europe.

Central to the Bill will be a universal entitlement to statutory sick pay (currently £116.75 a week) for all workers from the first day they are ill, removing the need to wait until day 4. Currently those earning less than £123 a week are unable to claim at all. The original proposal was to make this available to all workers, regardless of how much they earn.  After businesses lobbied against the “perverse incentive” of workers to take time off work, the Government seems to have bowed to setting a lower rate of sick pay for those who earn below the threshold.

Employees and workers will also have the right to take parental leave from day 1 in the role. This is unpaid time off to care for children, that can be taken in blocks of a maximum of 4 weeks per year, (up to 18 weeks in total) rather than waiting a year to start using this right.

Pregnant women will be entitled to take maternity leave after 15 weeks in the role, and be paid maternity pay accordingly, rather than waiting 6 months as is currently the case. 

Ban on ‘exploitative’ zero hours contracts / late notice of shift cancellations

The Bill will ban what the Government terms ‘exploitative’ zero hours contracts, which Unions have long opposed. We wait to find out what the Government means by ‘exploitative contracts’.

This will be achieved by ensuring workers have a “right to a contract which reflects the number of hours regularly worked”, which we think will be the average hours worked based on a 12 week reference period. Although it is unclear how this reference period will work in sectors where there are seasonal peaks in the number of hours worked, such as pre-Christmas retail periods, large one off events, and agriculture.

You may remember that the previous Government had announced plans to introduce similar changes with a ‘right to request a more stable contract’. It has been confirmed that the Workers (Predictable Terms and Conditions) Act 2023 will not be brought into force this Autumn as originally expected, because it will be overtaken by the new Employment Rights Bill.

Workers will have the right to reasonable notice of shift changes, and will receive compensation ‘proportionate to the notice given’ for shifts which are cancelled or curtailed. This does ensure more predictability and security for workers, and at the same time less workforce flexibility and potentially more employment costs for those businesses using freelancers, bank, seasonal or gig economy workers, especially those in the residential care and hospitality sectors.

Line Managers will need to be ‘on top of’ the shifts of zero hours teams, to ensure they give adequate notice of changes, and to avoid costly compensation pay-outs.

To offer some reassurance to employers, there is a specific reference in the MWP that ’employers will not be prevented from offering fixed-term contracts including seasonal work.’

A genuine Living Wage

The Bill will introduce a genuine living wage, a new remit for the Low Pay Commission to reflect the ‘cost of living’ as well as median wages and economic conditions when setting minimum wage rates. It will remove the lower age bands, which Government’s sees as ‘age based wage-discrimination’ and extend the living wage rate to 18-20 year olds.

It remains to be seen if recruiters faced with paying fresh-out-of-school 18 year olds the same living wage as more experienced 25 year olds, are willing to allow the 18 yr olds to make the shortlist.
Employers will certainly see increases in their wage bills. It will be essential to budget for these changes and to ensure they are able to meet the new wage standards. This inevitably means price hikes and inflation. Current National Minimum Wage and National Living Wage rates are here and usually change every April.

Ending ‘Fire and Rehire’ Practices

Think P&O ferries. This is a practice where a business in trouble and unable to agree changes to terms and conditions of employment with its workforce, dismisses its workers and re-engages them on new, less favourable terms.

The Government wants to outlaw the practice which it terms in the MWP the ‘scourges of ‘Fire and Rehire’, and ‘Fire and Replace’, a similar practice which sees workers dismissed and replaced by a workforce willing to work for less favourable pay, terms, and conditions.

The Bill will end both practices, but not entirely. The MWP seems to say it will permit its use in limited circumstances and the SOS for Business and Trade, Jonathan Reynolds, has since confirmed that whilst the current Code of practice, which came into effect on 18 July, will remain in place for now, the Bill will bring in a new strengthened Code of practice.

Hire and Fire practices make headlines but are relatively rare, as they are invariably devastating to a corporate brand and to employee relations. Of course, if an employer in trouble is denied the option to dismiss and re-engage, the danger is they are left with only one option – dismissal and business closure. That’s a zero sum game.

Flexible working from Day 1

Flexible working will become the default option from day one of employment, with employers required to accommodate it, except where it’s not reasonably feasible. This of course isn’t new. Since April 2024, employees have had the right to request flexible working from day 1. However making it the default option is changing the balance of power considerably in favour of the employee.

The MWP refers to ensuring workers can benefit from flexible working including opportunities for contracts and hours that better accommodate school terms. Term time working has long been the unreported holy grail for mothers who work, and its to the Government’s credit that, however easily accommodated or not, it is putting this on the agenda.

Jonathan Reynolds, the Business Secretary stated over the summer that the changes to flexible working will not go so far as to allow workers to demand compressed hours (i.e 5 day weeks worked in 4 days) .

Strengthening protections for new mothers

The Bill will make it unlawful to dismiss a woman who is pregnant or who has had a baby for six months after her return, except in specific circumstances. The MWP proposals say this will give ‘new mothers certainty that the law is on their side’.

But again, this isn’t a new initiative. Since April 2024 we have had enhanced protections from redundancy for pregnant women and those on/returning from maternity leave, for 6 months after maternity leave ends. Its only those as yet un-specified ‘specific circumstances’ that will or may make the difference.

A New Single Enforcement Body

The Bill will establish a Single Enforcement Body, also known as a Fair Work Agency, to protect the most vulnerable workers and strengthen enforcement of workplace rights and the minimum wage.

A well-resourced dedicated enforcement body will mean stricter enforcement of workplace rights. This may well lead to more litigation and regulation. This will require businesses to make more efforts than ever to ensure they are fully compliant with all aspects of the new legislation, to avoid penalties, naming and shaming and legal issues. Again, this isn’t a new initiative. Following the Taylor Review, the previous Government consulted at length on the creation of a single enforcement agency in July 2019.

Establishing a Fair Pay Agreement in the adult social care sector and other industries

The Bill will establish ‘Fair Pay Agreements’ in the adult social care sector, in order to, as the MWP states, “resolve the recruitment and retention crisis in this sector that has long been having such detrimental knock on effects on the NHS”. The aim is to ensure fair pay and conditions in social care and to assess the same to be rolled out to other, but not all sectors.

This means the introduction of collective bargaining, empowering unions and the workers whom they represent, to collectively negotiate increased pay and conditions.

This may ease recruitment and retention issues and meet demand in the social care sector. All well and good. Businesses in this sector, and other sectors in future, will need to adhere to new pay and conditions standards which will involve adjustments to current pay structures. The flip side is that the the cost of care is going to increase seismically. An eye watering concept with private care home fees already between £5600-£8000 per month.

Trade Union Legislation Updates

Labour now in Government is seeking an enhanced role for trade unions. The King’s speech briefing notes specifically mention that the Bill will strengthen the unions, update trade union legislation, introduce new rights, reverse the restrictions on trade union activity – including the previous Government’s approach to minimum service levels – and promote what it calls ‘good faith negotiation and bargaining in industrial relations’. It will be interesting to see how this plays out. We haven’t seen very much in the way of ‘good faith negotiations’ in recent years in some disputes.

Nevertheless, there will need to be a more collaborative approach to industrial relations. Employers and Unions will both have to move significantly towards each other. Businesses will need to engage in good faith negotiations and be ready for increased union activity.

Simplifying Statutory Recognition

The process for statutory recognition of trade unions will be simplified, ensuring workers have a reasonable right to access a union within the workplace. There will be rights for unions to access the workplace for recruitment and organisation purposes. A new duty on employers to inform all new employees of their right to join a union (to be included in the S1 statement of terms). Some employers may well wince.

School Support Staff Negotiating Body

The Bill will reinstate School Support Staff Negotiating Body to establish national terms and conditions, career progression routes and fair pay rates for teachers.

How will the Employment Rights Bill affect your business?

Increased compliance and disciplined assessment of Employees and Employee Relations

As the details of the Employment Rights Bill are finalised and the consultation processes on each of the proposals proceed, the detail and time lines for these changes will become clear.

Actions to take now:

  • Update your employee contracts for the enhanced leave rights and sick pay to be ready for when these changes come into force.
  • Ensure all contracts have probationary periods of no longer than 6 months.
  • Be very disciplined in the assessment of employees during their probationary periods and ensure line managers know how to monitor and assess new hires within that period.
  • Update and stick to your disciplinary and poor performance procedures as all employees will have unfair dismissal protection from day 1.
    The perception that dismissing staff within their first 2 years of service is easier will no longer exist.
  • Review and update as necessary your zero hours worker contracts to deal with late notice of shift cancellations and providing more regular working hours.
  • Regularly check that your businesses are paying at or over the minimum wage level, mindful of the cancellation of the age bands system when it comes.

More regulation, more litigation & ET Claims

The Employment Tribunal case management system is being digitised onto a cloud platform with the roll-out taking place over the Summer 2024. This will make it easier for employees to file claims.

These new employee rights, the new Fair Work Agency and a streamlined digital system for filing claims will make it easier for employees to enforce a raft of boosted employment rights.

The Employment Rights Bill may also include proposals on the gender pay gap, menopause and Sexual harassment at work.

Please remember the new duty for employers to prevent sexual harassment at work still comes into force on 26th October 2024, and that the day 1 right to request flexible working remains in place.

Draft Equality (Race and Disability) Bill

Alongside the Employment Rights Bill, the Government also plans a draft bill to:

  • extend the equal pay regime to cover race and disability as well as sex, and
  • introduce mandatory ethnicity and disability pay reporting for employers with at least 250 or more staff.

Commentators think these plans to change discrimination law to extend the complex equal pay regime to race and disability are flawed. And that its possible that this plan will be dropped before the Bill is finalised.

Guiding you through it all

Adapting to these regulations will be challenging. But they won’t all happen at once, and the changes may not be as significant as they appear. We will have to wait and see. We will know a lot more when we see the Employment Rights Bill.

Our team of employment law experts have been advising clients for over 20 years and have seen numerous Governments come and go, and we are here to support you through this latest transition.

We will provide as usual clear, comprehensive guidance and tailored resolutions to ensure your business remains de-risked, compliant, can deal with more employee disputes and thrives under the new legal framework.

If you would like to discuss how these changes will impact your business, or advice on preparing for and implementing the changes effectively, please contact Philippa Mullett or your usual employment team contact.

Contact us

For more information or queries about issues discussed in this article, please contact by email.

To speak directly with or any other of The Legal Partners team of specialist business and HR lawyers based at our Richmond UK office, or our partner lawyers in Singapore, please call +44 203 755 5288

This article explains the main legal issues and common situations to consider. It is not a substitute for legal advice. Please get in contact to discuss your particular issue or queries.

Contact us

For more information or queries about issues discussed in this article, please contact by email.

To speak directly with Philippa or any other of The Legal Partners team of specialist business and HR lawyers based at our Richmond UK office, or our partner lawyers in Singapore, please call +44 203 755 5288

This article explains the main legal issues and common situations to consider. It is not a substitute for legal advice. Please get in contact to discuss your particular issue or queries.