Proposed Major Changes to Workers’ Rights

In October, the government published the Employment Rights Bill, aimed at enhancing economic security and growth for businesses, workers, and communities across the UK.

The bill introduces 28 individual employment reforms, addressing issues such as exploitative zero-hours contracts and fire-and-rehire practices. It will also introduce “day one” rights for millions of workers, covering paternity, parental, and bereavement leave. Additionally, statutory sick pay provisions will be strengthened by removing the lower earnings limit for all workers and eliminating the waiting period before eligibility for sick pay begins. Protections from unfair dismissal, previously subject to a two-year qualifying period, will now apply from an employee’s first day on the job.

The government also plans to consult on a statutory probation period for new hires, giving companies the opportunity to assess an employee’s suitability for a role while reassuring new staff that they have rights from day one.

The bill aims to end exploitative zero-hours contracts, responding to research indicating that 84% of zero-hours workers would prefer guaranteed hours. Those on zero-hours and low-hours contracts who work regular hours over a defined period will gain the right to switch to guaranteed hours, securing consistent earnings while retaining zero-hours contracts for those who prefer them.

Key measures in the bill include:

  • Making flexible working the default for all employees, unless the employer can provide a valid reason why it isn’t feasible;
  • Establishing a new standard by introducing a right to bereavement leave;
  • Enhancing protections for pregnant women and new mothers, including safeguards against dismissal during pregnancy, maternity leave, and the six months following their return to work;
  • Addressing low pay by linking Minimum Wage adjustments to the cost of living and removing age-based pay bands; and
  • Creating a Fair Work Agency to unify enforcement efforts across government, uphold holiday pay entitlements, and strengthen statutory sick pay.

An Impact Assessment for the bill estimates that these measures will impose direct costs on businesses of up to £5 billion annually. The assessment suggests that these costs are relatively manageable, estimating that wage increases in lower-paid sectors could reach a maximum of 1.5%. However, it also notes that several of the bill’s provisions may have a disproportionate impact on small and micro businesses.

The government has launched consultations on four aspects of the proposed legislation, with the results set to shape amendments to the bill in early 2025. Currently, the bill is at the committee stage in Parliament, where it is being scrutinised in detail.

Employers should begin preparing by evaluating how the bill may impact their employment practices and considering any necessary budget adjustments for potential increased costs