The Employment Rights Bill is seen as the biggest shake up in employment legislation in a generation. Although much of the detail of the reforms is still to be determined, employers should start now to ensure they have sufficient time to consider the best options for their organisation and put them in place before the reforms come into effect.
This blog discusses some key proposals for change which employer should be aware of.
National Minimum Wage and SSP
The Bill makes it compulsory for employers to pay workers at least the National Minimum Wage (£12.21 per hour is the rate from April 2025). This includes workers on zero-hour contracts.
Workers will be entitled to claim statutory sick pay (SSP) from day one of their illness so long as they earn £125 per week (this earnings threshold will be enforced from April 2025).
With these proposals in mind, employers should review their current employment contracts alongside absence and return to work policies to ensure compliance.
Day One Right to Unfair Dismissal
Currently employees need to have worked for the same employer for at least two years to be able to claim unfair dismissal. The Bill proposes that unfair dismissal will become a day one right. This will be subject to a new statutory probation period (most likely 9 months) during which there will be a “lighter-touch” procedure for employers to follow to dismiss an employee. What this will be in practice is still subject to consultation, although as currently drafted this “lighter touch” procedure will not be applicable to redundancy situations.
Employers should consider who they are hiring now, as if the reform comes into effect in Autum 2026 (as anticipated) these employees will benefit from the day one right and will not need to have two years continuous service to gain unfair dismissal protection.
Ban of exploitative Zero-Hour Contracts
Currently employers and workers are free to agree contracts under which there are no (or few) guaranteed hours. The proposed changes means that employers will be required to offer guaranteed hours to workers and this will be based on the number of hours the worker has worked over a 12-week reference period. The worker can opt to continue working on a zero-hour contract basis if they prefer, but they must be offered guaranteed hours at the end of every 12-week period.
The Bill also requires employers to give workers reasonable notice ahead of any alteration in their shift pattern. Workers will be entitled to compensation for shifts altered or cancelled without sufficient notice. What is considered ‘reasonable notice’ has not yet been confirmed.
In light of these changes, employers may wish to consider the use of fixed-term contracts instead of zero-hour contracts to address any seasonal work requirements.
If you have any questions relating to the Employment Rights Bill and what it means for your business, please contact our Employment Team on 0345 646 0406 or fill in our online enquiry form and a member of our Team will be in touch.