Employment

Horizon scanning

Employment Rights Bill: a new dawn for UK employment rights

What is happening?
On 10 October 2024, the government published the first draft of the Employment Rights Bill, a Bill described as a “once-in-a-generation" upgrade to workers' rights across the UK.

The Bill, which is accompanied by a document called Next Steps to Make Work Pay, is yet to proceed to the House of Lords and is subject to consultation and secondary legislation. However, the proposed changes (28 in total) highlight the government's bold approach to wide-scale employment law reform.

Why does it matter?

Some of the key changes are outlined below.

Extended unfair dismissal protection
Currently, employees must have at least two years' continuous employment on the effective date of termination to bring an ordinary unfair dismissal claim.

The Bill removes this qualifying period of employment and introduces the concept of an "initial period of employment" (IPE). During the IPE, the standard of reasonableness for dismissals is modified where the reason, or principal reason, for the dismissal is related to the employee's conduct or capability, a statutory restriction, or some other substantial reason.

The government plans to consult on the duration of the IPE, although the Next Steps document indicates a preference for nine months.

Regulations are required to detail the steps that employers must take during the IPE, although the government has stated that this is likely to involve "a lighter-touch process" to enable employers to dismiss an employee who is not right for the job.

Flexible working as the default

The Bill provides that flexible working (for example remote working, hybrid working, part-time hours, compressed hours) should be the default "where practical" from day one for all employees. Currently, employees have the right only to request flexible working from day one of their employment.

Employers will be able to refuse requests for flexible working for eight statutory reasons, and these remain unchanged to those that currently apply. What has changed, however, is that such a refusal must be reasonable, meaning that if an

employer refuses an application, it must specify the statutory ground(s) for refusal and provide an explanation of why it considers the refusal reasonable. Essentially, the Bill increases the burden of justification on employers and, in doing so, raises the likelihood of employees challenging refusals to grant flexible working requests.

Ban on "exploitative" zero-hours contracts

The Bill requires employers to offer contracts with guaranteed hours to "qualifying workers", which includes both zero-hour and low-hour workers. The threshold for "low hours" workers will be defined in secondary legislation.

The contract offered must: (i) be no less favourable than the worker's current terms; and (ii) "reflect" the number of hours worked in the previous 12 weeks (the term "reflect" will be defined in further regulations). The employee may accept or reject such an offer and this process will not break the continuity of employment.

The Bill also introduces a right for qualifying workers to reasonable notice of changes affecting shifts and to payment for cancelled, moved or curtailed shifts. The length of notice and level of payment will be defined in further regulations.

Clamp down on "fire and rehire" practices

In a bid to clamp down on employers who use the threat of dismissal with neither proper discussion nor engagement to impose detrimental changes on employees, the Bill provides that it will be automatically unfair to dismiss an employee because (i) they failed to agree to an alteration to their contract of employment; or (ii) the employer intends to replace or re-engage them under an amended

contract to perform substantially the same duties as before.

Dismissal due to a failure to agree to a contract variation will only be fair if:

the reason for the variation was to eliminate, prevent or significantly reduce, or significantly mitigate the effect of, any financial difficulties which would affect the employer's ability to carry on the business as a going concern
the employer could not reasonably have avoided the need to make this variation.

Simply enhancing business efficiency does not meet this requirement; there must be a "genuine lack of alternatives", setting a high bar for justification. In reality, therefore, the exception is likely to apply only in rare cases.

Wellbeing and family-focused reforms

The Bill also introduces a number of wellbeing and family-focused reforms, including:

making statutory sick pay (the minimum amount that employers are required to pay their employees when they are off sick) available to all employees from the first day of their sickness, and removing the lower earnings limit requirement
a new right to bereavement leave for all employees to take time off to grieve the loss of a loved one. Details on how bereavement leave will work, for example clarification on the relationship that the employee must have had with the loved one, are subject to further consultation
making statutory paternity leave and unpaid parental leave day one rights
allowing parents to take their statutory paternity leave after their shared parental leave (currently, paternity leave must be taken before shared parental leave begins).

What actions should you take?
While these reforms are not expected to become law until at least 2026, employers would be well advised to use the time to review existing policies and procedures and their administrative and operational systems in preparation.

How each organisation decides to approach these reforms is likely to depend on how leadership teams want to define their culture. For example, businesses could view the upcoming reforms as an opportunity to drive forward diversity, inclusion, and belonging. These things are crucial to strengthening commercial success, bolstering recruitment, retention, and employee engagement.

We expect the reforms contained in the Bill to evolve and alter over the coming months. Therefore, as well as familiarising themselves with the details of the Bill, employers will also need to keep a watchful eye on the progress of the government's consultations and the wording of upcoming secondary legislation, which will implement the reforms.

The government has also announced a draft Equality (Race and Disability) Bill on mandatory pay gap reporting and equal pay rights to protect workers suffering discrimination based on race or disability. While we await further details of the draft Bill, employers can be proactive in identifying pay disparities to understand and address the reasons behind those gaps.

For a more detailed discussion on these reforms, listen to this 30-minute Work Couch podcast: Employment Rights Bill: What employers need to know, with Patrick Brodie.

Patrick Brodie
Partner
+44 7717 335615
patrick.brodie@rpclegal.com

Ellie Gelder
Senior Editor - Employment and equality
+44 7517 830744
ellie.gelder@rpclegal.com

Mimosa Canneti
Trainee Solicitor
+44 7511 877955
mimosa.canneti@rpclegal.com

Recent developments

Tougher stance on non-financial misconduct and new legislation on preventing sexual harassment

What is happening?
A new proactive duty on employers to take reasonable steps to prevent sexual harassment came into force on 26 October 2024 via the Worker Protection (Amendment of Equality Act 2010) Act 2023 (the Act). The Act adds a new s.40A to the Equality Act 2010, introducing a positive obligation on employers to take “reasonable steps” to prevent sexual harassment by their employees in the course of their employment.

At present, employers are vicariously liable for sexual harassment committed by their employees during the course of employment, unless they can demonstrate that they took "all reasonable steps" to prevent it from occurring.

Tribunals are often hesitant to accept that employers have satisfied the "all reasonable steps" defence.

The new Act introduces a positive obligation, requiring employers to implement reasonable steps to prevent sexual harassment from occurring in the first place.

However, the new Employment Rights Bill, the first draft of which was introduced on 10 October 2024, amends the wording of "reasonable steps" to "all reasonable steps", proposing a significantly more onerous duty on employers. Further regulations will be published to clarify what is required to comply with such steps.

The duty introduced by the Act does not currently extend to third parties such as customers, clients or friends and family of colleagues. However, it is proposed that by the Employment Rights Bill this will be changed, extending the duty to third parties.

The new legislative provisions sit alongside increasing regulatory scrutiny into instances of non-financial misconduct (NFM), including sexual misconduct and harassment. Recent consultations by the Financial Conduct Authority and the Prudential Regulation Authority have signalled a tougher stance, proposing that NFM be considered when assessing an individual's fitness and propriety.

What impact has this had?
Employers now have the onus of showing that they have reasonable steps in place to prevent sexual harassment.

Breach of the preventative duty does not give rise to a standalone employment tribunal claim. However, where a worker succeeds in a claim of sexual harassment and the employment tribunal is satisfied that the preventative duty has been breached, it may order the employer to pay additional compensation to the worker (a "compensation uplift") of up to 25% of the relevant award.

The Equality and Human Rights Commission (EHRC) can also take enforcement action against employers in breach of the new duty.

Conclusion
Whether or not an employer has taken reasonable steps is an objective test and will depend on the facts and circumstances of each situation.

A key ingredient of this is establishing a respectful workplace culture. This will require education to ensure that all employees understand what is and is not acceptable behaviour.

Leaders must also foster a psychologically safe environment where workers feel comfortable to speak up and call out harassment, ensuring that those subjected to harassment and witnesses are supported to do so without fear of adverse repercussions.

There are also a number of practical steps that employers should consider taking, such as:

carrying out enhanced training tailored to reflect different job roles and conducting risk assessments on sexual harassment
updating and reviewing policies covering sexual harassment and creating a standalone policy on the topic

reviewing governance and whistleblowing procedures to ensure people feel able to speak up
creating an independent reporting line for incidents of sexual harassment
keeping a thorough record of steps taken to prevent sexual harassment, which is regularly reviewed
circulating anonymous surveys to better understand the protection required.

As employers navigate this evolving landscape, it is clear that addressing NFM, including sexual misconduct and harassment, is not just about meeting regulatory standards or legislative requirements – it’s about fostering inclusive and respectful workplace cultures where employees can thrive.

Kelly Thomson
Partner
+44 7545 100420
kelly.thomson@rpclegal.com

Ellie Gelder
Senior Editor - Employment and equality
+44 7517 830744
ellie.gelder@rpclegal.com

Mimosa Canneti
Trainee Solicitor
+44 7511 877955
mimosa.canneti@rpclegal.com

For more information listen to our
Work Couch podcast episodes.

Employment Rights Bill

Preventing sexual harassment post #MeToo part 1 how do UK and Australian laws compare?

Preventing sexual harassment post #MeToo part 2 dos and don'ts