Understanding the Employment Rights Bill 2024: Key questions answered

The Employment Rights Bill promises to shift the employment law landscape with seismic changes requiring employers to adapt practices and policies. This article aims to address some common questions that have arisen in relation to the draft Bill.

 

The Employment Rights Bill promises to shift the employment law landscape with seismic changes requiring employers to adapt practices and policies. This article aims to address some common questions that have arisen in relation to the draft Bill.

Overview of the Employment Rights Bill 2024

Introduced into Parliament on 10 October 2024, this Bill is the first phase of the government's Plan to Make Work Pay and introduces 28 employment law reforms. The Bill seeks to overhaul existing employment laws and is designed to improve workers' rights and ensure fair treatment in the workplace. 

As the Bill passes through Parliament, numerous amendments have been proposed; the most notable of which is to increase the time limit for bringing employment tribunal claims from three to six months. This change alone signifies the government's commitment to providing workers with ample time to seek justice and resolve disputes.  However, as with many other elements of the Bill, this proposal will need secondary legislation to bring it into force and, so far, the government has not provided a timescale for when this might take place.

How Will Probationary Periods Work Under the Bill?

One of the significant changes introduced by the Bill is the removal of the two-year qualifying period for unfair dismissal claims, set to take effect from Autumn 2026. In its place, employees will be entitled to present claims for unfair dismissal from day one of their employment with employers having to justify the dismissal through one of the existing five potentially fair reasons and follow a fair process prior to dismissal. That said, the Bill proposes an initial period of employment, suggested to be nine months, during which a modified process can be followed to ensure fairness in dismissal cases related to the employee's performance.

While the specific steps of the modified process are yet to be detailed, it is anticipated that it will involve meeting with the employee to explain concerns about their performance, allowing the employee to be accompanied during this meeting. This modified process will apply during the initial period of employment regardless of whether a probationary period clause is set out in the employee's contract of employment. If there is such a clause, but it allows for a longer probationary period, the benefit of such a clause will be lost, since outside of the specified initial period of employment, a full process would need to be followed for a dismissal to be fair. Employers are, therefore, advised to align their contracts with the new process once the details are known.

Will It Be Possible to Vary Employment Contracts When the New Rules on Fire and Re-Hire Take Effect?

The Bill introduces stringent regulations around the practice of fire and re-hire. It will be deemed automatically unfair to dismiss an employee in a fire and re-hire scenario unless the employer is facing dire financial circumstances and the need for variation cannot be reasonably avoided. This change significantly increases the risk for employers seeking to introduce contractual variations in the normal course of business without the employees' agreement.

As a result, negotiations between employers and employees to reach an agreement on any changes will become critical. Employers will need to ensure that any contractual variations are mutually agreed upon to avoid falling foul of the new regulations.

Will It Still Be Possible to Use Zero Hours and Low Hours Contracts?

The Bill places new requirements on employers that use zero hours and low hours contracts. Specifically, employers will be required to make an offer of guaranteed hours to a qualifying worker after a set period, suggested to be 12 weeks. Additionally, qualifying workers must receive reasonable notice of cancellation or changes to shifts, and compensation must be paid if a shift is cancelled, moved, or curtailed at short notice. Following amendments to the original draft of the Bill, employers will also be required to give information regarding the right to guaranteed hours within a set period to workers where it is reasonable to assume they will become a qualifying worker.
These proposed rules place a heavy administrative burden on employers, as the requirement to offer guaranteed hours will arise repeatedly until the worker is no longer considered a qualifying worker (i.e. their contract exceeds the low hour threshold). This could result in multiple offers to a worker within a single year, potentially increasing costs for employers. However, exceptions may be made for genuinely temporary work, retaining some flexibility for employers.

Employers should also take some comfort from the fact that a worker can reject the offer and remain bound by their existing contract.  While that might seem unlikely, we must not forget that many workers prefer the flexibility that a zero hours’ contract provides, particularly where it is their second job, and an obligation to fulfil a minimum number of hours every week may be out of their control.

When Will the Changes Take Effect?

While consultations on the various Regulations and Codes of Practice needed to bring the provisions into force have already begun, it is likely that most reforms will not take effect until 2026. Employers will need to stay informed of ongoing consultations and prepare to make necessary adjustments to their recruitment, contracting, and workforce management practices once the reforms are enacted.