What Employers Should Know About the New UK Employment Rights Bill

At a Glance

• On 10 October 2024, the Employment Rights Bill was published. The bill contains key changes that employers should familiarize themselves with, including changes to employee benefits, contracts, flexible working arrangements and employer liability.
• The bill is still subject to full review by Parliament, and we will likely see additional amendments before its full implementation.

On 10 October 2024, the government published the text of its Employment Rights Bill (the Bill). The Bill, which was announced in the King’s Speech over the summer, includes sweeping changes to the employment law landscape in England, Wales and Scotland. These changes have been widely described as the most significant in a generation to impact UK employment law.

The government has not announced when the Bill will take effect, though reports have circulated that it could be as late as autumn 2026, giving employers ample time to understand the Bill’s impact and make appropriate adjustments.

Key Changes Employers Should Know

Unfair Dismissal

When the Bill takes effect, there will no longer be a two-year qualifying period for unfair dismissal, which will become a “day one” right for employees. It is anticipated that employers will be allowed to operate a probationary period, during which they will have greater flexibility to terminate newly hired employees. The government has indicated a preference that the maximum probationary period be up to nine months, though this is subject to consultation.  

Fire and Re-Hire Practices

It will be deemed an automatic unfair dismissal if an employer terminates an employee for refusing the terms of a contract variation, meaning employers will no longer be able to fire and re-hire employees as a means of seeking to implement new contractual terms. There are limited exceptions if the proposed variation is designed to mitigate the effect of financial difficulties on the employer’s business and the employer could not reasonably have avoided the need for the variation.

Collective Redundancy Consultation

Collective redundancy consultation obligations will apply when an employer proposes to make redundant 20 employees across its business in a 90-day period, regardless of whether those employees work at the same establishment. Currently, collective redundancy obligations are triggered only if the employer is proposing to make redundant 20 or more employees at the same establishment within a 90-day period.

Sexual Harassment

The Bill strengthens the duty to prevent sexual harassment (due to come into force on 26 October 2024) by requiring an employer to take ‘all’ reasonable steps to prevent harassment (currently it is ‘reasonable steps’). Reporting sexual harassment will also amount to a protected disclosure for whistleblowing purposes.

Liability for Third Party Harassment

Employers who fail to take reasonable steps to prevent the harassment of their employees by third parties will be liable for the harassment (which includes but is not limited to sexual harassment). This means employers have a responsibility to control harassment by not only their own employees, but also third parties such as clients, customers, vendors, contractors, etc.

Expanded Statutory Leave and Pay Rights

The Bill expands various existing leave rights, including:

• Statutory (Unpaid) Parental Leave – The 26-week qualifying period will be removed, making this a “day one” right.
• Statutory Paternity Leave – The 26-week qualifying period will be removed, making this a “day one” right, though entitlement to statutory paternity pay will remain subject to a 26-week qualifying period.
• Statutory Bereavement Leave – The right to bereavement leave will be expanded beyond the context of a parent who loses a child under the age of 18 (as currently provided for). The precise parameters will be defined in regulations that have not yet been drafted.
• Statutory Sick Pay –The three-day waiting period for statutory sick pay will be removed.

Expanded Protection for Employees During Pregnancy and Maternity Leave

The Bill provides for expanded protections against dismissal for employees who are pregnant or returning from maternity leave. These developments will be detailed in new regulations, which are anticipated to include a six-month protected period from an employee’s return from maternity leave.

Flexible Working Arrangements

The Bill builds on the changes to the reforms to the flexible working regime which came into force in April 2024. Where an employer refuses a flexible working request, the refusal must be reasonable, and the employer must explain this in writing to the employee.

Equality Action Plans for Large Employers

Employers with more than 250 employees may be required, subject to future regulations, to develop and implement action plans regarding gender equality in the workplace. This includes addressing the gender pay gap and supporting employees going through menopause.

Restrictions on ‘Zero Hours’ Contracts

Employers will be required to offer employees guaranteed hours (to be determined based on a variety of circumstances). Employees will also be entitled to reasonable notice of shifts as well as payment for cancellation of shifts upon short notice.

Fair Work Agency

The Bill creates a new state enforcement agency, expected to be called the Fair Work Agency. The government has said the agency is intended to “bring[] together existing enforcement bodies to enforce rights such as holiday pay and support employers looking for guidance on how to comply with the law”.

What’s Next?

The Bill will now start its long process through the UK Parliament, during which it is expected that some changes to the Bill will be made. Stay tuned for future updates.