The Employment Rights Bill 2024: The most extensive overhaul of workers’ rights in generations?

At a glance

• Right to claim unfair dismissal will become a ‘day one’ right, subject to a statutory nine-month probationary period.
• Parental leave and paternity leave become day one rights.
• Stricter controls on ‘fire and re-hire’ will be introduced.
• Flexible working will be more difficult for employers to refuse.
• Right to guaranteed hours contract for zero and low hours workers who regularly work more hours.
• Enhanced protection for pregnant women and new mothers.
• Extensive changes to trade union laws.
• Many measures will not come into force until Autumn 2026.
• ‘Next steps’ document outlines further changes to come, subject to consultation.

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On 10 October, the government laid the draft Employment Rights Bill 2024 (Bill) before Parliament, fulfilling Labour’s manifesto commitment to introduce the workers’ rights law within 100 days of taking power.

The Bill is promoted as 'the most extensive overhaul of workers’ rights in generations' and whilst many of the measures do not go as far as the headlines suggest, a few have the potential to transform the employment law landscape and oblige employers to adopt new practices and procedures. Under the Bill, individuals will get more workplace rights and greater security at work, but those rights will cost employers more and restrict flexibility.

The Bill contains 28 new measures (some of which only apply in the public sector) which employers will need to get to grips with, but with many not due to come into force until Autumn 2026.

‘Day one’ rights

Probably the most significant change is that employees will benefit from more rights from the day they start employment.

The two-year qualifying period of employment to be able to bring an unfair dismissal claim will be removed giving employees greater job security from the beginning. However, the government will consult on a new statutory probationary period of nine months (rather than six months as originally proposed) for new hires, during which there will be greater flexibility to dismiss. Employers will be able to dismiss for capability, conduct or illegality, or for some other substantial reason, subject to conditions to be set out in regulations. The right not to be unfairly dismissed will not apply where the employee has not yet started work.

Unpaid parental leave and paternity leave will also become day one rights. Parental bereavement leave will become bereavement leave and will be extended to apply where the employee has a (yet to be defined) relationship with the person who has died.

The three-day waiting period for statutory sick pay will be abolished, increasing costs for employers who do not pay enhanced company sick pay.

Stricter controls on fire and rehire

There will be further restrictions on an employer’s ability to terminate contracts and impose new, less favourable terms, through so-called ‘fire and re-hire’. Dismissal due to failure to agree to a contract variation will be automatically unfair where the reason for the dismissal is to enable the employer to employ another person, or to re-engage the employee, under a varied contract of employment to carry out substantially the same duties as the employee carried out before being dismissed. The dismissal will not be automatically unfair if the reason for the variation was to eliminate, prevent or significantly reduce, or significantly mitigate the effect of, any financial difficulties which affected the employer’s ability to carry on the business as a going concern or otherwise to carry on the activities constituting the business, if the employer could not reasonably have avoided the need to make the variation.

This has been watered down from the original proposal to abolish fire and rehire but will still have a significant impact on employers’ ability to make changes to contractual terms.

Zero hours contracts: Right to guaranteed hours

Workers on zero hours and low hours contracts who regularly work more than those hours will have the right to a guaranteed hours contract which reflects the hours regularly worked over a 12-week reference period. If more hours become regular over time, subsequent reference review periods will provide workers with the opportunity to reflect this in their contracts. The government will consult on how these subsequent review periods should work. The duty will be on the employer to offer the guaranteed hours contract, rather than on the worker to request it. There will be some flexibility to offer the new contract on a limited time basis.

Workers will also be entitled to reasonable notice of any change in shifts or working time, with proportionate compensation for any shifts cancelled or curtailed at short notice.

Harassment

The duty to take reasonable steps to prevent sexual harassment will become the duty to take ‘all’ reasonable steps and employers will become liable for third party harassment (not just sexual harassment) in the course of employment.

Disclosure of sexual harassment will be explicitly protected under the whistleblowing laws.

Enhanced redundancy rights

When the Woolworths chain of shops went into administration, each of the shops was treated as a different ‘establishment’ meaning that only employees employed at stores with 20 or more employees were entitled to collective consultation and received more substantial compensation. In the future collective consultation will be required where an employer is proposing to dismiss as redundant 20+ employees.

Flexible working

The Bill will amend the current right to request flexible working to provide that employers can only refuse the request on one of the existing statutory grounds and where it is reasonable to do so. Any refusal must explain why the employer considers that it is reasonable to refuse the application on that ground or grounds.

Protections against dismissal for pregnant women and new mothers

The Bill will enable regulations to be made to ban dismissals of women who are pregnant, on maternity leave, and during a six-month return-to-work period except in specific circumstances. It will also expand existing powers in relation to adoption leave, shared parental leave, neonatal leave and bereaved partner’s paternity leave to enable regulation of dismissal in the period after a person returns to work after taking one of these forms of leave.

Action plans on menopause and gender pay gaps

Employers with 250+ employees will be required to create and publish equality action plans on addressing gender pay gaps and supporting employees through the menopause.

Single enforcement body

The Bill will establish a new enforcement body, the Fair Work Agency (FWA), which will have inspection powers and will be able to enforce penalties for employers who breach workers’ rights. The FWA will bring together different government enforcement bodies, enforce holiday pay for the first time and strengthen statutory sick pay.

The implementation of the FWA will be subject to consultation.

Trade unions and industrial action

Employers will be required to give all workers a written statement that the worker has the right to join a trade union at the same time as the section 1 statement.

The Bill will also bring in a new right of access – with a transparent framework and clear rules designed in consultation with unions and business – for union officials to meet, represent, recruit and organise members and will simplify the statutory trade union recognition process, reducing the required percentage of union support within the proposed bargaining unit.

Union equality representatives will gain the right to reasonable time off to carry out their duties or undertake training during working hours.

The balloting requirements for industrial action will be simplified so that the union will only need the support of a simple majority of those voting in the ballot, rather than a percentage of those eligible to vote.

Employees will gain protection from being subjected to a detriment for union membership or activities.

The Strikes (Minimum Service Levels) Act 2023 will be repealed.

The Bill will update blacklisting legislation to protect a wider range of people from blacklisting due to trade union membership or activity.

Tipping policies

The new law on fair allocation of tips which came into force at the beginning of October will be strengthened by the introduction of a requirement to consult with worker representatives before introducing a tipping policy and to review the tipping policy every three years.

Next steps

The government will consult on a number of the proposed measures in 2025, meaning that many of the most significant will not take effect until Autumn 2026.

The government has also published a Next Steps document that outlines reforms it will look to implement in the future.

Subject to consultation, this includes:

• • A right to switch off, preventing employees from being contacted out of hours, except in exceptional circumstances.
  • A commitment to end pay discrimination by expanding the Equality (Race and Disparity) Bill to make it mandatory for large employers to report their ethnicity and disability pay gap.
  • A move towards a single status of worker and transition towards a simpler two-part framework for employment status.
  • Reviews of the parental leave and carer’s leave systems.

In the coming weeks we will publish a series of articles looking at aspects of the proposals in more detail.