…However, before employers become overwhelmed by the press hype on the Bill’s proposals, let’s look at the reality of the situation.
What The Employment Rights Bill all really means?
Reality Check 1: Timing of the reforms.
In its supporting document, ‘Next Steps to Make Work Pay’, the Government has stated its intention to consult widely with employers, industry bodies and unions before finalising the wording of the Bill. Consultation is not due to start until early 2025 and, as a result, the Government states that the majority of the proposed reforms will take effect no earlier than 2026. Specifically, the day one right to claim unfair dismissal will take effect no earlier than Autumn 2026. So, there is time to review current practices and start planning.
Reality Check 2: Too risky to take on new staff.
The proposal for employees to have unfair dismissal rights from day one has led a number of commentators to state that this makes it too risky to recruit new employees. It is also not clear how the proposed 9-month statutory probation period will fit with the day one right.
However, the Government has stated that it intends to ensure it is still possible for employers to dismiss an employee who is simply unsuitable for the role during the proposed statutory probation period; the focus will be on following a fair process when doing so. This is likely to involve meeting with an under-performing employee to tell them where they need to improve. If no improvement is seen, inviting them to a meeting (with the right to be accompanied by a work colleague or trade union representative) and explaining the reason for the dismissal, then following up the reason(s) for dismissal in writing. Arguably, these are steps a good employer would be taking now anyway, where there are performance concerns with an individual, so the process itself should not be too onerous.
In reality, there are already a number of situations in current employment law where an employee can bring a claim for unfair dismissal without having the normal two years’ service (discrimination or whistleblowing, for example), so the new provision is perhaps not as great a change to existing law as some commentators are suggesting.
Reality Check 3: Significant increase in employment costs
Several of the proposed reforms in the Bill will lead to increased costs for a number of businesses. One proposal is for entitlement to Statutory Sick Pay to start from day one of a period of sickness absence (instead of the current 3 waiting days before SSP starts), as well as the proposed removal of the Lower Earning Limit requirements. This will bring many more employees into scope of the right to SSP and will undoubtedly increase costs for some employers. However, many employers already offer sick pay schemes which are more generous than the statutory basic and this can benefit the employer through improved employee engagement and retention, so the increased costs will not affect all employers.
The same applies to other proposals to increase paid entitlements such as introducing the right to paid time off into existing legislation covering people with caring responsibilities – many employers are already providing a degree of paid time off in these circumstances, so again, the new proposals won’t affect all employers.
Reality Check 4: zero hours workers to gain right to guaranteed hours.
The government has pledged to ban ‘exploitative’ zero hours contracts which, for many employers with genuinely variable labour requirements, are an appropriate way of resourcing their businesses. The proposed new right will entitle zero hours workers who regularly work more than their ‘guaranteed hours’ to a zero hours contract reflecting the actual hours worked. The process will involve the employer using a 12-week average of the hours regularly worked, and the government is to consult on the process to use another reference period if the average changes. One key point here is that the government has also stated that there will be no expectation on employers to offer permanent contracts to zero hours workers, so a degree of flexibility will be retained.
This blog was contributed by MAD-HR and published on the 28th October 2024. It is just a summary of some of the key points in the Employment Bill and MAD-HR will be monitoring the consultation process for the Bill and will continue to provide updates and blogs as soon as more is known. MAD-HR can help employers to plan for the proposed changes and review current HR processes. For more information, visit https://www.mad-hr.co.uk/
