Major Employment Law Reforms Set to Shape the Future Workplace

Major Employment Law Reforms Set to Shape the Future Workplace

UK Ministers have introduced the Employment Rights Bill on 10 October 2024, aiming to boost economic security and promote growth for businesses, employees, and communities across the country. The Bill outlines 28 key reforms, which the government stated it may be autumn 2026 before the first of these changes comes into effect. The changes focus on expanding employee rights, enhancing workplace protections, and updating certain legal processes.

Key Areas of Reform

Unfair Dismissal Protection from Day One:

Currently, employees are only protected against unfair dismissal after two years of continuous service. The Bill will remove this requirement, granting unfair dismissal protection from the first day of employment. This is a significant step toward preventing arbitrary terminations. However, the introduction of a statutory probationary period of up to nine months, as proposed, will give employers some leeway in determining a worker’s suitability during the initial stages of employment. Unions, however, are voicing concerns over the extended length of the probation period, calling it excessive.

Day-One Family Leave Rights:

The Bill aims to extend day-one rights for parental, paternity, and bereavement leave, allowing employees to take leave immediately upon starting a job. This marks a notable departure from the current system, where paternity leave, for instance, is only available after six months of service. Strengthened protections will also be introduced for pregnant women and new mothers, preventing dismissals within six months of their return to work, except in exceptional cases​.

Enhanced Sick Pay Entitlements

Sick pay is set to undergo significant reform, with the removal of the three-day waiting period for statutory sick pay (SSP). Under the new rules, employees will qualify for sick pay from their first day of illness, regardless of their earnings, eliminating the lower earnings threshold. This is expected to benefit lower-paid workers who often miss out on sick pay under the current system

Flexible Working as the Norm:

Flexible working arrangements have gained prominence in recent years, especially post-pandemic. The Bill aims to make flexible working the default option, allowing employees to request flexible work from their first day of employment. Employers will only be able to refuse such requests if they provide clear, reasonable grounds in writing. This change is expected to improve work-life balance, particularly for employees with caregiving responsibilities​.

Strengthened Trade Union Rights:

The Bill provides for enhanced collective bargaining rights, allowing unions to have greater access to workplaces. The threshold for union recognition in workplaces may be reduced, expanding union influence. Additionally, new protections will be introduced to prevent workers from facing discrimination or detrimental treatment due to participation in industrial action​.

Ending Exploitative Zero-Hours Contracts:

Zero-hours contracts, which often leave workers with uncertain schedules and incomes, will be tightly regulated. Workers will now have the right to be offered a guaranteed-hours contract after a period of regular work. This change will give many employees more financial stability and predictability in their working hours. Employers will also be required to give adequate notice of shift changes and compensate workers if shifts are cancelled without reasonable notice.​

Banning Fire and Rehire Practices

The controversial practice of “fire and rehire,” where employees are dismissed and then rehired on worse terms, will face stringent restrictions. This practice will only be allowed in circumstances where a company is at risk of financial collapse, or where no other viable options exist. The aim is to ensure fairer treatment of workers during periods of restructuring​.

New Protections Against Workplace Harassment

Workplace harassment, particularly sexual harassment, is another focal point of the Bill. Employers will be required to take all reasonable steps to prevent harassment, including third-party harassment (e.g., by customers or clients). The Bill also proposes changes to whistleblowing laws, allowing employees to report harassment as a protected disclosure. The Equality and Human Rights Commission (EHRC) will have new powers to enforce these provisions, ensuring stricter compliance​.

Equality Action Plans

Larger employers, those with over 250 employees, will now be required to publish annual equality action plans to address gender pay disparities and provide better support for women. This is part of a broader push for greater workplace inclusivity

The Fair Work Agency

A newly established Fair Work Agency will consolidate existing regulatory bodies and oversee the enforcement of statutory employment rights, such as holiday pay and minimum wage compliance. This agency will help ensure that workers receive the protections to which they are entitled and will provide support to businesses in complying with the new laws

Timeline and Next Steps

While the changes introduced by the Employment Rights Bill represent an overhaul of the existing employment framework, many of these reforms will not be fully implemented until 2026. The extended timeline allows for careful consideration of the Bill in Parliament, as well as additional consultations with businesses, trade unions, and other stakeholders to ensure the legislation is both comprehensive and practical. Businesses will be given time to prepare for these changes, with guidance expected from the government in the coming months.