By the end of 2026, employment rights are expected to be considerably different to those in force today. ‘The publication of the Employment Rights Bill in October 2024 indicates the major legislative changes that are on the horizon, although much of the detail will be the subject of consultation and will then needs to be refined in regulations or codes of practice,’ says Patrick Glencross, a Senior Associate in the Employment team with Furley Page.
Protection from unfair dismissal, family-friendly rights, guaranteed hours for vulnerable workers, and protection from harassment, are all areas that will see the creation of new rights or an expansion of existing rights. The Government policy paper ‘Next Steps to Make Work Pay,’ also published on 10 October, outlines further future reforms and areas for consultation.
Patrick Glencross outlines the main points in the Employment Rights Bill, and the changes to the national minimum wage and employer’s national insurance contributions which were announced at the Autumn Budget on 30 October.
Wider rights to claim unfair dismissal
One of the biggest proposed changes is that protection from unfair dismissal will become a day-one right. At present, employees almost always need two years’ continuous service to bring a claim for unfair dismissal. Under the Bill, a statutory probation period would also be introduced – the Government’s preference is nine months – during which employers can fairly dismiss if they follow a ‘light touch’ procedure. This light touch procedure will not apply to dismissals for redundancy, meaning employees at risk of redundancy will have full protection from their first day of employment.
The Government will consult on the length of the statutory probationary period, with its preference being 9 months. The consultation will also cover how an Employment Tribunal should calculate an employee’s compensation if they are unfairly dismissed during the initial period.
The earliest these changes will come into effect is autumn 2026, in order to allow employers a substantial period of time to prepare and adapt.
New limits on ‘fire and rehire’
At present, if an employer cannot persuade an employee to agree changes to their terms and conditions, they may be able to follow a process to fairly dismiss the employee and offer to re-engage them on a new contract. This is often referred to as ‘fire and rehire’. Under the Bill, this practice would result in an automatically unfair dismissal, subject to a narrow exception if the employer can show it was not reasonably avoidable due to serious financial difficulties affecting the viability of its business.
Enhanced collective redundancy consultation rights
If more than 20 employees could be fired and rehired, this triggers collective redundancy consultation obligations. The Government is consulting on removing the current cap of 90 days’ pay that can be awarded for failing to collectively consult in this situation.
Under the current rules, employers must consult collectively in a redundancy situation if the number of redundancies proposed is 20 or more within 90 days ‘at one establishment’. The Bill increases the obligations to consult collectively by requiring the employer to count the proposed redundancies across all their sites and work locations, rather than at just one establishment.
New right to guaranteed hours
There is no right at present to a guaranteed number of hours’ work. The Bill would require an employer to offer guaranteed hours to a worker on a zero-hours contract or low-hours contract based on the hours worked during a defined period. This would not apply if there was a short-term need for work. The Government has indicated that the right would apply after 12 weeks, however this will be the subject of consultation.
New right to reasonable notice of shifts and payment for cancelled shifts
Some workers will be entitled to reasonable notice of a shift that they are required to work. If the employer cancels a shift, the worker will have to be given reasonable notice of this. If not enough notice is given, the worker would receive compensation to reflect the loss of income. Details such as the minimum amount of notice that needs to be given to cancel a shift will be consulted on.
Explanation for refusal of flexible working request
The same eight business reasons for refusing a flexible working request will continue to apply as present, but the Bill would add a new requirement for the refusal to be reasonable. The employer will also have to explain to the employee why their refusal is reasonable.
New obligation to inform about right to join a trade union
The Bill would introduce a new duty on employers to inform all new employees of their right to join a trade union, and to inform all staff of this right on a regular basis. This notice would be given at the same time as the section 1 written statement of particulars.
The Bill also proposes a framework of “access agreements” to enable employees to access a trade union within their workplace, for recruitment and organising purposes.
These proposals form part of a wide range of measures designed to introduce a new era of partnership between employers, trade unions and the Government.
Statutory sick pay more widely payable
The current limitations on statutory sick pay (SSP) are that employees are only entitled to SSP from the fourth day of illness and only if they earn more than a weekly minimum (currently £123). These limitations would be removed, with consultation on the rate payable to employees who earn less than SSP.
Widening obligations and liabilities for harassment at work
Since 26 October 2024, employers must take ‘reasonable steps’ to prevent sexual harassment of staff. The Bill will extend this duty to ‘all reasonable steps’.
The Bill would ensure that workers who report sexual harassment to their employer are protected in the same way as if they have made a whistle-blowing disclosure. Currently this protection could apply, but it is not explicit. The Bill adds reporting sexual harassment to the list of disclosures that can entitle the worker to protection as a whistle-blower.
Employers will be liable for harassment of their staff if they fail to take all reasonable steps to prevent harassment by a third party, such as a customer or supplier. The harassment could relate to any protected characteristic, such as gender or race.
Extending family-friendly rights
The Bill would extend the scope of a number of existing protections and rights:
- bereavement leave is currently only available to parents if a child under 18 dies or a baby is stillborn. The Bill would make it a wider right to at least one week’s bereavement leave, with the relationship with the deceased to be specified in the regulations.
- parents can currently take up to 18 weeks’ unpaid parental leave before their child turns 18 after one year’s employment. Instead, employees would be eligible from the first day of employment.
- under the current law, employees are only eligible for two weeks’ paternity leave if they have been employed for six months. This will become a day-one right.
- currently pregnant women and women on maternity leave or returning from maternity leave must be offered any available alternative employment in a redundancy situation. This will be widened to protection against dismissal, other than in specified circumstances and will apply to anyone on or returning from family-friendly leave for a specific period.
Government enforcement of holiday pay and other rights
The Bill would give the Government the power to enforce holiday pay rights. A new public body (the Fair Work Agency) would have this power, as well as taking on current enforcement powers, such as for the minimum wage and statutory sick pay, to bring these powers together in one body.
Autumn Budget 24: national minimum wage
The National Living Wage (NLW) for employees age 21 and over will go up to £12.21 from 1 April 2025. The 6.7% increase reflects the extension of the Low Pay Commission’s remit to start taking into account cost of living factors.
At the same time the rate for 18-20 year olds will go up to £10.00 (a 16.3% increase) and the rate for 16-17 year olds and apprentices will go up to £7.55 (18% increase). The narrowing of the gap between the 18-20 rate and the NLW is a step towards the long-term goal of achieving a single adult rate for the minimum wage.
Autumn Budget 24: employer’s NIC
From 6 April 2025, the employer’s rate for national insurance contributions (NIC) will increase from 13.8% to 15%. The threshold from which it becomes payable for each employee will be reduced from £9,100 to £5,000 per year, again from 6 April 2025.
The employment allowance will be increased from £5,000 to £10,500, meaning eligible employers (mostly small employers) can reduce their total NIC payments for the tax year 2025/26 by £10,500. Employers can check the government guidance on eligibility.
How we can help
Although the Employment Bill changes are not expected until 2026, they will bring a significant shift in how businesses need to operate their employment practices and how they should minimise the risk of a tribunal claim. For instance, thorough recruitment processes and effective performance monitoring during probationary periods will become increasingly important. We can advise you on how to prepare for these changes.
For further information, please contact Senior Associate, Patrick Glencross, in the employment team on 01227 763939.
Please note: This article is for general information only and does not constitute legal or professional advice.
