The Employment Rights Bill (the Bill) is the Labour government’s marquee draft legislation, setting out its vision of reforms needed to better protect UK workers. The Bill includes a suite of worker-friendly changes the government intends to make to current employment legislation.
The government has already started consulting on some of the reforms, although the majority will likely not take effect until mid 2025 -2026. Key changes include:
Unfair Dismissal – Day 1
The headline proposal in the Bill is to make unfair dismissal a day-one right for all employees. Currently, employees must be employed by their employer for at least two years before they can bring a claim for ‘ordinary’ unfair dismissal. By the government’s estimate, about 9 million UK employees have been working for their current employer for less than two years (and, accordingly, have limited protection against unfair dismissal). The government is proposing to abolish this waiting period.
While the proposal presents a radical change to how employee dismissals are managed, one key caveat is that the government envisages that employees may be fairly dismissed following a light-touch procedure during an initial statutory probation period (expected to be nine months). This less onerous process will need to be fleshed out in consultation; however, once implemented, the new day-one unfair-dismissal right will undoubtedly affect companies’ approach in hiring new employees, performance management, and the liability exposure associated with dismissing employees.
More Flexible-Working Rights
The UK has, in the years following the COVID-19 pandemic, catered more extensively to flexible working amongst employees. The Bill introduces a requirement that any employer’s refusal of a flexible-working request must be ‘reasonable’. While this change falls short of the government’s initial aim to make flexible working a ‘default’ right for most employees, it is likely that this proposal will change the cultural expectations for employees’ ability to work flexibly and place the onus on employers to demonstrate why a particular request cannot be accommodated.
Single Enforcement Body
The Bill proposes the creation of a Fair Work Agency, a state enforcement agency that will provide a stronger framework for employees to enforce their rights. Currently, employment rights are enforced through a mixture of employment tribunal and various government bodies enforcing certain rights on behalf of employees. The new state enforcement body will take over the enforcement of discrete employment rights in the first instance, but the Bill envisages the body’s remit and powers will be extended in the future.
Commentary
The Bill presents the most significant reform to UK employment law in decades. According to the government’s own impact assessment, the Bill is expected to impose a direct cost on UK businesses of up to £5 billion a year, on top of the NI increase announced in the budget. In addition, it is expected to have a wide-ranging impact on companies’ business practices, compliance costs, and tribunal claims.
Given most of the reforms will not take effect until 2026, we have sufficient time to prepare. The trend line under the Labour government is clear, and companies that carefully work with their HR advisors regarding how the upcoming changes to employment law will affect their business, and adapt accordingly, will be able to recruit, retain, and manage their talent effectively. To coin a phrase, “It’s HR Jim, but not as we know it.”
NMW increase has been announced for April 2025 with effect from 1 April 2025 @
- 21 and over – will rise from £11.44 to £12.21 an hour
- 18-20 – will rise from £8.60 to £10 an hour
- Apprentices – will rise from £6.40 to £7.55 an hour
This is the largest increase for under 21s on record and is the first step towards a single rate for all adults.
Harassment in the workplace
In Finn v. British Bung, the Employment Appeal Tribunal ruled that workplace comments targeting characteristics more prevalent in one sex, like baldness, can constitute sex-related harassment, underscoring the limitations of a “banter” defence.
Mr Finn was a longstanding employee of British Bung Manufacturing, which was described as a small family run business of around 30 employees who were predominantly (if not exclusively) male. “Industrial language” was said to be commonplace on the shop floor, and following a disagreement about a piece of machinery, Mr Finn was called by a male colleague ‘bald’ in an incredibly derogatory way, and was threatened with physical violence. He was later dismissed for gross misconduct, despite an unblemished disciplinary record. Mr Finn brought several claims against British Bung Manufacturing, including a claim for sex related harassment arising out of the comment made about his appearance.
The ET found in Mr Finn’s favour and upheld his harassment claim. This case is a useful reminder to employers that the scope of what can constitute sex related harassment in the workplace can be wider than you might ordinarily think. Comments that relate to characteristics more prevalent in one sex than the other, can cross the line into harassment if they cause emotional distress.
