Some additional documents have also been released by the Government[1].
As employment lawyers and HR people kept pressing refresh on their computers awaiting the new bill, all we had to go on was the headline announcement from the Government[2]. This followed the various commitments / promises made during the election campaign as they termed it ‘Making Work Pay’.
When the bill was published[3], we got more detail on the various elements and I’ve summarised my thoughts on some of the changes. There are also several other documents giving more information on the proposals[4].
Is the bill ground-breaking, game-changing, somewhat interesting or a damp squib.
My rather evasive summary would be – it depends.
It depends on your industry, it depends on whether your employees are predominantly minimum wage / lower paid, it depends on the strength of the unions in your workforce etc.
We don’t know the plans for a date of the new legislation coming into force, but all indications point to some elements being introduced in 2025 but the last elements to be in place by October 2026.
The summary below is predominantly aimed at my clients – financial services, professional services, tech / fintech and white-collar businesses in the private sector. It is not exhaustive but my interpretation of the changes that will most affect my clients.
Unfair Dismissal as a ‘Right from Day One’ policy
Current situation: An employee cannot claim unfair dismissal until they have two years of service.
Overview of the new proposals: This qualifying period will be removed (i.e. ‘Rights from Day One’) but there is to be a consultation on a new statutory probationary period (also referred to as an Initial Period of Employment). We all expected this to be a six-month period, but it says, “the Government’s preference is nine months”. The ‘Next Steps’ document[5] also suggests that there will be a “lighter-touch and less onerous approach for businesses to follow to dismiss someone who is not right for the job. As a starting point, the Government is inclined to suggest it should consist of holding a meeting with the employee to explain the concerns about their performance (at which the employee could choose to be accompanied by a trade union representative or a colleague)”.
The updated guidance seems to suggest that the light touch test for unfair dismissal would not apply to dismissals relating to redundancy in this period.
The potential financial compensation for Unfair Dismissal in this Initial Period of Employment may be different as stated in the Next Steps document “The Government also intends to consult on what a compensation regime for successful claims during the probation period will be, with consideration given to tribunals not being able to award the full compensatory damages currently available.”
Business Impact: We will need to see what the consultation / proposals say regarding dismissal during the new statutory probationary period. Will this mean in practice that we have moved from a two-year qualifying period to a nine month one? Depending on this, I suspect that there will be some businesses that will hesitate a little more before hiring with a worry that a new employee that just does not work out will be more difficult to get out of the business without a more lengthy, legal or financial process.
With the imposition of the reduced period, this will mean that the waiting time to be able to claim Unfair Dismissal, will in effect reduce over time up to October 2026.
Recommended Actions: Wait to see the detail of how the probationary period develops. In the meantime - is your hiring process as robust as it could be? Do you ever hire an individual who was the best of those you’d seen even though deep down you weren’t convinced they were a great candidate? When you are planning to ‘onboard’ (a word I don’t like but don’t have an alternative) a new employee, have you fully planned for how to make them more effective, more quickly? Are you ready to review their performance from Day One and if they fall short, tackle this quickly rather than kicking the can down the road?
Flexible working
Current situation: Employees can make a request for a change to their working arrangements (i.e. flexible working) up to twice a year. Employers must deal with these requests in a ‘reasonable manner' and can refuse the request for one or more of eight reasons (e.g. extra costs, not able to meet customer demand).
Overview of the new proposals: The Government said they will “change the law to make flexible working the default for all, unless the employer can prove it’s unreasonable”. The detail of the proposed legislation seems to indicate that the employer only needs to state the grounds of refusing the application and explain why they consider it reasonable to refuse the application on one or more of the grounds above. The proposals don’t appear to insist on this being in writing (although I’d always recommend doing so).
Business Impact: Not the ‘right to demand a four-day week’ that some newspapers were suggesting. No significant change. Not even sure this even closely meets the Government’s stated ambition of ‘making flexible working the default’. Of all the proposals I think this is the one that is furthest away from the promises that were made. The Business Secretary made a huge point of this in a number of speeches and interviews but, in my opinion, this has come to (almost) nothing.
Recommended Actions: Continue to consider all requests for flexible working reasonably and if it will be refused, be prepared to explain why.
Paternity, Parental and Bereavement Leave
Current situation: A few years ago, we had the introduction of Parental Bereavement Leave which received cross party support but there is currently no entitlement for anyone else who has been bereaved. Many businesses offer this either as a stated policy or an ad-hoc customary practice. Parental Leave allows an employee up to 18 weeks’ leave up to their child’s 18th birthday. It is unpaid and, in my experience, is used very rarely. Paternity Leave gives an employee whose partner is having a baby two weeks’ leave.
Overview of the new proposals: Parental Leave and Paternity Leave to be Day One rights. Bereavement Leave seems to be extended to anyone who is bereaved although the detail of the relationship that the employee must have had with the deceased isn’t clear. Bereavement Leave in the circumstances of losing a child will remain at two weeks, other Bereavement Leave to be one week.
Business Impact: Parental Leave is rarely used so I’m not sure this will change anything. Paternity Leave is currently paid at a low statutory rate and is one of the reasons many believe it has low rates of being taken.
Recommended Actions: Be aware of future introduction of Day One rights and amend policies if needed.
Note: There doesn’t appear to be any recommendations on Shared Parental Leave. This was, in my opinion, one of the most impractical and complex pieces of employment law I’ve ever seen.
Enhanced protection for pregnancy and new mothers
Current situation: Current protection against dismissal of employees on maternity leave or dismissal for reasons relating to pregnancy but many believe minimal if any protections for new mothers.
Overview of the new proposals: Seems to indicate a proposal to strengthen protections for pregnant employees and returning mothers. Timescales for new mother protection not stated but many expect this to be for six months after a return to work.
Business Impact: Other than for situations of genuine redundancy, most businesses would approach a potential dismissal of a pregnant employee or new mother returning to work with caution. We will need to wait to see what increased levels and timings of protection will be proposed.
Recommended Actions: Wait to see the outcome of the consultation and continue to exercise caution in these circumstances.
Protection from Sexual Harassment
Current situation: Employers have a duty to take reasonable steps to prevent Sexual Harassment but more limited liability for third party harassment.
Overview of the new proposals: Employers will have a duty to take all reasonable steps to prevent Sexual Harassment. Additional obligations to take all reasonable steps to prevent Sexual Harassment by third parties (i.e. not other employees of the employer) which means they will be liable for such situations.
Business Impact: The level of expectation of what an employer is supposed to do will be raised including carrying out risk assessments, having policies, having clear processes for reporting and handling complaints.
Recommended Actions: Consider where your organisation is now. Do you have clear policies? Are all employees aware of them? Do manager / supervisors understand their role in handling complaints? Have you undertaken a risk assessment to consider potential areas where Sexual Harassment could take place?
Other changes that will affect some employers
Statutory Sick Pay: To be paid from first day of sickness (currently three days waiting and payment from day four) and lower earnings threshold for SSP to be removed. Secretary of State to determine a level to set SSP as percentage of pay.
Ending ‘exploitative’ zero hours contracts: Employees to gain rights to request guaranteed hours and to have reasonable notice of shift changes or cancellations. The published documents are very complex and detailed, but we expect to learn more in due course.
When working out a baseline in response to a request for guaranteed hours, there will be a ‘reference period’ (it suggests 12 weeks) to set this level and then the employer will need to respond to the employee’s request.
Gender Pay Gap / Menopause: Increased obligations (for employer over 250 employees) to have action plans on gender pay reporting and supporting employees going through the menopause.
Previous proposals not covered
Right to Disconnect: Although in a separate document it says there will be a ‘Right to Switch Off’ delivered through a Statutory Code of Practice.
TUPE: Statement that there will be a call for evidence to “…examine a wide variety of issues relating to TUPE regulations and process, including how they are implemented in practice.”
Parental leave: Statement that “The current parental leave system does not support working parents…. we will conduct a full review of the parental leave system.”
Carer’s leave: Statement that “We will review the implementation of carer’s leave and examine all the benefits of introducing paid carer’s leave, while being mindful of the impact of any changes on employers, particularly small employers.”
Fair Work Agency: Establishing a single body to handle all enforcement processes.
Final note
This updated summary was written on Wednesday 30th October after the publication of the new bill. The detail and suggestions in here may become outdated after a period of consultation or parliamentary debate.
Any information in this paper should not be construed as specific legal advice.
[2] https://www.gov.uk/government/news/government-unveils-most-significant-reforms-to-employment-rights
[5]https://assets.publishing.service.gov.uk/media/6707a5eb92bb81fcdbe7b62b/next_steps_to_make_work_pay.pdf