At a glance: what's in the Employment Bill?

The government has published its much-anticipated Employment Bill. It contains a raft of new changes which, once implemented, will give workers substantial new rights and employers additional new responsibilities. The Bill provides a framework for Labour's plan to make work pay. Most of the detail will be set out in separate regulations.

This quick guide highlights what will change and what we know about the next stages in the process. It's divided by topic to make it easy to navigate. 

The majority of reforms are expected to take effect from 2026. The government has already launched several consultations and more are expected over the next year or so.

Dismissal related provisions

Day one unfair dismissal rights

Currently employees must have worked for their employer for two or more years before they can bring a claim for ordinary unfair dismissal. There are no rules about probationary periods.

The Bill will give employees the right to claim unfair dismissal from the first day of their employment. Employers will only be able to dismiss an employee if their dismissal is for one of the five, potentially, fair reasons (conduct, performance, statutory restriction, redundancy or for some other substantial reason) and has acted fairly. However, the legal test of fairness will be modified during the probationary period unless the employer is making an employee redundant. 

The procedure employers must follow and the maximum length of the probationary period will be set out in regulations. The government has said that it favours a maximum probationary period of nine months and wants the procedure for dismissing someone to be ‘light touch’. 

Changes to collective redundancy consultation triggers 

Currently, employers proposing 20 or more redundancies ‘at one establishment’ within a period of 90 days or less must collectively consult with a recognised union or employee representatives before making anyone redundant. If they don't, employees can claim a protective award of up to 90 days’ pay.

The Bill removes the words ‘at one establishment’ which means that employers will need to count any proposed redundancies across all of their sites or premises to work out if they need to embark on collective consultation.  

While not referred to in the Bill, the government has launched a new consultation on its plans to strengthen the legal framework around collective redundancies and fire and re-hire. It is seeking views on its proposal to increase the maximum protective award and is considering two options:

• Increasing the length of the award from 90 to 180 days; or
• Removing the cap entirely and give tribunals the power to award an amount it deems appropriate which will reflect the severity of the breach

More radically, the government is also considering allowing employees who are able to bring a claim for a protective award, the ability to claim interim relief. This would mean that employers would either have to re-employ the employee or pay them their salary and benefits until the tribunal reached a decision on the merits of their claim (which it would only be able to do after the hearing). 

Fire and re-hire only lawful in exceptional circumstances

Employers can fire and re-hire staff as a means of changing their terms and conditions of employment but only where this is a last resort. A new statutory code of practice on dismissal and re-engagement came into force on 18 July 2024 which sets out the steps employers have to take before going down this route.

The Bill will make it even more difficult for employers to deploy this strategy. Employees who are dismissed because they will not accept changes to their terms and conditions of employment will be able to claim that their dismissal is automatically unfair. An employer will only be able to successfully defend these claims if it can demonstrate it was facing financial difficulties that threatened its viability, and that changing the employee’s contract was unavoidable (e.g. it was the only way to prevent insolvency).  

Whilst not referred to in the Bill, the government has recently laid down secondary legislation which, if approved by Parliament, will enable a tribunal to adjust any protective award by up to 25% if it finds that one of the parties has unreasonably failed to comply with a relevant code of practice - including the one on fire and rehire.

It has also launched a new consultation on its plans to strengthen the legal framework around redundancy and fire and re-hire which includes a proposal to allow affected employees to ask a tribunal for interim relief if their employer has not complied with its duty to collectively consult before dismissing them and offering to re-engage them on new terms (see above for more details).

Outsourcing and TUPE

Ex-public sector employees and private sector employees can work for the same employer on different terms and conditions following the transfer of public contracts. This is known as a ‘two-tier workforce’.

The Bill will ensure that these workers are treated ‘no less favourably’ than each other and it will strengthen the existing code of practice that applies to ‘relevant outsourcing contracts’.  

Diversity, discrimination and pay reporting

Additional protection against sexual harassment

Since 26 October 2024 employers have a duty to prevent their staff from being sexually harassed ‘in the course of [their] employment’. It is an anticipatory duty which requires employers to consider where their staff are most at risk and to take ‘reasonable’ steps to prevent it.

The Bill will strengthen that duty and require employers to take ‘all reasonable steps’ to prevent sexual harassment. 

It will also explicitly provide that an employee who makes a disclosure about sexual harassment will be protected under the existing whistle-blowing legislation. 

Protection from third party harassment

Currently, it can be difficult for workers to bring successful claims against their employers for harassment they experience at work by customers or other third parties. The Equality Act 2010 used to provide specific protection but those provisions were repealed in 2013. 

The Bill will re-introduce employers' liability for third party harassment and this will extend to harassment for all nine protected characteristics in the Equality Act. Employers will be liable for any harassment and will only be able to successfully defend claims if they can show they've take ‘all reasonable steps’ to prevent it.

Requirement to publish action plays to reduce gender pay gap

Every year employers with 250 or more employees must publish information about their gender pay gap. There is no legal requirement to explain what steps they plan to take to reduce their gaps, but many employers already do this.

The Bill will require those employers to:

• publish ‘equality action plans’; and 
• identify the providers or employers of any contract workers they engage (but they won't have to include pay data for these individuals).  

Requirement to support menopausal staff

Currently employers have no legal duty to explain to staff how they will support those who are going through the menopause.

The Bill provides that employers with 250 or more employees will have to develop and publish annual ‘equality actions plans’.  These must set out the steps the employer is taking to both address its gender pay gap and support staff going through the menopause. 

Family rights

Requirement to explain why flexible working request has been turned down

Currently, employees can ask their employers to change their working hours, location and the days they work by making a written request. They can make up to two requests a year and employers can only turn these down if they can rely on one of the eight specified business reasons. The penalty for breaching the statutory flexible working regime is eight weeks’ pay, currently capped at £5,600.

The Bill will not change the eight business grounds but will require employers to explain why it was reasonable to turned down a request on these grounds. There may also be changes to steps an employer has to follow when consulting an employee about their request. 

Protection from discrimination after returning from maternity and other family related leave

In a redundancy situation, pregnant women, those on maternity leave, and those returning to work from maternity leave (within 18 months from the expected week of childbirth) have the right to be offered a suitable alternative vacancy ahead of anyone else who has been provisionally selected for redundancy. Similar rules apply to new parents returning from adoption or shared parental leave.

The Bill will protect women from being dismissed for other reasons (not yet defined) for a period of time after they return to work from maternity leave, except in limited circumstances (also not yet defined). The explanatory notes to the Bill, suggest that this additional period of protection will be for a six month period.

This additional protection will also apply to other employees taking other types of family-related leave such as adoption leave, shared parental leave, and other forms of leave not yet in force such as neonatal care leave and bereaved partner's paternity leave.

Day one right to bereavement leave

Currently employed parents who lose a child under the age of 18, or suffer a stillbirth after 24 weeks of pregnancy, have a day one right to take up to two weeks of parental bereavement leave. They also receive statutory pay if they have worked for their employer for at least 26 weeks and earn at least £123 per week. 

The Bill will extend protection and give employees a day one right to at least one week's unpaid bereavement leave following the death of a close relative or other person (to be defined). 

Day one right to parental leave

Employees who have been employed for at least 26 weeks can take up to 18 weeks of unpaid parental leave for each child. The maximum amount of leave they can take each year is four weeks.

The Bill will make this a day one right.

Day one right to paternity leave

Employees who have been employed for at least 26 weeks immediately preceding the fourteenth week before the expected week of childbirth and have a specified relationship with the child or its mother can take up to two weeks paid leave in the first year after the child's birth, or placement for adoption.

The Bill will make paternity leave a day one right. It will also remove existing rules which prevent employees from taking paternity leave after shared parental leave. 

Sickness 

Right to SSP from first day of illness

Currently, statutory sick pay (SSP) is payable from day four of sickness, and workers need to earn above the lower earnings limit of £123 to qualify. 

The Bill provides that SSP will be paid from the first day of illness and the lower earnings period will be removed. The rate of SSP will be set at either the flat rate in force (currently £123 per week) or a prescribed percentage of the employee's weekly earnings. The government has recently launched a consultation about what that percentage should be.

Zero hours contracts and predictibility

Zero hours contracts

Currently, employers can engage staff on zero-hours contracts provided they don't prevent them from working for someone else. 

Before the election, the Labour Party said that it would ban ‘exploitative’ zero hours contracts. The Bill doesn't ban these contracts. Instead, it introduces two key changes which will restrict their use and penalise employers who abuse them as follows: 

Right to be offered guaranteed hours

Employees engaged under zero hours or casual contracts don't have any rights to be offered a guaranteed number of hours each week. 

The Bill will repeal the Workers (Predictable Terms and Conditions) Act introduced by the previous government. New provisions will require employers to offer ‘qualifying workers’ a guaranteed number of hours after the end of every reference period (not yet defined but anticipated to be 12 weeks) reflecting the number of hours they have worked during that period. 

A qualifying workers is someone working under a zero hours contract or someone with a low number of guaranteed hours (not defined).

There will be some exceptions to these rules including where a worker resigns, has been fairly dismissed during the qualifying period or whose short fixed term contract has ended. 

These provisions do not apply to agency workers, but the Bill includes the power to include them and the government has recently launched a consultation on this point.

Right to be given reasonable notice of shift changes

Employers can swop and change the shift patterns of their staff with little notice unless they have contractual provisions in place regulating this. 

The Bill will require employers to give their staff reasonable notice of available shifts and reasonable notice if they want to make changes to shifts they've agreed to work. What is reasonable will depend on the circumstances, but there will be a minimum period of time which applies (not yet defined).

The Bill will also require employers to make a payment to staff each time they change their shift at short notice. 

These provisions do not apply to agency workers, but the Bill includes the power to include them and the government has recently launched a consultation on this point.

Trade unions and strikes

Right to statement of trade union rights

Employers must give all workers a written statement containing certain prescribed information on or before their first day of work. This must include information about any terms incorporated in their contracts which are subject to collective bargaining with a recognised union, or the absence of these. 

The Bill will require employers to tell their staff that they have a right to join a trade union when they start work (via the s1 statement or contract of employment) and at other ‘prescribed times’ (not yet defined) throughout their employment.

Right of trade unions to access workplaces

Unions don't have a general right to access workplaces to recruit and organise their members.

The Bill will give trade union officials the right to access employers' physical workplaces to recruit, organise and engage in collective bargaining, subject to following a specific process. Employers will be able to negotiate with the union to agree when and how they will access their workplace, or the union will be able to apply to the Central Arbitration Committee (CAC) to determine this.

The government has launched a consultation about these and other changes it wishes to make as part of its drive to provide a ‘modern framework for industrial relations’.

Facilities to trade union reps and members

Employers must provide certain facilities in their workplaces to union reps to enable them to meet with and communicate with staff.

The Bill will require employers to give union reps sufficient facility time and create new rights and protections for trade union equality reps. This will include a statutory right to take time off during working hours for specified purposes (not defined) related to equality in the workplace.

The Bill will also repeal the requirement for public sector employers to publish prescribed information relating to facility time.

Trade union recognition

If an employer doesn't agree to a request for recognition for the purposes of collective bargaining it can apply to the CAC which will determine it by reference to strict criteria.

The Bill will make it easier for unions to obtain recognition via the CAC by:

• replacing the 10% application threshold with a new ‘required percentage test';
• removing the requirement for a union to show that a majority of staff are likely to support their application; and
• removing the 40% support theshold at the ballot stage and reverting to a simple majority

The government has launched a consultation about these and other changes it wishes to make as part of its drive to provide a ‘modern framework for industrial relations’.

Check off

Rules that came into force on  9 May 2024 mean that public sector employers can only deduct union subscriptions from the pay of staff members if their staff have the choice of paying their subs in another way and the union gives the employer reasonable payments to cover their administration costs.

The Bill will repeal these conditions.

Ballots and picketing 

The Trade Union Act 2016 made it more difficult for trade unions to take industrial action by imposing higher ballot thresholds for certain important public services, requiring unions to re-ballot members after six months, and restricting picketing. Ballots have to be done via post.

The Bill will introduce electronic balloting for industrial action and repeal most of the Trade Union Act 2016 including:

• removing provisions which introduced strike ballot minimum turnout thresholds of 50% of those entitled to vote in key public sectors and that 40% of the entire membership must vote in favour of strike action;
• removing the need for the union to tell the employer how many members were entitled to vote and whether the minimum thresholds have been met;
• removing provisions which required certain information to be included on the ballot paper;
• reducing the notice period the union must give the employer of strike action to seven days; and 
• removing the requirement for a union representative to supervise picketing.

The government has launched a consultation about these and other changes it wishes to make as part of its drive to provide a ‘modern framework for industrial relations’.

Protection for taking industrial action

An employee who takes part in a lawful strike is protected against being dismissed during a protected period of 12 weeks, but not if their employer suspends or disciplines them in an attempt to prevent or deter them from going on strike.

The Bill will bridge this gap by protecting employees engaged in lawful strike action from being subjected to a detriment. They will also be protected against dismissal for taking part in industrial action for the entire duration of the strike.

Minimum service levels during strikes

The Strikes (Minimum Service Levels) Act 2023 came into force last ear and gave the government powers to make regulations to require businesses to make sure that a certain number of people remained working during strikes to meet minimum service levels in specified sectors. 

The Bill will revoke this law and will take effect two months after the Bill becomes law. 

Tips

New laws came into force on 1 October 2024 requiring employers to pass on all qualifying tips, gratuities and service charges to their workers. A statutory code of practice sets out the steps employers have to take to fairly distribute tips between staff.

The Bill will require employers to consult with trade union, employee reps or the workers themselves before producing the first version of their written policy on tips. Once the policy is agreed, it must review it once every three years in consultation with these reps. Employers must produce a written anonymised summary of the views expressed during the consultation.

Labour market enforcement

Employees have to bring claims in an employment tribunal to enforce most of their employment rights.

The Bill gives the government powers to enforce labour market regulation and to delegate this to a new public authority (expected to be called the Fair Work Agency).

How to keep up to date

We will be writing more detailed guides to these changes. You can receive these direct to your inbox by signed up to receive my posts, or our newsletters (see below).

We are also running a webinar on Wednesday 19 November to explain some of the key provisions. You can sign up to attend here. 

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