The government has announced a new employment rights bill that it says will mark the “biggest upgrade to rights at work for a generation”.
Some of the changes the government is proposing are sweeping, and could have far-reaching implications for you as a business owner.
The new legislation allows for a lead-in period of two years, which at least provides you with some breathing space for changes to the way you manage your business. Even so, it is clearly important to plan ahead and be aware of how the proposals could affect you.
The government website confirms that the bill contains as many as 28 measures around employment rights. This article explores some of the main proposals announced, and what they could mean for you and your business. Read on to find out more.
Employees will enjoy protection from unfair dismissal from their first day
The removal of the existing two-year qualifying period for protection from unfair dismissal is one of the most impactful changes proposed.
Instead, employees will enjoy that protection from day one of any new employment.
This proposal also provides stronger protections against unfair dismissal during pregnancy and maternity leave.
However, the government will be consulting with interested parties on a maximum of a nine-month probation period. During this time, employers will enjoy similar rights to those they have now with regard to new employees.
The expectation is that this change will result in some employers creating more robust recruitment processes and adjusting employment procedures to ensure they are adopting effective practices from day one.
Access to flexible working will become the default position for all employees
The existing Employment Relations Act introduced by the previous government already allows for staff to request flexible working. The new proposals just take this a step further by making it the “default” position rather than an exception.
Employers will be obliged to provide flexible working that suits the needs of an employee if requested, from day one.
The key underlying driver for these changes is to improve work-life balance, on the assumption that staff who have the ability to work flexibly when they need to, are liable to be more productive.
However, there is an important caveat in the new legislation which deems that employers can refuse to offer flexible working if it is believed to be “unreasonable”.
Some of the grounds for this could include if:
- The provision could result in additional costs to your business
- It would reduce the ability of your business to meet customer demand
- You would not be able to re-organise outstanding work among existing staff.
If you do not already have a flexible working policy in your business, you may want to consider putting one together.
Zero-hours contracts will still be available, but only for those who want them
The Labour Party had pledged to abolish the contentious concept of zero-hours contracts well before the recent general election, so it is no surprise that this proposal is in the new employment rights bill.
The use of these types of contracts is particularly prevalent in the retail and hospitality sectors, resulting in employees having little security of income from one week to the next, making any long-term financial planning very difficult.
Under the new legislation, employers will have to provide guaranteed-hours contracts based on the hours employees work during a 12-week period.
Importantly, however, the new proposals recognise that zero-hours contracts do suit some employees as they give them the right to work when they want to, rather than be compelled to work at a designated time.
The big change will be that they will have the right of access to guaranteed working hours if they want them.
The practice of “fire and rehire” will be outlawed, except in extreme circumstances
Another high-profile and contentious issue that the incoming government pledged to address is the practice of “fire and rehire”. This refers to the behaviour of employers sacking groups of staff and then offering them their original jobs on a reduced salary.
A notorious example of this occurred in 2023 when, as the Guardian reported, P&O Ferries threatened to sack 900 employees unless they accepted salary cuts and a change in conditions.
The new proposals will make such action far more difficult, but a company could still use it if it is at risk of becoming insolvent.
It is likely that this will prompt businesses to consider alternative ways of restructuring if they need to cut costs.
Unpaid parental and bereavement leave will become another right
As well as protection from unfair dismissal, another “day one” right that employees will enjoy under the new legislation is immediate access to unpaid parental and bereavement leave.
At present, parents are currently only permitted to take unpaid parental leave if they have been with a company for more than a year.
Additionally, any employee will also have the right to take time off unpaid if a dependant dies.
The definition of “dependant” includes any immediate family members, as well as anyone for who the employee has any care responsibilities.
You should consider how the changes will affect your business
There is no doubt that the new legislation is likely to have an impact on many employers and business owners.
For example, an employment law expert, quoted in a BBC report, suggested the transition could be painful in terms of the extra administrative red tape, while the same report suggests implementation costs could be as high as £5 billion.
However, Health and Safety Executive figures suggest that depression, stress, and anxiety led to 17 million working days being lost last year, costing the economy £5.2 billion in lost output. If the measures in this new legislation can help reduce the number of lost working days, then that might also help offset implementation costs.
It is important to look behind the headlines at the detail of the actual proposals themselves, and to consider how the changes could affect how you run your business.
By being aware of the planned changes, and taking advantage of the two-year period between when the legislation is on the statute book and when the changes come into effect, you will be better positioned to ensure that your HR practices align with the new legislation.
In doing so, you may be able to mitigate the financial cost to your business and avoid any sudden changes that could create unwelcome upheaval and potential interruptions to your business effectiveness.
If you have any queries or concerns, it may be sensible to get expert advice from an employment law specialist.
Get in touch
If you would like to talk about how the new legislation could affect your finances, then please do get in touch with us at DBL Asset Management.
Email enquiries@dbl-am.com or call 01625 529 499 to speak to us today.
Please note
This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.
