The Employment Rights Bill: Seven Questions for Employers

The Employment Rights Bill (ERB) has been hailed by the Prime Minister as “introducing the biggest upgrade to workers’ rights in a generation”. It is the most significant piece of employment legislation in decades, and includes 28 different reforms for employers to get to grips with. Although much of the detail is yet to be clarified, we have distilled the ERB’s core changes into seven key questions employers should now be asking themselves: 

How do you recruit and manage new staff?

The qualifying period for unfair dismissal protection will be removed by the ERB, with effect from late 2026. There will be a statutory probation period (expected to be up to nine months, but to be confirmed), during which employers will be able to dismiss under a more “light touch” procedure. Details are yet to be fleshed out, but it is intended to provide a period to assess the individual’s suitability for the role, and allow dismissal if they are reasonably found not to be the right fit.

Employers therefore need to review their recruitment procedures, to give themselves the best chance of recruiting the right candidates from the outset. Employment contracts for new joiners may need amending for new probation periods, during which new recruits should be carefully monitored and managed.

How do you collectively consult with employees? 

Employers who are not yet unionised should anticipate a trade union approach, under new powers of access for unions contained in the ERB. The union recognition procedure is also being streamlined and simplified, as is the ability for unions to call strike action. Existing employee engagement mechanisms should be reviewed, as their robustness may determine whether any union approach is successful or not.

All employers should also prepare for changes to collective redundancy consultation. Alongside the existing trigger of 20 or more proposed redundancies at one establishment within 90 days, the ERB allows for a new alternative threshold to be introduced, with details of how this will work in practice to be prescribed in regulations. The maximum protective award is also set to increase from 90 to 180 days’ pay per affected employee. 

What flexibility do you have to change terms and conditions?

Employers may need to make changes to contractual terms for a variety of reasons; financial, legal, regulatory or operational. Securing employee consent to these changes, at an individual and/or collective level, is not always straightforward. Whilst “fire and rehire” is seen as a last resort for most employers, the ERB is set to make it all but impossible, unless the employer can satisfy a very narrowly drawn financial distress exception. Employers therefore need to consider how they would avoid a situation where contractual changes are needed but cannot be agreed with employees.

Do you engage casual / seasonal workers? 

Many businesses value the flexibility that zero-hours or low hours contracts provide. Work can be offered when it is available, without the employer being tied to a regular hours commitment which it may not be able to sustain. The ERB however erodes this flexibility, with the aim of providing greater stability for workers on these contracts. It will require employers to make a “guaranteed hours offer” to certain qualifying workers, based on the average hours worked over a reference period. Agency workers will also be included within these reforms. There will be scope for employers to contract out of these measures using a collective agreement. The provisions are very complex and much of the detail is yet to be prescribed, but businesses who use these contracts need to be prepared to make some significant changes.

Are you doing enough to prevent harassment?

Employers have recently come under a new duty to take reasonable steps to prevent sexual harassment of their employees. Risk assessments are an essential method for identifying scenarios where employees may be at risk of workplace harassment, and identifying steps which could reasonably be taken to prevent it. However, more will soon be required – the ERB strengthens the new preventative duty by requiring employers to take all reasonable steps to prevent sexual harassment.

In addition, the ERB will reintroduce employer liability for harassment of their staff by third parties – and with a stricter test than previously applied until 2013, since the ERB’s provisions do not require at least two instances of harassment, of which the employer is aware, before it can be liable.

Is your approach to flexible working “reasonable”?

Labour’s Plan to Make Work Pay[1] committed to make “flexible working the default from day one for all workers, except where it is not reasonably feasible”. In fact, the ERB retains the current model whereby employees have a right to request flexible working from day one, but the employer can refuse if it considers the request reasonably and relies on one of the eight prescribed statutory reasons for refusal. The only change made by the ERB is to require the employer to act reasonably in determining its reason for refusal, and to communicate this rationale to the employee. Employers should nonetheless be braced for more flexible working applications, and prepared to demonstrate that their approach to all of them is reasonable.

What equality pay gaps do you have? 

Large employers (with 250 or more employees) will now be accustomed to collating and reporting gender pay gap information – and many already voluntarily publish equality action plans to tackle their pay gaps. The ERB will however make these action plans mandatory, and also extend them to measures the employer is taking to supporting employees through the menopause. It will also require employers to publish information about the service providers that they contract with for outsourced services. A separate Bill, the Equality (Race and Disability) Bill is also set to extend pay gap reporting beyond gender, to cover race and disability, and the government is consulting[2] on how this will work in practice. Employers will need to review their diversity data collection procedures in readiness for the new obligations.

The Slaughter and May Employment team is analysing the ERB’s provisions in depth, and closely monitoring its passage through Parliament. For more information on the ERB, including on how businesses are preparing, please speak to one of the authors, and/or your usual contact at Slaughter and May.

[1]LABOUR’S PLAN TO MAKE WORK PAY - Delivering A New Deal for Working People

[2]Equality (Race and Disability) Bill: mandatory ethnicity and disability pay gap reporting - GOV.UK