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11.10.24

The publication of the Employment Rights Bill (the Bill) on 10 October marked a significant step towards the Government’s implementation of the employment law reforms set out in its ‘Plan to Make Work Pay: Delivering A New Deal for Working People’.

Now that our legal experts and policy team have had more time to digest the 157 page Bill and the Government document Next Steps to Make Work Pay  (which outlines not only the reforms in the Bill but also other changes it is looking to implement in future), we set out some further detail on key measures and outline how HR can begin to prepare for the extensive changes to come. 

Significance of the Bill

The Bill represents a significant overhaul of employment law, including changes on matters such as unfair dismissal, changing terms, unpredictable hours contracts, flexible working, equality at work and harassment, trade union rights, family leave, sick pay and redundancy.  A number of key measures in the Bill require further consultation and secondary legislation.  Whilst Make UK support measures such as the efforts to eradicate exploitative market practices, it will be challenging for employers to absorb the cumulative impact of such major changes to employment practices.

Make UK’s engagement with Government and trade unions on the new legislation has been wide-ranging.  We welcome the fact that the Government announced there will be no major changes to the law until 2026. This indicates that it has listened to our concerns about taking time to get the detail right and avoiding unintended consequences, whilst giving businesses enough time to prepare for the changes to come into effect. Make UK members can be assured that we will continue our in depth and constructive dialogue with Government on the measures in the Bill, as well as on the other proposed changes to employment law, ensuring that their views continue to be heard.

Protection from unfair dismissal from day one

A key plank of the Government measures is to extend protection from unfair dismissal, making it available from day one of employment. The Government has responded to our concerns about manufacturers being able to dismiss underperforming, unsuitable or temporary employees at an early stage of their employment, and the Bill provides that employers will continue to be able to operate probationary periods to assess new hires. There will be a consultation on the length of probationary periods, with Government favouring a nine-month period. Government will also consult on a lighter-touch process for employers to follow if they wish to dismiss employees who are not right for the job during the probationary period, and on the appropriate compensation for such dismissals. Protection from unfair dismissal from day one will not apply until Autumn 2026 at the earliest.

To prepare for this change, we suggest reviewing your recruitment procedures as, whatever the outcome of the consultations, greater due diligence will be needed to ensure new hires are well-suited to your organisation. In addition, review your performance management processes to check that they can support capability dismissals from day one of employment. If you don’t believe that your managers will have sufficient training on how to manage employees in their probationary periods, it would be sensible to start this process early to embed good practice.

Ending ‘exploitative’ zero-hours contracts

The Bill seeks to end the one-sided flexibility of certain ‘exploitative’ zero-hours contracts by providing that employers must make a guaranteed hours offer to zero-hours workers and those with a ‘low’ number of guaranteed hours at the end of a specified reference period.  This offer may need to be repeated at the end of each subsequent reference period.  The ‘Next Steps to Make Work Pay’ document indicates that the reference period, which is not currently defined, will be 12 weeks, and the definition of ‘low’ guaranteed hours is left for Regulations and will be subject to consultation.  The offer of guaranteed hours, which may be a contract variation or a new contract, must reflect the number of hours that the individual regularly worked over the reference period and cannot be for a limited term contract, unless reasonable.  The Bill allows for Regulations to go further and provide that the guaranteed hours offer must also reflect the pattern, days and times of day worked in the reference period. The worker will be able to agree, ignore or refuse the offer, but the offer must be made regardless.

We are pleased that the Bill provides that where the employment is genuinely temporary, employers will not have to offer permanent contracts, and that workers on other types of contract who occasionally pick up overtime will not be affected. However, Make UK will continue to urge Government to target only genuinely exploitative practices; for example, we do not want to see the definition of ‘low’ guaranteed hours drafted so as to have the unintended consequence of preventing manufacturers from using annualised hours contracts, which offer employees greater financial security and predictability while retaining flexibility for the employer. We are also concerned about the impact on seasonal variations and the administrative burden on employers.

In the light of these changes, we suggest auditing your current workforce to identify who is engaged on zero-hours or low guaranteed hours contracts, and in which areas of the business they are used. Consider modelling if there are other approaches you could take to offer workers greater security as to hours, while still meeting your business needs to cover fluctuating demand.

Reasonable notice of changes to shifts

The Bill contains lengthy provisions aimed at ensuring that workers get reasonable notice of the scheduling of a shift, as well as of changes and cancellations to shifts, with proportionate compensation for any shifts which are cancelled or curtailed at short notice.  These provisions apply to zero-hours workers and those on minimum hours and those who do not have a set working pattern. There will be a presumption that notice is not reasonable, unless it is given a ‘specified time’ before the shift is to start. Regulations will define the ‘specified time’. It also remains to be seen what type of reasons would be sufficient to counter the presumption that notice is not reasonable, where notice is shorter than the specified time, and Make UK will reiterate to the Government the importance to manufacturers of agile and flexible responses to fluctuating demand. This will also be important as the Government considers its approach to a future ‘right to switch off’ and employers’ ability to communicate with workers outside of their contracted hours.

To prepare for this change, it is worth reviewing your processes around scheduling rosters and shifts. Are you able to better anticipate ‘pinch points’ and consequent changes to shifts at an earlier stage?

Making flexible working the default from day one

The Bill amends the current provisions about the right to request flexible working. Whilst employers will still be able to refuse an application for flexible working on the same grounds as they are able to now, they can only do this if it is ‘reasonable’ for them to rely on that ground.  Make UK welcomes the fact that Government has agreed that the existing business reasons for refusal should remain, but note this reasonableness requirement is a higher threshold than under the current legislation.  In addition, employers will be required to explain, in writing to the employee, why their refusal is reasonable.

As a result of this upcoming change and recent increased employee expectations around flexible working, you should be prepared for more flexible working requests from now on.  We suggest reviewing the types of flexibility you can accommodate and ensuring managers are up to speed on how to handle requests under the current regime, as this may make it easier to adapt when the bar is raised by the new legislation.

Enhanced protection from sexual harassment

From 26 October 2024, the Worker Protection (Amendment of Equality Act 2010) Act 2023 will place a new positive duty on employers to take reasonable steps to prevent sexual harassment at work – see our previous e-alert. The Bill will extend this duty so that employers will have to take all reasonable steps to prevent sexual harassment of their workers in the course of employment.  Regulations may specify the type of steps regarded as “reasonable”, including carrying out risk assessments, publishing plans or policies, and actions relating to the reporting of sexual harassment and the handling of complaints.  There is also a stand-alone right that requires employers to take all reasonable steps to prevent third party harassment. Although the Equality and Human Rights Commission takes the view that the sexual harassment preventative duty already covers third party harassment, this can only be enforced by the EHRC. The provisions in the Bill would give workers the right to claim compensation for third party harassment. In addition, protected disclosures under whistleblowing legislation will be extended to include a disclosure that sexual harassment has occurred, is occurring or is likely to occur.  Make UK will continue to engage with the Government as it considers what actions constitute ‘reasonable’ steps for an employer to take in seeking to prevent harassment at work.

It’s clear that tackling sexual harassment at work should be an HR priority, given the new legal duty on employers from 26 October this year, the extension included in the Bill and the time it takes to make cultural changes.  We suggest that you begin by auditing your existing arrangements (including policies, training and reporting procedures for raising concerns), as well as reviewing previous incidents and how they have arisen and been dealt with. Carry out a risk assessment and use those findings to identify your next steps and think about creating an action plan. Creating the right culture includes ensuring that you have the right HR policies in place, such as equal opportunities and anti-harassment and bullying policies; however, it also involves communicating these policies effectively to all staff and ensuring that they are implemented consistently in practice. As it is vital to create a culture which makes clear that you have a zero tolerance approach to inappropriate behaviour, we suggest providing awareness training to all staff on what constitutes sexual harassment and how they should report inappropriate behaviour that they have experienced or witnessed. Separately, we recommend additional training for managers, to help them spot when someone may be experiencing harassment, understand how to investigate allegations properly and know how to support the individuals involved. Make UK can help with all of these actions.

Ending ‘unscrupulous’ practices of ‘fire and rehire’ and ‘fire and replace’ 

One of the most significant measures in the Bill relates to measures aimed at ending ‘unscrupulous’ practices of ‘fire and rehire’ and ‘fire and replace’. The Bill makes it automatically unfair to dismiss an employee in order to vary their contract where the employee does not agree the variation, or to employ another person on varied terms to carry out substantially the same duties as the employee before the dismissal. The Government is of the view that current Statutory Code of Practice on Dismissal and Re-engagement, which came into force on 18 July this year, does not go far enough, and that automatic unfair dismissal claims will provide a more effective remedy to employees. 

In the future, employers will still be able to change terms via dismissal and re-engagement, but only where this allows them to remain viable where the business is in financial distress and there is genuinely no alternative. The Bill sets out the factors that a tribunal must consider when determining whether a dismissal is fair, including any consultation with the employee, any consultation with a recognised union or other representative body and anything offered to the employee in return for them agreeing to the variation. Regulations may specify other factors. There is no doubt that these provisions will make it more difficult to make changes to contractual terms without agreement. We will continue to impress on Government the importance to manufacturers of being able to modernise and adapt terms and conditions to respond to changing market conditions and innovations.  

If you are currently considering changing terms, you should beware of the reputational risks of ‘fire and re-hire’. In addition, you must follow the Code of Practice on Dismissal and Re-engagement. We recommend that Make UK subscribers speak to their adviser before beginning a dismissal and re-engagement process.

Strengthening provisions on collective redundancy consultation

Statutory collective redundancy consultation is currently triggered where an employer proposes 20 or more ‘redundancies’ (which includes dismissals and re-engagements to change terms) in a rolling 90 day period at one establishment. The Bill removes the wording ‘at one establishment’, so employers with more than one site will have to count proposed redundancies across all sites in a 90 day period when assessing whether statutory collective consultation is triggered.  Make UK will put forward our view to Government that this proposal has unintended consequences, which could make consultation unwieldy and less targeted, as well as risking inadvertent breach by employers who have nonetheless carried out an effective consultation.  We would like to see the Government open this reform up to further stakeholder consultation before it is implemented, in order to avoid this.

To prepare for this change, employers with more than one site should put in place processes so that all sites are aware of any proposed redundancies or dismissals and re-engagements at other sites.

Changes to family and other leave

The Bill introduces various enhancements to family and other leave, including Day one rights to unpaid parental and paternity leave and a new right to a week’s bereavement leave from Day one (the required relationship to the deceased is to be decided in Regulations). The restriction on taking paternity leave following a period of shared parental leave will be removed.  Make UK supports measures to make the workplace more family friendly and to retain parents in the workforce. However, we will urge Government to ensure that provisions to restrict dismissals of an employee while pregnant, on maternity leave and for six months after her return to work do not interfere with manufacturers’ ability to employ a workforce with the requisite skills and competencies.

HR will therefore need to keep an eye on developments and be aware that changes to family leave policies will be required in due course.  (Note, too, the Government has indicated that the whole complex family leave system will be reviewed in the first year of its term.)

Equality action plans

The Bill requires large employers to publish action plans to address gender pay gaps and support staff going through the menopause. Regulations may prescribe the content of such plans, how frequently they should be published and the requirement for senior leadership approval. Make UK will be encouraging the Government to make this process as simple and clear as possible for employers when it decides on the content and frequency of the plans. The Bill also introduces a new requirement for employers to identify the providers/employers of contract workers when publishing their gender pay reports.

We suggest that you review any gender pay gap action plan that you already have in place. If you do not currently have one, start thinking about what it will look like. For information about how to support employees with menopause symptoms, see our e-alert.

Establishing a new single enforcement body, the Fair Work Agency

The Bill provides for a new single enforcement body, the Fair Work Agency, to strengthen enforcement of workplace rights. This will bring together existing enforcement functions, including with regard to the minimum wage, statutory sick pay, the employment tribunal penalty scheme and labour exploitation and modern slavery, as well as gaining a remit over the enforcement of holiday pay.  The Bill also gives the Government broad powers to extend the Fair Work Agency’s scope to cover other employment rights.  Make UK asked Government to maintain the independence of the Health and Safety Executive.

If you have concerns over current or past potential minimum wage or statutory holiday pay breaches, you may wish to address these now, given the scope of this new enforcement agency and the possibility that it will take a more proactive approach to enforcement of such breaches.

Strengthening statutory sick pay

 The Bill strengthens statutory sick pay (SSP) by removing the lower earnings limit as well as the three-day waiting period. Regulations will provide for the percentage of pay individuals earning below the lower earnings limit should receive as SSP.  

Make UK has long supported the removal of the three-day waiting period for SSP, with manufacturers believing that this would help to reduce presenteeism and the risk of longer-term sickness absence.  Given the increased liability for employers and the potential during further consultation on this measure to increase the rate at which SSP is paid, Make UK is asking the Government to provide additional financial support to SMEs on the same basis as this was offered during the temporary extension of SSP during the pandemic.

If you do not already provide company sick pay during waiting days, we suggest working with your payroll provider to calculate the possible extra cost, and checking that it will be able to adjust its systems as appropriate when the measures are implemented. In addition, since the changes could potentially increase short-term absence in companies with no or limited company sick pay, you may want to review attendance management procedures, including triggers, and refresh manager training for handling frequent short-term absence.

Trade unions and industrial action

The Bill includes some significant changes to the law on trade union protection and industrial action. The Bill requires employers to inform their workers that they have the right to join a trade union and makes it easier for trade unions to access the workplace.  There are detailed provisions about negotiating access agreements, which involve the CAC, which will also be responsible for dealing with complaints about breaches of access agreements.  The rights to time off and access to facilities are strengthened for TU officials and learning representatives, and TU equality representatives who have met specific training conditions. In addition, the Bill includes provisions to simplifying the ballot and notice requirements for industrial action and the process for TU recognition, paves the way for electronic ballots and repeals restrictive legislation on strikes. Make UK will be engaging with the Government as it makes further decisions on the threshold for statutory recognition and seeking more information on the expected role and capacity of the CAC.

We recommend that you review your industrial relations strategy, and move towards a proactive approach; for example, consider the introduction of works councils, employee forums etc. to improve workforce engagement and give staff a collective voice. You may also want to support your managers in working more successfully with trade unions, for example training them on negotiation skills and managing conflict.

How we can help 

Make UK’s Policy Team has been engaging closely with Government, trade unions and other representatives, discussing the detail of the Government’s Plan to Make Work Pay to ensure that its proposals benefit both manufacturing employers and their workers. We will continue to represent the views of Make UK members to Government, sharing member insights, suggestions, and concerns via meetings, roundtables, and during the upcoming consultations.

In the meantime, if you are a Make UK subscriber, our legal experts will keep you updated on key points that arise over the coming weeks and months, through e-alerts, our Employment Law Updates  and bespoke training sessions. You can also speak to your regular adviser with any queries you may have about these various changes to employment law. Make UK subscribers can also access guidance on a wide range of employment law topics, including template policies and drafting guidance, in the HR & Legal Resources section of our website, which we will update as and when the new legislation is finalised and implemented.

As your trusted partner, Make UK consultants are available to help support you in any projects you undertake in preparation for the changes outlined above. If you are interested in our consultancy services, subscribers can talk to their adviser. If you are not a Make UK subscriber, email [email protected] for more information on our consultancy and training services. Here are some examples of the ways in which we can support you as you prepare for the changes in the Bill, Regulations and other proposed legislation:

Sexual harassment

Make UK can support your proactive duty to take reasonable steps (and all reasonable steps when the Bill is implemented) to prevent sexual harassment of your workers. Our offering includes a suite of training covering all levels from front line to Director, delivered virtually or face to face. HR and management workshops and visioning sessions can help you plan, review and monitor what steps to take to move towards compliance. We can provide you with template documentation, including an anti-bullying and harassment policy (including management guidance notes), workplace risk assessments and action plans. Workforce Surveys (including pulse surveys and focus groups) can help you identify both problem areas and things that you are doing well, providing a good base line for continual improvement. Alongside this, we have a full suite of ED&I training and consultancy to support your general duties under the Equality Act 2010. We also offer a specialised service to help you better support workers who are neurodiverse.

Recruitment, job design and working arrangements 

Make UK can help you prepare for day one unfair dismissal rights by improving your recruitment processes, to ensure that you hire the best person for the job. Our offering includes training on fair recruitment and selection and unconscious bias. We also offer visioning workshops for leadership teams and/or HR to consider recruitment strategies, processes and job design.  We can help you develop a recruitment policy.

In preparation for increased focus on managing employees during their probationary period, we offer courses (some of which are CPD accredited) for managers and supervisors to provide the necessary knowledge and skills needed to manage discipline, performance and grievance cases effectively. We also have expertise in helping employers to audit the effectiveness of working arrangements and to introduce alternative ways of working, such as annualised hours. We can also assist you in identifying which roles may be suitable for flexible working arrangements.

Working successfully with trade unions 

We have a wealth of expertise from working with trade unions at a local, regional, and national level. We can provide training on how to work successfully with unions, deal with union recognition agreements and respond to industrial action.

Become a subscriber

Given the amount and nature of upcoming changes to employment law, and the importance of manufacturing companies having their voice heard by Government at this crucial time, you may want to talk to us about the benefits of becoming a Make UK subscriber. For further information about membership or consultancy, contact us on 0808 168 5874 or email [email protected].

News / Make UK