Employment Rights Bill Amendments

Through four consultations launched in October 2024 – concerning zero-hours contracts, measures for agency workers, remedies in collective redundancy consultation cases, trade union legislation and statutory sick pay, as well as in its response to a consultation undertaken by the previous Government on tackling non-compliance in the umbrella company market, certain elements of the ERB faced criticism and areas of concern were identified.

However, as a result of the consultations, a number of further changes to the original proposals were confirmed. A summary of these is set out below.

Unfair dismissal

In the announcement made last week, the headline proposals of unfair dismissal protection as a ‘day one’ right, or complex provisions relating to zero-hours and low-hours workers were not rolled-back- as had been hoped, but further clarification was provided. The ‘initial period of employment’, the period during which a lighter touch dismissal process will be possible, was confirmed as running from month three to month nine of employment. Consultation will take place around exactly what the “light touch” approach will entail. It therefore remains to be seen just how onerous this new day one right will be on employers when it is expected to come into force in autumn 2026. It should be noted that for months one to three an employee has no protection from unfair dismissal unless the dismissal is for a reason related to a protected characteristic or for other breaches of statutory rights (e.g. whistleblowing). This effectively creates a three tier protection – none, some, to full, over the first 9 months (maximum) of an employee’s employment.

Zero-hour contracts

The purpose of the ERB was to legislate to provide workers with more predictable and stable working hours. The changes announced yesterday will see agency workers included in these protections with them having to be offered a contract guaranteeing a minimum number of working hours per week. The amendments also include provisions for agency workers to receive better notice of shift changes and proportionate pay for shifts that are cancelled/moved at short notice.

Agencies and hirers will remain free to negotiate terms which allow these costs to be recouped from the hirer (where they were responsible for the change). In the case of pre-existing contracts (those entered into before the Bill is passed) legislation will allow agencies to recoup these costs to the extent the hirer was responsible.

Statutory Sick Pay (SSP)

Amendments to SSP will make it more accessible for workers, ensuring that they can take necessary time off without the loss of income by removing the ‘waiting days’ for SSP, therefore making it payable from day one of the absence.

It is also proposed that lower-wage employees, including those earning below the lower earnings limit of £123, will be entitled to sick pay of 80% of their wages or the current rate of SSP, whichever is lower.

Legislation will be enacted to implement these changes so this is not expected to happen until 2026.

Fair Work Agency (FWA)

Significant changes to the proposed FWA have also been announced, which expand its powers to take action against employers who exploit their workers. These include:

• applying penalties for any underpayments including underpayment of holiday pay and;
• taking action in the Employment Tribunal on behalf of workers if they do not raise a claim themselves.

The second amendment grants the FWA a huge power that was not foreseen. Employers will therefore no longer be able to rely on individuals’ ignorance of their rights in order to avoid claims and enforcement action. FWA’s stated aim is however to take a balanced approach and therefore they will also seek to provide support for businesses that take steps to comply with the new regulations.

Fire and Rehire and Collective Redundancy

The Government is bringing forward an amendment to the ERB to double the maximum period of the protective award (from 90 – 180 days) if an employer fails to comply with its collective consultation requirements. This is 180 days of “actual pay”, and no weekly cap applies. The extension is aimed at greater financial security for workers facing redundancy and seeks to ensure that the penalty for deliberately ignoring collective consultation obligations is a deterrent and ensures that it is not financially beneficial for an employer to do so.

Also included in the amended bill are provisions for guidance on handling dismissal and re-engagement, and a provision which voids any imposed change to terms and conditions if collective consultation obligations are not complied with. However, the Government has decided against making interim relief available to employees who bring claims for the protective awards or who bring an unfair dismissal claim in a ‘fire and rehire’ scenario.

In its response to the consultation ‘Making Work Pay: Consultation on strengthening remedies against abuse of rules on collective redundancy and fire and rehire’ it is cited that the Government intends to gather further views on strengthening the collective redundancy framework and on updating the Code of Practice on Dismissal and Re-engagement to ensure that it reflects the ERB’s ‘fire and rehire’ provisions.

Industrial Relations

The Government proposed some amendments concerning trade unions and industrial relations, as set out in its response to the consultation ‘Making Work Pay: Consultation on creating a modern framework for industrial relations’. These are as follows:

• Strengthening protections against ‘unfair practices’ during the statutory recognition process;
• Requirement to give ten days’ notice of industrial action, (not the 7 initially envisaged);
• Removing the ten-year requirement for unions to ballot their members on the maintenance of a political fund;
• Simplifying the current information requirements for industrial action ballots and notices.;
• Extending the expiry of a trade union’s mandate for industrial action from six to 12 months; and
• Providing for digital right of access to the workplace for collective bargaining purposes.

With the ERB not due to obtain Royal Assent until summer 2025 and many of the changes not due to come into force until 2026 these areas are ones to continue to watch for further development and amendments. It is also clear that additional rights will likely be added, such as the right to bereavement leave following a miscarriage. We are there still some way off seeing exactly what the new laws and obligations on employers will entail, but will continue to update you as the draft bill develops.