Key takeaways
Significant reforms reshape the UK employment framework
Government proposals include updates on flexible work and redundancy.
Businesses need to prepare for new compliance rules
Changes will affect contracts, working patterns, and consultation duties.
Early action helps avoid costly legal disputes
Review policies now to stay ahead of upcoming legislation.
The Employment Rights Bill that is currently going through parliament will introduce radical reforms to UK employment law, including unfair dismissal rights for all employees, restrictions on restructuring exercises, increased trade union access, guaranteed hours of work for zero-hours workers, and new employee rights to leave.
In this update we look at the impact of the main changes on companies with employees in the UK.
Area of change | Impact |
Unfair dismissal | All employees will have unfair dismissal rights from the first day of their employment (compared with after two years’ employment which is the current position). This is likely to result in: a more procedural approach to dismissals more disputes with employees who are exited more employees being offered a financial package under a settlement agreement more data subject access requests as employees seek information |
Companies that have or develop: stronger performance management cultures and/or stronger recruitment processes are more likely to be able to mitigate the effects of this change. | |
Good/Bad Leaver arrangements eg in Articles of Association, LTIP or option schemes, or contracts of employment, should be reviewed. The changes to the law will make it less desirable to base Leaver categorisation on the issue of whether termination of employment has been unfair. | |
A modified unfair dismissal regime may apply during the first three to nine months of employment, but full details have not yet been published. | |
“Fire and rehire” restrictions Wider obligation to carry out collective consultation about redundancies | These changes may impact restructuring exercises, particularly in multi-site businesses eg: they will make it more difficult to impose new terms and conditions on employees (individually or collectively) they will extend the scope of consultation required for large redundancy exercises |
Protections for zero hours workers and others | Workers on “insecure” contracts will get new rights to: guaranteed hours of work notice of shift changes compensation for failure to give the required notice |
Businesses whose workforce contains workers on zero-hours or similar types of contracts are likely to face: an increase in fixed costs as workers obtain guaranteed hours more disputes about notice of changes and compensation for failure to give notice greater administration in navigating the complex, process-heavy statutory provisions that will implement these new rights | |
Some businesses are likely to look at altering their staffing model or even their business model in response to the new rights. | |
Trade union access rights | Trade unions will have the right to get a foot in the door of many businesses by making a request for access to the workforce for a wide range of purposes. |
If a voluntary access arrangement is not agreed, the union can start proceedings in the Central Arbitration Committee with a view to obtaining one. | |
Industrial action | The requirements for trade unions wishing to take industrial action will be reduced: the requirement for at least 50% of union members to vote in a ballot will be abolished ballots may be conducted electronically the advance notice that unions must give to companies about industrial action will be reduced to 7 days from 14 days |
The legislation that imposed minimum service levels in certain sectors during industrial action will be repealed. | |
Protection for employees who take industrial action will be extended. | |
Leave rights | Employees will be entitled to parental leave and paternity leave from the beginning of their employment. The current qualifying service requirement will be abolished. A right to a week’s bereavement leave will come into force. |
Sexual harassment | Companies will have wider obligations to prevent sexual harassment: they must take all reasonable steps to prevent sexual harassment by employees they must not permit a third party to sexually harass an employee |
Dismissal during pregnancy/after family leave | Enhanced protection will be introduced. |
Flexible working requests | The threshold for refusing a request will be raised: refusal will need to be “reasonable” as well as being for one of the proscribed statutory grounds. |
Reporting obligations | Companies with 250 or more employees in Great Britain will be required to: publish an Equality Action Plan publish information about the outsourced service providers with which they contract |
Extended time limit for employees to bring claims | This will increase to six months for all statutory employment claims – currently it is three months for most claims eg unfair dismissal, discrimination, whistleblowing, deduction from wages. |
This will extend the period during which a pre-litigation settlement can be agreed and is likely to increase the pressure to exit employees via settlement agreements in order to achieve certainty. | |
New enforcement body | The Fair Work Agency will be established, bringing together enforcement powers that currently lie within various bodies. |
