The Employment Rights Bill was introduced to Parliament on 10 October 2024, representing the biggest change to UK employment law since the 1990s. Delivering on its promise to introduce legislation within 100 days of coming into power, the new Labour government’s Bill proposes new and enhanced employee rights, makes provisions regarding pay and conditions in specified sectors, and reforms aspects of trade union conduct and industrial action. However, the Bill also rows back on several campaign pledges and stalls the implementation of some of the more complex proposals, such as ethnicity and disability pay gap reporting and the shift toward a two-part framework for employment status.
The Bill’s provisions are not expected to come into effect before 2026. Many of the requirements also depend on secondary legislation, the outcome of consultation, and codes of practice. The government has also explicitly said that reforms of unfair dismissal will take effect “no sooner than Autumn 2026.” Nonetheless, it is critical for employers to understand the implications these changes might have for their businesses.
We summarise below the Bill’s key points as well as comment in more detail about some of the more notable provisions. We also highlight which of Labour’s original proposals will likely form the subject of separate consultation processes beyond the scope of the Bill.
Topic |
Details |
New “Day 1” rights |
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Zero-hours workers |
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Flexible working |
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Sexual harassment |
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Third-party harassment |
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Pregnancy discrimination |
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Collective redundancies |
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Fire and re-hire |
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Trade unions |
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Equality action plans |
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Enforcement |
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Unfair Dismissal – A ‘Day 1’ Right?
Employees currently need two years’ continuous service to bring an ordinary unfair dismissal claim. Employers therefore have a degree of flexibility when it comes to terminating an employee’s employment within the first two years. The Bill removes this qualifying period, thereby ensuring that the right not to be unfairly dismissed begins on an employee’s first day of employment.
While in theory employers will therefore need to carefully consider their obligation to dismiss for a fair reason and carry out a fair procedure in all dismissal cases, the government plans to consult on a statutory nine-month probationary period, referred to in the Bill as the “initial period of employment.” Within this initial period, a “lighter-touch” and “less onerous” dismissal process will apply that employers will need to follow to dismiss an employee who is not considered suitable.
In this new initial period, the Bill provides that modifications will be made to the existing obligations concerning procedural and substantive fairness, provided that the reason for dismissal falls within categories that will be familiar to UK employers (i.e., capability, conduct, statutory restriction and some other substantial reason, but not redundancy). Subsequent regulations will clarify what those modifications entail and the meaning of the “initial period of employment.” The government has already suggested that this “lighter-touch” process would necessitate a meeting with the employee to explain the performance concerns.
We expect that many employers will reflect on and strengthen their probationary practices going forward considering the enhanced unfair dismissal protections provided for by the Bill. Employers should note now, however, that their ability to dismiss lawfully during a probationary period will likely be curtailed in comparison to present circumstances once the proposed statutory probationary period framework is in force. As explained above, the government has clarified that the unfair dismissal reforms will not come into effect any sooner than autumn 2026 and the current two-year qualifying period continues to apply until such time.
Flexible Working
Delivering on Labour’s promise to improve employees’ ability to work remotely by making flexible working arrangements the default where practical, the Bill modifies the current statutory flexible working framework with the intention of ensuring more requests are agreed to. Under the Bill, an employer’s reliance on any of the existing lawful grounds to refuse a flexible working request must now be reasonable. The employer must also state the ground or grounds for refusing the application and why it considers that it is reasonable to refuse the application on that ground or those grounds.
While the changes do require employers to consider flexible working requests more carefully, the lawful grounds on which a request can be refused remains the same and these are wide-ranging. The Bill also states that subsequent regulations may provide for other lawful grounds on which a request can be lawfully rejected. The Bill also does not change the penalty for breaching an employee’s right to flexible working. As such, whether these modifications ultimately result in making flexible working the default in reality remains to be seen.
Liability for Third-Party Harassment
A new obligation for employers to prevent harassment of their employees by third parties is inserted under the Bill into the Equality Act 2010. An employer will be considered to have permitted a third party to harass its employees where an employee has been subjected to harassment by a third party during the course of their employment and the employer is deemed to have failed to take all reasonable steps to prevent the third party from harassing the employee.
This provision will be particularly important for employers whose employees regularly interact with third parties due to the nature of their business. Such high-risk sectors include those in which it is common for employees to have public-facing roles, such as the retail, leisure and hospitality sectors, the transport sector, and industries which regularly engage third-party contractors, such as construction. These types of employers will likely have to conduct a harassment risk assessment (amongst other things) if they are to establish that they have taken all reasonable steps to prevent third-party harassment.
In our experience, this is a compliance gap in many organisations’ harassment-related procedures that will likely need revisiting with this new obligation in mind, as well as the new duty to prevent sexual harassment coming into force later this month.
The Fair Work Agency
The Bill establishes the Fair Work Agency, which shall unite the Gangmasters and Labour Abuse Authority, Employment Agency Standards Inspectorate, and the HM Revenue & Customs team that polices minimum wage. The Bill providers for powers to obtain documents or information, enter business premises to obtain documents, and the retention of documents. Offences for individuals and organisations are established as well as imprisonment and/or fines being potential liabilities for contraventions.
If properly resourced, the Agency could lead to a much more aggressive and interventionist approach to employment law enforcement than is presently the case, presenting disruption for employers across a wide range of industries. While the government has verbally committed to providing such support, it remains to be seen how the Agency will work in practice and whether its unified enforcement powers prove to be a more effective in enforcing employees’ rights against employers.
Following the introduction of the Bill, the government has also set out its vision for implementing its wider Make Work Pay plan. Potential further reforms that could be implemented via means outside of the Bill include the following:
Morgan Lewis lawyers stand ready to assist employers in keeping abreast of these important changes and the applicable implementation timelines to appropriately plan for the impacts such changes could have on their workforce.
If you have any questions or would like more information on the issues discussed in this LawFlash, please contact any of the following: