The Employment Rights Bill will still be subject to approval by Parliament, so it’s not yet clear when the provisions will come into force and we will provide further guidance on exactly how the changes will operate over the forthcoming days and weeks.
Probably the most significant changes for SMEs are:
- A ban on zero hours contracts and “fire and rehire” practices
- Introducing unfair dismissal rights from day one of employment
- Making flexible working the default position for all employees
- Scrapping a lower minimum wage for young workers
- Making statutory sick pay available from the first day of absence
We set out more details on these changes, and other measures affecting SMEs, below:
Banning certain zero-hour contracts
Workers on zero hours contracts will now have a right to be given a guaranteed number of hours of work, if they work regular hours over a defined period. However they will be able to opt to remain on a zero hours contract if they wish. This new right may prove challenging in industries where employers need to engage workers on a flexible basis such as hospitality and retail.
A prohibition on “fire and rehire” practices
Employers will be prevented from terminating an employee’s employment and re-engaging them on less favourable terms and conditions. Such practices are generally only used by employers as a last resort when there is a dire need to reduce costs to keep their business afloat and will therefore reduce the options available to businesses when the going gets tough.
Making unfair dismissal a day one right
Currently employees can only bring an unfair dismissal claim after two years employment (subject to very limited exceptions), which allows employers a reasonable period of time to decide whether a new hire is a good fit for the organisation, and if they are not, to let them go without fear of repercussions. Making unfair dismissal available from day one will mean that employers will need to follow much more onerous procedures before dismissing an employee in the early days of their employment, although the Government is still consulting on introducing a statutory probation period which would mean that it will still be relatively simple to let unsuitable employees go if they do not perform well within this (limited) period.
Making flexible working the default position
Whereas, currently, an employee needs to make a flexible working request which an employer can only refuse on reasonable grounds, the new legislation will make flexible working a default right unless an employer can show it’s not feasible in their workplace. Whilst this means employers can avoid measures such as flexible hours and remote working where it isn’t possible in their business, the onus is going to shift to businesses having to justify taking this position.
Having the same Minimum Wage for all workers
Currently it’s possible to pay young workers a lesser wage than adults, which encourages many employers to take on young workers and give them their first break. Going forward, employers will need to be prepared for all staff being entitled to the same minimum wage, even those that aren’t adults, and it is likely to increase to account for the cost of living.
Increasing the availability of statutory sick pay
Currently employees need to be earning a minimum amount before they are eligible for statutory sick pay and the entitlement doesn’t arise until an employee is on their fourth day of absence. Reducing the lower earnings limit and removing the waiting period will mean employers will need to budget for increased wage costs when employees are absent.
Giving employees rights to bereavement leave, paternity leave and parental leave from day one of employment
Employers will need to be prepared for the new rules regarding these types of leave, and be ready for the fact that there will be no minimum period of service required before employees can access the leave.
Strengthening protections against dismissal for pregnant women
Whilst no-one would object to protecting pregnant women and those returning from maternity leave from being unfairly discriminated against, sometimes it is necessary to reduce headcount, particularly when a business faces hard times. The new measures are likely to make it more onerous to do this when this involves pregnant employees and those who have just taken maternity leave.
Establishing a new Fair Work Agency to enforce employees’ rights
Meaning employers will need to take more care than ever before to ensure that they are complying with all their obligations under employment law. Here at Employment Hero, we’re committed to supporting SMEs on this journey every step of the way.
Whilst the measures above undoubtedly represent the biggest change in employment law in decades, the government plans to go even further and is also today publishing a Next Steps document that outlines its plans for future reforms.
Subject to consultation, the proposed changes include:
- A Right to Switch Off, preventing employees from being contacted out of hours, except in exceptional circumstances
- Making it mandatory for large employers to report their ethnicity and disability pay gap
- Ending the current two tier system of “workers” and “employees” and introducing one single category
- Reviewing the current parental leave and carers leave entitlements
This blog post was written by Employment Hero, you can find them in the Software Suppliers area of the website here.
