Employment Rights Bill amendments signify additional considerations for employers

Jon Fisher and Jonathan Coley, employment law experts at Pinsent Masons, were commenting following the amendment announcement. As stated, when it was originally introduced to parliament, this landmark legislation is designed to increase productivity, improve job security, and foster long-term economic growth.

However, certain elements of the ERB faced criticism, with extensive consultations with business groups, trade unions, and other stakeholders launched in order to identify areas of concern.

Responding to concerns, the government has reportedly decided to abandon the “right to switch off” policy, which would have allowed employees to ignore work-related communications outside of office hours. The decision was made to alleviate concerns from businesses about the financial impact and potential strain on operations.

However, employers may be disappointed to see that changes announced yesterday do not roll-back from the headline proposals of unfair dismissal protection as a ‘day one’ right, or complex provisions relating to zero-hours and low-hours workers. There is clarification that the ‘initial period of employment’, a quasi-probation period during which a lighter touch dismissal process will be possible, will run from month three to month nine of employment.

Following several consultations, the government has now set out a number of changes to its original plans impacting on areas including zero-hour contracts, statutory sick pay, the historically controversial fire and rehire practices, industrial relations, and establishment of a Fair Work Agency. 

The ERB introduces stricter regulation of zero-hour contacts, aiming to provide workers with more predictable and stable working hours. The changes announced yesterday will see agency workers included in these protections – they will now have to be offered a contract guaranteeing a minimum number of working hours per week. The actual number of hours is still to be confirmed. The amendments also include provisions for agency workers to receive better notice of shift changes and proportionate pay for shifts that are cancelled or moved at short notice. Apportionment of liability for payment is set out in the new provisions too.

Amendments to statutory sick pay (SSP) will make it more accessible for workers, ensuring that they can take necessary time off without the loss of income. Under the new amendments, lower-wage employees, including those earning below the lower earnings limit of £123, will be entitled to sick pay of 80% of their wages. This will be implemented following regulations, so is not likely to be introduced before 2026. SSP for other employees is set to increase to £118.75 per week from £116.75 from April. The ERB will also remove the ‘waiting days’ for SSP, and SSP will become payable from day one of absence.

Fisher said: “The removal of the SSP waiting days could prove costly to employers. It will place a greater emphasis on management of persistent short-term absence. The establishment of the Fair Work Agency will increase the importance of getting pay right first time. Currently some employers may take a risk-based approach when it comes to complex calculations such as holiday pay, reasoning that if challenged they can just pay the arrears. The agency’s new powers will mean that that will no longer necessarily hold true.”

Significant changes to the proposed Fair Work Agency have also been announced. The Fair Work Agency will have expanded powers to take strong action against employers who exploit their workers. This includes applying penalties for any underpayments including underpayment of holiday pay and even taking action in the employment tribunal on behalf of workers if they do not raise a claim themselves. The agency will also provide better support for businesses that aim to comply with the new regulations, with a stated aim of taking a balanced approach benefitting both workers and employers.

Fisher said: “Although the figures payable in relation to sick pay may not seem high in relation to individuals, employers in sectors such as hospitality and retail will be concerned about the increasing cost to the bottom line. The enforcement powers of the Fair Work Agency are also really weighty – it will have teeth.”

The ERB addresses the controversial practice of fire and rehire, setting out to enhance employee protection. The amendments include guidelines for handling dismissal and re-engagement, and a provision which makes void any imposed change to terms and conditions  if collective consultation obligations are not complied with.

In addition, the government decided to increase the maximum period for protective awards in cases of collective redundancy from 90 to 180 days. Its initial consultation had explored the idea of leaving this uncapped. This represents 180 days of “actual pay”, no weekly cap applies. The extension is aimed at greater financial security for workers facing redundancy and seeks to ensure that employers adhere to proper consultation processes.

“Whilst the decision not to proceed with uncapped liability will be welcomed by employers, the doubling of potential protective awards may well lead to employers facing an increase in speculative claims in this area,” said Coley.

One of the government’s major aims is to create a modern framework for industrial relations. The response to its consultation on this topic gives some news around industrial action that employers could take as a positive response. Firstly, the ERB will be amended so that trade unions will have to give ten days’ notice of industrial action, rather than the seven days which was initially envisaged. This is still a reduction from the current 14 days’ notice.

Additionally, the repeal of the minimum 50% industrial action ballot turnout threshold will be implemented at a later date, rather than coming in automatically two months after Royal Assent. With a likely timeframe for Royal Assent of the ERB still forecast for July, that would have meant the reduction in the ballot threshold coming into force potentially by September or October.

However, the response also indicates more potentially onerous provisions from an employer perspective. Following ballot, a mandate for industrial action will remain live for 12 months, up from the current six months. The changes will also allow trade unions access to workers, both physically and, potentially, digitally, subject to further consultation, with a proposal for employers to allow trade unions space on the platform they use to communicate digitally with employees.

Coley said: “These changes will not only impact on those employers with existing trade union relationships but on employers where there are a number of trade union members, and the trade union sees an opportunity to grow its support base.”

Steps will also be taken to make it more difficult for an employer to rely on a ‘sweetheart’ union deal. Even where an employer has voluntarily recognised a non-independent union, an independent union would still be able to apply for recognition, subject to the usual requirements including around balloting. Employers will also have a period of only 20 working days in which to agree an access agreement following a request for access – a pretty short period within the usual timeframe for employer-union discussions.