Charlie Barnes of RSM UK, head of legal services commented on the Employment Rights Bill after its publication (October 10, 2024): “The Bill delivers in some aspects what the government promised. The day one unfair dismissal right, the statutory probationary period and the complexity surrounding the use of zero hour workers will all add additional costs to employers. This complexity should be simplified, and employers given enough time to learn the rules. The Fair Work Agency’s wide range of responsibilities may ease the burden on employment tribunals, which is a concern. It is important to carefully consider this in order to ensure that the FWA’s enforcement powers are used in a way that respects the principles of natural law.
The Bill contains some important points that all employers should be aware of:
1. You still have time to adapt.
The bill still has to be voted on in parliament before it becomes law, but because the government holds a majority, there is unlikely to be much opposition, and this could speed up the process. The changes may need to be refined if they are subjected to more consultation and there is no date set for implementation.
2. The cost of labour will rise
The lower thresholds will no longer apply to statutory sick pay. Employers with high sickness rates will face increased costs, and payroll systems and HR procedures will have to be updated in order to comply. The Fair Work Agency will also be enforcing regulations, which will result in higher compliance costs.
3. The dismissal process will require an overhaul
It will no longer be necessary to have two years of service before you can bring a claim for unfair dismissal. There will be a procedure that applies to probationary periods, during which this right is not applicable. Employers will have six months to decide and then follow the procedural steps. It could be a return to the rigidity of the old statutory disciplinary procedures, which were a headache for employers. Some employers may even put off recruitment decisions. This will require a thorough review of the dismissal and probationary processes to make sure that policies, documents and procedures are adjusted to minimize risks. Line managers and people teams must also be aware of the new requirements under this new statutory period.
4. Employers must provide guaranteed hours, and compensate for late cancellations.
In a paradigm shift for employers, workers must be given the right to guarantee hours of work if they meet certain conditions. The employers will be penalized for late cancellations of shifts. Over 20 pages of the Bill are devoted to the complex rules. This will inevitably lead to businesses reconsidering their current labour supply, where they rely on zero-hour workers. Unintentionally, this could lead to an increase in temporary workers or short-term contracts.
5. Employers will be more careful to comply with regulatory enforcement and reporting requirements.
The government has decided to move forward with the plan to create a FWA that will have the authority to enforce National Minimum Wage and holiday pay as well as statutory sick leave, and to combat modern slavery. The framework for the FWA is already in place, with regulatory enforcement being undertaken by HMRC (Gangmasters and Labour Abuse Authority), EAS (Employment Agency Standards) and GLAA. These agencies will be consolidated under one roof and officers will have broad inspection powers to enforce the obligations. Employers with more than 250 employees will also be required to publish a plan on how to reduce the gender pay gap. Non-compliance could result in penalties.
6. The family-friendly processes need to be updated and reviewed
Family-friendly packages and procedures need to be redesigned. New fathers are entitled to paternity leaves from the first day of employment, and mothers have enhanced rights both during pregnancy and upon their return from maternity. Benefits and reward packages need to be updated and adapted to the new demands of a multi-generational workforce.
7. Employers will be held more accountable for sexual harassment due to changes in the law.
All employers will be affected by the new duty to stop sexual harassment, which comes into force on 26 October 2024. The current obligation for employers is to take reasonable measures to protect workers from sexual harassment at work. The Bill changes the obligation to include third-party acts in the reasonable steps that employers must take to prevent sexual harassing. This will increase the burden of employers, and they will need to revisit their risk assessments in the near term to make sure that all risks have been captured and that the necessary measures to mitigate those risks are taken.
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