“The government has promised an overhaul of worker’s rights which the Bill does deliver in some respects. Day one unfair dismissal rights, the statutory process for probationary periods and the complexity that surrounds the use of zero hours workers will all place additional costs on employers who will have to get to grips with these changes. Hopefully, this complexity will be simplified and employers will be given time to understand the rules before any changes take effect. Whilst there are concerns that employment tribunals will, if not already, become overwhelmed, the formation of the Fair Work Agency may lighten the load given its wide remit. This must be carefully thought through to ensure that employers and workers are treated in accordance with the principles of natural justice when the FWA is exercising its enforcement powers.”
Here are some key points all employers need to be aware of from the Bill:
1. There is time to adapt to these changes
The Bill still needs to go through the parliamentary process before becoming legislation, but with the Government having a large majority, it’s unlikely to face much resistance, which may speed up its passage. There may still be tweaks though if the changes are subject to further consultation, and there are no set dates for implementation yet.
2. Costs of labour will increase
Statutory sick pay will now become a day one right, and the lower threshold limits won’t apply. This will increase costs for employers with high rates of sickness absence and will mean that payroll systems and HR processes will need to be updated to ensure compliance. Employers also need to watch out for regulatory enforcement by the Fair Work Agency (FWA) which will increase compliance costs.
3. Dismissal processes will need an overhaul
The right to bring an unfair dismissal claim will become a day one right rather than needing two years’ service. However, there will be a statutory procedure for probationary periods during which the right won’t apply. There are set timeframes to enact, with employers probably having six months to make their minds up, and further procedural steps to follow. This could bring us back to the days of the statutory disciplinary procedure which caused a real headache for employers due to its inflexibility, and may put recruitment decisions on hold for some employers. It will require a root and branch review of dismissal and probationary procedures to ensure that processes, documentation and policies are adapted to mitigate risks. People teams and line managers must also understand what will be required under this new statutory probationary period.
4. Zero hours won’t be banned, but employers must offer guaranteed hours and pay compensation for late cancellations
ln what will be a major mindset shift for employers, workers must be offered the right to guaranteed hours of work if certain qualifying conditions are met. Employers will also face penalties for the late cancellation of shifts. The rules are complex, accounting for over 20 pages of the Bill. Inevitably, this will likely lead to businesses rethinking their labour supply where they currently rely on zero hours workers. The unintended consequence may be an increase in the use of employment agencies for the supply of temporary labour or the use of short-term contracts – neither of which solve the one-sided flexibility the government is concerned about.
5. Regulatory enforcement and reporting requirements will mean employers taking greater care with compliance
The government is proceeding with its plan to introduce a FWA which has the power to enforce National Minimum Wage, holiday pay and statutory sick pay, and tackle modern slavery. To some extent, the framework for the FWA already exists with the regulatory enforcement undertaken by HMRC, GLAA (Gangmasters and Labour Abuse Authority) and the EAS (Employment Agency Standards). However, these agencies will all be brought under one roof, and enforcement officers will have broad powers of inspection to enforce these obligations. Employers with 250 or more employees may also need to publish an action plan soon on how they intend to narrow the gender pay gap, with potential penalties for non-compliance.
6. Family friendly processes will need to be reviewed and updated
With new fathers entitled to paternity leave from day one of employment and mothers given enhanced rights during pregnancy and on their return from maternity leave, family friendly packages and procedures will need an overhaul. Reward and benefit packages must be compliant and fit for purpose in light of the changing demands from the multi-generational workforce.
7. Modifications to the duty to prevent sexual harassment will place greater responsibility on employers
The new duty to prevent sexual harassment comes into effect from 26 October 2024 and will affect all employers. Currently, the obligation on employers is to take reasonable steps to prevent workers from sexual harassment in the workplace. However, the Bill upgrades the requirement so that the employer must take all reasonable steps to prevent sexual harassment and includes the acts of third parties within this obligation. This change will place an even greater burden on employers and will mean that risk assessments must be revisited in the near future to ensure all risks are captured and the necessary steps to mitigate them are implemented.