Government unveils significant reforms to employment rights

Ministers have unveiled the Employment Rights Bill, introduced within 100 days of the new government coming to office, to help deliver economic security and growth to businesses, workers and communities across the UK.

Getting the labour market moving again is essential to economic growth with one in five UK businesses with more than 10 employees reporting staff shortages. Flexibility, for workers and businesses alike, is key to answering this challenge and is at the heart of the legislation to upgrade the law to ensure it is fit for modern life and a modern economy.

The existing two-year qualifying period for protections from unfair dismissal will be removed, delivering on the manifesto commitment to ensure that all workers have a right to these protections from day one on the job.

The government will also consult on a new statutory probation period for companies’ new hires. This will allow for a proper assessment of an employee’s suitability to a role as well as reassuring employees that they have rights from day one, enabling businesses to take chances on hires while giving more people confidence to re-enter the job market or change careers, improving their living standards.

The bill will bring forward 28 individual employment reforms, from ending exploitative zero hours contracts and fire and rehire practices to establishing day one rights for paternity, parental and bereavement leave for millions of workers. Statutory sick pay will also be strengthened, removing the lower earnings limit for all workers and cutting out the waiting period before sick pay kicks in.

Accompanying this will be measures to help make the workplace more compatible with people’s lives, with flexible working made the default where practical. Large employers will also be required to create action plans on addressing gender pay gaps and supporting employees through the menopause, and protections against dismissal will be strengthened for pregnant women and new mothers. This is all with the intention of keeping people in work for longer, reducing recruitment costs for employers by increasing staff retention and helping the economy grow.

A new Fair Work Agency bringing together existing enforcement bodies will also be established to enforce rights such as holiday pay and support employers looking for guidance on how to comply with the law.

Deputy Prime Minister Angela Rayner said:

This government is delivering the biggest upgrade to rights at work for a generation, boosting pay and productivity with employment laws fit for a modern economy. We’re turning the page on an economy riven with insecurity, ravaged by dire productivity and blighted by low pay.

The UK’s out-of-date employment laws are holding our country back and failing business and workers alike. Our plans to make work pay will deliver security in work as the foundation for boosting productivity and growing our economy to make working people better off and realise our potential.

Too many people are drawn into a race to the bottom, denied the security they need to raise a family while businesses are unable to retain the workers they need to grow. We’re raising the floor on rights at work to deliver a stronger, fairer and brighter future of work for Britain.

Business Secretary Jonathan Reynolds said:

It is our mission to get the economy moving and create the long term, sustainable growth that people and businesses across the country need. Our plan will give the world of work a much needed upgrade, boosting pay and productivity.

The best employers know that employees are more productive when they are happy at work.  That is why it’s vital to give employers the flexibility they need to grow whilst ending unscrupulous and unfair practices.

This upgrade to our laws will ensure they are fit for modern life, raise living standards and provide opportunity and security for businesses, workers and communities across the country.

Alongside the legislation, a ‘Next Steps’ document for the Make Work Pay Plan has been published outlining the government’s vision and long-term plans and setting out our ambitions for the plan to grow the economy, raise living standards across the country and create opportunities for all.

Ending one-sided flexibility

The legislation will level the playing field where all parties understand what is required of them and good employers aren’t undercut by bad ones.

The bill will end exploitative zero hours contracts, following research that shows 84% of zero hours workers would rather have guaranteed hours. They, along with those on low hours contracts, will now have the right to a guaranteed hours contract if they work regular hours over a defined period, giving them security of earnings whilst allowing people to remain on zero hours contracts where they prefer to. According to TUC research nearly two thirds of managers (64%) believe ending zero hours contracts would have a positive impact on their business.

Ending unscrupulous employment practices is a priority for this government and none more so than shutting down the loopholes that allow bullying fire and rehire and fire and replace to continue. The government is closing these loopholes and putting in place measures to give greater protections against unfair dismissal from day one, ensuring that the feeling of security at work is no longer a luxury for the privileged few.

This bill turns the page on the previously ineffective, costly and conflicting approach to dealing with industrial relations that has brought so much disruption to businesses and livelihoods. lt repeals the anti-union legislation put in place by the previous administration, including the Minimum Service Levels (Strikes) Act legislation that failed to prevent a single day of industrial action while in force.

Employment Rights Minister Justin Madders said:

We know that most employers proudly treat their staff well. However, for decades as the world of work has changed, employment rights have failed to keep pace, with an increase in one-sided flexibility slowing the potential for growth in the economy.

The steps we’re taking today will finally right these wrongs, working in partnership with business and unions to kickstart economic growth that will benefit them, their workers and local communities.

From tackling fire and rehire to ending exploitative zero hours contracts, we are delivering a modern economy that drives up living standards for families across the UK.

Supporting working families

Too many people find that the current system isn’t compatible with the realities of everyday life, whether that’s raising children or supporting a loved one with a health condition. The government wants to make sure that everyone can get on in work and not be held back because work isn’t compatible with important family responsibilities.

That is why the government will:

• Change the law to make flexible working the default for all, unless the employer can prove it’s unreasonable.
• Set a clear standard for employers by establishing a new right to bereavement leave, with the entitlement sculpted with the needs of employees and the concerns of employers at the forefront.
• Deliver stronger protections for pregnant women and new mothers returning to work including protection from dismissal whilst pregnant, on maternity leave and within six months of returning to work.
• Tackle low pay by accounting for cost of living when setting the Minimum Wage and remove discriminatory age bands.
• Establish a new Fair Work Agency that will bring together different government enforcement bodies, enforce holiday pay for the first time and strengthen statutory sick pay. It will create a stronger, recognisable single organisation that people know where to go for help – with better support for employers who want to comply with the law and tough action on the minority who deliberately flout it.

Beyond the bill

The Make Work Pay Plan doesn’t stop with this bill. Continuing to reform employment rights in line with changes to the economy and labour market is critical to maintaining growth, prosperity and opportunity. As an outlook to the future, the government has also today published a Next Steps document that outlines reforms it will look to implement in the future.

Subject to consultations, this includes:

• A Right to Switch Off, preventing employees from being contacted out of hours, except in exceptional circumstances, to allow them the rest and get the recuperation they need to give 100% during their shift.
• A strong commitment to end pay discrimination by expanding the Equality (Race and Disparity) Bill to make it mandatory for large employers to report their ethnicity and disability pay gap.
• A move towards a single status of worker and transition towards a simpler two-part framework for employment status.
• Reviews into the parental leave and carers leave systems to ensure they are delivering for employers, workers and their loved ones.