The Employment Rights Bill, introduced to Parliament on 10th October 2024, is a big first step in Labour’s Plan to Make Work Pay.
This new legislation brings in important changes to strengthen worker protections, including updates to unfair dismissal rules, flexible working requests, and sick pay entitlements.
As large organisations navigate increased scrutiny around compliance and operational adjustments, it’s essential to grasp the key aspects of the bill and how they might impact your business.
Below, we’ll highlight the main takeaways for large employers and outline what you need to consider moving forward.
Key changes and considerations
1. Day one rights: unfair dismissal
Key changes:
- With the new Employment Rights Bill, workers would be able to claim unfair dismissal from their very first day on the job, eliminating the previous two-year waiting period.
Main considerations:
- This change raises the stakes for large organisations, as employees would be able to file dismissal claims without needing to complete a two-year period.
- To reduce the risk of legal disputes, HR departments should focus on having strong and well-documented dismissal processes right from the start.
- Employers might also want to rethink their onboarding and probationary procedures to help navigate these new challenges effectively.
2. Zero-hour contracts
Key changes:
- Workers who regularly log a set number of hours would have to secure guaranteed-hours contracts based on their average hours over a 12-week period.
- Employers would also have to give reasonable notice for shift changes and compensate workers for last-minute cancellations.
- This new approach would replace the previous “right to request” with a solid right to guaranteed hours, helping to fulfil Labour’s commitment to end “exploitative” zero-hours contracts.
- Workers would still have the option to remain on zero-hours contracts if they prefer.
Main considerations:
- For large organisations, especially within retail and hospitality, the new guaranteed-hours rights introduce operational changes.
- Companies will need systems to monitor hours over 12-week periods, manage an expected increase in guaranteed-hours requests fairly, and possibly update workforce planning tools.
- Enhanced scheduling and shift management, along with provisions for last-minute shift changes or cancellations, will be key to balancing compliance with the need for workforce flexibility.
3. Flexible working
Key changes:
- Since 6th April 2024, employees have had the legal right to request flexible working from their first day on the job. With Labour's new change, flexibility will no longer just be an option; it will become the default, “where practical.”
Main considerations:
- Large organisations will need to adapt their operations to make flexible working the standard practice. This means reviewing current policies to ensure compliance and figuring out when flexibility can realistically be offered.
- Refusals of flexible work requests will need valid, justifiable reasons, which will increase the workload for HR teams.
- Additionally, companies should provide training for managers on how to assess and document these requests effectively while clearly communicating their decisions.
4. Sick pay
Key changes:
- The bill introduces two key changes to Statutory Sick Pay (SSP): it removes the £123 weekly earnings threshold, extending SSP eligibility to all workers, and eliminates the three-day waiting period, making SSP payable from the first day of illness.
Main considerations:
- These changes will significantly expand coverage of SSP. While this enhances employee support, large organisations will need to adapt their absence management systems and update policies to ensure compliance, which may lead to higher operational costs.
- Effective management of sickness absence will be crucial, requiring clear procedures for reporting and documentation. Training for HR and managers will also be essential to help them navigate the new rules and communicate changes to employees.
- By monitoring absence trends and fostering open communication about SSP, organisations can enhance employee wellbeing and maintain a supportive workplace culture during these transitions.
5. Parental and bereavement leave
Key changes:
- The bill brings significant improvements for pregnant employees and new mothers by extending dismissal protections for up to six months after they return to work.
- It also eliminates the qualifying period for both paternity leave and unpaid parental leave, meaning employees can access these benefits right from their first day.
- Plus, a week’s bereavement leave will become a statutory right from day one.
Main considerations:
- Large organisations must update their leave policies to accommodate new protections for pregnant employees and new mothers, including six months of dismissal protection after returning to work.
- With paternity and parental leave now available from day one, along with a week's statutory bereavement leave, more employees will likely utilise these benefits.
- This shift requires effective communication, manager training on leave requests, and adjustments in workforce planning to ensure adequate coverage, ultimately fostering a supportive company culture.
6. Fire and rehire
Key changes:
- The new bill aims to restrict "fire and rehire" practices, where employers dismiss employees and rehire them under less favourable contracts or replace them with new hires on inferior terms.
- Under this legislation, it will be deemed automatically unfair to fire employees who refuse contract changes.
- However, exceptions will exist for businesses on the verge of collapse, allowing them to adjust terms if it could prevent closure—a provision that has sparked concern among unions.
Main considerations:
- This change is particularly important for large organisations undergoing restructures or attempting to implement contract changes.
- HR teams will need to develop clear strategies for negotiating contract variations with staff, avoiding the use of dismissal as a fallback.
- Legal teams may also need to be involved earlier in the process to ensure compliance with these new regulations.
How GoodShape can support you
The Employment Rights Bill brings some important updates for large organisations and is estimated to cost businesses nearly £5bn per year.
At GoodShape, we know navigating new legislation can be complex—especially around SSP changes.
By getting a clear view of your team’s absence patterns and preparing proactive policies, you can keep absence costs in check while staying compliant. Our tools, like the absence cost calculator, can help you understand the financial impact and get ahead of any challenges.
Ready to see how we can support your team? Request a demo today, and let’s keep your workforce healthy, engaged, and prepared.