The UK Government announced the introduction of the Employment Rights Bill on 10 October 2024. If you are dealing with payroll, you will appreciate that anything employment law-related has the potential to impact ways of working.
The publication of the Bill was expected and should not have caused a great deal of surprise. It was promised during the General Election campaign and is the legislation that will put, not place, the proposals in the Labour Party’s ‘Make Work Pay’ document.
However, it received much media attention which was not always correct or comprehensive. Visionary Accountants’ Payroll Services Department has written this article to provide clarification of certain important points.
Action for employers
The Employment Rights Bill has been introduced into the House of Commons and it is from here that it will start its legislative progress through to Royal Assent. It is only at the point the Bill receives Royal Assent that this becomes legislation and, even then, the provisions may apply at some time in the future. Many of the Bill’s provisions will be subject to consultation and this will allow businesses of all sizes to put forward their views before the legislation is effective.
In terms of clarifications for employers:
- Our St Albans based payroll team will keep you advised of changes as and when they will impact you
- In this regard, the legislative process and the consultations mean the provisions will not be effective in 2024 or 2025. For employment issues that impact payroll, for example, reforms to Statutory Sick Pay (SSP), it is usual that these are effective from the start of a tax year. Where they do not impact payroll but do impact employers, it is usual that these are effective in the autumn. We are not looking any sooner than 2026, PLUS
- This is a Great British piece of legislation. Just because the Bill has started in Westminster does not mean the changes will apply UK-wide. Employment law is a devolved function to Northern Ireland which poses the ‘issue’ that there may be differences if the Great British Employment Rights Bill is not mirrored. Such is the case with the planned SSP reforms meaning we have SSP working one way in Great Britain and another way in Northern Ireland
It is right that employers be vigilant about the progress of this piece of legislation. It is not right that the same people are, perhaps, receiving incorrect information and our payroll team hope the above has clarified things for you.
Further information
Below is the unashamedly pro-government summary on gov.uk which you can take as you find:
- Legislation introduced in Parliament to upgrade workers’ rights across the UK, tackle poor working conditions and benefit businesses and workers alike
- Ahead of International Investment Summit, government reveals landmark reforms in under 100 days to boost pay and productivity, showing the benefits of a ‘pro-business, pro-worker’ approach
- New balance for early months of a job at heart of pragmatic reforms to help drive growth in the economy and support more people into secure work
- Employment Rights Bill will end exploitative zero-hour contracts and unscrupulous fire and rehire practices, while establishing rights to bereavement and parental leave from day one
Today (10 October) 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.
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.
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.
Small businesses need to stay informed
More than ever, small businesses, including our local clients in St Albans and Watford, need to stay informed. Make sure to speak to your local accountant and payroll team regularly. If they aren’t reaching out to you with updates on important legislative changes, it may be time to consider changing your accountant. For busy payroll departments, consider outsourcing to Visionary’s payroll team. Not only will we keep you informed, but we will also ensure that your business is properly set up for future changes when they become law.