Background

Arguably one of the most difficult stated aims in Labour’s New Deal for Working People was its move to ‘ban exploitative zero hour contracts.’

Whilst the term ‘zero hour contract’ has no strict legal definition (and certainly the use of casual labour with no guaranteed working hours is far from a new phenomenon), in recent years the increase in such arrangements under the ‘gig economy’ has led the term to becoming synonymous with the idea of unscrupulous employers taking advantage of vulnerable, low-income workers.

In a laudable attempt to try and slay this employment law dragon, the new Employment Rights Bill introduces a number of new concepts that it hopes will protect staff working under these types of arrangements.

It’s worth noting that the provisions do not currently apply to agency workers, but this is a matter for ongoing consultation.

Guaranteed working hours

The new law will create an obligation to offer workers contracts which include a set number of guaranteed hours which ‘reflect’ the hours they have actually worked over a specific reference period. This will mean employers will not be able to engage staff to work lots of hours without guaranteeing a proportion of those hours under a contract.

The right will apply to those workers who are working under a ‘zero hours’ arrangement or a low number of minimum guaranteed hours. The Government has yet to confirm what amounts to a worker with low guaranteed hours and where this threshold lies will have a huge impact on which arrangements will be affected.

The reference period over which a worker’s hours are calculated is likely to be 12 weeks based on the consultation documents to date but is yet to be confirmed. It’s also unclear how calculating subsequent reference periods will be dealt with.

The offer of guaranteed hours must also set out the pattern of days and times during which those guaranteed hours will be available, conceivably allowing workers to enjoy more predictable working patterns.

Any offers made must form a permanent change to the workers terms and conditions, unless specific exemptions apply. This includes where there is only a temporary need for the worker in question.

If a company fails to make offers to its workers when the right arises, those workers will be able to bring a tribunal claim and most commentators think that compensation will be based on the guaranteed hours that should have been offered.

There are real concerns that if the regulations are too complicated then they simply will not be used (much like the current shared parental leave provisions).

Reasonable notice of shifts

The law intends to make sure workers are given ‘reasonable’ notice, both of their shift patterns and changes to their shift patterns. A minimum notice period will be introduced though what will amount to ‘reasonable notice’ has yet to be defined. The law also starts with a presumption that if the required minimum notice is not given then any notice was not reasonable, unless the contrary is shown.

Where reasonable notice is not given, workers can bring a claim for compensation and such compensation will be the amount the tribunal considers just and equitable in all the circumstances to compensate the worker for any financial loss attributable to the unreasonable notice, subject to a cap (to be specified in regulations).

The level at which any compensation is capped is likely to have a material impact on whether companies will comply with the regulations or just choose to accept any additional financial burden for non-compliance.

Compensation for cancelled shifts

Closely linked to  the above, the law intends to make sure workers are given compensation if they have their shifts cancelled at ‘short notice.’ It also applies when shifts are moved or shortened.

How much compensation will be awarded and what amounts to ‘short notice’ is still to be defined. Most commentators best guess at what ‘short notice’ will be is 7 days and this is already the period set out as the minimum notice for when shifts are curtailed or altered rather than cancelled.

Where ‘short notice’ is given, workers can again bring a claim for compensation and such compensation will be the amount the tribunal considers just and equitable in all the circumstances. However, this will not exceed the amount of remuneration the worker would have been entitled to had they worked the original shift as planned. The regulations may specify different payment amounts depending on the length of notice given.

Conclusion

As ever, and in line with probably the majority of the changes under the Employment Rights Bill, the devil will be in the detail but certainly it won’t be long before employers who operate with more flexible workforces will have a lot more to think about. The changes are expected to be in force some time in 2026.

At the very least, those employers will need to review their current arrangements, consider how to implement more considered and more predictable shift planning, as well as potentially budgeting for additional operating costs.

If you’re a business and would like more information about this issue, please contact Stephen Mutch stephen.mutch@pannonecorporate.com

Published prior to this year’s general election, Labour’s Plan to Make Work Pay, made it clear that a Labour government wanted to strengthen trade union powers. With the publication of the Employment Rights Bill, we have a clearer understanding of the government’s proposed reforms. In this article we look at those changes that will be of most interest to employers.

Background

Prior to the election Labour stated that its aim was to “update trade union legislation so it is fit for a modern economy, removing unnecessary restrictions on trade union activity and ensuring industrial relations based around good faith negotiation and bargaining”.

The previous Conservative governments had introduced the Trade Union Act 2016, the Minimum Service Levels (Strikes) Act, and Conduct of Employment Agencies and Employment Businesses (Amendment) Regulations 2022. This legislation introduced a number of significant changes including:-

• minimum turnout requirements for industrial action ballots
• greater obligations on trade unions prior to industrial action
• time limits on the mandate ballots give for industrial action
• the ability of the government to make regulations providing for minimum service levels during strike action in “relevant services” e.g. railway services, NHS, and border security, and,
• removal of the prohibition on employment businesses supplying replacement workers to employers during industrial action.

In opposition Labour vowed to revoke this legislation. As it was, the removal of the prohibition on providing replacement workers during industrial action was found to be unlawful in 2023 so it was not necessary to revoke this legislation. However, whilst the new Bill removes the Minimum Service Levels (Strikes) Act in its entirety, it does not completely revoke the Trade Union Act 2016

Overview

In short it could be said that the proposed reforms in the Bill are designed to make it easier for trade unions to gain formal recognition in a workplace and generally make the regulatory environment more favourable to unions, make it easier for unions to conduct industrial action ballots and gain a mandate from members for industrial action, and to provide greater protection for employees involved in trade union activity or industrial action. Some of the reforms are more relevant to trade unions and outside the scope of this article but the key changes that will be of relevance to employers are:

• The Bill proposes changes that should make it easier for trade unions to gain access to workplaces and ultimately gain formal recognition within the workplace, by setting out a formal (and complicated) process for requesting access to a workplace.
• The Bill also strengthens the existing right to reasonable paid facility time for union representatives to carry out their duties, and requires employers to provide union representatives with reasonable access to facilities such as office and meeting space and internet/intranet access to enable them to carry out their duties or undergo training.
• A new statutory right for trade union equality representatives to take reasonable time off during working hours to carry out their equality related activities.
• The previous government had introduced a requirement that for a ballot to mandate industrial action there was a requirement that at least 50% of the eligible members must have voted. There was also an additional requirement that in “important public services” that in addition to the 50% turnout requirement, at least 40% of those entitled to vote must have voted in favour of industrial action. The Bill will revoke this requirement, meaning a simple majority of those that choose to vote in a ballot is required to approve industrial action.
• A reduction in the period of notice a trade union must give an employer of industrial action will be reduced from 14 to 7 days, which returns to the position prior to 1 March 2017.
• The ability of the Secretary of State to set minimum service levels for “relevant services” will be revoked.
• The Government intends to consult on simplifying the amount of information that unions are required to provide in industrial action notices.
• The Trade Unions Act 2016 provided that a mandate for industrial action following a ballot would automatically expire six months from the ballot date (or nine months if agreed by the union and employer). The Bill does not propose to repeal this provision but the Government is consulting on whether the time limit should be extended from six to 12 months.
• Prior to this year an employee was protected from dismissal for taking lawful industrial action but there was no protection against a detriment short of dismissal. Following a Supreme Court decision earlier this year this was found to be unlawful. As such the Bill inserts a new section that will provide employees with protection from detriment (short of dismissal) for taking industrial action.
• The Bill simplifies the rules which determine when a dismissal for taking industrial action will be unfair. These current rules depend on whether the industrial action was unofficial or official and, if official, whether it was protected or not. The Bill simplifies the rules meaning an employee will be automatically unfairly dismissed if the reason for their dismissal is that they took protected industrial action.

 Comment

A number of these changes take us back to the pre-2017 position and other changes are in line with arguments the unions and Labour have made for many years. However, the Bill will also revoke some of the more controversial changes made by recent Conservative governments.

When the changes come into force it is likely that trade unions will in the first instance use them to promote union membership within the workplace, with a view to gaining recognition. Formal recognition requires the employer to engage in collective bargaining with unions about pay and other terms of employment, which Labour sees as a positive step towards “increased cooperation between employers and unionised workers, leading to beneficial outcomes for the economy.”

If you’re a business and would like more information about this issue, please contact Michael McNally Michael.mcnally@pannonecorporate.com

In its pre-election manifesto, Labour’s Plan to Make Work Pay, Labour promised to review the parental leave system within the first year of government to ensure proper support for working families, and to make flexible working the default.  As a start, the Employment Rights Bill includes a number of provisions that expand the scope of existing family leave entitlements and entrench the right to request flexible working.

Bereavement Leave

Currently, only parents who lose a child aged under 18 have a statutory right to take bereavement leave.  The Bill builds on the existing statutory right to Parental Bereavement Leave by providing for a wider entitlement to Bereavement Leave.  This is described in the Government’s Factsheet as a “day one right to protected time off for employees to grieve the loss of a loved one.”

Details of who will be able to take this leave through their relationship to the deceased, and how the leave can be taken, will be opened up for consultation on draft regulations yet to be published.

Leave for losing a child will remain as the current period of two weeks whereas all other Bereavement Leave will be set as one week. Bereaved employees will be able to take leave at any time during the period of 56 days after the death.

Paternity Leave

As promised in the manifesto, paternity leave will become a day one right and may also be taken in addition to and following Shared Parental Leave.  In practice, that means employees will be able to give the required notice of their intention to take leave from their first day in a new job.

Unpaid Parental Leave

The right for an employee to take up to 18 weeks’ unpaid leave during the period up to their child’s 18^th birthday is very rarely used. This will however become a day one right under the Bill.

Flexible Working

Earlier this year, the right to request flexible working became a day one right, enabling employees to request changes to their working arrangements twice a year. Employers are required to handle requests in a “reasonable manner” and must only reject requests for one of eight specified reasons. The current framework allows for a broad interpretation of “reasonableness” provided one of the eight statutory grounds for rejection is met.

Labour’s pre-election promise that flexible working would become the “default” is reflected in the Employment Rights Bill, in the form of a more onerous obligation on employers to justify their rejection of a flexible working request.

Employers may still (and must only) reject requests for one or more of the eight statutory reasons however they will also need to explain why they consider it reasonable to refuse the request based on these grounds. Employers are essentially being asked to show their working out and provide contemporaneous justification for the refusal.

For example, if an employer refuses a flexible working request because it would lead to a “burden of additional costs,” the employer will need to explain the specific nature of those costs and why they consider those costs unreasonable in the context of their business.

The penalty for a breach of the flexible working provisions will remain unchanged at 8 weeks’ pay.

For more information about these issues, please contact Ciara Scanlon – ciara.scanlon@pannonecorporate.com

Following the highly publicised mass dismissal of P&O employees in early 2022, ‘fire and re-hire’ has become an emotive topic and Labour made it part of their manifesto pledge to end unscrupulous fire and rehire tactics and to strengthen collective redundancy rights. That pledge has been unequivocally fulfilled in the provisions of the Employment Rights Bill.

Fire and re-hire

Currently, employers are permitted to dismiss employees who refuse to agree to a change in their contract and offer them immediate re-engagement under a new contract to effect the change. Although uncommon, the threat of ‘fire and rehire’ can be a tactic used by employers to ensure employees agree to necessary changes in their contract.  Dismissals because of a refusal to agree to a change to terms will be fair for ‘some other substantial reason’ provided the employer can demonstrate they have a sound business reason for seeking to change the contract and they have followed a fair process, including consulting and considering alternative options.

The current approach is supported by a statutory Code of Practice, published in July this year, which sets out the minimum requirements for a fair process in these circumstances.

Reform

The Employment Rights Bill makes a significant change to this approach.  Where an employee is dismissed for failing to agree to a change in their contract, or if the employer dismisses an employee to replace or re-engage them on varied contractual terms, that dismissal will be treated as automatically unfair unless:

• the employer can evidence financial difficulties that were affecting, or were likely in the immediate future to affect, the viability of the business as a going concern
• the reason for making the change was to eliminate, prevent, significantly reduce or significantly mitigate the effect of those financial difficulties, and

• the need to make the change in contractual terms was unavoidable.

Even where the employer meets that test, an employment tribunal will still assess whether the dismissal was carried out fairly.  Relevant factors will include:

• whether the employer consulted with the employee, trade union or other employee representatives, and
• whether the employer offered the employee anything in return for agreeing to a variation to their contract.

Comment

The Bill imposes a high threshold on employers wishing to force through changes to contractual terms. Effectively, it will be unfair to dismiss in these circumstances unless the employer’s business is in dire financial straits.

It is worth noting that the new ‘automatically unfair’ reason covers not just employees who are dismissed because of a refusal to sign up to new terms,  but also employees who are dismissed and replaced with someone else who is willing to carry out the same or a substantially similar role on the varied terms.

Collective redundancies

When it comes to collective redundancy rights, the current position is that employers must inform and consult with trade unions or employee representatives if they propose to dismiss 20 or more employees because of redundancy at one establishment in a 90 day period.

The Employment Rights Bill removes the words “at one establishment” from the equation, meaning that employers who make a small number of redundancies at each of a number of sites or units, but where the total number of redundancies is 20 or more, will find themselves having to inform and consult about those redundancies where currently they don’t have to.

For more information about this, please contact Fiona Hamor: fiona.hamor@pannonecorporate.com

One of the most widely discussed Labour proposals before the election was to make the right not to be unfairly dismissed a “day one right” for employees. The Employment Rights Bill stands by this proposal, although it isn’t clear exactly what it will look like in practice. What is clear however is the impact it is likely to have for employers. Currently, only employees with at least two years’ continuous service can bring a claim for ‘ordinary’ unfair dismissal, so by making this a day one right, the Bill widens the pool of potential claimants significantly.

Overview

The headline in the Bill is the repeal of the two-year qualifying period needed to claim ‘ordinary’ unfair dismissal – employees will be able to bring an unfair dismissal claim from the first day of their employment.

Employees will not ordinarily be able to claim unfair dismissal before they have started work, unless the reason for dismissal:

• is one of the automatically unfair reasons currently listed in the Employment Rights Act, such as whistleblowing or trade union activities
• relates to their political opinions or affiliation, or
• is connected with their membership of one of the reserve armed forces.

The Government has always recognised the need for some sort of probationary period so employers can ensure that a job is a good fit for both the employee and the employer, and the Bill provides for an ‘initial period of employment’, during which dismissals may not be subject to the usual requirements of fairness if the reason for dismissal falls within a particular category, such as dismissal for capability, conduct, or some other substantial reason.

The Bill also provides for the repeal of the two-year qualifying period for the right to written reasons for dismissal. Employees will qualify for this right instead after the ‘initial period’.

The length of this ‘initial period’ and the detail of how employers can dismiss fairly during this period is not set out in the Bill but will follow in regulations yet to be published.  We do however have some idea of what the Government is proposing from the Factsheet that accompanies this part of the Bill. The Government proposes that for the first nine months of employment (described as a ‘statutory probationary period’), a lighter touch and less onerous process for businesses to fairly dismiss someone who is not right for the job will apply.

The length of the probationary period and how the lighter touch dismissal process will operate will be the subject of consultation in due course. Most commentators believe that some form of statutory dismissal process will be put in place during the probationary period, for example with a requirement for a meeting at which the employee has the right to be accompanied.

The consultation will also seek views about the unfair dismissal compensatory award regime for dismissals during the probationary period.

Comment

Even if employees can be fairly dismissed within the first nine months of employment by following a straightforward statutory process, they will still have the right to being a claim for unfair dismissal, however unmeritorious.  So, it will inevitably become more risky to dismiss employees with short-service, and we are likely to see an increase in unfair dismissal claims in the employment tribunal. The question is whether the increase in unmeritorious unfair dismissal claims will be offset by a decrease in unmeritorious claims for discrimination, whistleblowing and other automatic unfair dismissal claims – the sort of claims employees without unfair dismissal rights currently lodge with the employment tribunal.

The Government has confirmed that these changes will not be implemented before Autumn 2026. In the meantime, employers would be well advised to look at how they are managing probationary periods at the moment and consider whether recruitment and performance monitoring practices could be improved in order to ensure new recruits are the right fit for the business and the role.

If you’re a business and would like more information about this issue, please contact Lorna Croft – lorna.croft@pannonecorporate.com