The Employment Rights Bill has been published and it contains wide ranging reforms for employment law. From much publicised changes to the right to claim ordinary unfair dismissal, the ability of employers to use ‘fire and rehire’, changes around zero hours contracts and new / amended rights to support employees to access things such as statutory sick pay and time off work in some circumstances, there’s much to talk about.
With that in mind, here’s a few key headlines:
- Most of the reforms won’t take effect until 2026
- We don’t have a full picture yet – regulations will also be needed to provide the underlying detail for a number of the changes
- The government will undertake consultations on many areas covered in the Bill and it’s anticipated that this will start in 2025
In this, the first of our two Legal Updates on the Employment Rights Bill, we will be focussing on some of the key changes in relation to dismissals as this has understandably been an area of concern for many businesses.
- Unfair dismissal qualifying period
- Stronger protection from dismissal for pregnant employees
- Ability to fire and rehire significantly curtailed
- Collective redundancy requirements to apply in more cases
Unfair dismissal qualifying period
As you are likely already aware, currently employees need two years qualifying service for an ordinary unfair dismissal claim. Under the Bill this will be removed making ordinary unfair dismissal a ‘day one right’.
However, businesses will be able to dismiss a new employee during their probationary period a bit more easily, using a ‘light touch procedure’ if the ground for the dismissal is conduct, capability, statutory illegality or some other substantial reason – redundancy is excluded.
Whilst the length of the probationary period will be decided after further consultation, the government’s preference is nine months. The termination date could then be up to three months after the probationary period provided notice of termination is given during the probationary period.
In terms of what exactly businesses will need to do if they wish to safely dismiss a new employee during the probationary period, this isn’t yet clear. In their document ‘Next Steps to Make Work Pay’, when talking about poor performance the government says “as a starting point, [they are] inclined to suggest it should consist of holding a meeting with the employee to explain the concerns about their performance (at which the employee could choose to be accompanied by a trade union representative or a colleague)”. The government will be consulting on this area and have also said they will “engage further during the passage of the Bill on how [they] can ensure the probation period has meaningful safeguards to provide stability and security for business and workers”.
It’s also worth noting that the government intends to consult on “what a compensation regime for successful claims during the probation period will be, with consideration given to tribunals not being able to award the full compensatory damages currently available”.
We will keep you updated on developments. In the meantime, it’s likely to come as welcome news to many businesses that this reform won’t take effect before Autumn 2026.
Stronger protection from dismissal for pregnant employees
Protection against dismissal will be strengthened for pregnant women and those returning from maternity leave. The government intends to make it unlawful to dismiss them within six months of their return to work except for in specific circumstances.
Ability to ‘fire and rehire’ significantly curtailed
The Bill will restrict businesses’ ability to ‘fire and rehire’ by making it automatically unfair to dismiss an employee for refusing to agree to a change in their contract of employment.
There will be an exception to this in limited circumstances. That is, if the business can show the reason for the variation is “to eliminate, prevent, significantly reduce or significantly mitigate the effects of financial difficulties which, at the time of the dismissal, were affecting the employer’s ability to carry on the business as a going concern” and in all the circumstances the employer could not reasonably have avoided the need to make the variation.
The reform will make it harder for businesses to safely change employees’ terms and conditions without their agreement. It’s worth bearing in mind that even if the exception does apply to a business’s situation, they will still also need to be able to show that any of the dismissals are fair under ordinary unfair dismissal rules.
Collective redundancy requirements to apply in more cases
As you may already be aware, under the current law businesses proposing to make 20 or more redundancies ‘at one establishment’ within a period of 90 days must go through a process of collective redundancy consultation. This requires employers to comply with additional legal duties such as a minimum redundancy consultation period before redundancies can take effect and consulting appropriate employee representatives.
The Bill removes references to ‘at one establishment’ meaning that businesses would need to count redundancies across all ‘sites’. The effect of this is that more redundancy situations could be caught by the collective redundancy requirements than currently.
Businesses should also be aware that the government has said that they “are committed to consulting on lifting the cap of the protective award if an employer is found to not have properly followed the collective redundancy process”.
We will keep you updated on developments, in the meantime keep your eye out for the second Legal Update on the Employment Rights Bill.
Remember, we are here to help so if you have a HR matter that’s troubling your business please don’t hesitate to get in touch.