How the Employment Rights Bill’s proposed changes could impact your business

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Since Labour's rise to power, there's been a whirlwind of press coverage about their proposed changes to employment legislation and the ‘plan to make work pay.’ The Government said it planned to introduced the Employment Rights Bill within the first 100 days of the new parliament and as a small or family-owned business, it's crucial to understand the potential impact of these changes.

The measures listed in the Employment Rights Bill 2024 include:

Raising the National Living Wage

Labour is committed to raising the National Living Wage. While this sounds promising for employees, businesses will need to assess how to manage the increased wage bill. For small businesses, this could mean re-evaluating budgets and adjusting pricing strategies to maintain profitability.

Overhauling Universal Credit

Labour plans to replace the Universal Credit system with a new one that allows low-income earners to keep more of their benefits. This change aims to support workers, but it raises questions about the financial implications for taxpayers and businesses. If the National Living Wage is sufficiently high, will there still be a need for such benefits?

Statutory Sick Pay for all

One of the most talked-about proposals is the increase in Statutory Sick Pay (SSP) and its extension to all workers, including the self-employed and those earning below the threshold. This change could significantly impact small businesses, which already face an average annual cost of £3,000 due to sickness absence. The Federation of Small Businesses (FSB) has expressed concerns about the financial burden this could place on small enterprises.

Fair treatment in public sector contracts

Labour intends to award public sector contracts only to businesses that treat their employees fairly, recognise trade unions, and have collective bargaining arrangements. This move could encourage better working conditions but may also require businesses to make significant adjustments to their current practices.

Simplifying worker status

Labour aims to simplify the complex IR35 legislation by creating a single status of worker, except for those genuinely self-employed. This change could bring clarity but also requires careful implementation to avoid confusion and ensure fairness. IR35 was introduced in 2000 and still there are many court and tribunal cases to try and determine status.

Flexible working from day one

This measure would grant workers the right to flexible working from day one of employment. While flexibility can benefit employees, businesses must balance this with operational needs. The proposed ban on zero-hour contracts, although potentially softened, could also impact how businesses manage their workforce.

Ending "fire and rehire"

The reforms would end the practice of "fire and rehire," where businesses terminate contracts and rehire employees on new terms. While this protects workers, businesses must retain the ability to adapt terms and conditions to survive and thrive in a competitive market.

Ensuring work-life balance

The Government wants to ensure a better work-life balance by introducing the "right to switch off," preventing employers from contacting workers outside of working hours. While this respects personal time, businesses must consider how to manage urgent situations effectively.

Supporting pregnant workers and new parents

The proposals would extend rights for pregnant workers and those returning from maternity leave. These changes, already supported by previous legislation, aim to create a more inclusive and supportive work environment.

As these changes unfold, it's essential for small and family-owned businesses to stay informed and prepared in order to adjust to the evolving landscape of employment legislation.