The Government has recently published proposed new measures in the Employment Rights Bill 2024. In this first draft, some of the more noteworthy suggested reforms are to zero-hours contracts, sick pay, leave entitlements and workers’ rights.
This is the first phase of the Government’s plan to ‘Make Work Pay’ and while it is just the initial parliamentary reading, many are already calling this Bill ‘chaotic.’
Among the whopping 305 bullet points, which fall under the European Convention on Human Rights Memorandum, there are a number of proposed changes that could impact employers, should they pass through the required phases before coming into law. Below is just a small sample of some of the highlighted changes the Government hopes to pass through:
Rights to reasonable notice and payment for shift changes
The Bill aims to ensure employers tighten up on zero hour contracts (although this isn’t new as the previous government also wanted employers to follow a code of practice).
Employers will have to provide reasonable notice of shifts to workers on zero-hours contracts and other specified low-hour contracts.
Workers will be entitled to payment if their shifts are cancelled, moved, or curtailed at short notice, unless an exception applies.
Employers must notify workers of any exceptions and provide explanations, ensuring compliance with data protection laws.
Statutory Sick Pay
One of the biggest proposals in the Bill is the intention to remove the Lower Earnings Threshold, create different rates of Statutory Sick Pay (SSP) and remove the three day waiting period. The Bill proposes to:
remove the prohibition on employees earning below the Lower Earnings Limit being entitled to SSP
create a new lower rate of SSP. The new rate of SSP means that employees will be paid the lower of (a) a defined percentage of their normal weekly earnings; and (b) a flat weekly rate (currently £116.75 per week), and;
remove the waiting period for SSP and make it available from day 1 of a sickness absence.
Dismissal during pregnancy and following statutory family leave
This was a Private Members Bill that had already been going through the parliamentary process. It includes:
Extended protection from dismissal to cover the period of pregnancy and a period after returning from maternity leave.
Adoption leave, shared parental leave, neonatal care leave, and extended paternity leave for bereaved parents.
Parental and paternity leave: Removal of qualifying period of employment
Leave entitlements for parental and paternity leave would be brought in line with other statutory entitlements such as maternity leave, removing the requirement for a qualifying period of employment to make these rights available from day one.
Overview
This small selection of highlighted points emphasise the Bill’s focus on enhancing worker protections and entitlements. The Bill provides the definition of zero hours, which could lead to some interesting ideas from business as to how to comply, or not need to comply by doing something else. Furthermore, it introduces a new unfair dismissal right to limit the use of ‘fire and rehire’ or ‘fire and replace’ by employers, and additional changes are to be consulted on regarding the unfair dismissal rights. There are also hints of changes to contractors or deemed workers and perhaps making their entitlement to sick pay and treatment of equal pay to employees.
The Bill aims to ensure that any interference with personal data complies with data protection laws and is justified by legitimate aims, such as protecting workers’ rights and preventing crime.
It also sets out legislation proposing a change from a civil action to criminal action for certain non-compliance. Currently, for example, National Minimum/Living Wage non-compliance is a criminal offence. This Bill looks to make sick pay and holiday pay non-compliance criminal offences, with the latter concerning me greatly as most decisions are based on case law, and holiday pay changes for seasonal workers and zero-hours contracts were only introduced in January 2024 for holiday years from April 2024.
How could the proposed changes in the Employment Rights Bill impact businesses?
The Employment Rights Bill introduces several changes that if passed through, will impact small businesses in various ways. It may bring about positive impacts as the changes set out will improve job security and satisfaction, which could hopefully help increase employee morale and staff retention.
Providing statutory sick pay from the first day of illness may help prevent the spread of illness in the workplace, leading to a healthier and more productive workforce, and enhanced parental and bereavement leave policies could make small businesses more attractive to potential employees, fostering loyalty and reducing recruitment costs. However, these enhanced entitlements along with the proposed requirement to compensate workers for cancelled, moved, or curtailed shifts at short notice, will increase payroll for every employer if the Bill becomes law.
Operational challenges may arise as employers balance guaranteed hours and flexible working requests with business needs. This may be particularly challenging for businesses with fluctuating demand.
If the Bill receives Royal Assent, businesses will need to plan and adapt their operations to comply with the new regulations while maintaining efficiency and profitability. They may need to invest time and resources to understand and comply with the new regulations and there is hope that there will be some form of government support in this area.
Overall, while the Employment Rights Bill aims to create a fairer and more supportive work environment, small businesses will need to navigate the associated costs and administrative requirements carefully. The Government states that with proper planning and potential government support, businesses can adapt to the changes and potentially benefit from a more motivated and stable workforce. The Bill will now progress through Parliament and businesses and unions will be consulted on how the changes could be implemented.
For support and advice regarding your business payroll needs please get in touch.
