The new Labour government has unveiled its Employment Rights Bill. We break down what it contains and how businesses can adapt.
What are its key aims?
Deputy Prime Minister Angela Rayner says it delivers “the biggest upgrade to rights at work for a generation.” It aims to ban exploitative practices and enhance worker rights. It also aims to get the economy moving and create long term growth, with Business Secretary Jonathan Reynolds saying "the best employers know that employees are more productive when they are happy at work."
What new policies does it introduce for all sectors?
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Zero-hour contracts
Labour bans “exploitative” zero-hour contracts. Zero-hour contracts are employment agreements that do not guarantee a minimum number of hours of work. Around one million UK workers are currently on zero-hour contracts, often young people in the service industry.
Those on zero-hour contracts will now have the right to a guaranteed hours contract if they work regular hours over a defined period. Those who wish to stay on a zero hours contact can also choose to do so. The aim is that workers will be able to rely on their wage to a greater degree, providing a basic level of security.
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Ban ‘fire and rehire’ and ‘fire and replace’
Fire and rehire is when employers fire workers, then rehire them with a different contract, when they want to change the terms and conditions. Fire and replace involves hiring new workers to do the same job, for inferior conditions and pay. The government is closing the loopholes that allow these practices to take place.
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Parental leave, sick pay and protection from unfair dismissal from day one for all workers
There are currently qualifying periods for these core rights when an employee starts a new job. The Bill ends these, meaning the rights apply from day one. However, there will still be a nine-month probation period, affecting how easily employers can dismiss workers if they are not the right fit - though this is under review.
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Strengthening Statutory Sick Pay
Currently, Statutory Sick Pay is only paid after the employee has been off sick three days in a row, and is only available to workers earning over a certain limit. This Bill will remove the three-day waiting period and the lower limit, ensuring all employees are paid when sick.
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Make flexible working the default from day one
Employees have been legally able to request flexible working from day one since 6 April 2024. Labour’s change is in making flexibility not just an option to ask for but the default, “where practical”.
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Strengthening protections for new mothers
It will be unlawful to dismiss a woman who has had a baby for six months after her return to work, apart from “specific” circumstances.
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Update trade union legislation
The government will remove some barriers to trade union action. This includes ending the Strikes (Minimum Service Levels) Act that attempts to alleviate disruption caused to the public by prolonged strikes.
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Fair Work Agency
The government will establish an enforcement body called the Fair Work Agency, which will enforce rights such as holiday pay.
What sector-specific legislation will be introduced?
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Establishment of the Adult Social Care Negotiating Body
The Billl will establish the Adult Social Care Negotiating Body, which will bring together trade unions and representatives of social care employers to negotiate on fair pay and terms and conditions.
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Reinstate the School Support Staff Negotiating Body
The last Labour government created the School Support Staff Negotiating Body to give support staff a voice in negotiations and pay, which was scrapped by the Coalition government. It will be brought back now under this Bill.
How will National Living Wage change?
The government plans to change the remit of the Low Pay Commission to take into account cost of living when setting the minimum wage. It will also remove age bands for adult workers - meaning a pay rise for thousands of young workers.
What do Labour’s new employment law proposals mean for business leaders?
Banning zero-hour contracts might increase costs for employers. If they are required to devise staff contracts that promise a fixed regular amount of work, employers will need to plan their resourcing and job costing well in advance. This is difficult when demand is unpredictable and fluctuates, like in retail and logistics, and will need to be considered carefully to avoid under or over staffing.
Costs will also be increased by the changes in statutory sick pay. Sick pay will need to be managed via effective payroll processes, as will parental leave from day one.
Employers also need to consider how flexibility can be introduced.There are ways that even jobs that seem irrefutably on-site can have elements of flexibility added, like the ability to conduct admin tasks and training at home or choose from multiple shift patterns.
How can software help?
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Predicting new employment outgoings
Forecasting job costs will be key when assessing how these new rules will affect your business’s finances. Time & Attendance software has a job-costing functionality that allows leaders to compare planned tasks and budgets to those already achieved – crucial as leaders consider their outgoings and employment budgets following the alterations to zero-hours contracts and introduction of a new National Living Wage.
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Creating new contracts and integrating with payroll
Businesses are also facing the prospect that they will need to create new contracts and payroll structures in alignment with new regulations. Primed to adapt will be those who already have robust, HMRC-recognised Payroll software where it is quick and easy to adjust contracts and ensure they are compliant.
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Enabling flexible working
Strong Time & Attendance software will also help in making the requisite changes to enable flexible working. It will do so by offering flexibility in how time is tracked, streamlining the creation of new rosters and shift patterns, and ensuring time tracking is accessible both remotely and on-site.
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Ensuring compliance with pay changes
National Living Wage and sick pay changes will need to be incorporated into each business’s Payroll function. Robust, HMRC-recognised Payroll software will be updated in line with any changes, giving employers peace of mind that they are up to date with the new regulations.
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Taking the pressure off operational, payroll and HR teams
As all these changes come into force, the members of your team that deal with employment functions and workforce management will be under high stress. Automate tasks such as creating recurring shift patterns over multiple weeks or the repetitive jobs associated with payslip delivery, freeing up time for your team to concentrate on the strategic implications of new employment law.
OneAdvanced provides a host of host of people and workforce management solutions that can help you adapt. These are:
- Performance and Talent – Continuous performance management software
- Time and Attendance – Workforce management with automated rostering software
- Payroll - HMRC-recognised payroll software