By George Miller, employment law specialist at national law firm Roythornes Solicitors (www.roythorne.co.uk)
The Employment Rights Bill marks one of the most significant overhauls in UK employment law in recent history. Aimed at strengthening workers’ rights, the Bill introduces a wide range of changes that will impact both employers and employees across multiple industries.
George Miller, has highlighted some of the key changes and how businesses can prepare.
Promoted by the government under the slogan ‘Make Work Pay,’ the Bill is designed to improve job security, enhance workplace protections and ensure fairer treatment of employees. While workers stand to gain greater rights, many employers – particularly smaller businesses – are expressing concerns over the administrative burden and legal risks associated with these new laws.
There is no confirmed implementation date yet, but the government aims to pass the Bill within the next few months. To the relief of many, most changes will not take effect immediately, giving businesses time to adjust.
With stronger protections for workers on the horizon, the big question remains, how will businesses adapt to these challenges?
Key changes – what do employers need to know?
While adjustments to the Bill may still occur before its implementation, several key proposals stand to have a major impact on businesses.
Zero-hour and low-hour contracts
Under the new Bill, zero-hour contracts won’t be banned, but they will certainly become harder to manage. Employers will be required to offer guaranteed hours to anyone who worked regular hours during a 12-week reference period, meaning those employees would be entitled to continue those hours.
At the same time, businesses will face penalties for short notice shift cancellations, though the penalty amount hasn’t yet been defined. This could create difficulties in industries like hospitality, where last-minute changes are common and the need for workers can quickly disappear. For many businesses, this might mean overhauling booking systems or introducing cancellation fees – tasks that could be tricky to manage, particularly for smaller firms.
There’s also the issue of tracking work patterns. Employers will need to assess each employee’s hours every 12 weeks, which could lead to more administrative work – something many small and medium-sized businesses may struggle to handle without the proper resources.
The good news for some workers, however, is that if they prefer the flexibility of zero-hour contracts, they can still opt to stay in them.
Unfair dismissal and tribunal risk
Currently, employees must work for at least two years before they can claim unfair dismissal. Under the Bill, this qualifying period will be removed, meaning employees will be able to make a claim from day one. To counter this, the government will make it easier for employers to dismiss for conduct or performance during the first nine months.
For small businesses, this could lead to more tribunal battles as many struggle to meet increased legal obligations.
Redundancy law
The Bill also brings tougher rules for redundancy following the P&O Ferries redundancy scandal in 2022. If employers fail to follow the correct collective consultation procedures, they’ll face much higher protective awards – up from 90 days’ pay to 180 days’ pay per employee.
For large-scale redundancies involving 20 or more employees, the consultation process will need to be carefully managed to avoid severe financial penalties. Non-compliance will not only be costly, but could also lead to reputational damage. With tribunals now able to issue larger protective awards, businesses will need to tread carefully in this area.
Sexual harassment
One of the more significant changes is the new legal duty for employers to take “all reasonable steps” to prevent sexual harassment in the workplace, including harassment from third parties such as customers. This means industries like hospitality and retail, where customer interactions are frequent, will face additional compliance pressures.
For employers, this will mean more proactive measures, including staff training on anti-harassment policies. Failing to take these steps could lead to legal risks, so businesses will need to act swiftly and consistently.
Sick pay
The Bill proposes removing the current three-day waiting period before statutory sick pay kicks in. This change, while beneficial to workers, will increase costs for employers. However, the sick pay rate itself will remain unchanged.
The impact on hospitality sector employers
With all these changes nearing, the compliance challenge will likely be front of mind, especially for small businesses that lack the internal legal support to navigate complexities. Larger firms may be able to absorb the impact of these changes, where smaller businesses might find it more difficult to adapt.
The hospitality industry will likely face significant challenges because of these changes. For example, with the removal of the two-year service requirement for unfair dismissal claims, businesses in this high-turnover sector could see more claims from employees who have only been in the job for a short time.
The tribunal system is already under strain, and with the expected rise in claims, it could quickly become overwhelmed. Additionally, hospitality employers will need to take more care in ensuring they are addressing harassment from customers, which could mean more staff training and acknowledgement of greater responsibility.
Preparing for an uncertain future
While the Employment Rights Bill has good intentions, its complexity and depth is expected to place considerable strain on businesses. The key for employers will be to act now – reviewing contracts, HR policies and internal procedures to ensure they’re ready when the Bill comes into effect. Seeking legal advice is vital, as failure to comply with these new rules could lead to costly legal battles, reputational damage and uncertain futures.
While there is still uncertainty about how some provisions will play out in practice, such as those surrounding zero-hour contracts, one thing is clear – businesses that fail to prepare risk falling behind in this new legal landscape.