Government unveils most significant reforms to employment rights
Ministers have unveiled the Employment Rights Bill to help deliver economic security and growth to businesses, workers and communities across the UK.
- Legislation introduced in Parliament to upgrade workers’ rights across the UK, tackle poor working conditions and benefit businesses and workers alike
- Ahead of International Investment Summit, government reveals landmark reforms in under 100 days to boost pay and productivity, showing the benefits of a ‘pro-business, pro-worker’ approach
- New balance for early months of a job at heart of pragmatic reforms to help drive growth in the economy and support more people into secure work
- Employment Rights Bill will end exploitative zero-hour contracts and unscrupulous fire and rehire practices, while establishing rights to bereavement and parental leave from day one
Today (10 October) ministers have unveiled the Employment Rights Bill, introduced within 100 days of the new government coming to office, to help deliver economic security and growth to businesses, workers and communities across the UK.
Getting the labour market moving again is essential to economic growth with one in five UK businesses with more than 10 employees reporting staff shortages. Flexibility, for workers and businesses alike, is key to answering this challenge and is at the heart of the legislation to upgrade the law to ensure it is fit for modern life and a modern economy.
The existing two-year qualifying period for protections from unfair dismissal will be removed, delivering on the manifesto commitment to ensure that all workers have a right to these protections from day one on the job.
The government will also consult on a new statutory probation period for companies’ new hires. This will allow for a proper assessment of an employee’s suitability to a role as well as reassuring employees that they have rights from day one, enabling businesses to take chances on hires while giving more people confidence to re-enter the job market or change careers, improving their living standards.
The bill will bring forward 28 individual employment reforms, from ending exploitative zero hours contracts and fire and rehire practices to establishing day one rights for paternity, parental and bereavement leave for millions of workers. Statutory sick pay will also be strengthened, removing the lower earnings limit for all workers and cutting out the waiting period before sick pay kicks in.
Accompanying this will be measures to help make the workplace more compatible with people’s lives, with flexible working made the default where practical. Large employers will also be required to create action plans on addressing gender pay gaps and supporting employees through the menopause, and protections against dismissal will be strengthened for pregnant women and new mothers. This is all with the intention of keeping people in work for longer, reducing recruitment costs for employers by increasing staff retention and helping the economy grow.
A new Fair Work Agency bringing together existing enforcement bodies will also be established to enforce rights such as holiday pay and support employers looking for guidance on how to comply with the law.
Deputy Prime Minister Angela Rayner said:
This government is delivering the biggest upgrade to rights at work for a generation, boosting pay and productivity with employment laws fit for a modern economy. We’re turning the page on an economy riven with insecurity, ravaged by dire productivity and blighted by low pay.
The UK’s out-of-date employment laws are holding our country back and failing business and workers alike. Our plans to make work pay will deliver security in work as the foundation for boosting productivity and growing our economy to make working people better off and realise our potential.
Too many people are drawn into a race to the bottom, denied the security they need to raise a family while businesses are unable to retain the workers they need to grow. We’re raising the floor on rights at work to deliver a stronger, fairer and brighter future of work for Britain.
Business Secretary Jonathan Reynolds said:
It is our mission to get the economy moving and create the long term, sustainable growth that people and businesses across the country need. Our plan will give the world of work a much needed upgrade, boosting pay and productivity.
The best employers know that employees are more productive when they are happy at work. That is why it’s vital to give employers the flexibility they need to grow whilst ending unscrupulous and unfair practices.
This upgrade to our laws will ensure they are fit for modern life, raise living standards and provide opportunity and security for businesses, workers and communities across the country.
Alongside the legislation, a ‘Next Steps’ document for the Make Work Pay Plan has been published [available here – link to when available] outlining the government’s vision and long-term plans and setting out our ambitions for the plan to grow the economy, raise living standards across the country and create opportunities for all.
Ending one-sided flexibility
The legislation will level the playing field where all parties understand what is required of them and good employers aren’t undercut by bad ones.
The bill will end exploitative zero hours contracts, following research that shows 84% of zero hours workers would rather have guaranteed hours. They, along with those on low hours contracts, will now have the right to a guaranteed hours contract if they work regular hours over a defined period, giving them security of earnings whilst allowing people to remain on zero hours contracts where they prefer to. According to TUC research nearly two thirds of managers (64%) believe ending zero hours contracts would have a positive impact on their business.
Ending unscrupulous employment practices is a priority for this government and none more so than shutting down the loopholes that allow bullying fire and rehire and fire and replace to continue. The government is closing these loopholes and putting in place measures to give greater protections against unfair dismissal from day one, ensuring that the feeling of security at work is no longer a luxury for the privileged few.
This bill turns the page on the previously ineffective, costly and conflicting approach to dealing with industrial relations that has brought so much disruption to businesses and livelihoods. lt repeals the anti-union legislation put in place by the previous administration, including the Minimum Service Levels (Strikes) Act legislation that failed to prevent a single day of industrial action while in force.
Employment Rights Minister Justin Madders said:
We know that most employers proudly treat their staff well. However, for decades as the world of work has changed, employment rights have failed to keep pace, with an increase in one-sided flexibility slowing the potential for growth in the economy.
The steps we’re taking today will finally right these wrongs, working in partnership with business and unions to kickstart economic growth that will benefit them, their workers and local communities.
From tackling fire and rehire to ending exploitative zero hours contracts, we are delivering a modern economy that drives up living standards for families across the UK.
Supporting working families
Too many people find that the current system isn’t compatible with the realities of everyday life, whether that’s raising children or supporting a loved one with a health condition. The government wants to make sure that everyone can get on in work and not be held back because work isn’t compatible with important family responsibilities.
That is why the government will:
- Change the law to make flexible working the default for all, unless the employer can prove it’s unreasonable.
- Set a clear standard for employers by establishing a new right to bereavement leave, with the entitlement sculpted with the needs of employees and the concerns of employers at the forefront.
- Deliver stronger protections for pregnant women and new mothers returning to work including protection from dismissal whilst pregnant, on maternity leave and within six months of returning to work.
- Tackle low pay by accounting for cost of living when setting the Minimum Wage and remove discriminatory age bands.
- Establish a new Fair Work Agency that will bring together different government enforcement bodies, enforce holiday pay for the first time and strengthen statutory sick pay. It will create a stronger, recognisable single organisation that people know where to go for help – with better support for employers who want to comply with the law and tough action on the minority who deliberately flout it.
Beyond the bill
The Make Work Pay Plan doesn’t stop with this bill. Continuing to reform employment rights in line with changes to the economy and labour market is critical to maintaining growth, prosperity and opportunity. As an outlook to the future, the government has also today published a Next Steps document that outlines reforms it will look to implement in the future.
Subject to consultations, this includes:
- A Right to Switch Off, preventing employees from being contacted out of hours, except in exceptional circumstances, to allow them the rest and get the recuperation they need to give 100% during their shift.
- A strong commitment to end pay discrimination by expanding the Equality (Race and Disparity) Bill to make it mandatory for large employers to report their ethnicity and disability pay gap.
- A move towards a single status of worker and transition towards a simpler two-part framework for employment status.
- Reviews into the parental leave and carers leave systems to ensure they are delivering for employers, workers and their loved ones.
Responding to the government’s initiative, these businesses and employee groups have said:
Shirine Khoury-Haq, CEO of the Co-op, said:
We support the Government’s ambitions to strengthen rights for workers and value the co-operative approach to involve employers in the reforms. As the UK’s largest consumer co-operative, Co-op has long supported colleagues to have good working lives, with policies like our leading bereavement leave, day one right to request flexible working arrangements, and menopause support already in place. The positive impact of these policies is clear to see.
Being able to support colleagues when they need it, and in particular women, parents and carers, helps retain valuable talent and makes good business sense. We look forward to continuing to work with Government to make work pay and to deliver economic growth.”
Paul Nowak, TUC General Secretary, said:
After 14 years of stagnating living standards, working people desperately need secure jobs they can build a decent life on.
Whether it’s tackling the scourge of zero-hours contracts and fire and rehire, improving access to sick pay and parental leave, or clamping down on exploitation – this Bill highlights the Government’s commitment to upgrade rights and protections for millions.
Driving up employment standards is good for workers, good for business and good for growth. While there is still detail to be worked through, it is time to write a positive new chapter for working people in this country.”
Jane van Zyl, CEO at Working Families, said:
As campaigners for better rights for working parents and carers, we’re pleased there is hope on the horizon for the millions who stand to benefit from the transformational changes in the proposed Employment Bill.
Establishing workplace rights from day one and making flexible working the default could be the key to unlocking labour market mobility, with the promise of getting the economy moving and ensuring parents and carers are not held back in their careers. In addition, we welcome any strengthening of legislation that helps protect pregnant women and new mothers against losing their jobs unfairly at a vulnerable time in their lives.
The proposals in the Plan to Make Work Pay have the potential to remove barriers in the workplace, give a better start for new parents and reduce gendered roles in caring. The message it sends that worker’s rights matter, and the willingness to address inequalities, is very promising.”
Simon Roberts, Chief Executive of Sainsbury’s, said:
As one of the UK’s largest employers we put our colleagues at the heart of everything we do. We see the clear link between engaged, motivated colleagues and business performance and that is why we have increased colleague pay by over 50% in the last 5 years.
We share the Government’s vision of making work pay, enabling growth and driving productivity. We welcome today’s announcement and Government engagement with business to date and look forward to seeing progress on business rates reform, which would deliver real benefits for our colleagues, customers and communities.”
Peter Cheese, Chief Executive of CIPD, the professional body for HR and Learning & Development professionals, said:
We share the Government’s ambition to raise employment standards and job quality through the Employment Rights Bill as part of the wider Make Work Pay agenda.
The changes being proposed represent the greatest update in employment legislation in decades. We’re pleased to see the ongoing commitment from Government to engage with the business community to work through the important details to ensure they have a positive impact for both employers and workers.”
Jemima Olchawski, CEO of Fawcett Society, said:
Today’s draft employment bill is a win for women. Fawcett and our members have campaigned long and hard to see government chart a new course for inclusive economic growth and to improve women’s working lives. We share this government’s ambition to ensure all women can thrive at work and fully contribute to the economy.”
Mark Reynolds, Mace Group Chair and Chief Executive, said:###
Ensuring British workers are supported with strong employment rights benefits everyone – employers as well as employees. This package of reforms is a welcome insight into the Government’s plans and show that they have engaged extensively with businesses and taken a pragmatic approach. We’re pleased to support it; both on behalf of Mace and the wider construction industry. We look forward to working closely with the Government as they take these plans forward.”
Brian McNamara, CEO of Haleon, said:
It is crucial that the Government continues to engage with the business community on such an important piece of legislation and we welcome the dialogue to date. Haleon is committed to creating an inclusive culture that provides all employees with equal opportunities. This is central to our company strategy and will be core to our future success.”
Greg Jackson, CEO of Octopus Energy, said:
In formulating these proposals it’s clear that the government has listened to both workers and employers to create protections against bad practices while enabling good businesses to invest in growth and training. For example, the probation period will allow progressive employers to give a chance to people without typical experience or educational backgrounds, opening up new opportunities for them in great careers.”
Chris O’Shea, CEO of Centrica, said:
As the largest Unionised workforce in the energy sector, we are pleased to see the Government publish their landmark legislation providing more rights and flexibility to employees.
At Centrica, we offer a range of policies to support our 21,000 colleagues including flexible working and health and wellbeing support from day one, a leading 10 days paid carers policy, our Pathway to Parenthood which offers comprehensive financial support towards fertility treatment alongside paid leave to for any fertility, adoption or surrogacy appointments, and additional support for neurodivergent colleagues. It’s the right thing to do and we want to help our employees and share best practices with others. Our experience shows that there is a clear business case for doing this with savings from increased retention and ensuring colleagues don’t have to take unplanned absences.”
Helen Dickinson OBE, CEO of the British Retail Consortium, said:
As the country’s largest private sector employer, employing three million people, the industry stands ready to work with government to ensure these reforms are a win:win for employers and colleagues, and maximise employment opportunities, investment, and growth. Many of the expected provisions, including stopping exploitative contracts and offering flexibility in employment, are things that responsible retailers already do. Introducing these standards for everyone means good employers should be competing on a level playing field. We look forward to engaging the government on the details, including around seasonal hiring and the use of probation periods.”
Kate Nicholls, CEO of UKHospitality, said:
I’m pleased the Government has recognised the importance of flexibility to both workers and businesses. This is crucial for hospitality, which employs 3.5m people and provides countless flexible roles for working parents, students, carers and many more.
We look forward to continuing our engagement and consultation with the Government on its plans, which are not without cost, to get the details right for all parties.”
BT Group spokesperson, said:
BT Group believes that a strong economy is one that works for everyone, and has already adopted many of the measures that will be covered by this legislation. It will be crucial to get the details right, to avoid unintended consequences and keep the UK competitive, and we welcome the constructive, consultative approach that the Government is taking.