Dignifying or a 'fudge'? New worker rights ban zero hour contracts and give unions teeth back

Business Secretary Jonathan Reynolds said the Employment Rights Bill “will raise the minimum floor of employment rights, raise living standards across the country and provide better support for those businesses who are engaged in good practices.”

Proposals include banning zero hour contracts, further enshrining flexible working policies, ending ‘fire and rehire’ and toughening up how sexual harassment in the workplace is dealt with.

The CBI said ministers deserved credit for engaging with employers and unions on the Bill, which also includes improvements to parental leave and sick pay.

CBI chief executive Rain Newton-Smith said: “Politicians and businesses have a shared goal in wanting to raise living standards through higher levels of growth underpinned by investment and increased productivity.

“The Government deserves credit for its willingness to engage with businesses and unions on how to make a success of the Plan to Make Work Pay.

“With a number of critical details still subject to consultation, it’s important the Government builds on the good engagement to date to ensure we get the detail right on this decisive piece of legislation.”

Scotland’s leading business chief also welcomed the broad thrust of the proposals but cautioned against potential unintended consequences and yet further increases in costs.

Scottish Chambers of Commerce Chief Executive, Dr Liz Cameron CBE, said businesses are already implementing many of the principles of the new government’s bill, providing enhanced conditions and offering flexible working models. She emphasised that all potential changes need to be proportionate and sensible to accommodate all sizes and sectors of our economy.

“While the Scottish Chambers of Commerce is supportive of improving conditions and rights for staff we need to ensure there isn’t an unsustainable legislative and bureaucratic burden. And the Bill needs to ensure there is no increase in costs at a time when many are already struggling with higher wage bills and escalating costs.

Cameron added: “Employment rights should be good for employees and business and that means being practical and relevant to the workplace. Many of our 12,500 members rely on zero hours contracts to provide staff and the business the flexibility to cater for employees’ lifestyle and business needs. The Bill needs to offer opt-outs for those that don’t want a fixed hours contract.”

“Introducing employment rights from day one fails to take cognisance of the workplace reality where both employee and employer need to be able to be the right fit for each other and the role. Having probation periods are key to providing timely assessments and for taking decisions – on both sides.

“The proposed new rights to a tribunal access from day one will inevitably lead to more settlement agreements to avoid a lengthy and costly tribunal process, placing more burdens on businesses. All of this comes at a time when businesses are being held back by the inability to recruit experienced and skilled staff and the expense of securing and retaining them in a highly competitive market.

John Grant, an employment law specialist at Scottish law firm Wright, Johnston & Mackenzie LLP, said: "The Employment Rights Bill 2024 is a major step in improving worker protections across the UK, with the government calling it the biggest upgrade of worker’s rights in a generation.

"By removing the qualifying period for maternity leave and making sick pay accessible from day one, we are creating a fairer, more inclusive workforce where no one is left behind due to illness or family responsibilities.

"The measures to limit exploitative zero-hours contracts will also provide greater security to employees, ensuring that regular work means regular rights.

“This is a strong move towards safeguarding the dignity of workers and promoting workplace equality."

Workplace body Acas similarly welcomed the government’s focus on improving workforce relations.

Acas Interim Chief Executive Dan Ellis said: “It is good to see workplace relations taking centre stage today. Well-managed workplaces with good relations are more productive, more profitable, more resilient, and more likely to contribute to economic growth.

“We have already been engaging with the government and listening to employers and employees, drawing on our unique expertise and experience to inform thinking on the legislative programme.

“We will continue to work with the government and key stakeholders to support businesses and their staff to prepare for new regulations.”

But Jo Mackie, partner and leading employment lawyer at Burlingtons, tempered the view that the bill is entirely positive for workers and firms.

Mackie said: "The bill does make provision to cancel the two year probationary period for dismissal; however the government has committed to a consultation period before implementation. That does not make it a ‘day one’ right as advertised. It looks like a fudge by Labour and unscrupulous employers will be lobbying hard to get ‘day one’ extended, perhaps to several months.

“The Bill as proposed is good for business and, at best, so-so for workers. Bosses will be sighing with relief. The absence of a ‘right to disconnect’ tells its own story. Workers have been given the odd sweetener, such as the right to request flexible working. The only measure with teeth are the changes to zero hours contracts. The Bill does not make ground-breaking advances in workers rights as Labour had promised."

Nikki Slowey, co-founder and director of Flexibility Works, a social business that supports Scottish employers to create effective flexible working, said: “Today marks an important step in the right direction for workers and employers. The benefits of flexible working, such as improved wellbeing, recruitment, retention and productivity, are well documented, and are clearly good for businesses as well as people.

“We look forward to seeing more detail on how flexible working will become the ‘default’ in due course. In the meantime, we’ll continue supporting employers to make positive changes and we’re confident that good employers have nothing to fear in this new legislation.”

What is in the new Employment Rights Bill?

The Government has published the Employment Rights Bill, promising the biggest overhaul in workers’ rights in a generation.

Some measures have already been announced, such as changing the Low Pay Commission’s remit to take into account the cost of living for the first time.

Other measures in the Bill include:

– Introducing powers to create a Fair Pay Agreement in the adult social care sector.

– Reinstating the School Support Staff Negotiating Body.

– Reinstating and strengthening the two-tier code for public sector contracts, ensuring that employees working on outsourced contracts will be offered terms and conditions no less favourable to those transferred from the public sector.

– Paying Statutory Sick Pay from the first day of absence rather than the fourth, and removing the lower earnings limit to make it available to all employees.

– Bringing together the various agencies and bodies that enforce employment rights into a new Fair Work Agency, described as a simplified and strengthened system to protect workers and ensure justice in the workplace.

– Strengthen the rights of trade union representatives and bring “archaic and prohibitive” trade union legislation into the 21st century.

– Multiple measures will be brought forward to protect workers from dismissal and blacklisting for trade union activity, ensure workers understand their right to join a trade union, to simplify the statutory recognition process, and bring in a new right of access for union officials to meet, represent, recruit and organise members in workplaces.

– The Bill will repeal the Strikes (Minimum Service Levels) Act 2023 and the Trade Union Act 2016.

– Increase the likelihood of a request for flexible working arrangements to be granted.

– Introduce day one entitlement to paternity leave and unpaid parental leave, and introduce a statutory entitlement to bereavement leave.

– Require large employers to produce action plans on how to address gender pay gaps and support employees through the menopause, as well as strengthening rights for pregnant workers and new mothers.

– Day one protection from unfair dismissal, while allowing employers to operate probation periods.

– Increasing protection from sexual harassment in the workplace.

– End unscrupulous fire and rehire and fire practices.

– Strengthening rights and requirements for collective redundancy consultation.

– Ban exploitative zero hours contracts.

– Other measures, such as the right to switch off, aimed at stopping employers contacting staff out of hours, are included in a so-called next steps document for future discussion and consultation.