Employment Rights Bill: What changes can small business owners expect?

Labour have announced a “once-in-a-generation” overhaul of workers’ rights as part of their plan to ‘Make Work Pay’ under the new Employment Rights Bill 2024.

Consultation on the changes will begin in 2025 and changes to law will start in 2026. So, there is a bit of time to get to your head around the changes. But as with anything, good HR practices take time to build.

It’s advisable you start considering the steps you need to take to protect your business now and our Impact Assessment Guide contains lots of information about the various business HR and employee rights proposals which Labour are proposing.

Understandably, it’s a lot for small businesses without dedicated HR support to take on board. So, what changes can small business owners expect and what steps can you start taking now? Let’s break it down…

Removal of the 2-year qualifying period for unfair dismissal

Labour has proposed to give employees’ the new right to unfair dismissal from their first day of employment, removing the current qualifying period of 2 years.

This is still under consultation. But the government are discussing setting a statutory probation period of 9 months. This aims to help employers properly assess an employee’s suitability for a role, while giving workers’ strengthened rights from their first day of employment.

What are the main considerations for employers?

Firstly, recruitment and hiring processes will need to be tightened. Because it will be a lot harder to dismiss employees in their first 12 months of employment, small businesses will need to make sure they’re investing in the right candidate management tools to make sure their skills suit the role long term

New employees should also be given more support in their induction periods including clear objectives

Updates will need to be made to employee handbook, contracts, and the probation and performance management process will need reviewing

Exploitative practices like zero-hour contracts and ‘fire & rehire’ could be restricted or banned

Within the Bill there’s also proposals to ban the use of ‘exploitative’ zero-hours contracts replacing them with a new right for employees to have guaranteed hours if they work regular hours over a defined period.

Similarly, the government is proposing either a restriction on, or outright ban of, ‘fire & rehire’ practices. This refers to the practice of making contractual changes to an employee’s terms and conditions by terminating an employee and then re-hiring them on new terms.

What are the main considerations for employers?

It’s advisable for organisations who use zero-hour contracts to identify how they monitor hours worked, how they can manage a reference period, and assess how many individuals are currently on this kind of contract and whether this is practical

Industries that rely on the ‘fire & rehire’ method will need to make sure they keep ahead of consultations on this topic

The current code of practice remains in place until further notice, so employers still need to pay close attention to the rules until it’s been confirmed they’re changing

For instant, jargon-free advice on complex employment law topics, ask Brainbox: Can I fire and rehire?

Flexible working to become a default right “where practical”

Back in April 2024, flexible working rights were extended giving employees the right to request 2 flexible working requests in a 12-month period from their first day of employment.

Labour is proposing flexible working becomes a default right from day one where this is practical. Business owners should have already put new practices in place to deal with flexible working requests in line with Aprils changes. But should Labour go ahead with this proposal here are a couple of considerations they will need to make. What are the main considerations for employers?

• Flexible working conversations will need to be had earlier in the recruitment process

• Flexible working options must be added into staff handbooks and contracts of employment

• All current flexible working communications, policies, and procedures need to be reviewed

Statutory Sick Pay lower earnings limit to be scrapped along with the 3-day waiting period

Labour is proposing to make Statutory Sick Pay (SSP) a right from day-one of illness and employment. Removing the lower earnings limit band has also been proposed.

Penalties for breaching these rules will be dealt with by Labour’s Fair Work Agency, including failure to pay sick pay from day-one. So, it’s important you understand your legal obligations for employee sick leave and sickness pay.

What are the main considerations for employers?

• Managers and employees must be made aware of the changes

• Policies like absence, attendance, and return to work policies plus employee contracts should be reviewed carefully

• Employers must have an effective sick pay system in place

Need more support on Labour’s Employment Rights Bill?

It can be easy to feel overwhelmed by the sheer amount of changes on the way for small businesses. But don’t worry, BrightHR is here to help!

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