The Government is introducing its new Employment Rights Bill to Parliament today, which will implement the plans it outlined in its ‘Make Work Pay’ pre-election platform.

The Employment Rights Bill will still be subject to parliamentary approval. It is therefore not yet clear when the provisions will come into force and we will provide further guidance on exactly how the changes will apply over the coming days and weeks.

Perhaps the most important changes for SMEs are:

• A ban on zero-hours contracts and “firing and rehiring” practices
• Introduce unfair dismissal rights from the first day of employment
• Make flexible working the default position for all employees
• Remove a lower minimum wage for young workers
• Make statutory sick pay available from the first day of absence

Below we present more details on these changes and other measures affecting SMEs:

Ban certain zero-hours contracts

Workers on zero-hours contracts will now be entitled to a guaranteed number of working hours if they work normal hours over a defined period, although they will be able to choose to remain on zero-hours contracts if they wish. . This new right may prove difficult in sectors where employers need to hire workers on a flexible basis, such as hospitality and retail.

A ban on “firing and rehiring” practices

Employers will not be able to fire an employee and rehire them on less favorable terms. Such practices are typically only used by employers as a last resort when there is an urgent need to cut costs to keep their business afloat and will therefore reduce the options available to businesses when the going gets tough.

Make unfair dismissal from day one correct

Currently, employees can only bring a claim for unfair dismissal after two years of employment (subject to very limited exceptions), giving employers a reasonable amount of time to decide whether a new hire is a good fit for the organization and, if not, to let them go without fear of reprisal. Making unfair dismissal possible from day one will mean that employers will have to follow much more onerous procedures before dismissing an employee in the first days of their employment, although the Government is still consulting on the introduction of a period of dismissal. It would be relatively simple to let unfit employees go if they do not perform well during this (limited) period.

Make flexible working the default position

While currently an employee must make a request for flexible working which an employer can only refuse on reasonable grounds, the new legislation will make flexible working a default right, unless an employer can demonstrate that this is not feasible in the workplace. While this means employers can avoid measures such as flexible hours and remote working where this is not possible in their business, the onus will now fall on businesses to justify their stance.

Have the same minimum wage for all workers

Currently, it is possible to pay young workers a lower wage than adults, which encourages many employers to hire young workers and give them a first chance. In the future, employers will need to prepare for all staff to be entitled to the same minimum wage, even those who are not adults, and that this amount is likely to increase to take into account the cost of living.

Increasing the availability of statutory sick pay

Currently, employees must earn a minimum amount before being eligible for statutory sick pay and the entitlement only arises when an employee reaches their fourth day of absence. Reducing the salary cap and removing the waiting period will mean that employers will have to budget for increased salary costs when employees are absent.

Give employees the right to bereavement leave, paternity leave and parental leave from the first day of employment

Employers will need to prepare for the new rules around taking these types of leave and be prepared for the fact that no minimum period of service is required before employees can access the leave.

Strengthening protections against dismissal for pregnant women

While no one would object to pregnant women and those returning from maternity leave not being unfairly discriminated against, sometimes downsizing is necessary, particularly when a business is going through tough times. The new measures risk making this process more expensive when it comes to pregnant employees or those who have just taken maternity leave.

Creation of a new fair labor agency to uphold employee rights

This means that employers will need to exercise caution more than ever to ensure they comply with all their obligations under employment law. At Employment Hero, we are committed to supporting SMEs on this journey every step of the way.

While the above measures undoubtedly represent the biggest change in employment law in decades, the government plans to go even further and is also today publishing a Next Steps document which sets out its plans for the reforms future.

Subject to consultation, this includes:

• A right to stop, preventing employees from being contacted outside of opening hours, except in exceptional circumstances
• Make it mandatory for large employers to declare their ethnicity and disability pay gap
• End the current two-tier system of “workers” and “employees” and introduce a single category
• Review current entitlements to parental leave and carers’ leave

Need additional help?

We get it, keeping up to date with labor law is difficult and takes time. So if you need further help understanding your current or future employment law obligations, our human resources advisory service is here to help. Our HR Advisory service gives you unlimited access to a team of HR experts available to guide you through the maze of rules and regulations.

Let Employment Hero take the anxiety out of staying up to date with the law, so you can focus on what really matters: your people. To find out more, speak to a member of our team today.