The Employment Rights Bill, which gives effect to the government’s Make Work Pay programme, is currently before Parliament. So, we are getting more and more details about what the new legislation means for businesses. The government recently published its Next steps to make work pay guidance document which provides further information on how the Make Work Pay reforms will work.

Many details of exactly how the new laws will work will be provided in regulations or codes of practice which will fall under the new legislation. The government is currently consulting on a number of issues before deciding exactly how to implement the new laws. So we don’t yet have a complete idea of ​​how the changes will work.

What we do know is that the majority of the changes to the Employment Rights Bill will not come into force until 2026, so employers will have a reasonable amount of time to prepare for the changes .

In this three-part blog series, we take an in-depth look at some of the most significant changes proposed by the bill.

Unfair dismissal, a right from day one

One of the most important changes under the Labor Rights Bill is to make unfair dismissal a right from day one, which means that employees can claim unfair dismissal from the first day of employment. This differs from current law in that employers must generally wait until they have at least two years’ service before they can claim unfair dismissal.

To address employers’ concerns that this change will now require them to follow onerous and bureaucratic redundancy procedures, even for new employees who are clearly not a good fit for the organization, the legislation provides that employers will be able to follow a redundancy procedure modified or slight. -affect the dismissal procedure during an employee’s “initial period of employment”.

The initial period of employment will in effect create a legal trial period during which the light dismissal procedure can be followed.

The precise details of the implications of this light dismissal procedure will be set out in the regulations and subject to consultation. However, the government has indicated in its next steps document that any procedure should at least involve setting up a meeting with the employee to explain their concerns about their performance and giving them an opportunity to respond before they are terminated.

Similarly, the length of what is considered an “initial period of employment” will be defined in the regulations and is subject to consultation, but in the Next Steps document the government has suggested that in its view this period should be of 9 months. .

Interestingly, there is no mention that a light-touch procedure can be followed in the case of dismissal of employees due to redundancy. It would therefore seem that one of the effects of making unfair dismissal a right from the start could be that employers are obliged to follow a full dismissal procedure even when an employee has short seniority, in order to avoid the risk that the employee will be able to claim unfair dismissal.

Contrary to some previous suggestions, it is clear that the initial right to unfair dismissal only concerns employees. Workers still cannot claim unfair dismissal.

Making unfair dismissal a right from the outset is likely to be worrying for employers, as it would add a significant additional administrative burden for an employer wishing to dismiss a newly hired employee. Our advice for preparing for this change is to ensure your company has robust procedures in place for underperformance and terminations.

Restrictions on fire and rehiring

Firing and rehiring occurs when an employer fires an employee and rehires them under less favorable terms, such as lower pay or less attractive hours.

New legislation aims to restrict these practices. However, rather than completely banning firing and rehiring practices, the new laws will severely limit the situations in which firing and rehiring can take place, meaning it will only be acceptable to do so “where there is truly no alternative.”

The law will operate in such a way that it will automatically be unjust to fire an employee and rehire them on less favorable terms, or fire them for refusing to agree to modify their employment contract, subject to a limited exception.

The exception will be where the employer can demonstrate financial hardship and demonstrate that it must amend the contract to resolve those financial hardships which would otherwise affect the viability of the business. This will be a very high threshold for an employer to meet.

We understand that firing and rehiring practices are typically only implemented when companies are forced to make difficult personnel decisions to maintain financial viability. Although the Government has not yet clarified what constitutes ‘evidence of financial difficulty’, we hope that the legislation will not be applied so strictly that businesses experiencing genuine financial difficulties are not prevented from negotiating changes of their general conditions with their employees in order to stay. afloat.

Collective dismissals

Currently, wIn the event that an employer proposes to carry out massive layoffs of 20 or more employees in an establishment, within 90 days or less, he must consult all the representatives of the employees concerned on his proposal and also inform the secretary of the company. ‘State.

Changes to the Employment Rights Bill will mean employers will need to consult collectively when proposing to make 20 or more employees redundant within 90 days or less, overall of the company, regardless of where they are based. They will also be required to inform the Secretary of State.

Conclusion

With so much change on the horizon for business owners, it’s an anxious time. However, the good news is that business owners have until 2026 to understand and prepare for these changes.

If you’re having trouble understanding what the new laws mean for your business or how to organize in advance, talk to our HR Consulting Team. Or keep an eye out for our next blog in this series, we will cover limiting the use of zero hours and low hours contracts, the requirement to provide reasonable notice before shifts and sexual harassment.