Employment Rights Bill: consultation outcomes and proposed amendments

Zero hours contract measures for agency workers

The Government sought views via this consultation to understand how the right for zero hours workers to receive guaranteed hours which reflect the number of hours worked over a reference period, should work for agency workers.

The Government have confirmed in the outcome to their consultation, that agency workers should be able to access a contract that reflects the hours they regularly work, and also be entitled to the rights to reasonable notice of shifts and to proportionate payment when shifts are cancelled, curtailed or moved at short notice. However, the Government are planning to underpin the new rights by setting these out in Regulations, which will be consulted on, in order to identify the best way to achieve the policy objective of extending rights for agency workers “without causing unintended consequences to employment agencies and hirers.”

As a result of the outcome of the consultation, the Government have confirmed that amendments will be tabled to the Employment Rights Bill (ERB) as follows:

·       The obligation to offer these guaranteed hours will rest with the end hirer. There may be some flexibility to this obligation but this will be set out in secondary legislation.

·       The Secretary of State will be given the power to prescribe in Regulations the form and manner in which an agency worker should receive notice of shifts and any cancellations, curtailments or movements to these. This will not apply to notifications between the hirer and the agency.

·       It will be the responsibility of both the end user and the agency for providing the agency worker with reasonable notice of shifts, shift cancellations and changes. It will be the agency who are responsible for making payments to workers which may become due as a result of curtailment of a shift, movement of a shift or cancelled shifts at short notice – this is due to the fact that the worker will already be on the agency’s payroll.

·       Agencies will be able to recover from the hirer the proportion of payments made to agency workers for short notice cancellations, movement or curtailments that reflects the hirer’s responsibility for cancelling, moving or curtailing the shift at short notice.

·       In the case of pre-existing contracts (which are arrangements made between the employment agency and the hirer which were entered into before a date two months after the ERB receives Royal Assent) legislation will allow agencies to recoup these costs to the extent the hirer was responsible.

As part of the consultation, the Government have confirmed that where work is “genuinely temporary”, employers / hirers will be able to offer temporary contracts. There will be further details on how the measures will work in practice which will be “implemented via secondary legislation”. There will be an option for the zero hours offers to be turned down by a worker, where they would then remain on their pre-existing working arrangement if they wish.

Concerns were raised as part of the consultation responses as what would happen with seasonable or temporary work. The Government will consult on this point, but have reiterated that “businesses will be able to offer temporary contracts where it is a genuine temporary work need.” What does “temporary need” mean? This will be set out in future Regulations.

Concerns were also raised about the requirement for reasonable notice to be given for shifts, as short notice is inherent to agency work. The Government response on this point is that they do acknowledge that in some scenarios “short notice can be reasonable. Significant aspects of this right will be determined in secondary legislation.” We will certainly need further clarification on how this will work in practice.

Remedy for failing to comply with collective consultation obligations

It is interesting that as part of the outcome to the consultation, the Government have acknowledged that the responses of most businesses and their representatives was that the 90 day maximum Protective Award was largely considered to be an effective deterrent to non-compliance with collection redundancy obligations. However, most trade unions argued the opposite, stating that the current framework is too easily abused and there is not an adequate penalty for employers when they breach these Regulations. As a result:

·       An amendment will be proposed whereby the protective award will be doubled from 90 to 180 days where there has been a failure to adhere to collective consultation requirements.  However, it is clarified in the outcome to the consultation that, “Employment Tribunals will continue to have discretion to vary the length of the protected period, up to a maximum of 180 days, as they consider just and equitable, in all circumstances.”

·       The consultation did seek views on if interim relief should be available for employees who brought claims for the protective awards or if an unfair dismissal claim was brought in a fire and rehire scenario. The Government have decided that this will not be introduced. It is acknowledged that this measure would “cause increased pressure on tribunals, employees and employers when taken alongside the other changes proposed in this area.”

As part of the consultation, many organisations highlighted that support would be welcome to ensure compliance with collective redundancy obligations and ensure any legal complexities in the obligations are well understood. The Government have therefore committed to provide guidance to employers on consultation processes for collective redundancies “in due course”.

What impact will this have on the Code of Practice on Dismissal and Re-engagement?

By way of reminder, legislation was passed in 2024 which means in a collective redundancy scenario, where an employer has not followed the Code of Practice on Dismissal and Re-engagement the employment tribunal may apply an uplift in compensation of up to 25% to a protective award if it considers the employer’s failure to comply with the Code was unreasonable, and it considers it just and equitable in all the circumstances to do so.

As part of the consultation response, the Government have confirmed that this provision will remain, so therefore if the 25% uplift is applied, this would mean that the protective award could be increased to the 45 days compared to the current 22.5 days. The Government have commented in the consultation response that their view is “that this combination provides an effective remedy to strengthen compliance with collective consultation obligations. However, it intends to monitor the level of compliance in light of the doubling of the protective award and will consider if further measures are necessary should this prove not be a sufficient deterrent.”

The Government have committed to “gather further views” on updating the Code of Practice on Dismissal and Re-engagement in 2025, to ensure it reflects the changes to fire and rehire made by the ERB.

Creating a modern framework for industrial relations

This consultation was extremely lengthy and contained some quite significant proposals to change industrial relations. As a result of the consultation, the amendments to the Employment Rights Bill which are to be tabled are as follows:

·       There will be an extension of the current expiry of a trade union’s mandate for industrial action from 6 to 12 months;

·       The current ten-year requirement for unions to ballot their member on the maintenance of a political fund will be removed;

·       The ballot process will be simplified, specifically the information requirements for industrial action ballots and notices will be simplified, and there will be a further consultation on e-balloting;

·       There will be an extension to the notice that is required to be given to employers of industrial action from 7 to a 10 day notice period;

·       The protection against “unfair practices” during the statutory recognition process will be strengthened where the legislation will be changed to “make it easier for unions to win cases”; and

·       There will be a digital right of access to the workplace for collective bargaining purposes, in addition to the physical access that is already included in the current proposals contained in the ERB.

The Government is also planning to consult further on modernising the trade union landscape following Royal Assent of the ERB. The consultations envisaged will be with regard to lowering the admissibility requirements for the statutory trade union recognition ballot process; developing a code of practice to ensure union members and workers can access a union at work through a “regulated and responsible” route; and implementing secondary legislation that “delivers greater rights and protections for trade union reps to undertake their work, strengthening protections against detriment and union members from intimidation harassment, threats and blacklisting.”

As part of the outcome of the consultation, the Government have acknowledged that there is a need to strike a balance between allowing for effective strike action, whilst also ensuring that employers are able to reasonably prepare. The Government point to the extension of the notice period for industrial action being extended to 10 days as an exemplar of this. However,  the outcome of the consultation and the proposed amendments to the ERB do seem to focus upon the Government’s aim of bringing about changes to help to “bring trade union law and regulation into the 21st century”.

SSP – the percentage rate of SSP to be paid to those who earn below the Lower Earnings Limit.

The consultation sought views on the amount of SSP which should be payable to those whose earnings fall below the Lower Earnings Limit. An amendment to the ERB has been tabled as follows:

·       Employees will receive either the current rate of SSP, or 80% of their average weekly earnings, whichever is lower.

“The Government is confident that an 80% rate strikes the right balance between providing financial security to employees who need it, whilst limiting additional costs to businesses.”

When will this take effect?

The consultation outcome reiterates that the delivery of the Plan to Make Work Pay will be “approached in phases”, and that the Government will continue to work closely with stakeholders to ensure the reforms to strengthen SSP work as intended.

Additional concerns raised about the removal of the “waiting period (days).”

As part of the response to the consultation, there was an opportunity to raise any concerns regarding SSP being paid from the first day of the employee’s sickness. In the consultation outcome the Government state that “employers expressed concern that the changes would increase absenteeism as well as the cost of sickness absence for their business.” There were suggestions made which would see the waiting days replaced with a tiered system in which the percentage of income received increases at the end of the self-certification period.

In response, the Government have stated that they “believe this is important to enable millions of employees to access the safety net of SSP on their first day of sickness absence. This means that employees should feel better able to take the time they need to recover from short term illness, without struggling through work and often spreading infectious diseases… This in turn will reduce presenteeism and help increase overall productivity and can contribute to a positive work culture that better helps recruit and retain staff.”

Many SMEs as part of their response to the consultation, called for a rebate or the restoration of the Percentage Threshold Scheme (which was abolished in 2014). The Government have looked at these requests and determined that “the previous Percentage Threshold Scheme… was complex and expensive to administer, was underused by small businesses and did not encourage employers to take steps to support their employees to reduce sickness absence. Employers having responsibility for paying sick pay helps maintain the strong link between the workplace and the employee and employers are encouraged to support employees to return to work when they are able.”

Increase in the rate of SSP?

As part of the consultation, there were calls for an increase to the rate – either to a specific rate to align with other statutory payments, align with the NLW, or for SSP to be paid as a percentage of an employee’s salary. The Government state as part of the outcome that they will not be increasing the rate of SSP but instead say that “employers can choose to go further than their statutory requirements and provide greater financial support through occupational sick pay to their employees…. The rate of SSP will continue to be subject to an annual uprating process and we are committed to continuing to build our understanding of how these SSP changes impact employer and employees alike.”

Tackling non-compliance in the umbrella company market

This was a consultation which was launched by the previous Government to seek views on taking action in the umbrella company market to “protect the most vulnerable workers.”

An outcome to the consultation has now been produced which has resulted in an amendment to the ERB being tabled which will enable umbrella companies to be regulated for the purposes of employment rights.

Specifically the Government proposes to amend the ERB to:

·       Define what an “umbrella company” is;

·       Propose Regulations of umbrella companies;

·       Bring umbrella companies within the scope of the Employment Agency Standards Inspectorate (which will subsequently become the Fair Work Agency’s) remit.

There will be further consultation on Regulations to ensure that workers who work through an umbrella company will have comparable rights as they would have if they had been taken on directly through the employment business.  The Government is also “committed to closing the tax gap and making the tax system fairer by ensuring that temporary workers are protected from large, unexpected tax bills causing by unscrupulous behaviour from non-compliant umbrella companies.”

The Government will bring forward legislation to move the responsibility to account for PAYE from the umbrella company that employs the worker, to the recruitment agency that supplies the worker to the end client. Where there is no agency in a labour supply chain, this responsibility will sit with the end client. This will take effect from April 2026.

Employment Rights Bill – amendment paper

An amendment paper has now been tabled, which reflects the changes identified above regarding the outcome of the various consultations.

However, there are further amendments which have been proposed. Those of particular note are:

Domestic abuse victims leave

The amendment proposes a new period of statutory leave for victims of domestic abuse, with Regulations providing for a minimum of ten days’ leave. There would also be a requirement for  employers to take all reasonable steps to prevent their workers from experiencing domestic abuse.

“Carers” as a protected characteristic

There is a proposed amendment to make caring a protected characteristic under the Equality Act. The definition of “caring” in the proposed amendment is as follows:

Caring means the provision or intention of person (A) to provide care to a person (B) with a long term care need, if person (B)— (a) is a spouse, civil partner, child or parent of person (A); or (b) lives in the same household as person (A) or reasonably relies on person (A) to provide or arrange care.

(2) In subsection (1), person (B) has a long-term care need if person (B)― (a) has an illness or injury (whether physical or mental) that requires, or is likely to require, care for more than three months; (b) has a disability under this Act; or (c) requires care for a reason connected with old age. (3) In subsection (1), the provision of care is regarded as relevant under this section if person (A) provides or intends to provide care— (a) under or by virtue of a contract, or (b) as voluntary work.

There is also a proposal that the period of unpaid carers leave which is currently available to employees, will be a paid entitlement.

Kinship Care leave

There is a proposed amendment to the ERB which has been tabled for an individual to be able to take Kinship Care Leave. Kinship Care is described as “an arrangement where a child is raised by a friend, relative or extended family member other than a parent.” The employee would be entitled to 52 weeks leave, but the entitlement would only arise where the kinship care arrangement is intended to last at least one year and the until the child being cared for attains the age of 18. In addition, “the Secretary of State may by Regulations make provision for some or all of a period of kinship care leave to be paid.”

Right to be accompanied

There is amendment which has been tabled where Section 10 of the Employment Relations Act 1999 (right to be accompanied) is amended to insert a provision where a person who has been reasonably certified in writing by a “Professional Body” as having experience of, or as having received training in acting as a worker’s companion at disciplinary or grievance hearings, would have the right to accompany an individual.

Prevention of violence and harassment in the workplace

An amendment to Section 2 of the Health and Safety at Work etc Act 1974 is proposed which would require an employer to adopt proactive and preventative measures to protect all persons working in their workplace from violence and harassment, including gender based violence, sexual harassment, psychological and emotional abuse, physical and sexual abuse, stalking and harassment and threats of violence. The current wording would require employers to risk assess any potential risks of violence and harassment in the workplace and implement policies and procedure to eliminate these risks so far as is reasonably practicable.

Statutory Maternity Pay

There is a proposal for the rate of statutory maternity pay, statutory paternity pay, statutory adoption pay, statutory shared parental pay and statutory parental bereavement pay to be increased from £184.03 per week, to £368.06 per week. For statutory maternity pay purposes only, an amendment is proposed for this to be paid at an hourly rate in London.  In addition, there is a proposal which would require companies with more than 250 employees to publish information about their parental leave and pay policies.

Pregnancy loss

There is an amendment proposed which would give a right to two weeks leave for those bereaved as a result of pregnancy loss. Pregnancy loss is defined as a miscarriage, an ectopic pregnancy, a molar pregnancy or a medical termination conducted in accordance with section 1 of the Abortion Act 1967. This proposed amendment is an extension of the current law on parental bereavement leave, which applies where a child dies or there is a stillbirth after 24 weeks. There is also an amendment which has been tabled which would amend the Social Security Contributions and Benefits Act 1992, so that the entitlement to statutory pregnancy loss pay extends to those bereaved by this proposed new definition of pregnancy loss.

Period of which notice of underpayment may relate

This proposed amendment provides that the Secretary of State can give the employer a notice of underpayment, covering a period of up to 6 years where an employer has failed to pay a worker an amount due to the worker under certain legislation (for example minimum wage or SSP), requiring the employer to pay the amount due.

Collective redundancy trigger

The duty to collectively consult would be triggered when an employer is proposing to dismiss 20 or more employees as redundant within a 90 day period at one establishment. The ERB as originally drafted proposed to remove the wording “at one establishment” so that all redundancies across a business must be counted when considering if the duty to collectively consult was triggered. Now an amendment to the ERB has been proposed whereby collective consultation will be required where there are 20 or more redundancies at “one establishment or a threshold set out in Regulations is met”. We shall need to see the details of these Regulations to understand what this “threshold” will look like.

What happens now?

The ERB is going through the Parliamentary process and will be subject to scrutiny by the House of Commons and then the House of Lords. It is likely therefore, that some of the amendments proposed may not form part of the final piece of legislation which receives Royal Assent.

It is also important to remember that these are only proposed amendments to the ERB and the main provisions of ERB, such as the day one unfair dismissal rights, all remain. The number and frequency of amendments had been anticipated due to the commitment which the new Government made to bring the ERB before Parliament within 100 days of them coming into office. We shall now wait to see which of the proposed amendments to the ERB will receive Government backing. The ERB reaches Report stage in the House of Commons next week.

There is no requirement for any changes to policies or procedures to be made at present, further updates will follow as and when there are developments.