The Employment Rights Bill 2024 marks the most significant overhaul of UK employment law in decades. With new protections for workers, increased rights, and tighter regulations, businesses must prepare to adapt, particularly those relying on zero-hours contracts and contingent staffing.
Here’s what you need to know about the upcoming changes and their potential impact.
What’s changing?
1. Day one rights for unfair dismissal
The two-year qualifying period for unfair dismissal will be scrapped. Employees will have protection from their first day, but employers can still dismiss them within a new nine-month probation period.
Impact: This puts pressure on businesses to improve their recruitment processes, ensuring thorough evaluations during probation to avoid future risks.
2. Zero-hours contracts overhaul
Workers on zero-hours contracts will gain the right to guaranteed hours if they’ve worked regular shifts for 12 weeks. However, they can choose to stay on flexible terms. Employers will also need to give reasonable notice for shift changes or cancellations or face paying compensation.
Impact: Businesses heavily reliant on temporary or contingent workers, like those in the retail and hospitality industries, must now plan for more predictable staffing and may face higher operational costs.
3. Sick pay from day one
Statutory Sick Pay (SSP) will be available from the first day of illness, removing the current three-day waiting period and minimum earnings threshold.
Impact: This reform could significantly increase costs for businesses with large numbers of part-time or low-paid employees. Contingent workers will now also be entitled to sick pay.
4. Flexible working by default
Flexible working will become the default right for all employees from day one. Employers must justify why requests can’t be accommodated, making it harder to refuse.
Impact: This adds to the administrative burden and may push up staffing costs, particularly for companies that rely on flexible labour arrangements like zero-hours contracts.
5. End of fire-and-rehire practices
The controversial practice of firing employees and rehiring them on worse terms will be banned, except where businesses are at risk of insolvency.
Impact: Employers will have fewer options to manage labour costs by adjusting terms, placing greater emphasis on proactive workforce management.
6. Gender pay gap action plans
Large employers will be required to publish gender pay gap action plans, addressing inequalities across their workforce. These plans will also need to support employees going through menopause.
Impact: Businesses must invest in reporting systems and ensure that temporary and contingent workers are treated fairly, alongside full-time staff.
What are the key challenges businesses will face with these new reforms?
The bill introduces a host of challenges for employers, particularly around cost management and compliance. Key areas include:
- Sick pay reforms and guaranteed hours for zero-hours staff will push up labour costs, particularly in sectors with tight margins and flexible staffing needs.
- The move to flexible working as the default and the need for gender pay gap action plans will require significant investment in HR systems and compliance processes.
- Employers relying on agency and temporary workers will need to adjust their strategies to align with the new requirements for guaranteed hours and compensation for cancelled shifts.
Prepare for the changes now to get ahead
Though the reforms won’t come into effect until 2026, businesses should start preparing now by:
- Reviewing zero-hours and contingent staffing practices, ensuring they comply with the new rules on guaranteed hours and notice periods.
- Reassessing employment contracts and probationary guidelines in light of day one rights and extended probation periods.
- Updating recruitment, onboarding, and workplace policies to reflect the upcoming changes.
- Implementing systems to manage flexible working requests and prepare for gender pay gap reporting.
Final thoughts
The Employment Rights Bill 2024 will transform the UK labour market, particularly for businesses that rely on temporary or zero-hours contracts. The focus on worker protection, fair pay, and flexible working will require employers to rethink their staffing strategies and invest in compliance.
By planning ahead and adapting early, businesses can stay ahead of these changes and ensure they are well-positioned for the future.
