Proposed Changes to Employment Legislation: What to Expect

The government has recently announced a series of significant proposed changes to employment legislation, which, if agreed upon, could reshape workplace rights and protections. These reforms are set to be consulted on in 2025 and, if approved, rolled out no later than 2026 under the “Employment Rights Bill.” The aim is to provide greater security and fairness for employees while holding employers to higher standards of worker protection.

Key Proposed Reforms to UK Employment Law:

• Day-One Employment Rights: One of the most transformative proposals is the introduction of day-one protection against unfair dismissal. Currently, employees must complete a qualifying period before being entitled to such protections. If implemented, this legislation would grant these rights from the first day of employment, potentially reducing arbitrary dismissals and benefiting over nine million workers.
• Flexible Working Requests: The proposed reforms suggest that flexible working requests would become the default from day one of employment unless an employer can demonstrate impracticality for business operations. This change reflects the increased demand for work-life balance and the need to support employees with caregiving responsibilities.
• Banning Exploitative Zero-Hours Contracts: The legislation aims to curtail the use of exploitative zero-hours contracts, providing more stability to workers by guaranteeing minimum hours after a set period. If enacted, this change could positively impact over a million workers, offering more financial predictability and security in sectors reliant on irregular contracts.
• Crackdown on “Fire and Rehire”: Labour’s proposed reforms also address the controversial practice of “fire and rehire,” where employers dismiss employees and then offer to rehire them on less favourable terms. While not an outright ban, the practice would face stricter regulations, potentially providing workers with greater protection during company restructurings.
• Reformed Statutory Sick Pay (SSP): The bill proposes important changes to statutory sick pay, such as removing the three-day waiting period and the lower earnings threshold. These reforms would ensure that workers, particularly those on lower wages, can access sick pay from the first day of illness, providing much-needed financial support.
• Parental Leave and Protections: Another highlight of the proposals is the extension of day-one rights to paternity leave, unpaid parental leave, and bereavement leave, which would further protect workers with caregiving responsibilities. Pregnant women and new mothers would also benefit from enhanced protection against dismissal during pregnancy and for up to six months after returning from maternity leave.
• Gender Pay Gap Reporting and Menopause Support: If implemented, large employers would be required to create action plans to address gender pay gaps, including specific support measures for women going through menopause. This initiative aims to promote inclusivity and ensure better support for women in the workplace.
• Allocation of Tips: In hospitality, the proposed Tipping Act mandates that 100% of customer tips must be fairly distributed among staff, accompanied by clear policies and record-keeping. Employees would have the right to challenge unfair distribution practices, with potential fines for employers who do not comply.

Implications for Employers:

Should these legislative changes be enacted, they would represent a significant shift in how UK businesses operate. Employers would need to review their current employment contracts, policies on zero-hours contracts, and procedures for handling flexible working requests. Additionally, businesses would have to ensure compliance with new rules on sick pay, parental leave, and gender pay gap reporting. Companies engaging in restructuring should also be mindful of the proposed restrictions on fire-and-rehire practices to avoid potential legal challenges.

Conclusion

These proposed reforms aim to enhance worker protections and create a fairer workplace for millions of employees across the UK. Employers who begin to consider these changes early may find themselves better prepared for this new era of employment law, should the reforms be agreed upon.