The key points. After much anticipation, we are seeing the proposed changes that will take effect under the Labour Government.
Just by way of clarification, these are the published proposals and they are now subject to consultation between Governments, Trade unions and interested employer stakeholders – such as FSB, CBI etc. It is anticipated that the changes will be enacted into law by Autumn 2026.
What are the key points?
Unfair dismissal
Currently an employee has to be employed for 2 years before they can bring a claim for unfair dismissal. There will now be no qualifying period effectively making it an entitlement from day one of employment although there is some debate about the likelihood that where employees are subject to a probation period, the ability to claim unfair dismissal will only apply after the probation period has been completed.
This begs the question – how long can the probation period be? There is talk that the probation period cannot exceed 9 months and during this period, an employee can be terminated without following a process. However, an employee could still bring a claim for discrimination if they are terminated during their probation period.
Once we have clarity on the probation period, it is reasonable to assume that all employers will make employment subject to a probation period and the duration of that period will be the maximum allowed under the legislation.
Zero hours contracts
This was a lively topic of discussion and it is proposed that under the new legislation, employers will be required to offer a guaranteed hours contract based on the hours that the employee has clocked up during a 12 week period.
Employees who prefer to stay on a zero hours contract will be able to do so but the change is that they will have the right to request a contract based on guaranteed hours if they want to.
There will be a requirement for the employer to give “reasonable” notice ahead of planned shift changes as well as compensation if a shift is cancelled or ends early.
It is fair to assume that certain industry sectors – specifically hospitality and seasonal production businesses will be making representation about these plans.
Flexible working
Currently an employee has the right to request a flexible working arrangement and the employer can turn down the request on specific business grounds.
The legislation will make flexible working the default option whereby an employer is required to agree to the request unless they can prove the request is “unreasonable”
This may not be a massive shift from the current arrangement because it is likely that if an employer regards the request as “unreasonable”, they will be able to rely on the existing business grounds to justify the refusal but expect more challenge from the employee.
Sick pay
The waiting period of 3 days and the lower earnings limit to receive SSP will be removed. Currently, there is a 3 day waiting period before the payment of SSP.
Currently, qualifying employees get SSP of £116.75 for a maximum of 28 weeks.
This will be a direct cost hit for employers who may experience an increase in frequent short term absence especially absences of 1 or 2 days.
Unpaid parental and bereavement leave
This is not a major change although the entitlement becomes a day one right – currently an employee needs one years service before getting unpaid parental leave.
There will also be a legal right, regardless of service, for an employee to have compassionate leave if a dependent dies.
This will not be a massive impact because the arrangements are for unpaid leave and most employers give this now anyway but some employers offer paid bereavement leave.
Fair Work Agency
A new Agency will be created which will have powers to enforce employee rights such as National Minimum Wage, flexible working, holidays, sick pay whilst also dealing with issues around “gang” labour and modern slavery. This Agency will have “real teeth” according to Angela Rayner and the Government and will have power to prosecute and fine Companies who breach Employment law.
It is assumed that the role of ACAS will remain unchanged.
Stronger rights regarding pregnancy, return from maternity and the menopause
We can also anticipate that employee rights during pregnancy will be strengthened and also greater protection from dismissal for employees who return after maternity.
Large employers (over 250 employees) will also have to show positive action to address gender pay gaps and offer more support for employee during the menopause.
Any surprises…
It was anticipated that there would be a statutory “right to disconnect” meaning that employers couldn’t contact employees out of hours – similar to rights in some European countries but this is likely to be re-visited at a later date.
It was anticipated that there would be an outright ban on “fire and rehire” but this has been slightly watered down. So, “fire and rehire” which is the practice of changing an employee’s terms and conditions and making them less favourable will be banned unless there are “exceptional circumstances”.
This presumably means that a business can change terms and conditions if the alternative is that the business will go bankrupt.
Conclusion
There is much to be done on these proposals and the devil will be in the detail. Also, there is nothing much here that we did not expect after seeing the Labour manifesto.
Until we have more detail, it isn’t wise to rush off and change policies, procedures and contracts but what we can be sure about is that this will result in much more time being spent on HR issues in small businesses and with the extension of rights, employees will have to seek internal redress in the first instance – so employees will use the grievance procedure more.
Any business which ends up in an Employment Tribunal will find that the backlog of cases will be considerable and ACAS will need more staff to manage the inevitable increase in workload and they are already massively stretched.
The plan is that these changes will take effect from Autumn 2026. This might seem ambitious but the will of the Unions will be such that they will not allow this date to slip and the Labour party will want to deliver on these reforms.
Adrian Berwick offers HR support to SMEs and GP Surgeries and if you want any advice or guidance on the issues raised in this article, please either contact me on 07885 714771 or adrian@abhrsolutions.co.uk
