What’s in new workers’ rights bill and who should be worried?

Unions have been singing Labour’s praises over its Employment Rights Bill, with Usdaw hailing it as doing more for workers in 100 days of government than the Tories managed in 14 years.

And though some were worried about the costs when Labour set out its intentions in its manifesto in June, retailers have also cautiously welcomed the bill, while stressing their desire for continued dialogue.

“We look forward to engaging the government on the details,” says BRC CEO Helen Dickinson.

But not everyone is happy, with complaints from some quarters that it falls short on manifesto pledges and ignores some of the lowest-paid and most vulnerable workers.

The bill, presented to parliament for its first reading on 10 October, sets out 28 employment law changes in total, to be enforced by a planned new Fair Work Agency.

So, what are the big changes that matter most to the food & drink industry – and the areas where the bill is lacking? And who should be worried?

Day one rights

The bill repeals the two-year qualifying period for protection from unfair dismissal, delivering – Labour says – on its manifesto pledge to provide protections from day one.

However, the changes are “significantly less dramatic at this stage than anticipated”, says Yvonne Gallagher, partner at law firm Harbottle & Lewis.

For one thing, the government has indicated the reforms will take effect no sooner than autumn 2026, following a consultation period.

It is also set to consult on a new statutory probation period, with a preference for nine months, during which employers will face a “less onerous approach” to dismissing someone not right for the job, without giving rise to an unfair dismissal claim. It’s a proposal that will be “very helpful to employers”, says Gallagher.

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Stephen Simpson, content manager for employment law at HR experts Brightmine, warns the nine-month period will “increase pressure on HR teams to juggle multiple moving parts while dealing with the potential fallout of line managers not following the correct process”.

“If dismissals are not managed properly, businesses could face a rise in tribunal claims, further straining already overstretched HR teams.”

Liz Cotton, partner at TLT, says: “The impact upon the employment tribunal service is likely to be significant, meaning that employers may have to wait longer for claims to be adjudicated.”

Fire and rehire

The bill aims to end what the government calls “unscrupulous” fire and rehire practices, used to force through contract changes. It will do so by making it automatically unfair to dismiss employees who refuse to sign up to new terms.

“A dismissal will also be unfair if the employer replaces the employee with another person carrying out substantially the same duties who is willing to accept the varied terms,” says Mary Walker, partner at Gordons LLP. “The bill as it stands would dramatically curtail an employer’s ability to impose changes to terms and conditions.

“The hurdles to doing so will be significantly greater than dismissing employees altogether by reason of redundancy or reorganisation.”

Cotton says: “In most cases, it will be ‘automatically unfair’ to dismiss an employee for refusing to agree to a contractual change. Exceptions will only be made in limited circumstances, such as where the employer can evidence serious financial difficulties affecting or likely to affect the business.”

Read more: Unite to sue Oscar Mayer over alleged fire and rehire threats at Wrexham factory

A number of supermarkets may be reading with interest, with Tesco and Asda both having recently faced accusations of using fire and rehire tactics.

The bill also aims to strengthen the law on collective redundancy, pending a consultation on lifting the cap of the protective award if an employer is found to not have properly followed process. Currently, the law requires a collective consultation when there are 20 or more proposed redundancies at “one establishment” – ie one shop. The bill “reverses” this, so “the number of redundancies across the whole business should be calculated”, says Walker.

“The leading cases on collective consultation are retail based,” Walker adds.

The bill also aims to provide greater protection from dismissal for pregnant women and new mothers returning to work, by extending existing protections against redundancy.

Trade unions

“Under the suite of proposals all new employees will be entitled to receive details of trade union rights,” says Cotton.

The process for a trade union to acquire statutory recognition, together with the statutory requirements for strike ballots and picketing, is also set to be simplified, and a “new ‘right of access’ to workplaces will be introduced for trade union representatives”, Cotton adds.

Read more: Sainsbury’s and McDonald’s CEOs among bosses to meet government over workers’ rights reforms

Minimum wage

As promised, the government is also set to remove the age bands for varying levels of minimum wage, so everyone gets the same amount, while changing the Low Pay Commission’s remit to factor cost of living into setting the rate.

“Minimum wage will no longer be tapered by an individual’s age,” says Walker. “Whilst this may not directly impact retailers due to the current wage battle in the sector, this will impact suppliers and increase production costs which will increase retailers’ bottom line.”

Sick pay

The bill is set to introduce the right to statutory sick pay (currently £116.75 for a five-day week, or £23.35 a day) from day one, while removing the lower weekly earnings limits (currently £123) for workers to qualify. The government will consult on what the percentage replacement rate should be for those earning below the current flat rate of statutory sick pay.

The news is worrying convenience retailers. “Our members’ biggest concern is how new sick pay rules can help promote rather than reduce attendance,” says ACS CEO James Lowman.

Read more: How much do supermarkets pay their staff?

“In shops employing two or three people on shift at any one time, staff absence can see a business grind to a halt. We welcome the government’s forthcoming consultation and will be highlighting our concerns to ensure the new rules balance the needs of both workers and businesses.”

The bill is also set to make paternity and parental leave a day one right, while establishing a new right to bereavement leave.

Flexible working

Alarm bells are also ringing for convenience stores over the changes the bill makes to flexible working rules. It makes approval of an employee’s request the default outcome unless specific grounds for refusal are met.

“The bill introduces a new obligation that any such refusal must be ‘reasonable’ and employers must explain to employees in writing why this is the case,” says Cotton.

ACS’s Lowman is concerned about the administration burden this will place on retailers.

“The convenience sector employs almost half a million people across the UK, already providing genuine two-sided flexibility,” he says, adding that the measures will “impose unnecessary processes and procedures for employers that are already doing the right thing”.

Zero-hour contracts

To bill moves to end what the government has called “exploitative” zero-hour contracts.

Workers on zero-hour contracts, and those on a low number of guaranteed hours that they regularly exceed, will get the option to move to contracts reflecting the time they put in over a 12-week reference period, pending a consultation.

“This is not an outright ban on zero-hour contracts and there are circumstances when the provisions will not kick in, such as if an employee does not work on a regular basis,” says Walker.

Meanwhile, thousands of riders delivering groceries for the likes of Deliveroo will be “entitled to nothing from this legislation”, because they are deemed independent contractors and not on any kind of employment contracts, says Gig Economy Project co-ordinator Ben Wray.

That’s despite the fact “the reality of their working situation is extremely comparable to a zero-hours contract,” he adds.

Read more: Will Labour’s worker reforms apply to the gig economy?

“They are dependent on the platforms for work but have no job security or guaranteed hours, and can be sacked – or ‘deactivated’, in the parlance of the platforms – at a moment’s notice.

“That these workers, which study after study have shown frequently earn below the minimum wage, have been ignored by Labour’s Employment Rights Bill is a disgrace.

“There will be one gig economy constituency which will be very happy with this bill: the [delivery] platforms, which have been intensely lobbying Labour for years now to water down their commitments to improve the situation of gig workers.”

However, a move toward a single worker status is among subjects listed for consultation, along with a ‘right to switch off’ out of hours.

Migrant workers

Gig economy workers are not the only ones feared left out.

The charity Focus on Labour Exploitation says it will increase inequality for thousands migrant workers through its failure to tackle restrictive visas.

Such visas – like the ones given out as part of the government’s seasonal worker scheme – are often time-limited, non-renewable or don’t include a pathway to settlement, impeding workers’ ability to access protections or bring a claim to tribunal, Flex says.

Read more: Charity urges more support for migrant workers in Employment Rights Bill

It argues the Fair Work Agency presents an opportunity to help workers “who have been systematically exposed to risk in the workplace, including physical violence, labour abuses, human rights breaches, debt and sexual assault”.

But it says “essential components” need to be added to the bill first, which it has set out in a briefing note to government.

Policy head Kate Roberts says: “Until the government addresses temporary and restrictive visas, they are widening the gap between workers, entrenching the UK’s tiered workforce and leaving migrant workers in the dust.”