Employment Rights Bill: what do supermarkets need to know?

The Employment Rights Bill 2024 has lived up to the new Labour government’s promise that it would represent “the biggest shake-up in workers’ rights in 30 years”.

Of particular interest to supermarkets will be the day-one right to claim unfair dismissal; changes to trade union rights; the right for zero-hours workers to move to guaranteed-hours contracts; restrictions on when ‘fire and rehire’ processes can be used to effect contractual changes; and a minor change to flexible working requests.

Unfair dismissal

The Bill proposes to remove the two-year qualifying period for protection from unfair dismissal, meaning employees will be able to claim unfair dismissal from day one of employment. The government will consult on a new statutory ‘probation period’ in which an employee’s suitability for a role can be assessed and they could be dismissed using a ‘light touch’ dismissal process (which could be as straightforward as holding a meeting).

The scope of the proposal is subject to consultation, so we don’t yet know what protections will be introduced, but the expectation is that the day-one right will lead to more litigation. The impact upon the employment tribunal service is likely to be significant, meaning employers may have to wait longer for claims to be adjudicated.

Whilst having a ‘lighter touch’ process during the probationary period will give retailers more flexibility to dismiss, there will still need to be a process to avoid exposure to claims. On a practical level, employers will need to review their policies to ensure any issues can be addressed properly during the probationary period.

Zero hours contracts

The Bill does not ‘ban’ zero-hours contracts, contrary to reports. Instead it gives workers on zero or low-hours contracts the right to be offered a guaranteed-hours contract which properly reflects hours regularly worked over a 12-week reference period.

Employees are under no obligation to accept and can instead choose to remain under their original contract. If more hours become regular over time, 10 subsequent reference periods will enable workers to reflect this in their contracts. Under the proposals, employers will have to give ‘reasonable notice’ where there are changes in shifts or working time, and compensation will be payable if shifts are cancelled at the last minute.

The impact on retailers will depend on the details, which are subject to consultation. We may see a shift away from employers using zero or low-hours contracts, instead favouring overtime or the use of temporary or fixed-term staff.

Fire and rehire

Supermarkets have recently hit the headlines in terms of fire and rehire. The proposal to end these practices is arguably one of the most controversial. Its impact will significantly restrict the circumstances when fire and rehire or fire and replace procedures can be used to implement changes to terms and conditions of employment.

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.

Under the suite of proposals, all new employees will be entitled to receive details of trade union rights, and these should be included in their section one statement, which outlines the basic terms and conditions. Also, the process for trade unions to acquire statutory recognition, together with the statutory requirements for strike ballots and picketing, will be simplified and a new ‘right of access’ to workplaces will be introduced for trade union representatives.

Flexible working

Whilst the right to request flexible working – a day one right from April 2024 – can still be refused on specified grounds by employers, 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.

Supermarket employers may have seen an increase in flexible working requests since April, and it is important to be alive to the risk of discrimination claims in respect of flexible working requests, in the same way as before. However, whilst there will be consultation on the details, the Bill itself does not really change much otherwise on this topic.

While we await the final version of the Bill, supermarket employers will be given the opportunity to feed into consultations and have their voices heard. As the Bill makes its way through Parliament, employers should begin reviewing their policies now to see how they may need to be adjusted in line with the proposed measures, for example in relation to probation periods and responding to flexible working requests.

With persistent staff shortages and other pressures, not to mention increasing competition from e-commerce, time will tell whether these new measures will attract more workers back into the retail sector.