28 Reforms Coming to Employment Rights

On 10 October 2024, Labour published its much-anticipated Employment Rights Bill – just within its promised one hundred days of getting into power.

Hailed as “the biggest upgrade to workers’ rights in a generation”, the Bill and its accompanying Next Steps to Make Work Pay document, set out detailed plans about how Labour intends to bring its sweeping employment reforms into effect.

At more than 150 pages and containing 28 employment measures, the scope of the new Employment Rights Bill should not be underestimated.

Change will also take time – the Government expects to start consulting about reforms in 2025, and anticipates that the majority of changes will take effect no earlier than 2026, following a “substantial” transition period. It is safe to say that these reforms will remain a central talking point in employment circles for some time to come.

With 28 key reforms aiming to bolster employee protections and reshape HR practices across industries.

Here’s our breakdown of 6 key points to note to ensure your business is prepared for the new landscape.

1. Strengthened rights from day one

The bill mandates several “day one” rights, including entitlement to flexible working, protection against unfair dismissal, and access to family leave benefits. Employees will now have the right to request flexible working on their first day, supporting work-life balance and allowing employers to tap into a more engaged, diverse workforce​.

It is also envisaged that there will be a new “initial period of employment” introduced, possibly for the first 9 months of employment, whereby a lighter touch disciplinary procedure will be expected to have been followed.

2. Expanded protections against dismissal

One of the most impactful changes is the introduction of protections against “fire and rehire” practices, which have previously allowed employers to terminate and rehire employees on revised terms.

Under the new law, dismissal for refusing changes to terms will be considered automatically unfair unless clear business-related justifications are proven, ensuring that any reorganisation prioritises fair employee treatment​

3. Enhanced grievance and disciplinary procedures

The bill promotes fairer handling of grievances and disciplinary issues by expanding employees’ rights to raise concerns and appeal decisions. Employers must adopt comprehensive, non-discriminatory policies to align with the new standards, which emphasise transparency and fairness to minimise workplace disputes​.

4. Proactive duty to prevent workplace harassment

Effective from late October 2024, employers are legally obligated to take reasonable steps to prevent sexual harassment from third-parties e.g. clients or customers. This shift requires businesses to implement robust anti-harassment policies, establish reporting mechanisms, and demonstrate proactive efforts to protect their workforce from harmful behaviours.​ Currently however an employee cannot make a direct claim for third party harassment. The Bill will change this and take the protection a step further by providing that employers take all reasonable steps to prevent harassment from third parties. This does not just relate to sexual harassment and will provide a right to pursue direct third party harassment claims. 

5. Fair distribution of tips in hospitality

For those in the hospitality industry, The Employment (Allocation of Tips) Act stipulates that tips and service charges must be distributed equitably among workers, and employers must maintain transparent, written policies on tip allocation. This reform addresses long standing grievances in the hospitality sector, ensuring workers receive reward for excellent service.​

6. Expanded sick and family leave benefits

Statutory Sick Pay (SSP) will be accessible from the first day of illness, and family leave protections are extended, especially for parents and caregivers. These adjustments require employers to review existing policies to meet the increased support obligations for employee health and family responsibilities​

How do you prepare for compliance with the new regulations?

For businesses, aligning with the new reforms will involve updating handbooks, reviewing HR practices, and training management on policy compliance. It is hoped by the current government that these changes not only support compliance but also reinforce trust, transparency, and retention among employees, contributing to a healthier, more dynamic workplace.

With the 28 reforms on the horizon, this is a pivotal moment for UK businesses to reassess and align with the evolving standards of employment rights. By staying informed and proactive, employers can ensure they’re ready for these transformative changes, positioning their organisations for sustainable growth and compliance in 2025 and beyond.

Just the beginning

Of course, a bill is only legislation in draft form, and as such represents the very start of the legislative process. The Employment Rights Bill must now be scrutinised by both Houses of Parliament, who will have the opportunity to propose amendments to the drafting. Only once both Houses have agreed the final content of the bill will it receive Royal Assent and become law.

The Bill is also only part of the picture. Further detail about many of the policies has been left to secondary legislation, and in some cases, codes of practice. Proposals will also be subject to what the Government itself describes as “extensive” consultation.

What is clear is that the Employment Rights Bill is just the beginning of a period of significant upheaval for employment law and employment practitioners, though where we may end up in several years’ time may look very different from the draft Bill that has just been published.

This publication is a general summary of the law. It should not replace legal advice tailored to your specific circumstances.

As for the recent Budget?

The 2024 Autumn Budget is expected to introduce a substantial increase to employers’ National Insurance (NI) contributions, with a potential rise of up to 2%, from the current 13.8% to 15.8%. This increase could help raise around £20 billion to support public services, especially the NHS. Additionally, changes to the earnings threshold for NI contributions may further impact businesses, particularly those with larger payrolls, as they’ll face higher overall NI costs under the new structure​

For employers, the anticipated increase in National Insurance (NI) contributions means a direct rise in payroll expenses. If the contribution rate increases by 2% as projected, businesses will pay significantly more in NI for each employee. This change will especially impact companies with large payrolls, raising costs and potentially affecting hiring budgets or business growth plans. Additionally, the budget may adjust the NI earnings threshold, potentially bringing even more wages under NI obligations and further increasing employer contributions.

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With the proposed changes affecting workers’ protection from unfair dismissal to statutory sick pay, you will need to start prepping your HR documents and policies now to avoid costly financial penalties. View our packages here.

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