Employment Essentials: Employment law changes 2025 and beyond

Policy

A ban on 'exploitative' zero-hour contracts ensuring workers have a right to a contract that reflects the number of hours they regularly work. The policy also includes giving workers "reasonable notice" of any shift changes and compensation for any cancelled or curtailed shifts.

Following consultation, the Government has amended the ERB to extend the rights in the ERB to guaranteed hours contracts, reasonable notice of shifts and compensation for short notice of cancelled, curtailed or moved shifts to agency workers (see Agency Workers below),

The Bill's provisions (zero-hour/low hour contracts)

The Bill when passed will insert new sections 27BA to 27BT into the Employment Rights Act 1996, resulting in complex provisions.

1. Right for qualifying workers to be offered guaranteed hours

Employers will be required to offer a guaranteed hours contract (GHC) to 'zero-hour' or 'low-hours' workers after the end of every reference period. Essentially, the new right will apply to a 'zero' or 'low' hours worker who, during a relevant reference period, worked a number of hours that satisfy certain conditions in respect of number, regularity or otherwise.

This right will apply to those employed by the same employer under one or more worker's contracts (whether or not continuously) in the relevant period.

For qualifying workers

• the employer will be obliged, subject to certain exceptions, to make an offer of guaranteed hours after the end of every relevant reference period that reflects the hours they worked during that reference period.
• The new provisions will allow for a 'guaranteed hours offer' to be of a limited term but only where there is a reasonable 'limiting event', for example upon completion of a task for which the worker was employed or where the employee was employed to cover another worker's leave, and the worker on leave returns, or the employer reasonably considers there is only a temporary need.
• There will be a rebuttable presumption that a zero hour or low hours contract is not a limited term contract (in other words it will be for the employer to prove a reasonable 'limiting event').
• Where an employer is not required to offer a GHC, the employer will be required to give notice to that effect stating the exception relied upon.
• A duty will be imposed on employers to ensure workers who have the potential to qualify for a GHC are aware of and have access to 'specified information' relating to their rights.

Important detail being is left to implementing regulations includes:

• Who will qualify for this right - The definition of 'zero-hours' and 'low-hours' qualifying workers.
• The length of the reference period (likely to be a 12-week rolling reference period).
• Qualifying 'hours worked' (in terms of regularity and the number of hours worked or otherwise).
• The requirements of a 'guaranteed hours offer' - how, when and in what form must it be made.
• The requirements for accepting/rejecting 'guaranteed hours offer'.

2. Right to reasonable notice of a shift

What is 'reasonable' will depend on all the circumstances of a case. It is to be presumed, unless the contrary is shown, that notice of a shift will not be reasonable notice if it is given less than a specified amount of time (to be set out in subsequent implementing regulations) before the shift is due to start.

3. Right to reasonable notice of cancellation of or change to a shift

Employers must give workers reasonable notice if they cancel a shift or change the day or time.

It is to be presumed, unless the contrary is shown, that notice will not be reasonable notice if it is given less than a specified amount of time (to be set out in subsequent implementing regulations) before the shift would have started or on or after the start of the shift.

4. Right to payment for cancelled, moved and curtailed shifts

Employers will be under a duty to make a payment, of an amount to be specified in subsequent implementing regulations to a worker each time there is a cancellation, movement (i.e., a delay or bringing forward of a shift), or curtailment at short notice of a qualifying shift that the worker has agreed to work for the employer.

Curtailment of shifts can include hours being cut from the middle of a shift (in addition to the start and finish). The maximum amount of compensation for cancelled, moved and curtailed shifts is the amount that would have been earned save for the cancellation or curtailment and if moved what they would have earned for the original shift with such payments to be treated as 'wages'.

Important detail being left to implementing regulations includes:

• What will amount to 'short notice'?
• What amounts to a 'moved' shift?
• The 'payment' amount. This will be subject to a cap of what the worker would have earned had they worked the hours and may be subject to a sliding scale depending on how short the 'short notice' was.

5. Agency workers guaranteed hours and rights relating to shifts

Amendments to the Bill extend protection to agency workers intended to "ensure that agency work does not become a loophole in the plans to end exploitative zero hours contracts". See "Agency Workers" below.

6. Collective agreements contacting out

Following an amendment to the ERB, the rights to guaranteed hours, reasonable notice of shifts and compensation for cancelled, curtailed or moved shifts for zero hours, low hours and agency workers (see below) can be excluded by a relevant collective agreement. A relevant collective agreement is one which is in writing and made by, or on behalf of, one or more independent trade unions and the worker's employer. Contracting out on this basis can occur where the relevant terms of the collective agreement are incorporated into the contract, provided that the worker or agency worker has been notified in writing of the incorporation and effect of those terms.

This is a key change inserted into the ERB in March 2025

• This has the potential to be a wholesale opt out.
• It can apply to both workers and agency workers (in which case the collective agreement can be with the person who has the contract with the agency worker) and does not require the gap to be filled with comparable terms.

This potential option appears to be a pragmatic approach to address employers' concerns about the workability of these provisions but will require agreement with the relevant union. Allowing an employer and trade union to reach agreement on arrangements, will simplify compliance with the complex new provisions where agreement can be reached.

Under the current version of the ERB, this is the only basis upon which it would be possible to contract out of these provisions. Accordingly, there is no opt-out route for non-unionised workplaces.

7. Anti-avoidance measures

A new provision has been added to the ERB to prevent the manipulation of hours made available to a worker, with the intention of making a lower guaranteed hours offer, or to avoid the obligation altogether.

The amendment introduces the right to bring a claim in the employment tribunal in respect of a guaranteed hours offer made by the employer on terms requiring the employer to provide, and the worker to do, less work than would have been the case if the employer had not, for the sole or main purpose of being able to comply with the duty by making such a reduced offer, during the relevant reference period:

• Limited (by whatever means, including termination of a worker's contract or an arrangement) the number of hours of work made available to the worker.
• Decided to make work available to the worker in the way that the employer did.

The employment tribunal may make a declaration and an award of compensation up to the "permitted maximum", which will be specified in regulations. There are equivalent rights for agency workers which can be brought against the hirer or work-finding agency, depending upon which party has limited the hours worked during the relevant reference period.

8. The ERB will repeal the Workers (Predictable Terms and Conditions) Act 2023

Comment

The above provisions are intended to end one-sided flexibility, ensuring that jobs provide a baseline of financial security and contractual predictability so workers can better plan their lives and finances. We await the consultation on important elements such as what constitutes 'low hours' contracts and what will be the requirements of a 'guaranteed hours offer', the Government has stated it will also ensure that

• workers on full-time contracts who occasionally pick up overtime hours are not affected; and
• where work is genuinely temporary, there will be no expectation on employers to offer permanent contracts.

The 'who' question

Just where the threshold will be set for those considered to be working on a 'low-hours' contracts will significantly shape the impact of these provisions. If a low threshold is set, for example at three hours per week then many employers would simply guarantee workers three hours work. If the threshold were to be set at 18 hours per week, then the provisions will have much greater impact. Many part-time workers would be in scope and employers would have to monitor any additional hours they worked very carefully.

The 'reference period' question

What the reference period will be, is also an important issue for consultation. While the Bill is silent on the definition of the 'reference period', in the "Next Steps to Make Work Pay" the Government favours a 12-week rolling reference period. But such a reference period may make it difficult to account to for seasonal variations in workloads? This will be an important consultation. It should be remembered that zero-hours contracts are not being banned altogether. While employers will be required to make a 'guaranteed hours offer', it can be for a limited term where reasonable. Having said that, the employer will need to rebut the presumption that it is not for a limited term. Would significant seasonal variation be sufficient to rebut the presumption?

In the response to the consultation on the application of zero hours contracts measures to agency worker, the Government recognised concerns regarding seasonal or temporary work. It recognises that it would be inappropriate to require hirers to provide qualifying ZHC and agency workers in genuinely temporary work with a permanent contact. As such it intends to consult before setting out further detail about what constitutes a temporary need in future regulations. It is also keen to discuss other ways in which the legislation could cater for seasonal work.

Worker's choice

The worker will not be obliged to accept the offer, thereby retaining full flexibility on the worker's part. The Government states that it appreciates that zero-hours contracts can work well for some individuals, such as students and those with caring responsibilities, so those who are offered guaranteed hours will be able to remain on zero-hours contracts should they wish.

As currently drafted these provision place on employers a rolling need to offer a GHC to workers including those who have confirmed they do not want a GHC, instead wishing to retain their existing flexible arrangement. This appears to be unnecessary bureaucracy. One obvious solution would be to provide an opt-out option similar the 48-hour working week opt-out which can last indefinitely subject cancelation by the worker at any time by serving seven days' notice. We wait to see if the Government will consider any such opt-out, beyond the collective agreement with a trade union route (see above).

Next steps

The one thing that is sure, is that the legislative provisions are extremely complex. How workable these provisions will be will largely depend on future consultations and the detailed implementing regulations. The definitions of "low hours" workers and the "relevant reference" will be crucial as will the promised future consultation on what will constitute a "temporary need"/"limiting event" exempting the need to offer a guaranteed hours contract.

These provisions are not expected to come into force "earlier than 2026". Given the need for future consultation and extensive and significant substantive regulations with further consultation, 2026 may prove to be optimistic.

Policy

1. Guaranteed hours and rights relating to shifts

On 4 March 2025, the Government published a response to its consultation on extending to agency workers the rights set out in the ERB that relate to those working under zero-hours or low hours contracts.

The Government has decided to go ahead with extending to agency workers the rights to:

• guaranteed hours contracts,
• reasonable notice of shifts, and
• compensation for short notice of cancelled, curtailed or moved shifts.

These amendments are intended to "ensure that agency work does not become a loophole in the plans to end exploitative zero-hours contracts".

2. Umbrella companies

Expand the scope of the Employment Agencies Act 1973 to cover other types of business that participate in arrangements under which persons are supplied by their employer to work for other persons (such as “umbrella companies”).

The Bill's provisions

1. Right to be offered guaranteed hours

1. The right to guaranteed hours (see above) is extended to qualifying agency workers who satisfy the following criteria:
   • During the reference period, they worked for and under the supervision and direction of the hirer for a number of hours (the "reference period hours").
   • The reference period hours satisfy such conditions as to number, regularity or otherwise as are specified in regulations.
   • When the agency worker worked the reference period hours, it was not as an excluded agency worker (to be defined in regulations).
2. It will be the responsibility of the hirer to make a guaranteed hours offer to a qualifying agency worker but there is the power for regulations to instead place obligations on the agency or other entities in certain circumstances.

As is the case for zero hours/low hours workers (see above) workers who are offered guaranteed hours will be able to turn down the offer and continue to work under their pre-existing arrangements if they prefer.

Comment

The Government appears to have simply not engaged with the issue that by requiring employers to directly offer guaranteed hours contracts to relevant agency workers, this will fundamentally alter the working relationship. Rather than an agency worker relationship, the individual will be engaged directly by the end user with all the consequential implications that entails, such as unfair dismissal rights etc.

In addition, transfer fees payable to the agency may also be triggered. In the consultation response the Government simply states that the changes under the ERB "will not change the current system of transfer fees and extended hire periods which are set out in the Conduct of Employment Agencies and Employment Businesses Regulations 2003". Employers may wish to consider their current contractual arrangements with employment businesses in this regard.

2. Right to reasonable notice of a shift

1. Agency workers will be entitled to reasonable notice of shifts, unless the shift is an "excluded shift".
2. What will amount to an "excluded shift" is being left to implementing Regulations. Regulations may refer to the amount payable for working the shift, the number of hours to be worked during the shift or the shift corresponding to the time of a shift provided by the worker's contract.
3. The responsibility for the right to reasonable notice of shifts will be shared by the work-finding agency and the end hirer with liability apportioned to reflect the party responsible for providing unreasonable notice in each case.

3. Compensation when shifts are cancelled, curtailed or moved at short notice

1. Work-finding agencies will be responsible for paying agency workers compensation for any short-notice cancellation, curtailment or movement of shifts, regardless of whether the agency or the end hirer is at fault.
2. This will not apply in respect of "excluded shifts", which will be defined by regulations.
3. Agencies and hirers will remain free to negotiate terms which may allow these costs to be recouped from the hirer where the hirer was in fact responsible for the change.

4. Collective agreements contracting out

See zero-hour/low hour contracts and guaranteed working hours above.

5. Anti-avoidance measures

See zero-hour/low hour contracts and guaranteed working hours above.

6. Umbrella companies

The Government has added an amendment to the ERB expand the scope of the Employment Agencies Act 1973 to allow umbrella companies to be regulated for the purposes of employment rights. The Government will consult further on regulations to ensure that workers have comparable rights and protections when working through an umbrella company as when taken on directly by an employment business.

Recognising existing issues for defining umbrella companies, a new definition of "employment business" will be a business of participating in employment arrangements doing any of the following:

• Being an employer of the persons supplied under the arrangement;
• Paying for, receiving or forwarding payment for the services of a person with a view to them being supplied to a hirer in consideration of directly or indirectly receiving a fee from those persons;
• Supplying those persons;
• Taking steps with a view to doing any of the above.

Comment

This is a very wide new definition of "employment business" with implications beyond umbrella companies, such as secondments. We wait to see if unintended consequences result in a rethink of the new definition.

Next steps

The one thing that is sure, is that the legislative provisions are extremely complex. How workable these provisions will be will largely depend on future, the detailed implementing regulations. The definition of "the "relevant reference" will be crucial as will the promised future consultation on what will constitute a "temporary need"/"limiting event" exempting the need to offer a guaranteed hours contract.

These provisions are not expected to come into force "earlier than 2026". Given the need for more consultation and extensive and significant substantive regulations with further consultation, 2026 may prove to be optimistic.

Policy

Making flexible working the default.

The Bill's provisions

1. Added to the existing requirement that an employer may only reject a flexible working request based on one or more of the eight statutory reasons will be an additional requirement that "it is reasonable to refuse that application on that ground or those grounds ".
2. A new requirement that where a flexible working request is refused, the notification of the decision must state the ground or grounds for refusing the request and explain to the employee why the employer considers that decision is reasonable (subject to a national security reason exception).
3. The Secretary of State is also given powers to introduce additional steps employers will need to take for compliance with the requirement to consult before rejecting an application.

Comment

The Bill aims to ensure that more requests are agreed. The absence of a reasonableness element for an employer considering that one of the statutory reasons applies has been seen as a loophole for some time. The need to include an explanation for a refusal takes us back to the 2014 position. Both of these changes are in accordance with current ACAS recommend best practice.

In the run up to the Bill being published, press reports warned of workers "being able to demand" compressed hours so that they can work a five-day week in four days. Requesting a compressed hours working arrangement is and has been a possibility since the right to request flexible working was first introduced over 20 years ago. The Bill does not contain provisions requiring employers to agree to compressed hours working arrangements where such a working pattern is not reasonable. Nor is there a proposal for a right to a four-day working week. What is proposed is a shift in the dynamic for flexible working requests generally so that employers consider flexible working (which can be in a variety of forms) with rejections taken on a reasonable basis. So, more of a mindset shift.

As for a possible future introduction of additional steps, this may see the statutory minimum process requirements introduced on 6 April 2024 (that an employer must consult with an employee, as a means of exploring the available options, before refusing a flexible working request) expanded. Currently there is no legislative de minimis requirement of what that 'consultation' needs to include.

Next steps

As stated in the 'Next Steps to Make Work Pay'', the Government will develop the detail of the approach in consultation.

These provisions are not expected to come into force "earlier than 2026". The new requirement that a refusal is 'reasonable' and the ground for refusal stated could be brought into force by simple implementing regulations without further consultation.

Policy

Strengthening statutory sick pay (SSP) by removing the lower earnings limit (LEL) to make it available to all workers, as well as by removing the waiting period.

The Bill's provisions

1. Removal of the first three days waiting qualifying period for entitlement
2. Removal of the LEL requirement
3. The weekly rate of SSP to be the lower of:
   1. £118.75 (the SSP applicable from 6 April 2025); and
   2. 80% of the employee's normal weekly earnings.

Consultation responses

Initially the Bill did not set out the percent rate to replace the LEL. On 4 March 2025, the Government published its Response: Making Work Pay: Strengthening Statutory Sick Pay confirming that following the consultation, the rate will be set at 80% of normal weekly earnings, where 80% of an employee's normal weekly earnings is less than the flat rate of SSP. The Government believes that this rate strikes the right balance between providing financial security to employees and retaining incentives to return to work, while limiting additional costs to businesses.

On 14 March, the Government confirmed in response to a Work and Pensions Committee report that it does not intend to equalise the rate of SSP (£118.75 from 6 April 2025) with the flat rate of statutory maternity pay (£187.18 from 6 April 2025). It reasoned that SSP and SMP are paid for different reasons. Employers can plan for maternity leave absences and they can claim back up to 92% of SMP, with those qualifying for Small Employers' Relief claiming back up to 103% (108.5% from 6 April 2025) of their SMP payments. In contrast, employers pay the full cost of SSP. Declining to accept the recommendation for a small business rebate for SSP, the Government suggested that having responsibility for sick pay encouraged employers to support employees to return to work.

Comment

The removal of the waiting period (the first three days of sickness) was previously done as a temporary measure during the COVID-19 pandemic to simplify the SSP system and get help to those in need more quickly.

While the policy statement referred to "all workers", this does not represent a change. SSP will continue to apply in relation to "employees" which for SSP purposes includes all those whose earnings are subject to Class 1 National Insurance contributions – so already includes many "workers".

However, the removal of the LEL (currently £123 per week) will help low-paid casual workers. While that will be the case, a concession has been added that the rate of SSP will be set at a lower rate for low paid employees instead being 80% of their weekly pay. This concession is being included in light of business fears of those on low pay would otherwise have an incentive to take sick leave.

Next steps

These provisions are not expected to come into force "earlier than 2026".

Policy

Strengthening the law to ensure hospitality workers receive their tips in full and workers decide how tips are allocated.

The Bill's provisions

1. Introduces a requirement for employers to consult with the representatives of recognised trade unions or worker representatives, or, where there are no such representatives in place, workers likely to be affected by the policy. Such consultation is to be carried out before the employers produce the first version of their written tipping policy.
2. Introduces a requirement for employers to review their written policy from time-to-time in consultation as above. The first review must take place at least once within three years from the date the initial version of the policy is issued, even if that date is before this provision comes into effect. Following that, reviews must take place thereafter at least once every three years.
3. Introduces a requirement for employers to also make available to all workers a written summary (in anonymised form) of the views expressed in the consultation

Comment

The Employment (Allocation of Tips) Act 2023 together with the statutory Code of Practice on Fair and Transparent Distribution of Tips came into force on 1 October 2024 (see below). The 2023 Act regulates how employers allocate tips among workers by introducing obligations to ensure that workers receive "tips, gratuities and service charges" in full, and that those tips are allocated in a fair and transparent way. In addition, workers will receive a new right to request more information about an employer's tipping record with employers being required to have a written policy on how tips are allocated.

However, unlike the headline policy stated in the 'Plan to Make Work Pay' the changes that came in on 1 October 2024 do not go so far as to provide that "workers decide how tips are allocated". The provisions contained in the Bill are aimed at increasing the voice of the workforce in determining the allocation of tips policy. As many employers have recently drafted their tipping policy in compliance with the 1 October 2024 changes, scheduling a review to take place before October 2027 will be needed.

Not part of the ERB, but note that from 6 April 2025, the limit on the compensatory award for failure to have a written tips policy, or for failure to allocate and pay tips fairly, increases from £5,000 to £5,135.

Next steps

These provisions are not expected to come into force "earlier than 2026", But note, that when they are brought into force the tipping policy review provisions will apply to tipping policies which predate the Bill's implementation.

Policy

Introduction of "day-one" employment rights, including entitlement to paternity leave, and unpaid parental leave.

The Bill's provisions

1. Removal of the one-year qualifying service requirement for (unpaid) parental leave.
2. Removal of the 26 weeks qualifying service requirement for paternity leave.
3. Removal of the restriction on employees taking paternity leave and pay following shared parental leave and pay. 

Comment

This change makes paternity leave and parental leave a day one right bringing them in line with maternity and adoption leave. Allowing paid paternity leave to be taken after a period of shared parental leave, is simply correcting what appeared to be an inadvertent error following the April 2024 changes to paternity leave (extending the period in which paternity could be taken from within 56 days to within 52 weeks of birth).

Next steps

These provisions are not expected to come into force "earlier than 2026". As a family-related leave change, April 2026 is a best guess.

Policy

Establishing bereavement leave.

The Bill's provisions

1. Extending "parental bereavement leave" to become “bereavement leave”.
2. The Secretary of State is given powers to make regulations giving employees who are bereaved the right to take protected time off work, in addition to the already existing provision for parental bereavement leave. A “bereaved person” will be defined in regulations by reference to the employee’s relationship with the person who has died.

Possible future amendment

On 15 January 2025, the Women and Equalities Committee (WEC) published a report recommending that ERB should be amended to extend the existing parental bereavement leave and pay to employees who suffer pregnancy loss before 24 weeks. This is an extension of the current law on parental bereavement leave, which currently only applies where a child dies or there is a stillbirth after 24 weeks.

The Government did not accept this amendment as the House of Commons stage. However, it has accepted the principle of bereavement leave for pregnancy loss and indicated that discussions will take place with a view to the ERB being amended during its passage in the House of Lords. One to watch.

Comment

We await detail to be provided in the implementing regulations (though some minimum requirements are set out in the Bill) regarding:

• Eligibility – what relationship will the bereaved person need to have had with the deceased.
• Duration – the Bill sets a minimum of seven days days in respect of a person other than child. The existing two-week period will remain in respect of a death of a child.
• When the leave can be taken – the Bill sets a minimum of up to 56 days after the death.
• Multiple deaths – the Bill requires the entitlement to be in respect of each deceased person.

Next steps

These provisions are not expected to come into force earlier than April 2026. Substantive implementing regulations will be required setting out much of the detail. Consultation on the content of the implementing regulations expected.

Policy

Increasing protection from sexual harassment.

The Bill's provisions

1. Amend the "duty to take reasonable steps to prevent sexual harassment" coming into force on 26 October 2024 (see below) to a "duty to take all reasonable steps to prevent sexual harassment".
2. Re-introduce employer liability for third-party harassment of workers in the course of their employment. To cover all forms of harassment not only sexual harassment, subject to an "all reasonable steps" defence.
3. The Secretary of State is given powers to make regulations to specify steps which an employer must take and matters to which they must have regard for the purposes of meeting the obligations set out in the Equality Act 2010 to take all reasonable steps to prevent sexual harassment.

Comment

On 26 October 2024, the Worker Protection (Amendment of Equality Act 2010) Act 2023 came into force. The Act introduces a new positive legal obligation on employers to take "reasonable steps" to protect their workers from sexual harassment. During a difficult passage through Parliament, the originally proposed provisions of the 2023 Act were very significantly diluted:

• The original provisions provided for re-introducing employer liability for third-party harassment of workers in the course of their employment, which was remove: and
• The potential 25% compensation uplift in sexual harassment cases, test was diluted from requiring employers to have taken "all reasonable steps" to simple "reasonable steps" (a lower bar).

These dilutions came when the 2023 Act was before the House of Lords as peers expressed concerns that those provisions would "jeopardise free speech" and "increase the regulatory burden on employers". 

Next steps

We wait to see whether these provisions in the Bill fare better before the House of Lords in this Parliament than they did in the previous Parliament. More heated debate likely.

If passed, these provisions are not expected to come into force "earlier than 2026".

Policy

Strengthen whistleblowing protections (including those related to sexual harassment).

The Bill's provisions

1. Explicitly include "sexual harassment that has occurred, is occurring or is likely to occur" as a 'relevant failure' in relation to disclosures qualifying for protection.

Comment

Under the existing whistleblowing legislative provisions, for there to be a 'qualifying disclosure of information' which is protected, the information disclosed must reasonably tend to show one or more of five 'relevant failures' has occurred, is occurring, or is likely to occur:

1. A criminal offence
2. Breach of any legal obligation
3. Miscarriage of justice
4. Danger to the health and safety of any individual
5. Damage to the environment
6. The deliberate concealing of information about any of the above

Due to concerns that not all complaints of sexual harassment fall within a or b above, sexual harassment will be explicitly added after health and safety which will also make deliberate concealment of information regarding sexual harassment a relevant failure.

Claims for sexual harassment are likely to fall within the ambit of the additional 'public interest' test due to the nature of the wrongdoing disclosed.

Next steps

We wait to see if the tabled amendment is accepted and thereafter the content of the implementing regulations with implementation no earlier than 2026.

Policy

Nothing set out in 'Make Work Pay' documents.

Bill's provisions

As introduced in Parliament on 10 October - nothing.

Proposed amendment

On 1 November 2024, an amendment to the Bill was proposed by a Liberal Democrat MP to add a provision which would render void any non-disclosure agreement insofar as it prevents the worker from making a disclosure about harassment (including sexual harassment). This amendment was rejected at the Committee stage due to the "specific" wording that was proposed. However, when before the Public Bill Committee, the Parliamentary Under Secretary of State Justin Madders, stated that the Government does "intend to look more closely at what we can do in this area". Watch this space.

Related pending legislation

Separately, back on 24 May 2024, the Victims and Prisoners Act 2024 (VPA) received Royal Assent as part of the "wash-up" before Parliament was dissolved in advance of the 4 July General Election but largely not yet implemented.

When in force, section 17 will make void any provision in an agreement that purports to preclude a disclosure of information by a victim (or a person who reasonably believes they are a victim) of a crime to:

• Any person with law enforcement functions, for the purpose of those functions being exercised in relation to relevant conduct.
• A qualified lawyer, for the purpose of seeking legal advice about relevant conduct.
• Any individual who is entitled to practise a regulated profession, for the purpose of obtaining professional support from that service in relation to relevant conduct.
• A regulator of a regulated profession for the purpose of cooperating with the regulator in relation to relevant conduct.
• A person who is authorised to receive information on behalf of any of the above persons for the purposes mentioned above.
• A child, parent or partner of the person making the disclosure, for the purposes of obtaining support in relation to the relevant conduct.

"Victim" includes a person who is "subjected to criminal conduct", or "where the person has seen, heard, or otherwise directly experienced the effects of, criminal conduct at the time the conduct occurred".

Comment/next steps

We wait to see if the Government amends the Bill to render void any non-disclosure agreements in relation to sexual harassment and perhaps harassment more widely.

As regards section 17 of the VPA, the Parliamentary Under Secretary of State also confirmed that "the Ministry of Justice is carefully considering plans to bring the relevant section of [the VPA] into force and will be working closely with the victim support and business sectors to ensure that the new measure is implemented and deployed effectively".

Policy

Introduction of "day-one" employment rights, namely protection from unfair dismissal subject to probationary periods to assess new hires.

The Bill's provisions

1. Removal of the two-year qualifying service requirement for entitlement to unfair dismissal rights with the repeal of section 108 of the Employment Rights Act 1996 (ERA), which sets out the current qualifying period.
2. A new provision specifying that an employee cannot claim unfair dismissal unless they have started work subject to exceptions for the existing ‘automatically’ unfair reasons for dismissal.
3. Removal of the two-year qualifying period for the employee’s right to make a request for written reasons for dismissal. To be replaced by a requirement that the dismissal must have occurred after 'the end of the employee’s initial period of employment'.
4. Minor amendments to unfair dismissal rights for 'employee shareholders' to include protection where the reason for dismissal relates to the employee’s political opinions or affiliations.
5. The Secretary of State is given powers to make regulations to modify the operation of the test for unfair dismissal where termination falls:
   1. within the 'initial period of employment'; or
   2. within the three months immediately after the end of that period, if the employer has given notice of termination before the end of that period

and the reason for the dismissal must relate to one of four statutory reasons:

1. Capability/qualifications: A reason related to the capability or qualifications of the employee.
2. Conduct: A reason related to the conduct of the employee.
3. Statutory ban: That the employee could not continue to work in the position because their continued employment would contravene a statutory duty or restriction.
4. Some other substantial reason ('SOSR'): Relating to the employee.


6. The Secretary of State may specify a lower compensatory award where a tribunal finds an employee was unfairly dismissed during the initial period of employment.
7. The Secretary of State is given powers to make regulations:
   1. Specifying circumstances in which two or more periods of continuous employment are to be treated as a single period of continuous employment;
   2. Provisions for determining whether a reason does, or does not, relate to an employee; and
   3. Specifying steps employers must take for a fair dismissal.

Comment

Although there had been previous references to ‘workers’ gaining this ‘day-one right’, it is still currently limited to ‘employees’.

While simply reducing the current two-year qualifying service itself would have been a simpler and quicker option (the Government already has the legislative power to do that via secondary legislation), this is not what the Government is proposing. Unfair dismissal will become a day-one right for employees but there will be provisions specifically dealing with dismissals within an 'initial period of employment'.

Technically, by removing the qualifying period altogether, employees who have been recruited and have a contract of employment but who have not yet started work could also qualify. The Bill contains provision to prevent this by a specific exception. However, this exception will not apply where the employee can show they were dismissed for one of the existing 'automatically' unfair reasons where the existing two-year service requirement is already disapplied, for example dismissal in connection with pregnancy, whistleblowing, acting as an employee representative, asserting a statutory right etc. Or for dismissals in relation to spent convictions, relating to an employee’s political opinions or affiliation, and membership of a reserve force. Note that a dismissal in connection with a transfer of an undertaking (a TUPE transfer) will be included within the exception (while currently an automatically unfair reason the two-year service requirement does currently still apply). The ERB has been amended to clarify that the new right not to be dismissed for failing to agree a contractual variation contained in the ERB will not apply to the dismissal of an employee if, at the time of dismissal, they have not yet started work.

As regards the 'initial period of employment', what that 'initial period' will be is to be subject to further consultation, although the Government has stated in the 'Next Steps to Make Work Pay' that its preference is nine months. There is no reference in the Bill to the 'initial period of employment' necessarily being a contractual probationary period. Accordingly (assuming the Government's preferred choice of a nine-period being used), the same rules will apply to an employee who has no contractual probationary period or a three/six-month contractual probationary period and an employee who has a contractual nine- month probationary period. 

What the 'modified dismissal procedure test' will require and how that will compare with our understanding of the usual processes employers follow to conduct a fair dismissal is yet to be fleshed out. In the 'Next Steps to Make Work Pay', the Government suggests as a starting point that it should consist of holding a meeting with the employee to explain the concerns about their performance (at which the employee could choose to be accompanied by a trade union representative or a colleague). Furthermore, the Government will consult 'extensively', including on how it interacts with Acas’s Code of Practice on disciplinary and grievance procedures.

It will still be possible for an employee in the 'initial period of employment' to successfully claim unfair dismissal, but the test to show their dismissal was unfair will be a harder one to pass. But note:

• The employer will still have to show that the reason for dismissal is related to one of four statutory reasons: capability/qualifications, conduct, statutory ban or 'SOSR related to the employee’. It is just the test for whether the employer acted reasonably in treating that reason as sufficient for dismissing the employee which is being modified.
• The existing fifth statutory fair reason for dismissal (which will continue to apply to the period after the 'initial period of employment') of redundancy is not included in this list. This means that employees who are made redundant on day one can claim unfair dismissal in the same way as any employees outside of the 'initial period of employment' with the existing unmodified test of fairness applying.
• The reference to 'SOSR' is also slightly different. In a normal unfair dismissal claim, the employer has to show that the reason for dismissal is “SOSR of a kind such as to justify the dismissal of an employee holding the position which the employee held”. But for a dismissal during an 'initial period of employment' the SOSR must be "related to the employee of a kind to justify dismissal" suggesting a dismissal connected with a business reorganisation would not be covered. We wait to see if this remains the case after consultation
• As for compensation, the Government states that it will also consult on what a compensation regime for successful claims during the 'initial period of employment' will be, with consideration given to tribunals not being able to award the full compensatory damages currently available.

Next steps

The mechanism proposed for the removal of unfair dismissal qualifying service period will now be subject to "full consultation". Given the concerns already expressed by employers over this change, the Government has committed in the 'Next Steps to Make Work Pay' not to introduce changes to unfair dismissal before the autumn of 2026. The further detail around the 'initial period of employment' is greatly needed.

Assuming a 1 October 2026 implementation date with no additional transition provisions, essentially this amounts to an informal transition period with the effective qualifying period reducing over time. Employees recruited today will qualify for unfair dismissal in just under two years. Employees recruited this time next year will qualify after just under one year’s service and so on.

Policy

Strengthening rights for pregnant workers.

The Bill's provisions

1. The Secretary of State is given powers to make provision in regulations about redundancy during or after a protected period of pregnancy.
2. The Secretary of State is given new powers to make provision in regulations about dismissal for reasons other than redundancy, during or after a protected period of pregnancy.
3. Following a Government amendment, supplementary regulations may be made:
   1. About notices, evidence and other procedures to be followed by employees and employers.
   2. About the consequences of failing to comply with any such procedural requirements.
   3. Overlap with contractual rights
   4. To modify the calculation of a week's pay in relation to an employee who is or has been absent during or after a protected period of pregnancy.
   5. Modify or exclude laws during or after the protected period.

Comment

The scope of any new rules that may be introduced by the government in relation to non-redundancy dismissals during or after the protected period of pregnancy remains unclear.

We await details of how this will differ from the rights which came into force on 6 April 2024 under the Protection from Redundancy (Pregnancy and Family Leave) Act 2023 and the corresponding Maternity Leave, Adoption Leave and Shared Parental Leave (Amendment) Regulations 2024 which extend the existing redundancy protections (priority for suitable alternative employment) while on maternity, adoption or shared parental leave to additionally cover the pregnancy period until 18 months beginning with the first day of the expected week of childbirth or placement date for adoption (essentially an additional six-month period). We also await details of the types of dismissal other than those by reason of redundancy that will be protected.

Next steps

In light of the 6 April 2024 changes, what the new rights to be introduced under the Bill actually entail is left entirely to Regulations. Consultation on the content of the implementing regulations is expected soon.

Any provisions to be introduced are not expected to come into force earlier than April 2026.

Policy

Abolishing the scourge of fire and rehire.

The Bill's provisions

1. Adding to the list of 'automatically' unfair reasons for dismissal, a dismissal (a s401I dismissal)
   1. for not agreeing to a variation to their contract; or
   2. if the employer dismisses the employee to replace, or to re-engage them on varied contractual terms to carry out the same or substantially the same duties.
   3. unless the employer can demonstrate they fall within an exemption

   (words substantially the same added via amendment to the ERB).

   
   
2. A dismissal will not be 'automatically' unfair where an employer can show:
   1. The reason for the variation was to eliminate, prevent, significantly reduce or significantly mitigate the effects of financial difficulties which, at the time of the dismissal, were affecting the employer’s ability to carry on the business as a going concern.
   2. Where an employer does not operate on a going concern basis, for example certain public sector bodies, the employer would have demonstrated the reason for the variation was to eliminate, prevent, significantly reduce or significantly mitigate the effects of financial difficulties which, at the time of the dismissal, were affecting the employer's ability to carry on activities constituting the business; and
   3. in all the circumstances the employer could not reasonably have avoided the need to make the variation.


3. Where an employer can show a s401I dismissal is not automatically unfair, when determining whether a dismissal was fair or unfair consideration must be given to:
   1. whether any consultation was carried out by the employer with the employee, an independent trade union or another employee representative about the variation of the employee’s contract of employment, and
   2. whether the employer offered the employee anything in return for agreeing to a variation.


4. The Secretary of State is also given a power to specify other factors that must be taken into account.

Consultation response

In October, the Government consulted on whether to expand the list of unfair dismissal claims for which interim relief can be sought to include claims under the new s401I (variation of contract refusal). Interim relief is currently limited to unfair dismissal cases regarding union/employee rep activities/membership and whistleblowing. Interim relief enables a tribunal to make an order for the continuation of an individual's employment pending final determination of the case making this a potentially powerful tool for a claimant.

The Government has dropped its plans to extend interim relief in fire and rehire scenarios. As there will be significant changes to fire and rehire in the ERB, the Government believes that there should be additional discussions with employers and employees to review the impact and implementation of these changes before additional remedies, such as interim relief, should be considered. Nonetheless, the Government is pressing ahead with the severe restrictions on this practice (see Comment on unintended consequences below).

Comment (unintended consequences?)

A Code of Practice on dismissal and re-engagement devised under the previous Conservative Government did in fact come into force post the general election on 18 July 2024. The existing Code requires employers to consult employees and explore alternative options, without raising the prospect of dismissal unreasonably early or using the threat of dismissal as a negotiating tactic to put undue pressure on employees in circumstances where the employer is not envisaging dismissal – so called 'fire & rehire' or 'fire & replace tactics'.

The Bill's provisions will significantly strengthen employee protection from unfair dismissal in these circumstances while still permitting the use of dismissal and reinstatement for employers facing financial difficulties in circumstances where the employer could not reasonably have avoided the need to make the variation. In such circumstances, the Bill includes a number of matters that must be considered when determining whether the dismissal is fair, including the degree of consultation (compliance with the Code of Practice) and whether the employer offered the employee anything in return for agreeing to the variation.

However, the Bill goes much further than the Code of Practice in that it will be automatically unfair to dismiss an employee for failing to agree to any variation of their contract, unless the employer is able to meet the high hurdle of being in financial difficulties. This is a very significant change that may have possible unintended consequences. Consider scenarios such as:

1. an employer is providing week-day support services and the client informs them that this needs to change to include weekends; or
2. a manufacturing firm invests in new machinery that will increase productivity but only if shift patterns are changed; or
3. a care home introduces a new contractual requirement that all employees must have a COVID vaccination to protect vulnerable residents.

None of the a would meet the test of ‘financial difficulties’ that would ‘in the immediate future’ affect the employer’s ability to operate as a going concern. What is an employer to do in those circumstances? Would a contractor have to just lose the contract and make employees redundant? But then there would be a TUPE service provision change so the incoming contractor would now have the issue. Would the manufacturer simply need to continue with its current machinery and not seek to improve productivity? Does the care home employer ignore the health and safety of its residents?

These are just some examples of unintended consequences of confining the exception to cases of ‘financial difficulties’. A sensible amendment could be to add ‘technical or organisational reasons’ to the exceptions as well as a 'health & safety' exception. This would still be a significant change as dismissal would still only be lawful when the employer ‘could not reasonably have avoided’ the need to make the variation - a test being significantly more restrictive than the current test of reasonableness in unfair dismissal cases. This would enable the policy of 'ending the scourge of fire and refire' without extensive unintended consequences. We wait to see if any movement is made in this regard.

Related Secondary Legislation

On 17 October 2024 the Trade Union and Labour Relations (Consolidation) Act 1992 (Amendment of Schedule A2) Order 2024 was made on 2 December 2024, meaning that from 20 January 2025 where a party brings a successful claim for a protective award (for failure to collectively consult on redundancies), an employment tribunal can adjust any protective award made by up to 25% if it finds that employer failed to comply with a relevant Code of Practice, for example the Code of Practice on dismissal and re-engagement.

Next steps

We await updates to the Code of Practice and the content of the implementing regulations with implementation "not before 2026".

Policy

Strengthen provisions on collective redundancy.

The Bill's provisions - Significant changes

The ERB originally contained provisions:

1. Removal of the reference to 'at one establishment' so that the requirements to collectively consult, and to notify the Secretary of State, apply where the employer is proposing to make 20 or more employees redundant.
2. Specific amendments to the notification obligations in certain cases involving redundancies of ships’ crews.

Change 1 intended to amend provisions of the Trade Union Labour Relations (Consolidation) Act 1992 (TULRCA) would have meant that the obligation to collectively consult (s188 TULCRA) and to notify the Secretary of State about redundancies (s193 TULRCA) would apply more often and was set to have far-reaching impacts for employers. In particular, large multi-site employers might have found themselves in constant cycles of consultation and notification (see below). The Government has heeded employers' warnings in this respect and has abandon its proposal to remove the 'at one establishment' wording.

The Bill's provisions as amended

The ERB now provides:

1. A new section 188(A1) of TULRCA 1992 will provide that the obligation to collectively consult over redundancies under section 188 is triggered where an employer is proposing to dismiss as redundant within a period of 90 days or less either:
   • 20 or more employees at one establishment; or
   • at least the "threshold number of employees", as defined in a new section 195A TULRCA.


2. Under the new section 195A, the Secretary of State is given the power to make regulations specifying the threshold number of employees. The threshold number may be either:
   1. a specified number;
   2. a number defined by a specified percentage of employees; or
   3. determined in another way specified in the regulations.

   However it must not be lower than 20.

   
   
3. A new section 188(2A) TULRCA will provide that obligations to consult under section 188 will not require an employer to consult all appropriate representatives together, nor to undertake consultation with a view to reaching the same agreement with all the appropriate representatives.


4. Where the employees whom the employer is proposing to dismiss as redundant are not all at one establishment, a new section 188(4)(ca) TULRCA will require employers to disclose in writing to the appropriate representatives the total number of employees it is proposing to dismiss and the establishments in which they are employed.


5. The trigger for the obligation to notify the Secretary of State under s193 TULRCA will be aligned with the trigger for collective consultation under new s188(A1). Where the employer is proposing to dismiss as redundant 100 or more employees under the new s188(A1), the notification will be required at least 45 days before the first dismissal takes effect, instead of 30 days.


6. The trigger for consultation obligations on a TUPE transfer under s198A TULRCA will be aligned with the trigger for collective consultation obligations under new section 188(A1).

Comment

No doubt the policy remains aimed at closing the perceived Woolworths loophole (there was a closure of all stores nationally, but as each store a separate 'establishment' only employees at the larger stores had collective consultation rights triggered). The Government's explanatory statement to these amended provisions, confirms that its intention is that, where employees are being made redundant at more than one establishment across a business, the trigger for collective consultation under s188 and notification under s193 can be set at a higher number than 20 employees (which will remain the trigger in relation to redundancies at one establishment).

The amended provisions do go a long way to address the unintended consequences (see below) of a simple wholesale removal of the 'at one establishment' requirement and are welcomed. In particular, it is helpful that although consultation must be carried out with all appropriate representatives, it need not be carried out with all appropriate representatives together or with a view to reaching the same agreement with all appropriate representatives. However, just what that modified trigger will be is being left to future regulations. So far, there is no indication what the modified trigger may be. Clearly, this will be critical to understanding the impact of the revised proposals on employers.

Unintended consequences of simply removing the 'at one establishment' requirement:

For example, a nationwide company with sites across the UK:

• It proposes to restructure the sales team in its Southampton branch with the result that there will be 12 redundancies.
• At around the same time the company is merging two retail stores Wales with the loss of a further seven jobs.
• A month later the Aberdeen head office then decides to reduce the number of its administrative staff.

If the redundancies for three genuinely different business reasons are spread over a period of no more than 90 days, then the duty to consult will apply.

The problem for the employer is that each location is engaged in a completely separate redundancy exercise that may not be coordinated in any way. Does it have to carry out one single consultation exercise or can it carry out three separate ones? The issues for the employees at the different sites for different business reasons will be, well very different. If redundancies must be aggregated across different establishments in different parts of a business and spread over the whole country, then large employers will need to consider wide coordination/oversight of any redundancies across any parts of its business.

Next steps

No doubt, more consultation to come on the content of the implementing regulations, though such consultation may take place after the ERB is passed. As for implementation, so far we only have "not before 2026", though that may be optimistic in light of the additional consultation that will be needed.

Policy

In the 'Next Steps to Make Work Pay', the Government "committed to consult on lifting the cap of the protective award if an employer is found to not have properly followed the collective redundancy process as well as what role interim relief could play in protecting workers in these situations".

Bill's provisions

As introduced in Parliament on 10 October - nothing.

Following the consultation about strengthening protection in collective redundancy, the Government has amended to the ERB to add a new clause to:

• Amend s189(4)(b) TULRCA by doubling the cap the protective award period available for failure to collectively consult from up to 90 days to of up to 180 days' pay per affected employee.

Consultation response

In October 2024, the Government consulted on:

1. Increasing the protective award from 90 to 180 days’ pay per affected employee; or and
2. Introducing new rights to interim relief for in collective redundancy protective award claims.

While the Government has decided to go ahead with proposal 1, it no longer plans to take proposal 2 ahead.

Comment

The change to the protected period for a protective award will make the cost of non-compliance with collective consultation obligations significantly more expensive for employers. To address non-compliance as a result of employers misunderstanding the complex collective consultation framework, the Government has committed to produce guidance for employers of all sizes on compliance with collective consultation obligations "in due course".

Note, it will remain the case that where a company is insolvent the 8-week cap for payment by the Insolvency Service will remain unchanged (the balance instead being an unsecured debt in the insolvency).

As for the rejected proposal to extend interim relief it will be welcomed that the Government has recognised that interim relief with its tight short deadlines, complex evidence requirements and the general strain on the tribunal system, simply mean interim relief is not a viable option in this context. The increase in the level on a protective award should alone provide an effective means to meet the Government's aim to strengthen compliance with collective consultation

Next steps

"Not before 2026", though that may be optimistic in light of the additional consultation that will be needed in relation to the changes to collective consultation thresholds (see above).

Policy

Improved protection of workers in public sector outsourcing.

The Bill's provisions

1. Amendments to the Procurement Act 2023, to allow the Secretary of State to make regulations specifying that certain contractual provisions be included within relevant public sector outsourcing contracts to avoid the emergence of a two-tier workforce consisting of ex-public sector employees and private sector employees.
2. Places a duty on the Secretary of State to publish a Code of Practice containing guidance to contracting authorities in relation to relevant outsourcing contracts.

Committee Stage accepted amendments

Having been accepted at Committee Stage the Bill now also ensures the powers and duties under this provision extend to the devolved Scottish and Welsh authorities. Also, clarifies that implementing regulations are not required for before the Code of Practice may be published.

Comment

The intention of this provision is to ensure parity of treatment between individuals transferring from the public sector and those employed by the supplier. The Government has separately indicated that measures ensuring that outsourcing of services can no longer be used by employers to avoid paying equal pay will be delivered through the Equality (Race and Disability) Bill.

Next steps

We await the content of the implementing regulations and code of practice which will also require consultation. Implementation "not before 2026".

Policy

Strengthening working women’s protections from maternity and menopause discrimination and introduce gender pay gap action plans.

The Bill's provisions

1. Equality plans

1. The Secretary of State is given power to make regulations which require employers with 250 or more employees and some public sector employers to:
   1. develop and publish an equality action plan showing the steps that they are taking in relation to their employees with regard to matters related to gender equality; and
   2. publish prescribed information relating to the plan.
2. Regulations may not require an employer to publish information more frequently than every 12 months.
3. A matter is related to gender equality if it is related to "advancing equality of opportunity between male and female employees" and include:
   1. addressing the gender pay gap; and
   2. supporting employees going through the menopause. 

2. Outsourced workers

1. The Secretary of State is given power to make regulations requiring require private and voluntary sector employers with at least 250 employees in Great Britain to publish information about the service providers that they contract with for outsourced services.

Comment

Gender pay gap report

Employers who are already required to publish gender pay gap reports will also be required to develop and publish an 'equality action plan' showing the steps that they are taking with regard to gender equality, including addressing the gender pay gap and supporting employees going through the menopause.

The implementing regulations may also set out certain requirements in respect of the plan, such as its contents, frequency of publication and any requirements for board approval.

Outsourced workers information

Before the Public Bills Committee, it was made clear that the provisions of the Bill are limited to "getting large employers to disclose who they have outsourcing relationships with". In other words, large employers will only need to disclose with whom it contracts for outsourced workers. It will not extend to including pay data of outsourced workers within the end-users pay gap reports. Instead, the measure will simply link the outsourced workers' employer’s pay gap reporting to the end-user.

Next steps

We await the content of the implementing regulations with implementation sometime in 2026.

Policy

Reinstating the School Support Staff Negotiating Body (SSSNB), to establish national terms and conditions, career progression routes, and fair pay rates.

The Bill's provisions

• Establishing and setting out the remit for a new SSSNB.
• Outlines matters within the SSSNB’s remit to include remuneration, terms and conditions, training, and career progression for school support staff.

Comment

School support staff covers those employed by local education authorities (LEAs) in England and governing bodies maintained by LEAs in England under a contract of employment providing for the person to work wholly at one or more schools maintained by an LEA in England, and those employed by academies.

Next steps

We await the content of the implementing regulations with implementation sometime in 2026.

Policy

A new fair pay agreement in the adult social care sector will help to establish national terms and conditions and fair pay rates.

The Bill's provisions

• Introduction of sectoral agreements in the adult social care sector.
• The Secretary of State is given power to establish the Adult Social Care Negotiating Body (ASCNB).
• Outlines matters within the ASCNB’s remit to include the remuneration and terms and conditions applicable to social care workers, and ‘any other specified matters’ relating to their employment.
• ‘Social care worker’ means any person who is employed (meaning as an employee or worker) wholly or mainly in, or in connection with, the provision of adult social care as defined in the Bill.
• The Secretary of State is given power make regulations regarding:
  • how the ASCNB may consider matters within its remit, the procedure for reconsideration, provisions relating to disagreements and ratification, and the ability of the Secretary of State to ‘step in’ where agreement cannot be reached;
  • allow for guidance and codes of practice to be issued;
  • impose record keeping obligations on employers; and
  • amend the National Minimum Wage Act 1998.

Comment

The Government originally committed to establishing sector-wide collective bargaining through which unions would negotiate fair pay agreements with employers across an entire industry (instead of merely a single employer or workplace). Instead, there will be the introduction of a fair pay agreement limited to the adult social care sector where the Government has identified issues relating to relatively high turnover and vacancy rates. A fair pay agreement is aimed at empowering workers, trade unions and employers to negotiate fair pay, terms and conditions, and training standards.

Next steps

The Government will launch a consultation "soon" to consider exactly how the fair pay agreement should work.

Policy

Strengthening trade union legislation and simplifying the process of statutory recognition.

Following consultation, the Government has made a number of amendments concerning trade unions set out in its Response to the consultation 'Making Work Pay: Consultation on creating a modern framework for industrial relations'.

The Bill's provisions

1. Right to statement of trade union rights

1. Employers will be required to provide to an employee a written statement of the worker's right to join a trade union. This statement must be given at the same time as the employer provides the statement of their employment particulars, and at 'other prescribed times' that will be set out in regulations.
2. Details of the content and form of the statement, and the manner in which it must be provided, will also be specified in secondary legislation.
3. The penalties for failure to comply with this new requirement will mirror those that apply to a failure to provide a statement of employment particulars.

2. Right of trade unions to access workplaces

1. Access agreements
   1. The Bill provides for 'access agreements' to be entered into between listed trade unions and employers that allow officials from those trade unions to access the workplace for the purposes of meeting, representing, recruiting or organising workers, or facilitating collective bargaining ('the accesses purposes'). Following amendment this has been expanded to include 'supporting' to make clear that access can be for the purpose of supporting workers in any way.
   2. An amendment to the ERB expands the scope to communication with workers other than by means of physical entry into a workplace (for example digital or virtual means) and for the provision of information to workers (for example all-staff emails).
   3. Also added is that physical entry to a workplace should not be refused solely on the basis that communication with workers by non-physical entry is permitted and vice versa.
2. The Bill sets out the access principles:
   1. union officials should be able to have workplace access for any of the access purposes in any manner that does not unreasonably interfere with the employer's business;
   2. an employer should take reasonable steps to facilitate access by officials; and
   3. access should be refused entirely only where this is reasonable in all the circumstances.
3. The Bill sets out the process:
   1. the trade union submits an access request.
   2. the employer provides a response notice.
   3. the parties negotiate the terms on which union officials are to have access within a 'negotiating period'.
   4. jointly notify the Central Arbitration Committee (CAC) of the terms.
4. Both the access request and the response notice will need to be in a prescribed form, containing prescribed information and given in a prescribed manner.
5. An application may be made to the CAC to determine a union's workplace access where the employer has not responded to the access request or negotiations have been unsuccessful.
6. The Secretary of State will have power to set out in regulations:
   1. The length of the 'response period' and the 'negotiating period'.
   2. The form and manner of the access request and response.
   3. The form and manner of notification to the CAC.
   4. Exempt certain workplaces.
7. An amendment has been added to make it clear that the provisions requiring trade unions to have access to workers and workplaces cannot require physical entry into dwellings, the disclosure of personal data without consent (whether or not that would be a breach of the data protection legislation) or a disclosure in breach of the data protection legislation.

3. Trade union recognition

1. Replacing the 10% application threshold for the CAC to accept a trade union recognition application with a new 'required percentage test' (to be set between 2% and 10%).
2. Removal of the requirement at the application stage (and at other stages of the recognition scheme) for a union to demonstrate that there is likely to be majority support for trade union recognition.
3. Removal of the 40% support threshold at the recognition ballot stage (reverting to a simple majority threshold).

New provisions now added:


4. Extend the prohibition on unfair practices to the entirety of a recognition or derecognition process and ensure the CAC can make orders in relation to unfair practice regardless of whether the practice in question changed voting behaviour.
5. Increase the time limit for making claims in relation to unfair practices (from one day after the ballot has closed to five working days after the ballot has closed).
6. Provides for binding access agreements giving unions access to workers throughout a recognition or derecognition process, to be concluded in a 20-day negotiation window after which, if no agreement is reached, the CAC can intervene to adjudicate unless both parties request a delay (capped at ten working days) to allow negotiations to conclude.
7. Prevents workers who joined the bargaining unit after a recognition application being received by the CAC from being counted for various purposes.
8. Prevents a new recognition agreement entered into by an employer with a non-independent union (so-called sweet-heart unions) from stopping a recognition process.

4. Trade union finances

1. Repeal of the requirement for trade unions to opt out their members from contributions to political funds, unless they have expressly requested to opt in. This will return (in substance) to the position before the introduction of the Trade Union Act 2016, trade union members being automatically opted in to contribute to a political fund, unless they expressly opt out.
2. Repeal of the Trade Union Act 2016 restrictions on public sector employers from providing a check off service.
3. Repeal of the power to make regulations requiring public sector employers to publish information relating to time off taken by trade union representatives (facility time).

Comment

The Bill will simplify the route to statutory recognition by revising the relevant voting thresholds and will introduce rights for unions to access workplaces for recruitment and organisation purposes. It also increased protections and facilities for union representatives. The removal of the 10 per cent application threshold for statutory recognition and related changes in relation to sweet-heart unions is significant. Just where the application threshold will be set, which could be as low as 2%, will be the subject of future consultation expected to take place after the ERB has been passed.

Expanding the new right of access for trade unions to the workplace to include digital/virtual access is a long-standing goal of the trade union movement, which could potentially help them to modernise the ways they organise and campaign in workplaces. Further detail on what this involves is to be set out in subsequent regulations.

The specification that after the CAC receives a recognition application from a union, the number of workers in the proposed bargaining unit cannot be increased for the purposes of the recognition process is designed to stop the recruitment of new workers for the purpose of diluting union membership during recognition campaigns, though this would already be a highly unusual tactic in practice. Note, while the number cannot go up, it can still go down for this purposes of the recognition process.

The amendments do not, however, cover the membership requirement for an application for union recognition. This is currently 10% of the bargaining unit. The ERB gives the Government the power to reduce the required threshold for union membership to as low as 2% of the proposed bargaining unit through future secondary legislation, but the consultation response does not provide any more information.

Next steps

The provisions regarding the new right of access to the workforce, statements of trade union rights and facilities. These provisions are not to come into force before sometime in 2026.

The repeal of the existing financial restrictions on contributions to political funds and deduction of trade union subscriptions from wages in the public sector as well as the repeal of the public sector facility time publication provisions will come into force two months after the Bill is passed.

As stated in the October 2024 Consultation, after the Bill is passed there will be more consultation to include:

• Lowering the admissibility threshold for the statutory recognition ballot process.
• Ensuring union members and workers can access a union at work.
• Introducing rights for trade unions to access workplaces for recruitment and organising purposes and a code of practice.
• Greater rights and protections for trade unions reps to undertake their work, strengthening protections for trade union representatives against unfair dismissal and union members from intimidation, harassment, threats and blacklisting.
• Introducing statutory rights for trade union equality reps in order to strengthen equality at work.

Policy

Modernise the rules on blacklisting.

The Bill's provisions

1. Extends prohibitions to lists that are not prepared for the purposes of discrimination, but that subsequently are used for that purpose.
2. Gives the Secretary of State power to widen the scope of the existing power in relation to third parties compiling lists and third-party use of blacklists.

Comment

This will enable regulations to be brought in to ensure that where AI compiles a list, where that list is subsequently used or sold or supplied by a person with a view to discriminate, that list becomes a prohibited list at that point.

Next steps

These provisions will come into force two months after the Bill is passed.

Policy

Strengthen the collective voice of workers.

Following consultation, the Government has made a number of amendments concerning industrial action set out in its Response to the consultation 'Making Work Pay: Consultation on creating a modern framework for industrial relations'.

The Bill's provisions

1. Removal of the provisions which introduced strike ballot minimum turnout thresholds of 50% of those entitled to vote and for key public sectors, an additional support threshold of 40% of the entire membership must vote in favour of strike action. But note that following consultation the repeal of the 50% turnout threshold will not be enacted immediately but instead require separate implementing regulations (see below).
2. Removal of the provisions which require certain information to be included on the ballot paper (summary of the trade dispute, specify the type of industrial action if other than a strike and the time period the industrial action is to take place).
3. Removal of the requirement for unions to provide information to the employer on how many members were entitled to vote and whether the minimum thresholds have been met.
4. Extend the expiry period for a mandate for industrial action from 6 to 12 months.
5. Removal of the requirement that an independent review is commission before the Secretary of State can permit electronic balloting (consultation to take place before introducing electronic balloting).
6. The notice period a trade union must give the employer of industrial action after securing a ballot mandate to be reduced from 14 to 10 days (amended from the initial version of the ERB which had proposed reduction to seven days).
7. Removal of the requirement for union supervision of picketing.
8. Repeal of the Strikes (Minimum Service Levels) Act 2023.
9. Miscellaneous changes to the powers of the Certification Officer.

Comment

Repeal of the power of the Secretary of State to specify minimum service levels (MSLs) during periods of strike action in the fields of health, transport, education, fire and rescue, border control, and nuclear decommissioning and radioactive waste management service has been largely trailed. Prior to the election, secondary legislation introduced MSLs for passenger rail, ambulance services, border security, and fire and rescue services. Although the ability of employers to give MSL work notices will legally continue until the legislation has been formally repealed, the Government "strongly encourages" employers to use alternative mechanisms for dispute resolution, avoiding the imposition of MSLs in the meantime.

The removal of the strike ballot minimum turnout thresholds of 50% of those entitled to vote and for key public sectors, an additional threshold of 40% of the entire membership must vote in favour of strike action, results in a return to the pre-March 2017 position. This means that provided the union allows all those being called upon to take action to vote, only a simple majority of those who actually vote is needed to validate the action. As such, if there is a very low turnout to vote, a strike could be called based on a small percentage of the actual membership who turned out to vote and voting in favour.

As regards the repeal of the information provisions, this will mean that the law will revert to requiring a trade union to ask its members on the ballot paper which type of industrial action they want to take part in, expressed in terms of whether it is strike action or simply action short of a strike. The type of action that a majority of members vote for will then (assuming other legal requirements are met) be protected and immune from legal action by the employers or others.

Not included in the Bill is the formal repeal of the provisions which purported to allow the use of agency workers to cover for striking workers. However, in the 'Next Steps to Make Work Pay' the Government stressed that these provisions have already been held by the High Court to be unlawful .

Next steps

Originally, the above provisions were all to come into force two months after the Bill is passed, except for the repeal of the MSL provisions which will come into force immediately upon the passing of the Bill. That remains the case for the majority of the changes including the removal of the 40% support threshold in key public services. However, the repeal of the 50% turnout threshold is being paused. Repeal will take effect from a date to be specified in regulations. This is intended to align the removal of the 50% threshold as closely as possible with the introduction of e-balloting to ensure that industrial action mandates will have demonstrably broad support.

Policy

Strengthen the collective voice of workers

The Bill's provisions

1. Protection against detriment for taking industrial action. A worker will have the right not to be subjected as an individual to detriment by an act, or any deliberate failure to act, by the worker's employer, if the act or failure takes place for the sole or main purpose of preventing.
2. Employees will be protected against dismissal for taking part in industrial action for the length of the strike action by removing the current protected period (first 12 weeks).

Comment

In April 2024, in the case of Secretary of State for Business and Trade v Mercer, the Supreme Court made a declaration of incompatibility in relation to the lack of statutory protection from detriment for taking part in lawful industrial action (for example, withdrawing discretionary benefits). The Court found that section 146 of the Trade Union and Labour Relations (Consolidation) Act 1992, which protects workers from detriment for taking part in trade union activities, does not provide protection from detriment for participating in lawful strike action. The Bill will rectify this perceived loophole.

Next steps

We await the content of the implementing regulations with implementation sometime in 2026.

Policy

Establishing a new single enforcement body, also known as a Fair Work Agency, to strengthen enforcement of workplace rights.

The Bill's provisions

1. The Bill provides that the Secretary of State has the function of enforcing certain specific ‘labour market legislation’ and allows for ‘enforcement officers’ to be appointed.
2. The legislation in scope includes (but is not limited to) the enforcement of:
   1. statutory sick pay (SSP) and the national minimum wage (NMW) – including entitlement to and record-keeping requirements;
   2. the right to paid annual leave;
   3. certain rules relating to the conduct of employment agencies and businesses;
   4. the financial penalties for a failure to pay compensation awarded or settled by the employment tribunal in a COT3; and
   5. some offences relating to gangmasters and modern slavery.
3. Detailed provisions are included in respect of the delegation of functions, the appointment of an Advisory Board, the requirement for a labour market enforcement strategy and reports, and various enforcement powers.

Added to the Bill following the House of Commons stage:

4. Enforcement notices
   1. The Secretary of State will be given power to issue a notice of underpayment to a "liable party" who has failed to pay a sum due to an "underpaid individual" under a provision of the labour market legislation set out in a schedule to the ERB. This includes NMW, SSP and holiday pay.
   2. A notice of underpayment will require the liable party to pay the required sum within 28 days. A notice may be issued even where the sum has been paid by the time of giving the notice but may not be issued where proceedings have been brought in respect of the matter.
   3. Regulations may provide for the sum that must be paid to be calculated at the date of giving the notice, if that would be greater, to take account of any uprating in line with legislative changes.
   4. A notice of underpayment must require the "liable party" to pay a penalty to the Secretary of State of 200% of the sum specified in the notice, subject to a maximum of £20,000 for each individual and a minimum of £100 within 28 days. If paid within 14 days, the liable party is only required to pay the required sum due plus 50% of the penalty.
   5. A notice of underpayment may only relate to sums falling due in the six-year period before the date of the notice.
5. Power to bring employment tribunal proceedings
   1. In any case where a "worker" has the right to bring employment tribunal proceedings in England, Wales or Scotland, and it appears to the Secretary of State that the worker is not going to bring proceedings, the Secretary of State may, in place of the worker, bring those proceedings.
6. Power to provide legal assistance
   1. The Secretary of State is being given power to assist a person who is, or may become, party to civil proceedings in England, Wales or Scotland "relating to employment or trade union law or the law of labour relations" including the provision of legal advice and representation.
7. Power to recover costs of enforcement
   1. Regulations may be made to require a person who has failed to comply with any relevant labour market legislation to pay a charge relating to the enforcement costs incurred. The amount may be a fixed amount or be calculated by reference to an hourly rate.
8. Fraud
   1. Certain offences of fraud under the Fraud Act 2006, when committed in relation to a worker or work-seeker, are added to the list of "relevant labour market legislation" that may be enforced by the Secretary of State (or delegated to the Fair Work Agency (FWA)).

Comment

While not referred to by name in the Bill, in the 'Next Steps to Make Work Pay' the Government states it will establish the FWA to bring together existing enforcement functions in relation to the above. The aim is to improve workforce retention by strengthening the employment rights framework to provide clarity for employers, tackling the undercutting that good employers currently face when trying to do the right thing.

Many of these areas are already covered by existing enforcement agencies which will be combined into one agency – the FWA. The Bill will combine the Employment Agency Standards Inspectorate, HMRC’s National Minimum Wage Enforcement Team, and the gangmasters and Labour Abuse Authority and abolish the Director of Labour Market Enforcement (DLME), who currently oversees the work done by these bodies.

A significant new addition is enforcement of rights to holiday pay. This is not currently subject to enforcement by a state agency, and it is also a notoriously complex area where employers may make inadvertent mistakes.

Since 2016, an employer who fails to pay a tribunal award/settlement can be subject to a penalty payable to the Secretary of State if the claimant completes an enforcement form. This is little used, indicating its inclusion is intended to bolster enforcement.

The powers to bring enforcement notices and employment tribunal proceedings are potentially a highly significant potential game changer to employment law enforcement. When it comes to brining proceedings, it appears that this power will extend to any employment tribunal proceedings and not just in relation to the "relevant labour market legislation". The ability of a governmental enforcement agency to step into a worker's shoes and bring employment tribunal litigation on their behalf is a truly significant change to the existing regime. It remains to be seen how this will work in practice and how often these powers will be utilised. A best guess will be that the FWA will prioritise use of enforcement notices while using the power to bring employment tribunal proceedings sparingly.

As for the power to assist, this is another substantial new power not seen before in the employment litigation. No detail has been provided as to which cases may be chosen for assistance and what kind of assistance may be provided other than legal advice and representation which does not extend to the provision of facilities to settle a dispute. The ability for the Secretary of State to claw back its costs will also need careful consideration. Similar to the power to bring employment tribunal proceedings on behalf of a worker (see Power to bring employment tribunal proceedings), this new power will also need appropriate levels of funding.

How effective of a body the FWA will be and how widely it will use its new extensive powers will largely come down to a question of financial resources and priorities for enforcement.

Next steps

On 4 November, the DLME issued a call for evidence focused on what the enforcement bodies need to be doing to prepare for the transition and in particular what should be the priorities for employment rights enforcement in the run up to the establishment of the FWA and then for the FWA. The call for evidence closed on 13 December 2024.

The DLME is due to deliver the 'Labour Market Enforcement Strategy for 2025 to 2026' in March 2025. While more details of the Government plans for the FWA are expected to emerge throughout 2025, the DLME state there are no planned Government consultations specifically related to the FWA itself and the FWA will not become operational before the 2026/2027 financial year.

Policy

Nothing set out in 'Make Work Pay' documents.

Bill's provisions

As introduced in Parliament on 10 October - nothing. Added by way of amendment:

1. A new reg 16B to be added to the Working Time Regulations 1998 imposing new obligations on employers to keep certain records relating to compliance with annual leave and pay for annual leave, including in relation to irregular hours and part-year workers.
2. Such records will need to be kept for six years, in such manner and format "as the employer reasonably thinks fit".
3. Failure to do so will constitute an offence, punishable by a fine.

Comment

This will sit alongside the existing requirement to keep and maintain for two years, adequate records to show compliance with the working time limits on average working time, night work and provision of health and safety assessments.

The six-year period for annual leave records ties in with the up to a six year period for which an enforcement issued by the Fair Work Agency will be able to relate (see Labour market enforcement above).

Policy

The time limits within which employees are able to make an employment claim is to be increased from three to six months.

Bill's provisions

As introduced in Parliament on 10 October - nothing.

Committee Stage accepted amendments

Having been accepted at Committee Stage, the Bill now also increases the time limits to bring the vast majority of employment tribunal claims from three months to six months. The claims for which the time limit is being extended is set out in Schedule 12 of the ERB and is a very extensive list of claims including those under the Employment Rights Act 1995, TUPE 2006, the Working Time Regulations 1998, Trade Union and Labour Relations (Consolidation) Act 1992, the Equality Act 2010, as well as others. It leaves very few stones unturned. One exception are breach of contract claims after employment has ended up to a value of £25,000. We wait to see if this is a mistake or being left tp future possible reforms (see Tribunal procedure below).

Comment

Given this policy choice was included in the Plan to Make Work Pay which was part of Labour's manifesto, it was surprising that this was not included in the initial draft of the Bill.

The increase in time limits from three to six months is likely to lead to an increase in tribunal claims giving potential claimant longer to seek legal advice and also conclude internal grievances/appeals before deciding to initiate legal proceedings.

It should be noted that while the basic time limit is being extended from three to six months, Acas Early Conciliation with its 'stop the clock' provisions will continue to apply. In addition, tribunals will retain their ability to extend the time limits for example "where it is just and equitable" in discrimination case and "where it was not reasonably practicable to bring the claim earlier" in unfair dismissal cases. So, while the default has doubled, the margin for extensions remains.

The Neonatal Care (Leave and Pay) Act 2023 provides for a statutory right to up to 12 weeks paid neonatal care leave for eligible employed parents whose new-born baby is admitted to neonatal care. This is in addition to other leave entitlements such as maternity and paternity leave. The 2023 Act is largely an enabling Act, with much of the detail of the rights left to further regulations.

On 20 January 2025, the Government published the draft substantive implementing regulations to come into force on 6 April 2025: The Neonatal Care Leave and Miscellaneous Amendments Regulations 2025 and The Statutory Neonatal Care Pay (General) Regulations 2025. Subsequently, the Statutory Neonatal Care Pay (Administration) Regulations 2025 were also published.

Neonatal Care Leave will apply:

• Day one right for employed parents of children born on or after 6 April 2025.
• Available to employed parents of babies who are admitted into neonatal care up to 28 days old and who have a continuous stay in hospital of seven full days or longer.
• Eligible parents to take up to 12 weeks of leave on top of any other leave they may be entitled to, including maternity and paternity leave. A parent will be entitled to one week’s leave for every week their child spends in neonatal care capped at a maximum of twelve weeks. The parent can take the leave when their child is still receiving neonatal care or after any other parental leave that the parent may be eligible for, to allow time to bond with the child after leaving neonatal care.

Neonatal Care Leave Pay

• Eligible employed parents will receive a payment of £187.19 per week or 90% of average earnings (whichever is the lower).
• Available to those who meet continuity of service requirements (26 weeks) and a minimum earnings threshold.

Policy

The Government has pledged to make the minimum wage a genuine living wage and ensuring all adults are entitled to the same minimum wage regardless of age.

1 April 2025 increases

From 1 April 2025 the rates of the national minimum wage (NMW) will be as follows:

• National Living Wage (NLW) (21 and over): £12.21 (6.7% increase, currently £11.44).
• 18-20 year old rate: £10.00 (16.3% increase, currently £8.60).
• 16-17 year old rate: £7.55 (18% increase, currently £6.40).
• Apprentice rate: £7.55 (18% increase, currently £6.40).
• Accommodation offset: £10.66 (6.7% increase, currently £9.99).

Future remit

On 31 July 2024, the Department for Business and Trade (DBT) published the Low Pay Commission Remit 2024, stating:

• The NLW rate does not drop below two-thirds of UK median earnings for workers aged 21 and over.
• The NMW rate for 18-to 20-year-olds will remain from April 2025 but "to narrow the gap with the NLW taking steps year by year in order to achieve a single adult rate".
• Set the under-18 rates and apprentice rates "as high as possible without damaging the employment prospects of each group".

Noting that an NLW worker working 37.5 hours per week will see their annual gross pay increase by £1,505.54, the LPC reported seeing some signs of employers finding it harder to adapt to NMW increases. Nevertheless, it anticipates consulting next year on the pathway to achieving the Government's goal of reducing the NLW age threshold from 21 to 18.

Comment

This is a slower transition to a single adult rate (for those aged 18-plus) than originally expected by many. This continues the existing move over recent years towards a single adult rate NMW (in April 2024 the age band for the NLW lowered to 21 - previously 23 having already reduced from 25 in April 2021). As expected, (and has always been the case), there are no plans to merge the youth and apprentice rates with the adult rates (despite what has been misreported in some sections of the press).

From 6 April 2025:

• a week's pay increases to - £719 (previously £700).
• maximum basic award/statutory redundancy payment - £21,570 (previously £21,000).
• maximum compensatory award – the lower of £118,223 (previously £115,115) or 52 weeks' pay.

Note: The new rates apply where the “appropriate date” occurs on or after 6 April 2025 (e.g. for unfair dismissal the effective date of termination) not the date of the corresponding tribunal hearing.

Rates from 6 April 2025:

• The standard rate of statutory sick pay increased to £118.75 per week (previously £116.75) from April.
• The standard rates of statutory maternity, paternity, adoption, shared parental leave and parental bereavement pay increased to £187.18 per week (previously £184.03).

Recovery of statutory maternity pay

Also from 6 April 2025, regulations increasing the amount of SMP which small employers can recover increases.

Small employers who are entitled to recover 100% of the SMP they have paid to employees, are also entitled to an additional payment, known as the "compensation rate", to compensate for the employers' National Insurance Contributions (NICs) which they must pay on SMP. The rate of payment is currently 3% of the SMP which a small employer has paid. This percentage is being increased to 8.5% from 6 April 2025 (A "small employer" for these purposes is an employer whose gross Class 1 NICs payments, including employer's and employees' shares, do not exceed £45,000 for the qualifying tax year).

The recovery position in relation to non-small employers will remain at 92% of their SMP.

The statutory Code of Practice on Dismissal and Re-engagement devised under the previous Conservative Government came into force on 18 July 2024. The new Code sets out how employers should act when:

1. it is considering making changes to one or more of its employees’ contracts of employment; and
2. it envisages that, if the employee and/or representative does not agree to some or all of the changes, it might opt for dismiss and re-engagement in respect of that employee.

Employers are expected to consult employees and explore alternative options, without raising the prospect of dismissal unreasonably early or using the threat of dismissal as a negotiating tactic to put undue pressure on employees.

Notably, the Code states that "the employer should contact Acas for advice before raising the prospect of dismissal and re-engagement". Failure to follow the Code could result in a 25% uplift to compensation awards in relevant cases including unfair dismissal and discrimination. A notable omission from the list of clams to which a 25% uplift can apply are protective awards for failure to collectively consult on collective redundancies. The pre-election proposed addition of protective awards unfortunately failed to gain House of Lords' approval before the general election.

On 2 December 2024, a new The Trade Union and Labour Relations (Consolidation) Act 1992 (Amendment of Schedule A2) Order 2024 was made providing for the 25% uplift to apply to protective awards for failure to collectively consult on collective redundancies from 20 January 2025. As transitional provisions have not been included, an uplift or reduction could potentially apply in any pending claims to which the Code applies, not just new claims brought since 20 January 2025. (Note: the Code does not apply where the prospect of fire and re-hire was raised with employees or their representatives before 18 July 2024.)

See above for future reform under the Employment Rights Bill to further strengthen the Code.

The Employment (Allocation of Tips) Act 2023 together with the statutory Code of Practice on Fair and Transparent Distribution of Tips came into force on 1 October 2024.

Under the new provisions:

• Employers must distribute all qualifying tips, gratuities, and service charges" to workers fairly and transparently, without any deductions except for income tax.
• Qualifying tips must be paid no later than the end of the month following the month in which they were paid by the customer.
• Employers are required to keep detailed records of all tips received and their distribution among workers with workers having the right to request access to these records.
• Where tips are paid on more than an occasional or exceptional basis, employers must maintain a written policy detailing how tips are managed and distributed.
• It will still be possible for employees to pool tips and for tronc systems to be operated independently of the employer.

As for penalties for non-compliance, businesses found non-compliant with the legislation risk facing claims in the employment tribunal. A compensation payment of up to £5000 may be ordered in respect of each worker:

• Where a claim relates to a failure to comply with the obligations regarding a written policy or keeping records than the usual three-month time limit applies.
• However, for claims regarding allocation or payment of tips, a significantly longer 12-month limitation period applies starting from the date of non-payment or incorrect allocation. Where the complaint relates to a series of failures to comply, the 12-month period will commence with the date of the last failure in the series.

See above for future reform under the Employment Rights Bill concerning workforce consultation and review of tipping policies.

On 26 October 2024, the Worker Protection (Amendment of Equality Act 2010) Act 2023 came into force. The Act introduces a new positive legal obligation on employers to take "reasonable steps" to protect their workers from sexual harassment. If an employer breaches the preventative duty, the Equality and Human Rights Commission (EHRC) will have the power to take enforcement action against the employer. In addition, employment tribunals will have the power to increase compensation by up to 25% where an employer is found to have breached the new duty.

Under the existing provisions of the Equality Act 2010, where a person commits an act of discrimination (including harassment) in the course of their employment, their employer is ordinarily liable for that act, in the event a claim is brought, unless the employer can show that it took "all reasonable steps" to prevent the discrimination from arising. "All reasonable steps" is a high bar, and many employers find it difficult to demonstrate that they have taken all such steps.

It will remain the case that to establish the existing statutory defence in a sexual harassment claim involving harassment by a colleague, the employer will still need to show that it took "all reasonable steps" to prevent the sexual harassment. But where a claim is upheld and the employer fails to establish the statutory defence, the employer may still potentially be able to avoid a "failure to prevent claim" and the corresponding 25% uplift to compensation if the employer can show it took "reasonable steps" to prevent sexual harassment of employees – a lower threshold. Employers need to think now about what steps they currently have in place and any further measures they can put in place with a good paper trail.

In July, The EHRC's Technical Guidance: Sexual harassment and harassment at work (originally issued in January 2020) was updated to include a new chapter with information on the new preventative duty.

During a difficult passage through Parliament, the originally proposed provisions of the 2023 Act were very significantly diluted:

• The original provisions provided for re-introducing employer liability for third-party harassment of workers in the course of their employment was removed; and
• The potential 25% compensation uplift in sexual harassment cases, test was changed from requiring employers to have taken "all reasonable steps" to simply "reasonable steps".

The Employment Rights Bill contains provisions to revert to its original drafting, which would make employers responsible for taking 'all reasonable steps', not just "reasonable steps" to prevent sexual harassment in the workplace and also to provide protection from harassment from third parties generally. It is therefore in employers’ best interests to ensure that they have robust processes in place in this regard.