Employment Rights Bill: What You Need to Know

Now the dust is starting to settle on Labour’s landslide victory, priorities are starting to shift from campaigning to policy implementation. Last month’s King’s Speech was packed with ideas to unlock economic growth across the country and improve standards for working people, in a mission to rebuild Britain.  

One of the key takeaways, particularly for those in the recruitment sector, was the Employment Rights Bill, a new legislation that has been proposed to ban exploitative practices and boost employment rights. It’s been described by the Government as “the biggest upgrade to workers’ rights in a generation.” 

What could the Employment Rights Bill involve? 

We anticipate that the bill could bring about major changes in the employment and recruitment industry. In APSCo UK's Inside the Economy Q2 Update, economist Christian Spence explains what we could expect if the bill were to pass through:  

“The big challenge for any new government is that announcing things is very easy, but delivering on them is very hard... 

The expectation for the Employment Rights Bill is huge. From a workers lens, there are lots of good things to think about – banning exploitative use of zero-hour contracts and trying to make that a playing field where workers receive contracts for hours they routinely work, ending fire and rehire, parental leave sick pay protection from day 1 and introducing a  Fair Work Agency,  a new enforcement body. The challenge we need to set in mind is the balance of these things with everything else.  

The government has committed to extensively consult on the arrangements for the proposals. APSCO members should absolutely make sure they are involved in those details.” 

Watch the full Inside Economy Report here. 

Starmer’s Employment Rights Bill will be introduced to Parliament within the first 100 days of the new administration, along with a series of expected consultations.  

We will now provide a more detailed outlook into some of the aims of the proposed new legislation and how it could impact your business.  

A round-up of what to expect from the Employment Rights Bill:

• Day one employment rights –employees could receive day one rights such as sick pay and earlier protection from unfair dismissal. 

• Banning ‘exploitative’ zero-hour contracts to ensure workers have rights to a contract reflecting their average hours and increased job security.  

• Ending fire and rehire policies – Hand-in-hand with the ban on zero-hour contracts, Labour is committed to ending the practice of ‘fire and rehire’ – where an employer dismisses an employee and rehires them on less favourable terms that benefit the employer.  

• Employees will have improved rights to flexible working, where reasonable, from day one. It is important that recruitment organisations highlight flexible working options, a factor that is increasingly important to job seekers. 

• Improving rights for new mothers – It would be unlawful to dismiss anyone who has had a baby within six months, except in certain circumstances.  

• Simplifying statutory recognition for workers by ensuring all employees have a reasonable right to access a union wherever they work. Following this legislation, trade unions could be able to access the workplace in a reasonable and responsible manner for recruitment purposes. 

• Introduce a new Single Enforcement Body, the Fair Work Agency, to protect workers and ensure regulations are being followed. Overall, the role of the Fair Work Agency would be to make sure employment rights are upheld. 

Find out more by taking a look at our Legal Updates where we address the key commitments of the proposed bill and other potential bills that could come into force, as well as laying out some next steps to consider.  

Potential Challenges 

It will be important for Labour to get the balance right, to give the economy the boost it needs. While the employment reform presents opportunities, it can bring some challenges to the recruitment sector if it becomes legislation. This includes a potential rise in operational costs due to increased regulations and investment in training, legal and recent technologies. It is also important for the government to support and differentiate skilled contracting from general agency and gig economy work whilst avoiding excessive business costs. 

During our Northwest Business Forum, Tania Bowers, Global Public Policy Director at APSCo detailed the policies most likely to affect recruiters. You can read APSCo’s policy analysis here. 

Discussions with attendees at the forum made it clear that there are some concerns about the potential new legislation amongst the recruitment sector, including: 

•  Day one unfair dismissal rights could lead to less diverse internal hiring, as recruiters make 'safer' candidate choices to limit the risks of the wrong hire.

• A zero-hour ban could apply to temporary workers working for different clients on varying hours.

In a recent article by Manpower, Tania was asked for her advice on how organisations can respond to the new government’s legislative reforms.  

Tania said, “The professional recruitment and staffing outsourcing sectors are familiar with legislative change both here in the UK and across their international operations. Although the changes proposed under the Employment Rights legislation and particularly the one status of “worker” review have the potential to be wide ranging in scope, the Government is well aware of the importance of the independent contractor workforce both to the public sector and to growth in the private sector. They have made it clear to us they will continue to take our advice into consideration when drafting the new laws and regulations and this is an opportunity to define the professional self-employed in law.  

Now is the time for employers to review their processes around onboarding, off-boarding and managing the performance of their flexible and permanent workforces, thinking more strategically about their headcount planning. APSCo and OutSource members are experts in workforce change management, helping their clients navigate complex commercial demands. To deliver the growth the economy needs, businesses must continue to look positively at opportunities.” 

The resource provides a great dos and don’ts checklist for hiring managers to inform workforce planning over the coming months. Find the checklist here. 

Bridging the skills gap 

Skills England is a separate initiative in the Labour Manifesto to drive growth in the skills landscape. The new body will bring together central and local government, businesses, training providers and unions to meet the demands of the workforce and address the skills shortage. Establishing Skills England and reforming the apprenticeship levy will be beneficial to the sector, however, there needs to be considerations around the highly skilled contract market. Perhaps the UK would benefit from an increase in the scope of the Levy to ensure agency workers and the self-employed are included in reskilling opportunities. 

Going forward

The proposed policies from the King’s Speech are largely welcomed by workers, and ministers will be working closely with unions and businesses to achieve this.  

Employers should consider putting preparations in place, such as weighing up potential financial considerations to align with additional employee rights and benefits. It will be important for employers to get involved with consultations and make use of the opportunity to have their voice heard. 

The devil is truly in the details with the new employment reform if it is passed through Parliament, and we expect more details to emerge in the coming days, weeks, and months.