On 4 March 2025, the Government published its responses to five consultations, relating to provisions contained its landmark Employment Rights Bill, which is currently making its way through Parliament. These responses addressed proposals to strengthen workers’ rights in relation to zero hours contracts, collective redundancy consultation, Statutory Sick Pay, industrial relations and Trade Unions, and non-compliance in the umbrella company market. The headline points in respect of each response are set out below
- Agency workers are to be included in the Government’s proposals to “ban” “exploitative” zero hours contracts.
This means that they will be entitled to:
- guaranteed minimum working hours,
- reasonable notice of any changes to working hours, and
- payment for hours which are cancelled or curtailed at short notice.
Liability for minimum working hours and reasonable notice of changes will rest with the end-hirer employer (albeit the agency will be jointly liable for the latter), and agencies will be liable to pay for cancellation or curtailment of working hours (but can claim this back from end-hirer employers).
There will be exemptions for work which is genuinely seasonal or temporary in nature; however, the Government is yet to define either term or explain how this will work in practice. A further government consultation will take place, in relation to this specific point, before the precise arrangements are confirmed.
These proposals appear, at first blush, to have the potential to help bring an end to the exploitation of zero-hours workers by unscrupulous employers; by creating greater certainty of hours, security of income and improved working practices. However, they may in practice unintentionally create greater uncertainty for workers, by in effect encouraging employers not to engage them over extended periods of time. In addition, the removal of flexibility around working hours may have unintended downsides for workers – who may not want or be able to work a specific minimum number of hours each week / month / quarter.
These provisions may also inadvertently lead to greater numbers of workers falsely being classified as self-employed, in order to circumnavigate the new requirements.
From an employer’s perspective, these proposals may reduce or hinder their organisation’s ability to engage casual workers and/or fill unexpected resourcing gaps with temporary staff. It will likely also reduce the level of flexibility that an employer has when engaging such workers. Careful consideration will therefore need to be given to the best way in which to engage such workers, to ensure that the organisation is not inadvertently creating an engagement which involves more working hours, or is more costly, than intended.
There is also scope for conflict to arise, between employers and agencies, as to each party’s respective liability under the new regime.
2. The maximum protective award for employees, where an employer has failed to comply with its collective consultation obligations in a redundancy situation, will increase from up to 90 days’ pay to up to 180 days’ pay.
This will apply to large-scale redundancies of 20 or more employees in a 90-day period, in respect of which there are already stringent statutory rules governing notification to the Secretary of State and prescriptive consultation processes which employers must follow (and these will continue to apply).
Tribunals will retain the discretion to make a proportionate protective award of up to a maximum of 180 days’ pay, according to what they consider to be just and equitable, having regard to the seriousness of the employer’s actions as well as any mitigating factors.
The Government will also be updating the statutory Code of Practice on Dismissal and Reengagement to reflect the new maximum protective award; bearing in mind that the Code allows for a 25% uplift to protective awards in the event of an employer’s unreasonable failure to comply. The latter could be worth up to an additional 45 days’ pay (on top of the protective award maximum of up to 180 days’ pay).
The Government has acknowledged that some employers (particularly small and medium organisations) may need greater support to ensure compliance and avoid inadvertent breaches. It will therefore issue further guidance in due course, for employers of all sizes, on consultation processes for collective redundancies, including guidance on best practice.
It is notable that the Government has declined to bring forward proposals to make interim relief available for either collective redundancy or fire and rehire scenarios, on the basis that this would be difficult to implement in practice, and the complexities for the employee in bringing a claim would outweigh the benefits in doing so. However, it has promised to keep this area under review.
It is hoped that these proposals will help to ensure that employers do not deliberately ignore their obligations (for example, by simply firing and rehiring staff without warning or consultation), by providing a strong financial incentive for such compliance.
From an employer’s perspective, these proposals will heighten the legal and financial risks associated with carrying out large scale redundancies, and care will need to be taken to ensure that statutory requirements are adhered to. The cost of getting things wrong will increase significantly for employers (up to a maximum of 225 days’ pay in the worst of cases), and we may see more speculative claims being brought against employers for such awards – even where these do not have particularly strong prospects of success.
3. Statutory Sick Pay will be payable from the first day of absence, and the lower earnings threshold eligibility criteria will be removed, making SSP accessible to far greater numbers of workers.
The Employment Rights Bill will amend the Statutory Sick Pay scheme so that:
- Workers will be entitled to sick pay from the first day of absence (the waiting period of 3 days will be removed).
- There will no longer be a lower earnings limit requirement to be eligible for SSP (this was previously £123 per week).
- SSP will be payable at the lower of the prescribed weekly rate, and 80% of the worker’s normal weekly earnings (the latter having been confirmed in the government’s consultation response).
However, the Government has declined calls to increase the rate of SSP – which will be £118.75 per week from 6 April 2025.
It is hoped that these provisions will ensure that SSP is available to a far greater number of workers, and that this in turn will reduce the number of people going to work when ill and therefore spreading infections in the workplace; thus, boosting productivity and benefitting businesses. Though critics say that the rate of SSP remains too low, and that this will still disadvantage many / discourage many from taking sick leave.
From an employer’s perspective, being able to offset a greater amount of sick pay with SSP, will help (in many cases) to reduce the financial cost of sickness absence for the organisation. Though some smaller businesses have criticised the removal of the 3-day waiting period, for having the potential to drive up costs and increase rates of absenteeism.
4. Restrictions on Trade Union activities are to be removed, with a greater emphasis on collaboration, proportionality and accountability, and a system that aims to balance the interests of workers, businesses and the wider public.
This will involve improving the process and transparency around Trade Union recognition and access, including streamlining the recognition process and strengthening protections against unfair practices, by:
- addressing unfair practices to prevent mass recruitment designed to influence the bargaining unit and prevent recognition being granted,
- introducing a new fixed timeline for employers and Trade Unions to agree access arrangements for recognition purposes,
- removing the requirement to prove that an unfair practice influenced voting behaviour,
- extending the Code of Practice on Access and Unfair Practices (from the point the CAC accept a recognition application), and
- extending the unfair practice complaint timeframe (from 24 hours to 5 days).
The Government is also proposing to amend the Employment Rights Bill so that independent unions can apply for recognition where an employer has voluntarily recognised a non-independent union. There will also be amendments to extend union access provisions to include digital access; introduce a fast-track route for achieving an “off the shelf” access agreement; and provide a mechanism to ensure there are robust penalties in place for non-compliance.
The 10-year requirement for unions to ballot members on political fund maintenance will be abolished; the information requirements for industrial action ballots and notice to employers will be simplified; the expiry of mandate for industrial action will be extended from 6 months to 12 months; and Trade Unions will be required to give a 10-day notice period for industrial action.
The Government is also proposing to introduce e-balloting, and repeal the 50% industrial action ballot turnout threshold.
These changes mark a significant increase in Trade Union powers, while removing a number of protections for businesses which had been put in place by previous governments. Though the government consultation states that it has aimed to balance the interests of both workers and businesses, these proposals have undoubtedly swung the pendulum in workers’ favour.
5. Workers will be able to access comparable rights and protections, when working through an umbrella company, as they would when taken on directly by an employment agency.
This follows on from a consultation by the previous Conservative government, on proposals to regulate umbrella companies and tackle tax non-compliance.
As a result of the consultation, the Government is proposing to amend the Employment Rights Bill to allow umbrella companies to be regulated for the purposes of employment rights, and aiming to ensure that workers have comparable rights and protections when working through an umbrella company as when taken on directly by an employment business. The precise details of these provisions will be subject to further consultation and regulations, which are yet to be carried out / made.
It is hoped that these proposals will discourage the use of umbrella companies as a means of circumnavigating employment rights and/or tax evasion.
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The material in this article is provided for guidance and general information only and is not intended to constitute legal or other professional advice upon which you should rely. In particular, the information should not be used as a substitute for a full and proper consultation with a suitably qualified professional. Please do contact the Bates Wells team if you require further information.