Uncategorised The UK’s New Employment Rights Bill: What SME Employers Need to Know
By Kimberly Bradshaw (CEO, Spotlight HR.)
October 2024.
Here at Spotlight HR headquarters, we’ve been eagerly anticipating the details of the Employment Rights Bill, released last week, which is why we are a bit later with our monthly update. Now it’s out, the Bill has been described as the biggest upgrade to rights at work for a generation. However, many of the changes will be subject to extensive consultation at a national level which will delay its full implementation for up to two years, so no action needs taking straightaway.
The Employment Rights Bill introduces 28 employment reforms aimed at improving job security and fairness. These changes present significant challenges for small and medium-sized enterprises (SMEs).
There is certainly a lot to take in…
Key measures include:
- Workers on zero-hours contracts will now have the right to a guaranteed-hours contract if they work regular hours over a defined period, giving them, the Government argues, security of earnings whilst allowing people to remain on zero-hours contracts, should they so wish.
- Extending protections from unfair dismissal to all employees from day one. The Government will consult on a new statutory probation period for new recruits to allow for proper assessment of their suitability for work.
- Enhancing statutory sick pay (SSP) by removing the lower earnings limit for all workers as well as removing the three-day waiting period. SSP will be paid from day one of sickness.
- Flexible working to become the default unless businesses can prove it’s impractical.
- New paternity, parental and bereavement leave entitlements will be available from day one for all employees
- Strengthen protection from dismissal whilst pregnant, on maternity leave and within six months of returning to work
- Take account of the cost of living when setting the minimum wage and remove discriminatory age bands
- Establish a Fair Work Agency that will enforce holiday pay and strengthen SSP.
The Government will also seek comments on a number of items, including the right to switch off, preventing employees from being contacted out of hours, except in exceptional circumstances. It will also consult on removing legal loopholes presently allowing for ‘fire and re-hire’.
These reforms will almost certainly increase costs and administrative burdens for SMEs, particularly with managing leave, adhering to the requirements of the statutory probation period, handling flexible work requests, and updating employment contracts. While consultations and phased implementations may provide some breathing room, SMEs must prepare early to avoid potential compliance issues.
Challenges for SMEs
SMEs face unique challenges with these reforms. Tina McKenzie, chair of policy at the Federation of Small Businesses, criticised the bill as “clumsy and chaotic,” noting that the simultaneous introduction of 28 new measures could overwhelm small employers. The added compliance requirements, including managing flexible working, ensuring fair dismissal processes, and adjusting contracts, could increase administrative burdens.
SMEs will also need to budget for potential cost increases from the removal of SSP restrictions and the new rights to guaranteed hours for some zero-hour contract workers.
Moving Forward
It is important to note that, as explained above, the rollout of the Employment Rights Bill, will occur gradually, with many of its 28 reforms subject to consultations that could delay implementation by some years. While the bill proposes significant changes, immediate impacts on businesses will vary. Some reforms, like SSP changes and day-one rights for leave, could take effect sooner. In contrast, others, like flexible working and the introduction of a new Fair Work Agency, will require more time for consultation and planning. SMEs should stay informed as details evolve to ensure timely compliance.
While the bill has broad implications for all businesses, SMEs should focus on strategic workforce planning, staying informed of phased consultations and changes. The establishment of the Fair Work Agency, aimed at guiding businesses through compliance, may provide valuable resources to help SMEs navigate these new regulations. Engaging in consultations and understanding the bill’s impact early on will allow SMEs to make informed adjustments, mitigating risks and ensuring smooth transitions into compliance.
Your take home: Preparation is key to handling these reforms effectively, allowing businesses to support their employees while maintaining operational efficiency.
The Spotlight HR team will be keeping a close eye on developments and will keep our clients up to date.
Please reach out if you need independent advice on how your business can best tackle these changes.
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