To bring you up to speed, the current state of play on the key issues for employers is as follows:

Tribunal claims – time limits and day one rights

• What’s the change? Currently, most tribunal claims must be brought within three months of the date of dismissal or act complained of. The Bill increases the time limit to six months
• What’s the impact? This, coupled with the removal of the two-year qualifying period of service for unfair dismissal claims, will significantly change the employment claims landscape. Employers will see more time and resource spent on removing employees with short service, along with a longer period of uncertainty in which a claim might land. With the increase in volume of claims and the wait for a final hearing, memories are likely to fade and witnesses may have moved on. We may see more employers seeking out certainty through increased use of settlement agreements.
• What should we be doing? Along with tightening up on recruitment processes, ensure processes are in place for preserving documents and taking contemporaneous statements from witnesses, rather than waiting until the tribunal-imposed deadlines.

Fair Work Agency and compliance enforcement – holidays, national minimum wage and sick pay

• What’s the change?
  • The FWA is a new enforcement body that will be created to police compliance with employment laws such as national minimum wage, modern slavery, and holiday pay. The Bill significantly strengthens the powers available to the Fair Work Agency (FWA).
    • The FWA will be able to bring a claim in the Employment Tribunal on behalf of a worker where it believes the worker isn’t going to, as well as provide legal assistance for employment-related proceedings. It would seem unlikely that the FWA will deploy these powers in ‘run of the mill’ claims brought by an individual employee. Instead, it seems more likely to be used in multi-claimant cases concerning vulnerable groups, e.g., employment status and holiday pay.
    • The FWA will be able to issue notices of underpayment (dating back six years unless shortened in future regulations) where an employer has failed to make a statutory payment (such as National Minimum Wage and holiday pay). This will be combined with a penalty payable of , subject to a current maximum of £20,000 for each individual and minimum of £100 (future regulations may change these figures). The underpayment and penalty must be paid within 28 days, although the employer can effectively reduce the penalty by 50% by paying within 14 days of the notice.
    • Provision has been made to allow the FWA to recover its enforcement costs – further detail will be provided in regulations.
  • In addition, the Working Time Regulations will be amended to include a new obligation on employers to keep records demonstrating compliance with holiday entitlement (pay and leave) for six years. Failure to comply will be a criminal offence punishable with potentially unlimited fines
• What’s the impact? For most employers, the new enforcement body seems unlikely to drastically change things. It should be noted that much of the powers of the FWA can already be exercised by other bodies. However, the creation of the body is an indication of Labour’s intent to take more action to tackle systemic non-compliance with the rules around minimum wage, sick pay and holiday pay.
• What should we be doing? Carry out an audit to ensure compliance with the above so that any areas where you are falling short can be rectified in good time.

Collective redundancy and fire and re-hire

• What’s the change?
  • Currently, where a business is proposing to dismiss 20 or more employees as redundant within a 90-day period at “one establishment”, collective consultation obligations are engaged. The Bill initially proposed to remove this “establishment” element, so that proposing 20 or more redundancies within a 90-day period across the entire employing entity (not just at one establishment) would trigger collective consultation obligations. Concerns were raised that this would significantly increase the burden on employers – particularly those with many sites. In response, the proposal has been modified. The current “20 or more” threshold will remain where redundancies are proposed at the same establishment. However, there will be a further trigger for collective consultation where employees are to be made redundant across more than one establishment. Details of what this threshold will be will come in future regulations.
  • The cap on protective awards in collective redundancy scenarios for a failure to inform and consult will increase to 180 days’ gross pay (up from 90 days). This is clearly a significant step which will make non-compliance substantially more expensive for employers (albeit at least there is certainty as to financial risk, as the initial proposal was to remove the cap entirely).
• What’s the impact? There will be an increased burden on employers when making redundancies across multiple sites, coupled with greater financial liability where collective consultation obligations are not complied with. It should also be noted that failing to comply with the obligation to file a HR1 notice in respect of collective redundancies is already a criminal offence.
• What should we be doing? Businesses operating multiple sites will need to implement measures to track proposed dismissal numbers.

Sick pay

• What’s the change? Currently, employees whose weekly earnings are less than the ‘lower earnings limit’ are not entitled to SSP. The Bill removes this bar. Instead, employees will be entitled to 80% of their normal weekly earnings if it is less than the SSP flat rate (expected to be £118.75 per week from 6 April 2025). Coupled with the removal of ‘waiting days’ from the SSP regime, employees will therefore be entitled to receive this payment from day 1 of absence.
• What’s the impact? Increased cost to employers.
• What should we be doing? Factor into future employment costs but also consider ways to seek to reduce sickness absence levels, including focusing on the mental wellbeing of employees.

Zero-hours and low-hours contracts (obligation to offer guaranteed hours and reasonable notice of shifts and of cancellation, movement or curtailment of shifts)

• What’s the change?
  • One of the most talked about provisions of the Bill is the obligation to offer zero-hours workers (and low-hours workers) guaranteed hours if they have worked, on average, a certain number of hours over a reference period (still to be determined).
  • Extension to agency workers: The Bill now extends the protections to agency workers fitting the zero/low-hours profile. Where an agency worker is entitled to a guaranteed hours offer, responsibility to offer guaranteed hours will fall on the end hirer as opposed to the employment business (often referred to as an ‘agency’). The Government has left open the door for further regulations which could place obligations on the agency in certain scenarios (albeit the current drafting gives no indication of what those scenarios might be).
  • End hirers will still be able to offer temporary assignments where there is a genuine temporary work need (such as seasonal demand) and there are provisions that cover scenarios where (acting reasonably) an end hirer tells the agency to stop supplying the worker for, e.g., their capability or conduct.
  • Notice of and cancellation of shifts: Responsibility for providing agency workers with reasonable notice of shifts will be on both the employment agency and the end hirer.
  • Responsibility to pay any short-notice shift cancellation, movement or curtailment payments will be on the employment business. However, employment businesses will undoubtedly look to push this cost onto the hirer in their contracts. For any agreement entered into on or before the date which falls two months after the Bill enters into force (and is unmodified thereafter), the agency will be automatically entitled to recover an amount which reflects the hirer’s responsibility for the shift being cancelled, moved or curtailed at short notice
  • Anti-avoidance provisions: The Bill now includes a set of provisions designed to prevent the employer from manipulating how they offer shifts to workers to either take the worker outside the scope of the provisions or to make the guaranteed hours offer lower and therefore easier for them to comply with. There will be concern that workers will use this provision to challenge any decision not to offer them a particular shift. Regulations will detail how much compensation a worker could receive in these circumstances.
  • Contracting out: It will be possible to contract out of the requirement to offer guaranteed hours and replace it with something else by way of a collective agreement if this is agreed by an employer and a union. It seems unlikely that unions would see the attraction of this.
• What’s the impact?
  • Less flexibility when it comes to engaging causal workers/greater cost associated with guaranteeing hours.
  • It seems likely employment businesses (agencies) will start to include provisions in their contracts covering short-notice cancellation/movement/curtailment, which employers may want to negotiate.
  • The anti-avoidance provisions create a great deal of uncertainty – it remains to be seen whether they will provide workers with an effective tool against employers seeking to manipulate or avoid their guaranteed hours offer obligations.
• What should we be doing?
  • To the extent that end hirer employers don’t do so already, it would seem prudent to start thinking about implementing agreed processes for communicating shifts and (in agency agreements) apportioning liability so as to mitigate the risk of constant litigation over this (while noting the protection for employment businesses in the case of pre-existing arrangements). Note the Government has recognised that ‘reasonable’ notice will depend on the facts, so an agreed process in and of itself may be helpful evidence as to what is reasonable in the circumstances.
  • Using fully outsourced service providers (as opposed to employment businesses) may be an option to mitigate the risks, although they might still seek to pass on the costs to the client.

Trade Unions and industrial action

• What’s the change?
  • Industrial action ballots: The removal of the requirement for a turnout of at least 50% of those entitled to vote for industrial / strike action (so a ballot will simply need a majority of those voting). This will not be enacted immediately, but will require separate regulations, the aim being to introduce this change at the same time as e-balloting.
  • The notice period for industrial action will be 10 days (as opposed to the current 14 or the 7 that was originally included in the Bill). The information a union is required to provide will also be less onerous, including in relation to the number of employees in each ‘category’ (usually broken into departments) that are expected to take part in the strike / industrial action.
  • A valid ballot currently gives a mandate for action for 6 months – this will increase to 12 months.
  • The Central Arbitration Committee is to be provided with a framework for fines to be issued for non-compliance with the right of access to the workplace for trade unions.
  • Union access to workplace arrangements will include virtual access as well as physical.
• What’s the impact? The amendments will make it ‘easier’ to strike (or conduct other industrial action) and action can be taken at shorter notice, without clear descriptions of who will be involved, and with the threat of action looming over employers for a whole year once validly balloted – all of which equates to greater disruption to a business in the event of a trade dispute.
• What should we be doing? Strengthening relationships with unions and ensuring well defined processes for negotiation are included in collective agreements.

Other matters – umbrella companies, bereavement leave, right to disconnect

• Umbrella companies are to be brought within the definition of an ’employment business’ and will be regulated in the same way in an effort to crack down on perceived non-compliance resulting from loopholes in the existing law. Umbrella companies and those engaging workers with an umbrella company in the chain will need to take advice to ensure their arrangements are compliant.
• The Government has accepted the principle of extending bereavement leave (itself newly extended from the existing right to parental bereavement leave) to pregnancy loss (pre 24 weeks) and the Bill will likely be further amended during its passage through the House of Lords to include this. If included, this would represent an important culture shift.
• Although not part of the amendments, it has been reported that the “right to disconnect” from work outside of working hours (proposed as part of the ‘Make Work Pay’ paper) has been dropped.

The amendments to what was already a complex Bill are extensive and it is clear that the dramatic reshaping of employment law and responsibilities on employers continues to be a topic of hot debate (hence the continued development and shifts in the proposed legislation).

If you need any further guidance or would like to discuss any of these topics further, please get in contact with one of the team.