Together with the vast scope of the legislation, covering 28 distinct areas of employment law, the amendments and consultation responses represent a complex legal landscape to understand. Some of the statutory changes will come in via secondary legislation, such as regulations or codes of practice, still to be designed. Therefore it will take some time before the full and final detail of this employment reform package is clear. For example, we still don’t know the length of the ‘initial period’ of employment that will be set as part of the new right not to be unfairly dismissed from day one. Although the government has indicated a preference for nine months, the period is not confirmed in the amendments and will be subject to consultation.
Below, we consider the latest key developments as well as the results of our recent survey on how organisations view the forthcoming legal reforms.
Application of zero-hours contracts measures to agency workers
The government’s response makes clear that amendments to the ERB will allow the government to apply the new right for zero-hours workers to a contract that guarantees the hours they normally work, to agency workers. The CIPD’s view remains that agency workers should be exempted from this provision.
Creating a modern framework for industrial relations
The government has confirmed in its response to Creating a modern framework for industrial relations that it will reduce the notice period unions have to provide ahead of strike action from 14 to 10 days. It is also planning to extend the mandate for industrial action after a ballot from six months to 12 months, a change the CIPD opposed in its consultation response. The government will also table amendments:
- specifying that the repeal of the 50% industrial action ballot turnout threshold will be subject to commencement on a date to be specified in regulations
- extending the trade union access provisions to cover digital access and introduce a fast-track route for achieving an ‘off-the-shelf’ access agreement where certain conditions are met, alongside a mechanism to ensure there are robust penalties in place for non-compliance.
Strengthening remedies against abuse of rules on collective redundancy and fire and rehire
In its response to consulting on new rules around collective redundancy and fire and rehire, the government has made a significant change to its original proposal. Under current law, employers proposing 20 or more redundancies ‘at one establishment’ within a period of 90 days must go through a process of collective consultation beforehand. The bill initially proposed removing reference to the ‘at one establishment’ rule. This would have meant that all redundancies across the organisation and its sites would need to be taken into account to trigger the employer’s collective redundancy obligation. In its consultation response, the CIPD and its members expressed serious concern at the impact this proposed change would have on employers and employees.
In a major change, the government announced that collective consultation will now be required if there are 20 or more redundancies at one establishment or a ‘different threshold’ is met, with those threshold details to be set out in further regulations. The alternative threshold could be based on redundancies across the employing entity as a whole and could be a percentage, or a higher number.
Strengthening Statutory Sick Pay
The ERB will remove the waiting period so that Statutory Sick Pay (SSP) is paid from the first day of sickness absence and will extend eligibility to those earning below the Lower Earnings Limit (LEL). The CIPD has welcomed both of these reforms.
The government has also published its response following consultation on introducing a new SSP rate for the lowest earners. Low-earners will be entitled to the flat rate of SSP or 80% of their normal weekly earnings, whichever is lower. This could mean that a minority of low-paid employees could be worse off under the change, particularly if they would previously have received the full SSP rate (currently £116.75). The CIPD’s view was that they should be eligible for the SSP flat rate or their wages, whichever is lower.
We also believe further review and reform of SSP is needed, for example to make it more flexible so that more employees could return to work on a phased basis, receiving part-wages and part-SSP.
What could be the impact of the ERB on organisations?
The CIPD's Labour Market Outlook (LMO) - Winter 2024/2025 survey of more than 2,000 employers found that 4 in 5 (79%) organisations expected measures planned to be introduced in the bill, for example, changes to unfair dismissal rules, SSP reforms and the right to guaranteed hours for those on zero-hours contracts, to increase employment costs. Among employers that expected costs to increase because of the bill, the most likely ways they planned to manage this is through:
- reducing the number of employees through redundancies and/or recruiting fewer workers (30%)
- introducing or increasing automation (23%)
- cutting back on training spend (22%)
- reducing hours worked by staff (17%)
- increasing the share of the workforce that is temporary (17%).
The CIPD is also warning that the scale and complexity of measures in the bill could compound challenges facing many employers following recent increases in employer National Insurance costs, the National Living Wage and business rates.
What do UK workplaces need to deliver on Make Work Pay?
One of the CIPD’s key concerns is that the government needs to take on board the combined impact of the statutory changes on employers. Smaller employers in particular are likely to find it challenging to implement such an extensive number of regulatory changes. Therefore, we are calling on the government to develop a phased implementation plan and clear guidance for employers as part of its Make Work Pay proposals. We have also highlighted the importance of additional resources for Acas, the Central Arbitration Committee and the employment tribunal system to cope with the expected increase in employer demand for advice as well as the potential rise in tribunal claims.
Implementing the legal changes enacted by the ERB will represent an enormous change management programme for organisations. People professionals have a major role to play in ensuring compliance with new laws and updating policies and procedures across the breadth of the organisation’s people management framework. Effective implementation at a workplace level will also require a supportive employment relations approach to strengthen joint working and minimise conflict.
With this in mind, the government’s consultation and response on Creating a modern framework for industrial relations set out four principles for modern industrial relations: collaboration; proportionality; accountability; and balancing the interests of workers, employers and the public.
The CIPD welcomes this new emphasis on social partnership. Meaningful collective voice and employee engagement will be instrumental in helping organisations innovate and adapt to the challenges facing them as they implement the biggest transformation in employment rights in a generation.
To bring these to life, the reforms should reflect these principles across the breadth of its legislative programme. It’s also crucial that the government takes action to reinforce these principles at a workplace level, by helping organisations to embed them through guidance such as a code of practice. There needs to be oversight to encourage ‘accountability’ and to ensure that all stakeholders, including employers and trade union officials, behave in a way that reflects the four principles.
Consultation continues
The CIPD will continue to provide regular updates as new information and detail emerges, as well as on the timeline for implementation, as soon as these become available. We will continue to consult with members and seek to influence government on the measures which are still to be shaped through secondary legislation. So keep checking the CIPD website for updates and we’ll keep updating and engaging with our members as more detail becomes clear.
