UK: amended Employment Rights Bill passes third reading in the House of Commons

Yesterday the amended Employment Rights Bill passed its third reading and will now progress to the House of Lords.  Given the speed with which the Bill was drafted in order to meet the Government's 100 day pledge, it was perhaps inevitable (if unhelpful) that copious amendments would be needed as it progressed through parliament, even with much of the detail being left for secondary legislation.  Employers keeping an eye on the Bill's progress should note the following:

• All of the Government's amendments introduced at the second reading of the House of Commons in January were accepted.  Many were technical drafting amendments; the most significant amendment for employers was the expected extension of the time limit for all employment tribunal claims to six months (which had been trailed back in October). 
• On 4 March the Government published its responses to the four consultations it ran at the end of last year to inform further amendments to the Bill.  The following amendments were all added to the Bill and passed at the third reading:
  • the maximum period of the protective award (for a breach of the information and consultation obligations in respect of collective redundancies) will be doubled from 90 to 180 days. The Government has decided against making interim relief available to employees who bring claims for protective awards or who make an unfair dismissal claim in a ‘fire and rehire’ scenario.  It will issue further guidance for employers on redundancy consultation processes and intends to gather further views in 2025 on strengthening the collective redundancy framework and on updating the Code of Practice on Dismissal and Re-engagement.  The response is here.
  • the zero hours provisions (the detail of which will be set out in regulations, on which further consultation is planned) will be extended to cover agency workers - see the response here. The obligation to offer guaranteed hours will rest with the end user of the worker’s services as a default position, subject to exceptions to be set out in secondary legislation. Both the end user and agency will be responsible for providing reasonable notice of shifts, shift cancellations and changes to shifts, with agencies responsible for payments for short notice (though liability could be reallocated to end users through contractual terms). 
  • additional amendments will be made to trade union legislation including to the statutory recognition process, digital right of access to employees, changes to industrial action ballot and notice requirements, and an extension of the mandate for industrial action from 6 to 12 months.  See the response here.
  • statutory sick pay for employees earning below the Lower Earnings Limit will be set at the lower of the flat rate and 80% of normal weekly earnings (see the response here).
• The Government also published its response to the previous government's 2023 consultation on umbrella companies.  The Government will consult further on regulations to ensure that workers have comparable rights and protections when working through an umbrella company as when taken on directly by an employment business.  As announced in the Autumn Budget 2024, the Government will also bring forward legislation to move the responsibility to account for PAYE from the umbrella company that employs the worker to the agency that supplies the worker to the end client (and where there is no agency in a labour supply chain, this responsibility will sit with the end client), from April 2026.
• The Government added further amendments to the Bill (not included in the four consultations) at the report stage this week.  These include the following significant changes:
  • the original Bill proposed applying the threshold for collective redundancy consultation obligations (of 20 or more proposed dismissals) across all of an employer's establishments in aggregate, rather than per establishment. The new amendments reinstate the original threshold of 20 or more proposed dismissals 'at one establishment', but allow for regulations to be made to implement an alternative threshold which would also trigger the obligations.  This could be a fixed number (higher than 20) or a percentage of the workforce, and will presumably apply across the employer's whole workforce. The Government will consult on this alternative threshold.  Another new provision clarifies that consultation does not have to be carried out with all of the appropriate representatives together, nor with a view to reaching the same agreement with all of them.
  • employers will be required to keep records for six years to show that they have complied with the paid annual leave entitlements in the Working Time Regulations 1998;  failure to comply will be punishable with a fine;
  • the Fair Work Agency will be given additional enforcement powers including:
    • the ability to issue a notice of underpayment looking back six years in respect of failures to pay specified statutory payments to workers (including holiday pay and statutory sick pay), requiring payment within 28 days and imposing a penalty of 200% of the sum due (up to a maximum of £20,000 per underpaid individual)
    • the power to bring an employment tribunal claim on behalf of a worker, if it appears that the worker is not going to do so
    • the power to provide legal advice and representation for employment-related proceedings
    • the ability to recover its enforcement costs from employers not complying with the law, with details to be set out in regulations.
  • an employer and union will be able to agree a collective agreement contracting out of the zero hours provisions for both workers and agency workers
• A host of non-government amendments were also moved at report stage;  none have made it into the Bill at this stage, although Government support was expressed for initiatives on some issues outside the Bill.  The amendments included:
  • the extension of (unpaid) bereavement leave to cover pre-24 week pregnancy loss. Currently there is a right to two weeks' paid parental bereavement leave for the loss of a child under 18 or stillbirth after 24 weeks' pregnancy.  The original Bill includes provision for at least one week's (unpaid) bereavement leave for the loss of significant others (regulations will specify the duration and relationships covered).  The proposed extension to cover early pregnancy loss seems likely to be adopted in due course, given it has cross-party support and the Business Minister stated in debate that he fully accepts the principle of bereavement leave for pregnancy loss and looks forward to further discussions as the Bill moves on to the House of Lords;
  • rights for victims of domestic abuse - the Business Minister commented that a cross-government strategy is required on the issue of violence against women and girls and will be published shortly;
  • kinship care leave, payment for carer's leave, and various other proposed changes to the parental leave regime - the Business Minister stated that work is already underway across Government in planning for the delivery of a separate review of the parental leave system and that this will commence before Royal Assent;
  • invalidating non-disclosure agreements (NDAs) that prevent workers from making a disclosure about harassment, with exceptions for confidentiality protections requested by the worker - the Business Minister stated that this issue warrants further consideration and the Government will continue to look at the issues raised;  he also noted that the Government is pressing ahead with plans to implement the provisions relevant to NDAs in the Victims and Prisoners Act 2024 (which clarifies that NDAs cannot be legally enforced if they prevent victims from reporting a crime to law enforcement or a regulator, for the purposes of obtaining legal or professional advice, to obtain victim support services or to immediate family);
  • extending whistleblowing dismissal protection to apply when a protected disclosure is just one of the reasons (rather than it having to be a principal reason) - the Business Minister stated that the Government is considering where it goes next on whistleblowing legislation (this echoes his comments during the Public Committee debates in January that he was planning to meet Protect to discuss the issues, that the Government needed to understand the findings from the previous government's review, and that in due course the Government will be looking at the whole area of whistleblowing to see whether there are things that can be improved);
  • reintroducing statutory discrimination questionnaires - the Business Minister stated that the Government would not support this amendment but had sympathy with its aims and "will be giving close consideration to the impact of the repeal of the statutory questionnaire and any steps that may be needed during this Parliament".  
• During the Public Committee debates in January the Business Minister commented that in relation to the proposed 'right to disconnect', the Government will not be legislating to ban all communication outside of working hours; instead it is looking to implement a statutory code of practice, which will set out clear expectations and obligations to get the balance right between allowing flexibility and make it clear that people’s home lives should be respected. Earlier this month there were press reports that the Government had abandoned its plan to add this to the Bill (although in fact, when the Bill was introduced in October, this proposal was included in the 'Next Steps' document and expressed as an intention to issue a statutory code rather than to add a right to the Bill) and that a government source had stated that "The right to switch off is dead".  The Business Minister did not touch on this issue during this week's debates.  

The Bill will now proceed to the House of Lords.  Although it may be a few months before we have the final version, and much of the detail will in any event remain to be set out in regulations, employers may wish to start considering how the new rights will impact their business.  Please do get in touch with your usual HSF contact if you would like to discuss this further.