Unpacking the new Bill

The recent Employment Rights Bill announced by the UK Government has sparked a wave of discussions amongst businesses, from trade bodies like the Federation of Small Businesses (FSB) to the HR press. Information is being widely shared about the contents of the Bill, but we thought we’d take a look at the reality for CPOs as they consider the potential impact to their business, their function and their people.

What is the likely impact on your EVP (Employer Value Proposition)? Will these changes have a significant impact on policies, working practices and the experience you deliver for your people? Or will there be relatively immaterial changes that won’t impact the day-to-day?

In this article, we break down the key changes and their effects on large businesses. While we’re not legal experts, our goal is to give you a clear overview of these legal shifts and, more importantly, help you make informed decisions on preparing and managing the changes effectively.

Key changes and talking points

The Bill introduces several significant changes, summarised as:

• Addressing one-sided flexibility, ensuring that jobs provide a baseline of security for workers
• Supporting family-friendly rights by improving flexibility and security
• Prioritising the fairness, equality and wellbeing of workers
• Ensuring workers get fair pay for a fair day’s work
• Modernising trade union legislation, giving trade unions greater freedom to organise, represent and negotiate on behalf of their workers
• Improving enforcement of employment rights

The Bill was introduced into the House of Commons on 10 October 2024, and the government expects to begin consulting on the majority of these reforms in 2025, including input from key stakeholders. Most reforms in the bill will take effect no earlier than 2026.

Here, we’ll focus on the most relevant aspects for large organisations:

• Unfair dismissal and probation: The two-year qualifying period for unfair dismissal claims is proposed to be removed. However, details regarding a potential nine-month probation period remain unclear. This creates confusion as probation periods serve a different purpose than unfair dismissal rights.
  • Action points: Monitor further developments regarding the probation period and its interaction with unfair dismissal rights. Consider how your performance processes will serve you well in an extended probation period. Are you tracking and monitoring with an appropriate frequency and maintaining proper records, and are your managers sufficiently enabled to manage probation periods to achieve the best outcome proactively?

• Zero-hour contracts: The Bill aims to tackle exploitative zero-hour contracts. Workers on these contracts, or contracts with guaranteed low hours, who regularly work more than a set reference period (likely 12 weeks), will be entitled to a guaranteed hours contract reflecting their average working hours.
  • Action points: While this benefits workers, it introduces administrative burdens for HR functions. Consider the impact on payroll teams and how systems or processes many need to be adapted. Communication strategies for transitioning employees to guaranteed hour contracts should be considered. Additionally, explore whether to continue offering zero-hour contracts based on your business needs and the value proposition you want to offer to your employees.

• Flexible working: Employees will have the right to request flexible working from day one of their employment. Employers will be required to consider these requests seriously and provide clear reasons for rejection.
  • Action points: Re-evaluate your flexible working policy and ensure it’s compliant with the new regulations. Train managers on handling flexible working requests effectively, focusing on a collaborative approach to addressing requests.

• Statutory sick pay: The minimum earnings threshold for statutory sick pay will be removed, meaning all employees will be entitled to sick pay from day one, regardless of income level.
  • Action points: Review your sick pay policy to ensure it aligns with the new regulations. Consider the financial implications and explore potential cost-saving measures.

• Other employee protections: Employees may gain additional rights with regard to parental and bereavement leave, menopause support, stronger protection for pregnant women and working mothers.

Remember, this is just the beginning. The Bill outlines changes with varying implementation timelines. Stay informed and adapt your HR practices accordingly.

A functional perspective

Many CPOs act as the conscience of the organisation – ensuring that business-led decisions are considered through a people lens too, but also sit as a critical member of an executive leadership team and lead the HR function. These multiple hats mean that when considering changes such as those proposed by the new ER Bill, you must consider a range of issues beyond the legal details.

Mobilising the Team

Your HR leadership team and the functional experts working across your function need to be mobilised to get into the details of the Bill, understanding the specifics of the legislation, the impacts and costs, and how it will be implemented in your organisation. There will be different implications across the function – from consideration of the employee experience to how payroll will implement changes to a review of the suitability of the performance processes to meet the needs of the new regulations.

Cost implications

No doubt, the new legislation will have cost implications for your business – from the addition of new rights for employees on day one to the zero-hours contract changes, there are likely to be direct cost impacts, but also the indirect costs associated with review, implementation and evaluation. Preparing your business leaders for the costs that might be incurred, whether one-off or ongoing costs of employment, will be key.

Impact on your EVP and experience

You will want to consider how your employer’s value proposition is affected by new regulations. Your value proposition may be positively impacted by changing employee rights and benefits, and you might consider how you can ensure that they serve you well in talent attraction and retention.

Consistency

It will be really important to consider how the changes as a result of the Bill impact your UK organisation, but also where you want to ensure consistency across your business landscape – i.e. does a UK led change provide opportunity across geographies, or is it an appropriate business decision to maintain local legislative flavour and not push for consistency. Your EVP may already be differentiated to take account of geographical differences (cultural and legal for example) and you may want to decide where to apply changes across the board, to the advantage of the business and employees alike, and where to ringfence UK legislative requirements.

Change and Communications

Your colleagues across your UK based businesses will be hearing much about the new legislation under the Bill from the media, their social interactions, and each other. Misinformation and assumption can be rife, and so ensuring that you are leading the way in communicating what is proposed, and how it will affect them will be key. Proactive engagement with union and employee representative groups will help to disseminate the key messages around changes too, and may provide insight on making it work effectively, and anticipated demand for new entitlements and opportunities.

LACE as your trusted partner in a changing landscape

The Employment Rights Bill presents both challenges and opportunities. At LACE Partners, we understand the complexities of managing a large workforce and navigating a changing workplace landscape. We’re not legal experts, but we can offer support within our suite of HR services to help you adapt and thrive in this new environment.

Here’s how we can support you:

• EVP development: Revisit your EVP to reflect the changing landscape and attract and retain top talent in a competitive market.
• Employee Experience: Consider how changes to the legal landscape will impact on the workplace experience for your employees – what will benefit them, what might not, and how can you adapt your HR service delivery and policy / process approach.
• Change management: Support your organisation through the transition period, ensuring a smooth implementation of the new regulations.

Ready to discuss your specific needs and how we can help you? Contact LACE Partners today.