Significant Government backed amendments were announced in July, shortly before the summer recess.
As the Employment Rights Bill ("ERB") proceeds towards the end of its passage through Parliament, a 64 page Running List of proposed amendments to the ERB was published in early July. While this included a number of changes proposed by opposition parties that are unlikely to go ahead, Government backed amendments covered topics such as fire and rehire, guaranteed hours, bereavement leave for pregnancy loss and a whole new section on non-disclosure agreements ("NDAs").
Fire and rehire
As originally drafted, the ban on "fire and rehire" prevented employers from making any changes to employees' contractual terms unless the business was facing a financial crisis that impacted its ability to continue as a going concern, and the measure could not be reasonably avoided. In any other circumstances, irrespective of how sensible the change might be, a dismissal for failing to agree to the contractual change would be automatically unfair. That position has been relaxed. The ban on fire and rehire will now only prevent dismissals arising from a "restricted variation" to contractual rights. A restricted variation is one that:
- Reduces pay
- Alters performance-based pay measures
- Affects pension
- Changes hours of work or timing or duration of shifts
- Reduces time off; or
- Is a variation of a description to be specified in regulations
Additionally, there is an anti-avoidance measure preventing employers from imposing contractual flexibility clauses allowing such changes. It appears existing flexibility clauses would not be caught in this way, and employers may want to audit contracts now to assess how effective their existing terms might be.
Employees may still be dismissed and re-engaged to impose contractual changes that do not fall under the definition of "restricted variation". However, while those dismissals may not be caught by the fire and rehire ban (and therefore will not be automatically unfair) they may still form the basis of an ordinary unfair dismissal claim. A further amendment sets out matters that must be considered when determining whether such dismissals are fair or unfair, including the reason for the variation, the consultation carried out and whether anything was offered to the employee in return for agreeing to the variation.
Whilst this does represent a softening of the ban, it still leaves employers in a difficult position if they cannot agree to "restricted variation" changes.
Extension to cover fire and replace
The concept of "fire and rehire" hit the national headlines in March 2022 when P&O Ferries dismissed nearly 800 UK based seafarers via a pre-recorded message and replaced them with cheaper agency workers. Technically therefore this was a case of "fire and replace". Currently such a scenario could be covered by redundancy, due to the diminution of employees required, and be potentially fair. In the case of P&O, the company reportedly paid £36.5m in compensation to the dismissed employees.
Surprisingly, up until this point the ERB had not addressed fire and replace. A new amendment to the ERB means replacing a workforce with agency workers, or any non-employees, would also be regarded as automatically unfair. As with fire and rehire, the only exception to this would be if the employer could show the measure was to avoid financial difficulties likely to, in the immediate future, affect its ability to continue as a going concern, and the measure could not reasonably have been avoided.
Non-disclosure agreements
A whole new section covering non-disclosure agreements ("NDAs") has been introduced. As drafted, the proposed amendment covers current and former employees and workers, but it is possible that secondary legislation may extend that to include groups such as contractors. Any clause in an agreement between an employer and a worker will be void in so far as it prevents the worker from either (a) making an allegation or disclosure of information relating to "relevant harassment or discrimination"; or (b) making an allegation or disclosure of information relating to the response of the employer to the relevant harassment or discrimination, or to the making of such an allegation or disclosure.
The harassment or discrimination is "relevant" if it is carried out by the employer or a colleague, and the victim must either be the worker or a fellow worker. That suggests third party harassment is not included and could therefore still be validly included in an NDA. Similarly, it seems not to include the duty to make reasonable adjustments and nor is victimisation specifically included.
The ban will not apply to "excepted agreements". The UK Government press release announcing the ban makes it clear that settlement agreements will not be an "excepted agreement". This may have a significant impact on the likelihood of employers settling claims if confidentiality cannot be guaranteed. On 17 July, an impact assessment published by the Department for Business and Trade provided further insight into how an "excepted agreement" might be defined in secondary legislation. It appears that an agreement requested by a worker rather than offered by an employer will be an excepted agreement. This is similar to the approach to NDAs that has been in place in Ireland since the end of 2024.
The impact assessment also emphasises that businesses will remain free to use NDAs "to protect sensitive business and commercial information and to protect trade secrets and other confidential data".
Bereavement leave for pregnancy loss
Currently the only type of statutory bereavement leave and pay available is for parents who lose a child under the age of 18 and after 24 weeks of pregnancy (a stillbirth). Although this parental bereavement leave is a day 1 right, there are earnings and service requirements to receive parental bereavement pay. The ERB in its original form extended bereavement leave to cover those in a "qualifying relationship" to the deceased, albeit the entitlement is unpaid and for a shorter period than parental bereavement leave.
The new proposal extends the leave provided under the ERB to employees experiencing pregnancy loss before 24 weeks. It would be a broad right covering both abortion and failed IVF implantation as well as miscarriage. The mother and her partner would be entitled to at least 1 week's leave with this, it seems, being unpaid.
Guaranteed hours
The provisions contained in the ERB introducing the right to guaranteed hours, reasonable notice of shift changes and cancellations and related compensation to zero and low hours workers are already incredibly complex. The latest amendments include ensuring guaranteed hours offers made by end hirers to agency workers are made on no less favourable terms than the most favourable terms they had previously been working under. There is a complicated exception when a hirer may pay less than the most favourable terms (but not less than the least favourable terms) that the agency worker has been working under during a relevant reference period. This must be a proportionate means of achieving a legitimate aim.
Terms and conditions relating to pay must be no less favourable than the most favourable terms offered to comparable workers doing broadly similar work, with a similar exception that requires to be a proportionate means of achieving a legitimate aim.
A further amendment confirms that where a guaranteed hours offer is accepted by an agency worker from a hirer, they become worker and employer. However, employers should not assume that means the worker is not also an employee - employment status will be a question of fact and degree.
What is next?
Progress on the ERB will not continue until the end of the summer recess. MPs return on 1 September. It is likely that the ERB will pass into law shortly thereafter. We can then expect consultations and implementation over the next 2 years. For details on the UK Government's recent implementation timetable see our overview at Employment Rights Bill implementation roadmap published.
