UK: Employment Law Reforms – Consultations Launched and New Draft Legislation Published

Authors: Corinna Harris, Ruth Bonino, and Sophie Jackson 

The UK government has recently published four consultations and new draft legislation as part of their plans to reform workplace law.

Employment Rights Bill – consultations

The government has launched four consultations on planned new workplace rights and protections set out in the Employment Rights Bill.

The consultations, which run until early December 2024, seek views on the Employment Rights Bill’s (the Bill’s) measures relating to:

• a new right to a guaranteed hours contract for zero or low hours workers
• collective redundancy consultation and ‘fire and rehire’ practices
• trade union legislation, and
• Statutory Sick Pay.

The collective redundancy plans include doubling the maximum compensation award for failures to collectively consult from 90 to 180 days’ pay per affected employee or removing the cap on compensation altogether. There are also plans to consider doubling the minimum consultation period when an employer is proposing to dismiss 100 or more employees from 45 to 90 days.

‘Fire and rehire’ compensation

A new statutory Code of Practice on dismissal and re-engagement – often called ‘fire and rehire’ – came into force on 18 July 2024.

The current Code sets out the steps that an employer should follow when it is considering making changes to terms and conditions and envisages it may dismiss employees if they do not agree to those changes. Where an employer is found to have unreasonably failed to comply with the Code, awards for certain Employment Tribunal claims (including unfair dismissal) can be increased by up to 25%.

The previous government had intended to extend these powers to enable Employment Tribunals to order an uplift of the protective award that can be made in collective consultation claims where a party has failed to follow the Code, but this power did not come into force before Parliament was dissolved prior to the election.

The Labour government has now resurrected draft legislation dealing with this. Protective award claims are capped at 90 days’ pay per employee so if a 25% uplift is applied, an award could equate to up to 112.5 days’ pay.

Key Action Points for Human Resources and In-House Counsel

The government’s plans for employment law reforms are significant for employers in many ways, you can find out more about the proposals here. For further details on what is included in the government’s consultations, read our detailed update.