Following the Labour Party’s win in this year’s General Election, it was announced in the King’s Speech that, within 100 days, a new Employment Rights Bill (Bill) would be laid before Parliament. We were told that this would be a “New Deal for Working People” that would “Make Work Pay”.
The much anticipated Bill has finally been published and, as expected, it promises to make seismic changes to the Auckland employment law landscape.
The proposals
The Bill sets out 28 proposals, but the major changes that will impact employers the most include:
• Unfair dismissal: The qualifying period of 2 years’ service will be removed, meaning that employees will have the right to claim unfair dismissal from “Day one”. However, this right will be tempered by a statutory probation period (currently proposed to be 9 months’ long) that the government will now consult over.
• Zero-hours workers: The Bill will ban “exploitative” zero-hours contracts and place a duty on employers to offer guaranteed hours to qualifying workers, specifying the dates and times when work will be available. Employers must also give reasonable notice to workers when a shift becomes available and make payment for cancelled, moved, or curtailed shifts.
• Flexible working: Employees should have any flexible working request granted, unless their employer can, with reference to 9 specific grounds, demonstrate why it is reasonable to refuse this application. The subtle change here is that employers will now have to show why a refusal is reasonable as well as referring to one of the statutory reasons.
• Statutory sick pay: The waiting period before an employee will be eligible to receive SSP will be removed and the Lower Earnings Limit will be adjusted to increase eligibility for low paid workers.
• Redundancies: The Bill will require employers to collectively consult when contemplating 20 or more redundancies across their whole business rather than, as was previously the case, 20 or more redundancies at a single establishment (e.g. a single office, branch, site etc.).
• Leave entitlements: As with unfair dismissal, parental leave, paternity leave, and bereavement leave will all become ‘Day one’ rights.
• Fire and rehire: Employers will be prevented from dismissing employees and then rehiring them on new contracts of employment with less favourable terms, unless they can demonstrate that there is a legitimate business case for doing so.
• Tips and gratuities: Employers must produce a policy in relation to the allocation and distribution of tips to employees and must consult with either a trade union or workers representatives when formulating the policy.
What was missing?
The Government states that it intends to implement the remainder of the “Make Work Pay Plan” in time, so will roll out more reforms over the course of this parliament. It is notable that much publicised proposals, such as the right to ‘switch off’ and the creation of a unified worker status, were not included in the Bill, most likely because of the difficulty in addressing such complex issues meaningfully within the 100-day target set by Labour.
When will these changes be introduced?
As the Bill will be subject to further consultation and the legislative process, it is unlikely that these proposed changes will come into effect until 2026 at the earliest.
What next?
The Bill will now make its way through parliament and it is likely that its final form will be different from that published, as a result of the consultation and the amendments made during the legislative process.
In any event, it is important that all employers keep up to date with the progress of the Bill and make sure that their processes and procedures are ready for when it finally becomes law. Whatever the final form of the Bill looks like, one thing is certain – the administrative burden that will be placed on employers will be materially increased.
If you have any questions about the Bill or how it will affect your business, please email or call our Employment Law team today on 0113 207 0000.
