REWARD
Employment Rights Bill 2024
Paul Chamberlain, head of employment law, JMW Solicitors LLP, outlines the main proposals set out in the Employment Rights Bill that payroll professionals should be aware of and their likely impact on the industry
F ollowing the King’s Speech on 17 July 2024, the Employment Rights Bill was released on 10 October. The proposed changes mark a significant shift in employment regulation. This article introduces the key proposals and the effect they are likely to have on businesses’ payroll departments. It also offers advice on how payroll professionals / providers can best prepare for the changes and considers what the Bill generally means for employers. Zero-hours contracts Clause 1 of the Bill proposes that if a worker is under a zero-hours or minimum hours contract, the employer has an obligation to offer them a guaranteed hours contract. This will be based on the number of hours the employee worked during the previous reference period. According to the consultation paper, ‘Consultation on the Application of Zero Hours Contracts Measures to Agency Workers’, it’s expected the reference period will be set at 12 weeks. As there are currently around 1.03 million people on zero-hours contracts in the UK, many workforces will inevitably be affected by the changes. Payroll teams are likely to already have appropriate methods in place to keep accurate records of staff working hours for HM Revenue and Customs purposes and to ensure compliance with national minimum wage legislation. However, as
we move from a zero or minimum hours to a ‘guaranteed hours’ system, more responsibility will rest on payroll teams to keep continuous and precise records of workers’ recent working hours. This will ensure employers can determine the hours worked within the relevant reference period that is to be finalised following responses to the consultation paper. “The upshot of the right to guaranteed hours contracts for employers is that they will need to find alternative ways to manage staffing where both the business and the worker want the benefits of flexibility” The upshot of the right to guaranteed hours contracts for employers is that they will need to find alternative ways to manage staffing where both the business and the worker want the benefits of flexibility. One
alternative could be that the business offers zero-hours contracts on condition that they offer candidates a contract with a set number of hours too. Employers should pay close attention when reading the consultation paper and prepare alternative staff management options while the consultation process is ongoing. Unfair dismissal Clause 19 of the Bill provides that the qualifying period of service, which is currently two years, will be removed for the purposes of ordinary unfair dismissal. This means employees will have the right to claim the right from day one of their employment. A new statutory probationary period will be finalised through consultation. It is expected this will be set at six months. However, there is commentary that suggests a nine-month period may be favoured. The government has estimated that nine million employees will have the right to claim ordinary unfair dismissal under the changes. That said, employees’ right to access this type of claim will probably still depend on them completing a successful period of probation. The ambiguity surrounding the new statutory probationary period is hardly reassuring for employers. In particular, there is increased potential for new recruits who are simply unsuited for the role to launch tribunal claims, which could
| Professional in Payroll, Pensions and Reward | December 2024 - January 2025 | Issue 106 39
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