The Employment Rights Act

Our latest podcast by Rebecca Cairney and Mark Landon looks at the Employment Rights Act and what employers need to be aware of.

Transcript

Podcast Transcript:

The Employment Rights Act

Rebecca: Hello, everybody, and welcome to the next edition of the Employment Insights podcast.

Rebecca: My name is Rebecca Cairney, and I'm a Partner in the employment team based in Liverpool. I'm joined today by my colleague, Mark Landon, who's a Partner based in our London office. So hello, Mark, and thank you for joining us today.

Mark: Yeah. Hello. It's a great pleasure.

Rebecca: Thank you.

Rebecca: And today, we are going to be covering the Employment Rights Act, which I know everybody is probably sick to death of hearing about; the Employment Rights Bill - but from the 18 December 2025, we now have the Employment Rights Act.

Rebecca: So, I suppose without further ado, Mark, the implementation date 18 December 2025, the Royal Ascent, sorry, was considerably later than the government had first envisaged. And how do you believe this is then impacted on the anticipated timetable for, you know, implementation of the Act's various provisions?

Mark: Well, I mean, until a week ago, I would have said not much.

Mark: Because, actually, despite the fact that because of the ping ponging between the House of Commons and the House of Lords, the bill didn't receive Royal Assent till probably three or four months later than it should have done.

Mark: And despite the fact that all the autumn consultations didn't happen, up until about a week ago, the government were steadfast in saying that the July 2025 road map timetable for implementation would be adhered to. And then, of course, what they probably did was to say, well, actually, no. We're now going to have a revised timetable. And if you look at the revised timetable, a lot of the things in the July time frame remain, but there are a couple of postponements which are potentially quite significant.

Mark: So, what we've got, the early stuff, which happened both on the 18 December and some things coming in the 18 February, are all about industrial relations. So, what happened on the 18 December was the Employment Rights Act, repealed the Minimum Service Levels Act introduced by the Tory government, which, If you remember, was never actually used. But the idea was that if you were having strike action, you would, in certain key services, have to maintain a sort of 20% staffing level.
Mark: Well, that's got repealed. And then on the 18 February, this year, what we're going to see are various changes as regards industrial action balance. And in a nutshell, frankly, they're going to make it easier, to have a lawful strike. They are simplifying the information that a union must provide.

But I guess for most people, a key issue is going to be around the 6 April 2026. And that's the first point. When we look back at the road map in July 2025, it just said April, whereas, actually, we now know it's from the 6 April.

Mark: We're getting, again, with regard to unions, simplification of the rules around trade union recognition.

Mark: But things that are more relevant to non-unionized employers. There's the doubling of the protective award where there's a failure to collectively consult, so from 90 to 180 days’ pay per employee.

Mark: There are changes to the parental and paternity leave entitlements, and in particular, making those both day one rights. Whereas at the moment, you need 6 months continuous service to get paternity leave and a year to get parental leave. So those both become day one.

Mark: Statutory sick pay, as from the 6 April, will become payable on day one rather than day four.

Mark: Sexual harassment complaints will become protected disclosures for whistleblowing purposes. Now in reality, in many cases, they probably would be already. But actually, I think it just makes it much clearer there. Still have to be in the public interest, but I think it adds ammunition, if you like, to a sexual harassment complaint. And then slightly oddly, on 7 April - so we wait a whole day -for the establishment of the Fair Work Agency.

Mark: That, of course, is this sort of super enforcement body that's going to combine, you know, some of the existing enforcement actions of things like HMRC and the, Gangmasters Licensing Authority. Although, actually, the powers of the Fair Work Agency will not come in on the 7 April. They're going to be some time because I think the reality is that transferring enforcement action, from an existing body to the Fair Work agency is going to be quite a complicated, issue.

Mark: Then what we have no earlier than August 2026, is the introduction of electronic balloting for statutory trade union ballots.

Mark: And then we move on to October. Now two key changes with the new timetable are that the extension of time limits for submitting tribunal claims, currently 3 months from the course of action to 6 months. Well, that has been postponed from October. Well, what they've said is instead of coming in ‘in October’, it'll take effect ‘no earlier than October’.

Mark: And in some ways, actually, I don't think that's going to be a hugely significant change because it's not granting new legal rights. It's just saying that the jurisdiction of the tribunal will be extended to 6 months rather than 3 after the act you're complaining about. But what has been postponed from October is the introduction of various restrictions on an employer's ability to dismiss and reengage staff, the so-called fire and rehire.

Mark: That was going to come in in October 2026. It's now going to come in on the 1 January 2027. And there is, in fact, an ongoing consultation exercise on this. And it's an odd one because if you remember back to the Labour Party manifesto for the general election in July 2024, they talked about the ‘scourge’ of fire and rehire, you know, this sort of Darth Vader esque legislation.

Mark: And, what they said they were going to do is do an outright ban on the ability to fire and rehire if you want to force through changes in an employment contract. Well, of course, what happened was the Employment Rights Act was watered down.

Mark: So, what they said was, well, there'll be certain ‘restricted variations’ where this ban would apply, say, for, extreme financial difficulties. And, actually, if you look at the consultation, it looks like they're watering this down even more because they're talking about taking certain changes outside the scope of a restricted variation. So, for example, a change in shift wouldn't count as a restricted variation unless it was a sort of severe change. And the example in the consultation is that if you said someone on nights was going to be transferred to days, that would be a restricted variation. But if you were changing somebody from a 9 to 5 to the 10 till 6 shift during the day, that wouldn't be a restricted variation. So presumably, you could ultimately use fire and rehire to force it through. So, we got this slightly odd thing where they have pushed it back from October 2026 to January 2027.

Mark: But, also, it looks like they are taking on board the various concerns raised by local government, the CBI, etcetera, who actually rely upon the ability to fire and rehire to deal with the sort of diehard stick in the muds who won't agree a change. Because, of course, what they don't want is a two-tier workforce where some Yeah. Agree a change and some don't.

Mark: So that that is one of the significant changes.

Mark: Other things coming in October, duty to take all reasonable steps to prevent sexual harassment. Now at the moment, again, this is one of those things that I think will make no difference at all. At the moment, you have to take reasonable steps to prevent sexual harassment. That really, by adding the word ‘all’ reasonable steps, it seems to me is to bring it into line with the statutory defence against vicarious liability. But what we have got in October, which I think is going to be quite significant, is the introduction of protection against third party harassment as regards all nine protected characteristics. Since October 2024, employers have been under an obligation to protect staff against third party sexual harassment.

Mark: But as of October 2026, it'll be third party harassment in respect of all nine protected characteristics, so disability, religion, gender reassignment, whatever it happens to be. But what is troubling is that the government have said, oh, we're going to publish regulations to explain what these reasonable steps will be to protect staff, but we're not doing that until 2027.

So, what we've got is a new rule coming out, but, actually, the regulations that will flesh it out might not be out for anything up to a year after.

Mark: And I think most employment practitioners will know it's pretty hard to run the existing statutory defence to vicarious liability. And given that employers have significantly less control over what third parties do as opposed to what your own staff do to each other, I think this is a real issue. If you work in hospitality or retail, I would be very nervous about the October 2026 third party harassment provisions. Because, essentially, if they occur in the course of employment and it's found that you didn't take reasonable preventative measures as an employer, you're liable.

Mark: And it's almost a sort of strict liability in a sense. Yeah. So that that is something. Other than that, in October 2026, there are other trade union rights, being introduced; rights of access, rights to certain facilities, and so on.

Mark: And then as I said, first of January 2027, we have a reduction in the qualifying period for protection against ordinary unfair dismissal from two years to six months. That's probably the most headline grabbing change.

Mark: And bear in mind that if, as of the first of January, I only need six months continuous service to claim unfair dismissal, it means anyone employed from the beginning of July 2026 will fall within that six months.

Mark: So, what it means in reality is that employers need to be looking now at things like probationary periods, notice periods, etcetera, performance management policies because anyone you take on from the beginning of July, will gain protection against ordinary unfair dismissal on the first of January onwards.

Mark: So, you know, what it means is you're in the slightly bizarre situation that if on the 1 July 2026, I was a new starter, and if on the 1 July 2026, I had six months left to run on my two years continuous service, I'm in the same boat. You know, we will both get protection on the 1 January. And I think that, yeah, there can be a risk that some employers will think that somehow this right only begins on the first of January. Well, actually, anyone with six months as of the first of January gets that protection.

Rebecca: Yeah. That's an important distinction, isn't it?

Mark: Yeah. No. It is. It is. And then in 2027, we're not sure when, but presumably either April or October, there will be additional protection against dismissal during or after pregnancy.

Mark: There will be potentially additional protection against dismissal during or after other statutory family leave. So you can imagine that shared parental leave and adoption leave at the very least will have to mirror the protection for maternity.

Mark: Action plans on gender equality and supporting employees through the menopause will come in. Those are mandatory.

Mark: Changes to the threshold number of staff for collective consultation; At the moment, if you make twenty or more people at one establishment redundant in a three month period, collective consultation kicks in. What we're going to see is that will remain, but there will be a supplemental provision that if within a three month period, you make more than a threshold number of staff across the whole business redundant, it will kick start the collective, consultation obligations. Question to be, clarified is what will that threshold be?

Mark: I'm assuming it's going to be a percentage of the whole workforce. You can see the logic in that. Yeah. But where they set the percentage will indicate how much of an impact that will be. 

Mark: Flexible working; the change is there. The idea that, not only if you reject a request for flexible working, you'll have to base it on one or more of the existing eight business reasons. But in addition, it will have to have been reasonable for you to do so, which means tribunals can scrutinize your thinking.

Mark: General bereavement leave will come in, and then, of course, I suppose, the world's most complicated provision. That's the right for zero and low hours workers and low hours agency workers to be given a guaranteed contract of hours after twelve weeks. So, they will work out the average for the previous twelve weeks, and employers or hirers have to offer that as a guarantee. You don't have to accept it, but the employer has to offer it. And, of course, the real oddity there is that if I have been engaging an agency worker for twelve or more weeks, I not only have to offer them a guaranteed number of hours based upon the average hours I've given them over the last twelve weeks, but they become my worker as well, presumably my employee. So presumably, their employment would transfer from the agency to the hirer if they were employed by the agency.

Mark: So, you know, lots happening. I think the initial things this April are primarily around unions.

Mark: But you know? And I think things that are not that contentious, parental and paternity leave becoming a day one right, for example.

Rebecca: Yeah.

Mark: I think, as always with this, what we've also got, which complicates it, I think we had five consultation papers published last week. And, you know, what we're trying to catch our breath with is, well, you know, how will the actual regulations that flesh out these provisions look once we've had responses to the consultation papers? Because, you know, if you look at things like the trade union changes, there's very little time, you know, before that becomes law. So presumably, when the consultations close for those, what you're going to get is a fairly fast-tracked set of regulations to flesh out or, in some cases, codes of practice to flesh out what these things mean in practice. And I would imagine and there are two things, aren't there? If I already have a unionized workforce, there are going to be enhanced rights of access and facilities, etcetera.
If I don't have a unionized workforce and I'm thinking here of the likes perhaps of Amazon who in the past have fought statutory recognition. Well, the chances are that the simplified formal recognition process will be used pretty swiftly by any unions trying to get in there.

Mark: And so, you know, I think for non-large non-unionized, employers, the potential there is you can see, you know, in April, suddenly facing interest from a number of unions who would like to represent their workforce.

Rebecca: Yeah. Yeah. And the I mean, the lack of detail to some of this is still quite unhelpful, isn't it? I know, certainly from my experience, that employers are worried about some of these changes and the lack of detail that we've got as to what they might look like in practice.

Rebecca: And I suppose the point from an employment lawyer perspective is how on earth all of these additional rights are going to be enforced; again in practice because I know we certainly had, a couple of weeks ago, our first final hearing listing in 2029.

Rebecca: So if individuals are already having to wait, I suppose, three years to get any kind of, you know, justice or decision or, you know, determination on their case. You know, I can only envisage that side of things, getting more backlogged and more prolonged. And, yeah, it does feel, like there's an awful lot here.

Mark: And I think, you know, the law of unintended consequences comes in here.

Mark: I mean, are two things that strike me. I mean, the first is when you reduce the qualifying period for ordinary unfair dismissal from six months, sorry from two years to six months, the number of people who'll become eligible to bring a claim will go up. Yeah. But the law of unintended consequences is, I think, there'll be a lot more people dismissed in month sort of three and four of their new employment by employers who don't want to take a chance.

Mark: And, of course, the irony being that if the number of claims goes up, that long waiting list becomes even longer

Rebecca: Yeah.

Mark: Unless they significantly resource it.

Mark: I think also if you look at something like the very complex new rights for zero and low hours workers and agency workers.

Rebecca: Yeah.

Mark: What you're going to face is you know, let's be honest. A lot of people who are on those sorts of contracts, yes, they might be a student for whom this is really useful. But often, you know, they are low paid. They're like unlikely to have legal representation.
Mark: And so, what you've got are complex new rules that can only be enforced in an employment tribunal. And, potentially, if I think, for example, my employer should have offered me a 20 hour a week guaranteed contract, and they're only still offering me 10. And I think that's unfair. Am I really going to be hanging around for 3 years waiting for that?

Mark: And you know, whilst there are avoidance provisions, anti-avoidance provisions in things like these guaranteed hours for zero low hours workers, you and I know that one of the things that people will ask themselves is, how do I avoid the anti-avoidance provisions? Because it's a bit like the Agency Workers Regs 2010 where you get certain rights at twelve weeks. Well, we all know that a number of organizations just adopt a blanket policy of never having an agency worker for more than, say, six weeks without having a break.

Mark: So, again, it's this law of unintended consequence. Are the very people who this is meant to protect going to be the ones that lose out? Because well, I heard one employer who is a regular user of, low hours staff because it suits them.

Mark: And they said, well, look. Rather than employ ten people on five hours a week or eight hours a week, I'll just get rid of them all and employ two people full time because I'm much safer having a full timer.

Rebecca: Yeah.

Mark: And so suddenly, I think we're in a job market where AI has impacted the sort of jobs that leavers and graduates get. You know, a lot of those first-time jobs are being impacted by AI. And I think the trouble with this additional protection, it's terrific if you're an existing employee, but you've got to get a job in the first place. And if what happens as a result of this is that the job market for first time workers, young workers, becomes even more difficult, then it seems to me that there is a risk that some of this becomes counterproductive.

Rebecca: Yeah. And especially with that point around agency workers and after the twelve weeks, they're taken on by the hirer rather than the agency if they're on the low hours contracts and that type of thing. We know that in practice, that's going to be really, really complicated and difficult to deal with. And, you know, we know even with the Agency Worker Regulations, people do slip through the cracks.

Rebecca: Unintentionally, you know, go over that twelve-week period, might not be necessarily offered the same things because itS not an intentional, you know, differentiation or anything like that. It it's literally just, you know, it’s not been flagged somewhere on somebody's system that they've hit the twelve-week mark.

Rebecca: And you just think the potential fallout of something like that combines with the complexity of it. Yeah.

Mark: I mean, and there are two things there, aren't they? What the ERA says is that the contract you offer must be not less favourable than their existing contract. And that's going to be open to debate because presumably, there are certain things which, by definition, I wouldn't necessarily apply to someone who's working a larger number of hours or guaranteed hours, and I might to someone who's on a very variable contract because it just might not make sense.

Mark: I think, yeah, the other thing with this is we're used to the idea that when someone's employment transfers from one employer to another, typically under TUPE, all their rights and obligations pass as if the contract had always been with the receiving employer. And so, of course, if I've got an outstanding equal pay claim or discrimination claim against the agency by whom I'm employed, does that transfer to the hirer, or does it remain with the agency? Because, you know, this is a very real thing. If I suddenly find that I've inherited someone who has got some horrendous equal pay claim worth a fortune, well, frankly, I think I'd rather just breach the regulations and not take them on. And so, when I take on someone from an agency, do I do due diligence and say, I'm only interested in having agency workers who have no outstanding claims against you, no outstanding grievances?

Mark: Or when I enter into a commercial relationship with an agency, do I include indemnity provisions that in the event that they transfer, I can look to you for any damages or compensation, and you will give evidence in a tribunal you know. You can see, aside from the obvious thing is the agency seems to me to be potentially blown out the water if after twelve weeks, you know, they're no longer working for me but for the hirer.

Rebecca: Yeah. And, I mean, the practical side of that as well is that the hirer will not have a direct contractual relationship with the individual, you know, prior to that twelve week period and are likely to have no knowledge at all or very little knowledge as to what is actually contained within the contract between the individual and the agency.

Rebecca: And they you know, there might be situations where then as a hirer you're then stuck with a load of individuals who've been working for you for twelve weeks that suddenly become employees or workers of your business with contracts that you, you know, that you've never seen, that you have no idea about. 

Mark: I mean, it seems to me if I'm liaising with, I don't know, you know, Manpower, whoever it happens to be, If I'm a you know, a large employer and I'm a regular user of large numbers of agency workers, and we have some clients who do use, you know, thousands of agency workers, it seems to me the starting point is going to have to be we want to see their standard terms and conditions. 

Mark: And we're going to have to work out the anti-avoidance provisions; It seems to me that the commercial reality is such that  - is it avoidance for a hirer to go - look - We don't want to take on anybody?. The reason why we use agency staff is we're not sure of the numbers needed. It gives us flexibility, etcetera. So, actually, this isn't avoiding these provisions. This is saying our commercial model is such. We can't afford to have all these people as employees.

Mark: So, actually, if I then say, I don't want any agency work. I'll have them for four weeks, and then they must go away for two months. Then they can come back for another four weeks, go away. You know, you can see that someone is going to say, well, when the regulations are published and we look at the anti-avoidance, how do we avoid it? Because in order to run a business commercially, we cannot. Of course, it's, again, that law of unintended consequences that someone who might have been pretty much guaranteed a reasonable amount of low hours work per week suddenly finds himself being rotated.

Mark: And it could work, I guess. I mean, if I work for Pret for four weeks and then Costa Coffee for four weeks and then, I don't know, a supermarket for four weeks, and then I'm back to Pret four weeks. I mean, it could work. It's pretty clumsy.

Mark: Yeah. And at some point, no doubt, someone will challenge it. Well, again, good luck because, you know, three years waiting list to get on there. But it just seems to me that in a job market, which is already difficult, where you've got record numbers of people not working between the ages of 18 and 34, who are more likely to be using this sort of work as a first job.

Mark: And I absolutely get the need to protect zero and low hours workers from unscrupulous employers.

Rebecca: Oh, absolutely. I don't think there's any doubt about that, is there?

Mark: But they're going about it in a very, very complex way.

Rebecca: Yeah. And as you say, it's that unintended consequence of this, isn't it? So, absolutely, I don't think there's any anyone that would argue that, you know, they're not entitled to these additional rights and that it's a good thing to do in principle. But it absolutely, it's that other side of things, isn't it? It's well, what will it actually mean in practice, and what will employers do?

Mark: You know? And I think, to be honest, that kind of characterizes the Employment Rights Act 2025 as a whole. Lots of things that are good in principle Yeah. But the way they are being introduced seems to me to be overly complicated and not striking the right commercial balance.

Mark: You know, if you take fire and rehire, there is a world of difference between what P&O Ferries did and what a local authority does when it's got a couple of awkward squad members who don't want to agree a change that has been agreed following consultation with the union for the whole of the rest of the staff. And it's just daft, actually.

Mark: And it seems to me that one probably could have, given the necessary protection by introducing much more punitive terms. You know? So, if you think with things like data protection where you can have up to four percent of worldwide turnover, it's a fine. You'd very quickly stop P&O Ferries and their if you just made it commercially nonviable to do what they did.

And I think there is a risk that with a lot of these changes, I think, ultimately, the problem is that you have an act that was born out of general election manifesto promises.

Mark: And for ideological reasons, it was felt necessary to adhere to certain ‘lines in the sand’ even if they don't make a whole load of commercial sense.

Rebecca: Yeah. No. Absolutely. Absolutely.

Rebecca: Okay. Well, thank you very much, Mark, as always, for those helpful insights, and thank you everybody for listening to us.

Rebecca: Do keep an ear out for our other important employment law updates by subscribing to our podcast, the Employment law Insights. For now, if you do need any assistance with anything employment or HR related, then please feel free to either contact myself at rebecca.cairney@weightmans.com or Mark on mark.landon@weightmans.com. But thank you again, Mark, for providing us with those updates.