The Definite
The centrepiece will certainly be the right for employees on zero-hours contracts to move to fixed contracts IF their work pattern meets specific requirements over a defined period. While the details of how an employee will qualify are not determined, it is likely that, for example, an employee working 10 hours every week over a period of months would be entitled to a fixed-hour contract of 10 hours minimum. It is hard to argue against this on principle; giving employees who regularly work and are committed to a fixed-hour contract closes a loophole that many would believe is unfair.
Giving employees day-one rights is in many of the headlines; in reality, this change will have a limited impact. The key is that there will be a new statutory probation period, likely nine months, during which a new employee can be terminated provided there is just cause, effectively a reduction from the current two-year period. The day one protections from unfair dismissal cover issues such as:
- refused to give up your working time rights – for example, to take rest breaks
- resigned and gave the correct notice period
- joined a trade union
- took part in legal industrial action that lasted 12 weeks or less
- needed time off for jury service
- applied for maternity, paternity and adoption leave
- were on any maternity, paternity, and adoption leave you’re entitled to
- tried to enforce your right to receive Working Tax Credits
It’s important to note that employers will still be able to terminate employment within a reduced probation period if the employee does not meet the job requirements.
One concern small businesses will have is the day-one right to statutory sick pay. There are many anecdotal stories of new employees not turning up for work and calling in sick, never to be seen again. How employers can deal with such situations will be important, and this is one to watch.
Another definite change will be a clampdown on holiday entitlements and other unpaid leave entitlements, along with tightening up security for pregnancy and maternity leave.
The bill’s core aims are not necessarily to extend existing employee rights but to close loopholes and clamp down on practices designed to circumvent employees’ earning entitlements.
The Aspirational
A lot will be made in the press of initiatives such as the right to flexible working and the right to switch off. My reading is that these elements will be kicked into the grass or sufficiently too weak to be enforceable – I don’t think these are at the core of what the Government is trying to achieve. Flexible working rights are only likely to be of impact if some employees are offered flexible working and others refused. I.e. it will impact the right to flexible working within an organisation if current practices are somehow unfair to one employee versus another. I would be surprised if we see anything extensive in the final rules about these issues.
The One to Watch
The one-line item which may alarm small businesses, particularly in Wales, will be:
“Tackle low pay by accounting for cost of living when setting the Minimum Wage and remove discriminatory age bands.”
This flags up the potential for further increases in minimum wage inflation and the potential abolition of the lower minimum wage levels for younger age groups.
The rise in the minimum wage does not take into account regional economic differences, and there is an argument it has undermined Wales’s competitiveness. It also leads to unintended consequences, such as making job progression less attractive. I would much rather that the Government focussed on changes to the benefits system, which currently traps people in low-paid part-time work than just use the minimum wage as a battering ram.
Conclusion
As it stands, the Employment Rights Bill shouldn’t be a huge cause of concern for small businesses. The fact that there will be ongoing consultations suggests we will not end up with any major new changes for employers, more of a levelling of the playing field that most responsible employers shouldn’t fear – and most small businesses are responsible employers. It will be interesting to see if there is lobbying for very small firms to be excluded from any of the new regulations; smaller firms who don’t have in-house HR specialists may find themselves needing to seek advice, which could place a burden and a cost on smaller firms.
Tax changes in the upcoming budget and the minimum wage are likely to be the issues that really determine small business growth. Staffing and skills shortages, with too many people excluded from the workforce, are really what’s holding the economy back.
