The Employment Rights Bill: What It Means for UK Pay Practices

As the UK’s new Labour government prepares to introduce the Employment Rights Bill, organisations across the country will be bracing for significant changes in employment law. This legislation, expected to be included in the upcoming budget, aims to strengthen worker protections and rebalance the employer-employee relationship.

In this week's newsletter, we will look at the details of this bill and what further legislative changes we might expect, particularly when it comes to pay and pay transparency.

‘Day One Rights’

One key aspect of the new legislation is the introduction of “day one rights” for employees. From the first day of employment, workers will be entitled to:

• Parental leave

• Statutory sick pay

• Protection from unfair dismissal

It’s important to note that these day one rights don’t spell the end of probationary periods. Employers can still implement probation, but it will be capped, and any decisions made during this time must be justified.

Zero Hour Contracts

Currently, around one million UK workers are on zero-hours contracts which the Labour government proposes to ban. These contracts have been criticised for disproportionately benefiting employers at the expense of workers’ stability.

The Employment Rights Bill will give some workers the right to a contract reflecting the number of hours they regularly work. This move aims to provide employees with more predictable work schedules and income security.

It also requires employers to provide “reasonable notice” and compensation if shifts are changed or cancelled. However, those who like the flexibility of zero-hours contracts will still be able to opt in if they believe it’s the right option for them.

Fire-Rehire

The practice of “fire and rehire,” where employees are dismissed and then re-employed on less favourable terms, will also be prohibited under the new legislation. This change aims to protect workers from sudden and unfair changes to their employment terms.

Changes Likely to Come

These new laws demonstrate an overarching principle of the Labour Government—providing greater rights and power to employees.

While not explicitly part of the bill, there are indications that the government may consider making other changes when it comes to pay.

Removing Barriers

Future legislation may remove barriers for employees to raise a grievance against their employer if there is pay inequity. This mirrors legislation already being enforced in other countries—particularly the EU Pay Transparency Directive.

This could include shifting the burden of proof in fair pay cases from employee to employer.

Equal Pay Audits

Gender pay gap reporting has been compulsory for organisations in the UK with 250 or more employees for a few years now.

But equal pay audits are not.

Despite previous governments (labour in particular) including this in their manifesto for large organisations, it still hasn’t happened. Now, with all of these employment rights changes on the way in, this may be something they rethink soon.

Time to Prepare

While the full impact of the Employee Rights Bill remains to be seen, one thing is clear: the trend towards greater employee rights and pay transparency is here to stay.

By taking proactive steps now, we can not only prepare for the inevitable but begin to reap the benefits of fairer, more consistent processes.

At 3R Strategy, we’re committed to helping organisations navigate these changes and build pay and reward strategies that attract, retain, and motivate top talent. Whether you need help with job evaluation, salary benchmarking, or crafting effective pay communications, our team of experts support our clients with these challenges every week.

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