Employment Rights Bill – what do small business owners need to know?

If you’re a small business owner who employs staff, then you’ll need to know about the Employment Rights Bill. Published by the UK government on 10 October 2024, the Employment Rights Bill outlines new workplace rights that all employers need to know.

Currently passing through the House of Lords, there’s not yet a fixed date for when the bill will pass. But as the proposed changes are significant, it’s a good idea to prepare.

If you’re a small business owner, keep reading to find out how it could affect your business.

Zero hour contracts

As part of the new legislation, employers must offer workers employed on zero hour contracts a guaranteed-hours contract, which will be based on the hours they’ve worked during a 12-week period.

Zero hour workers will also be entitled to compensation if their shifts are cancelled or end early. You’ll also need to give them ‘reasonable notice’ ahead of any changes to their shifts.

However, employees have the choice to stay on a zero hour contract if they prefer.

Unpaid parental and bereavement leave

The Employment Rights Bill means that employees will be able to access unpaid parental and bereavement leave from their first day of employment. This currently only applies to staff who’ve been employed for more than a year.

Read our full guide to unpaid leave to learn more about how to approach parental and bereavement leave as an employer.

Unfair dismissal

Employees will now be able to claim unfair dismissal from their first day of employment in a business. Employees are currently only able to claim unfair dismissal after two years working at a company.

However, workers will now be subject to a longer probation period. During this period, employers are able to dismiss staff more easily while having more time to assess their suitability for a role. So far, the government has a preference for the probation period to last nine months.

Flexible working

The bill is also set to bring changes to how businesses approach flexible working – which is to be seen as the default from day one. Employers will now have to say yes to flexible working requests, unless they can prove it’s “unreasonable”. Some reasons for denying a flexible working request include:

• additional costs to the business
• affecting the ability to meet customer demand
• inability to re-organise work among existing staff
• inability to recruit additional staff
• detrimental impact on quality

The right to request flexible working from the first day of employment was originally introduced in April 2024 as part of the previous government’s Flexible Working Bill but this new legislation goes further, by making flexible working the default.

Statutory Sick Pay

Employees looking to access Statutory Sick Pay (SSP) currently need to be ill for more than three days in a row, as well as earn an average of £123 a week.

But the Employment Rights Bill plans to change this, giving workers access to SSP from their first day of illness. Those earning under the £123 minimum will also now be able to get SSP.

Fire and rehire

Firing and rehiring refers to employees firing their employees and hiring them back under worse conditions – such as less pay, fewer hours contracted, or differing start and end times.

The Employment Rights Bill is set to ban these practices. However, there are some exceptions (such as if a business is at risk of becoming insolvent).

Protection for pregnant workers and new mothers

There will now be further protection in place to protect pregnant workers, as well as those returning from maternity leave. Further details of how this will work are yet to be announced, but protection from dismissal could be extended for up to six months after returning from maternity leave.

Fair Work Agency

But how does the government plan to enforce these new changes? The answer is by establishing a new Fair Work Agency, which will combine different specialist enforcement bodies to help protect workers’ rights, as well as offering guidance to employers on all the above.

How will the Employment Rights Bill help small business owners?

While the Employment Rights Bill has a lot of benefits for the workers it’s designed to protect, it also brings many benefits for employers. The introduction of this new legislation could boost employee retention – if your staff are happy, they’re less likely to leave. This in turn will reduce the cost of recruitment.

There are also benefits to the economy. Deputy Prime Minister Angela Rayner said: “This government is delivering the biggest upgrade to rights at work for a generation, boosting pay and productivity with employment laws fit for a modern economy. We’re turning the page on an economy riven with insecurity, ravaged by dire productivity and blighted by low pay. 

The UK’s out-of-date employment laws are holding our country back and failing businesses and workers alike. Our plans to make work pay will deliver security in work as the foundation for boosting productivity and growing our economy to make working people better off and realise our potential.”

This new legislation comes alongside the Worker Protection Act, which saw recent updates in October 2024.

What do you think of the Employment Rights Bill? Let us know in the comments below.

More guides for employers

• How to write a staff handbook: a guide for small businesses
• How to create an onboarding process for your business
• HR toolkit: what HR tools do growing businesses need?
• What does employers’ liability insurance cover?

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