Employment Rights Bill A Major Step Forward In Improving Working Life For Low Earners - But It Is Far From Job Done
11th October 2024
The package of measures included in the Employment Rights Bill should deliver a marked improvement in working conditions for millions of low earners across Britain, who are most likely to benefit from stronger protection from unfair dismissal, improved access to sick pay, and greater security in working hours. But the job is far from done, with further work needed to flesh out key details of the new measures and then to ensure employment rights are properly enforced, the Resolution Foundation said on Thursday 10th October 2024.
The Employment Rights Bill contains 28 measures designed to improve working conditions, most notably ‘day one' protection against unfair dismissal, expanded eligibility to statutory sick pay, a new right to guaranteed hours for workers on zero- or short-hours contracts, and a new single enforcement body to uphold employment rights.
Resolution Foundation research shows why these new rights are needed for low-paid workers in particular, as they are:
1. most affected by a lack of unfair dismissal protection as they were twice as likely to have lost their jobs involuntarily during the past two downturns as high-paid workers;
2.least likely to receive support when sick, with 1.1 million low-paid workers currently ineligible for statutory sick pay; and,
3. more than ten times as likely to be on a zero-hours contract as high earners, with one-in-twelve currently employed on one.
The Government has tried to strike a balance between improving working conditions, while minimising trade-offs in terms of potential costs to businesses and the risk of reduced hiring. Giving probation periods legal meaning in employment law at the same time as greatly reducing the waiting period for protection from unfair dismissal could represent a reasonable compromise.
However, this remains hard to judge because the Government has not yet set out what the new legal process for dismissals during probation periods will be, or how long probation periods can last. In the vast majority of advanced economies, workers gain full unfair dismissal protection within six months of starting a job, suggesting this would be a reasonable limit.
The Government has also taken a balanced approach to the new right to guaranteed hours (based on hours worked over the previous three months) as it seeks to tackle the exploitative use of zero and short-hours contracts, while allowing these approaches where workers genuinely want them. However, questions remain over whether this right will be to extended to those on volatile hours, who would benefit most from guaranteed paid work.
Reforms to remove waiting days and extend eligibility for Statutory Sick Pay (SSP) are welcome, but the UK will still have one of the stingiest sick pay regimes in the OECD, because the level of SSP is set to remain low. Under the Government's plans, someone working full-time on the National Living Wage would face a 73 per cent reduction in earnings if off sick for a week and reliant on SSP. This is an improvement on the 89 per cent earnings reduction they would face under the current system, but still too high a penalty.
The Foundation notes that even with these reforms, the UK will still not be a high-regulation country.
Furthermore, while all workers are entitled to these new rights, only a minority are likely to be affected in reality - most businesses already use probation periods (though on a contractual rather than employment law basis), and offer secure paid hours and enhanced sick pay to their staff.
Finally, the Foundation says that these new rights will only make a difference if they are properly enforced. The welcome creation of a Fair Work Agency could well turn out to be to the unsung star of this package of reforms, as it is critical to improving job security. However, it will need financial backing and legal teeth to properly uphold labour laws.
Nye Cominetti, Principal Economist at the Resolution Foundation, said, "The introduction and ramping up of the minimum wage have boosted the hourly pay of low earners, but wider concerns about job security have been left unresolved for far too long. The Government's Employment Rights Bill is set to address these concerns head on, and marks a major step forward in the working conditions of low earners across Britain.
"There are inevitably trade-offs and compromises involved in introducing new rights, so the Government will need to strike a sensible balance between boosting job security and maintaining labour market flexibility as it consults on the detail of these measures.
"For all the supposed controversy about these new rights, the main change will be to make Britain look more normal compared to our peers. Currently, only five out of 38 OECD countries have weaker employment protections than British workers.
"As well as getting the details right, the biggest challenge now is ensuring they deliver meaningful change for workers at the sharp end of our jobs market. Employment rights are only effective if they are upheld. A lot of this package rests on the new Fair Work Agency having sufficient resources and legal teeth to ensure that all employers play by the rules."
