July is usually the time when people start drifting away on summer holidays, exhausted teachers decide to put on a film and colleagues sneak off to watch a bit of Wimbledon. But the Government hasn't been putting its feet up or its “out of office” on - at least not when it comes to employment law reform. It has just published a slew of new amendments to the Employment Rights Bill (ERB), including some very significant changes.
Fire and rehire
The ERB originally made any dismissal of an employee for failing to agree to a change to their contract (or to replace them with someone on different contractual terms) automatically unfair, except in very narrow circumstances (essentially where the employer was teetering on the edge of insolvency). The Government's new amendments make the position much less strict. A dismissal in those circumstances will only be automatically unfair where the contractual change is a “restricted variation”. A “restricted variation" is a change to pay, pensions, hours, shift pattern, time off, the inclusion of a contractual variation right, or other matters to be set out in regulations.
This does not include changes to the employee's job title, duties, reporting line or place of work - giving employers significantly more flexibility than under the previous version of the Bill.
If an employee is dismissed because they did not agree to a contractual change which wasn't a restricted variation, the Employment Tribunal will still be able to consider whether the dismissal was fair or unfair, but will be required to take into account specific issues, including the reason for the change and any consultation - much as they do currently in such cases. Employers are likely to welcome this change, which is more in touch with commercial realities than the previous version of these provisions.
Fire and replace
The Government's amendments also create an entirely new category of automatically unfair dismissal, where an employer dismisses employees in order to replace them with non-employees (e.g. contractors) performing substantially the same work. Unless the reason for the dismissal is that the employer's need for the work has diminished, the dismissal will be automatically unfair. This means that it will be automatically unfair for an employer to shift to using self-employed staff simply because they are cheaper. Along with the closer regulation of umbrella companies, this reflects the Government's increasing scrutiny of businesses which use self-employed or atypical workers to minimise their tax and compliance burden.
NDAs
After many years of lobbying by campaign groups, the ERB now contains provisions which mean that a confidentiality clause (whether in an NDA, settlement agreement or employment contract) will not be capable of preventing an employee, worker or contractor from disclosing information or making allegations about harassment, discrimination or an employer's handling of such allegations. There will be exceptions to this, to be set out in regulations.
This is perhaps the most sweeping change - and one which is likely to be controversial, given that it is likely to make settlement less advantageous for employers in many situations. It remains to be seen what exceptions will be set out in the draft regulations, but we expect them to be limited in scope.
Guaranteed hours contracts
The ERB now contains more detail about the requirement to offer guaranteed hours contracts to certain agency workers, including more detail about the pay terms which must be offered. In brief, the terms relating to pay must meet one of the following conditions:
- terms as favourable as the best terms which applied while the worker was supplied by the agency during the reference period
- terms no less favourable than the worst terms which applied to the agency worker during that period (which must be a proportionate means of achieving a legitimate aim)
- terms as favourable as the most favourable terms applicable to a directly-employed comparable worker
- terms as favourable as those applicable to the only comparable directly-employed worker
- terms no less favourable than those applicable to at least one directly-employed comparable worker (which must be a proportionate means of achieving a legitimate aim).
Although it is helpful to have a little more detail about how these new rights will work, employers already tearing out their hair at the complexity of the guaranteed hours provisions may not find the detail reassuring.
Bereavement leave
This will now also apply to parents who have suffered miscarriages, stillbirths and IVF implantation failures. Although many employers offer compassionate leave in these circumstances in any event, many parents will welcome a specific statutory right.
As before, a lot of the finer details are to be spelled out in regulations and subject to further consultation - but it appears clear that the Government, even after the ERB received some stinging criticism in the House of Lords, is very far from backing down on its ambitious programme of employment law reform.
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