Government proposes significant changes to Employment Rights Bill

The Government has proposed some significant changes to the Employment Rights Bill which will be considered by the House of Lords at the Report Stage later this month. Some 64 pages of amendments have been tabled in total, but only those proposed by the Government are likely to be retained in the final version of the Bill when it receives Royal Assent. This is now expected to be in the Autumn.

Key proposals include:

Fire and Rehire

The Government proposes to reduce the restrictions on using fire and rehire/ dismissal and re-engagement to bring about changes to contractual employment terms.

Its original proposal was that it would be automatically unfair to dismiss an employee for refusing to agree to any variation to their employment contract (or in order to replace them with another employee on varied terms). The only circumstances in which a dismissal would not be automatically unfair would be where the business is facing financial difficulties which affect its ability to carry on operating as a going concern.

However, the Government now proposes to limit cases of automatic unfair dismissal to “restricted variations” to employment contracts. These encompass a reduction in pay or time off, a change to the number of an employee’s working hours or shift times or duration, a change to pension terms, introduction of a clause allowing the employer to vary any of the above contract terms without the employee’s consent, as well as any other variation specified in Regulations.

For any other contractual changes where an employer decides to dismiss and reengage, a dismissal will not be automatically unfair; however, it could still be “unfair”. In deciding whether a dismissal in this situation would be unfair, the Government has proposed that the following must be taken into account by an employment tribunal when considering fairness:

• the reason for the variation
• any consultation with the employee, trade union/employee representatives
• anything offered by the employer in return for the employee agreeing the variation
• anything else specified in Regulations.

The Government is also proposing a different “financial difficulties” test for local authority and other public sector employers to reflect the fact that such difficulties do not lead to them going out of business.

Replacing employees

The Government also proposes to introduce a new provision which will make it automatically unfair to dismiss employees in order to replace them with people who are not employees but who are carrying out essentially the same activities. However, a dismissal will not be unfair where it is wholly or mainly attributable to the fact that employer’s need for those activities have ceased or diminished or where the employer meets the relevant “financial difficulties” test, as mentioned above.

Pregnancy loss bereavement leave

The Government proposes to extend the new right to bereavement leave to parents who suffer pregnancy loss before 24 weeks. This will be a period of at least one week’s unpaid leave. For pregnancy loss after 24 weeks, employees are already entitled to two weeks’ paid parental bereavement leave.

Non-disclosure agreements

The Government proposes to introduce further restrictions on the use of non-disclosure agreements (NDAs). It is proposing that contractual provisions which purport to prevent a worker from making allegations of or disclosing information about workplace discrimination and harassment (or how an employer responded to such allegations or disclosures) will be void, unless contained in an “excepted agreement” (which is currently undefined and will be specified in Regulations). It is unlikely, in our view, that a settlement agreement will be an “excepted agreement” for these purposes. These restrictions are on top of those already contained in the Bill which make disclosures about sexual harassment protected disclosures for whistleblowing purposes. As a result, NDAs seeking to prevent a worker from making such disclosures will similarly be void.