A landmark moment for employment policy – but important details still to be decided

Yesterday the Government published its keenly awaited Employment Bill, meeting its promise to publish within its first 100 days – no mean feat given the Bill itself extends to 168 pages and over 53,000 words. In advance of its publication, there were many questions about the detail and implementation of the Government’s reforms. So, how much did we learn after yesterday’s landmark moment?

Perhaps less than some might have hoped. But the Employment Bill was never going to provide all the answers. In part that’s for good reason. Some of the reforms – such as the right to a contract covering your regular hours – are radical departures from existing employment law, and the Government is right not to rush. Policy will be developed through consultation with unions, employers and lawyers over the coming months. But it’s also the case that this is how UK employment law tends to work: as the Government notes, it’s usual for primary legislation to set the legal framework, but actual policy routinely comes later via secondary legislation.

But it’s still useful to take stock of how much of the Government’s plans are clear. In some areas we do know a bit more about where policy is heading. But there remains plenty of important detail still to fill in. Two of the areas of greatest uncertainty are the new right to a regular hours contract, and how probation periods will work and interact with employees supposedly gaining ‘day one’ protection against unfair dismissal.

The three key questions in the run up to the Bill about the new right to guaranteed hours were:

1. what form will the guaranteed hours take – a weekly minimum? or an average over some longer period of time?,
2. who will gain this new right – will all employees be eligible?, and
3. over what ‘reference periods’ will a worker’s hours be assessed?

Although business groups and unions have also been keenly debating 3), that looks to have been settled at 12 weeks – and that’s again what the Government said yesterday. But what about those other questions?

On 1), the form of the new right, the language in the Bill implies the right will be substantive. The Bill (section 27BB) mentions that the hours guarantee will have to specify “the days of the week, and the times on those days, when the employer is to be required to make work available”. Requiring employers to offer hours with a specific pattern like this is a larger commitment than, say, requiring a contract just to specify a number of hours to be worked per week.

On 2), who will gain the right, there is less clarity. We suggested last month that some of the Government’s language was suggesting that it would apply to employees whose hours already met some test of regularity. There was again language along these lines in the press notice accompanying the Bill, which said that employees will have this right “if they work regular hours over a defined period”. This is an important question on which clarity would be welcome: it doesn’t seem to be something that the Government, unions or businesses are discussing.

The other area where much is still to be decided is on ‘probation periods’, and how these will work alongside making protection from unfair dismissal a day one right. The two questions we were asking in the run up to the Bill were:

1. what will be the legal status of probation periods (i.e. what protections from dismissal will employees have during their probation period); and
2. how long can probation periods last?

Technically, the Government is now consulting with interested parties before making a final decision, but it has stated that it would prefer probation periods to be capped at nine months (this is mentioned in the accompanying ‘Next Steps’ document rather than the Bill itself). Whether this should be seen as a short or long duration depends on what legal protections are given to employees during these probation periods – i.e. what counts as a ‘reasonable’ dismissal during probation, including what processes employers have to follow. If probation dismissals are very straightforward (i.e. not much more onerous than making dismissals when employees don’t yet have unfair dismissal protections) then nine months would be an overly cautious approach. Across the OECD, the majority of countries give employees full unfair dismissal protection at six months or less. Which makes sense – six months is enough time to decide if a worker is a good fit for a job. If, on the other hand, probation dismissals were closer to dismissals under full unfair dismissal protection, then nine months would not necessarily be overly cautious.

So, a lot rides on what the rules are governing dismissals during probations. The Government appear to be leaning towards making probation dismissals straightforward. The Bill itself largely leaves that up to future regulation, but the accompanying Next Steps document says:

The government is inclined to suggest it should consist of holding a meeting with the employee to explain the concerns about their performance (at which the employee could choose to be accompanied by a trade union representative or a colleague).

This would be less onerous than the process employers are expected to follow at present when full unfair dismissal protection applies. This suggests the Government’s policy position could currently be described as cautious – in the sense that it will continue to be easier for UK employers to make dismissals than in most other rich countries.

Clearly, with important detail still to be decided, yesterday’s Bill marks the start of a process rather than the end. The Government plans to spend 2025 consulting on its reforms, meaning many reforms won’t be implemented until 2026, and the unfair dismissal reforms will take effect ‘no sooner than autumn 2026’. We should also remember that the Bill contains nothing about what is arguably the trickiest area of reform – the plan to simplify the legal distinction between workers and the self-employed. Here, the plan is to consult before publishing any sort of legislation.

Some will be disappointed to wait two more years before seeing actual change (or more, in the case of worker status), given the real and pressing problems these reforms are designed to address. Until action is taken, two million employees will continue to experience anxiety as a result of hours volatility, and the lowest-paid employees will miss out on sick pay. There is also some frustration in the approach taken: making unfair dismissal a day one right but adding probation periods is more complicated than just lowering the qualifying period for unfair dismissal to six or nine months.

But it is important to get the details right. There are real trade-offs to be considered: the wrong unfair dismissal policy might overload an already creaking employment tribunal system, or put employers off hiring. Another reason to get it right is to make the reforms durable. The minimum wage was created with the backing of both unions and business groups, and ambition was tempered with caution, and a willingness (as embodied by the Low Pay Commission) to take data and evidence seriously. This has created a very enduring policy. Not all employment reforms are so successful. In New Zealand, for example, Jacinda Ahern’s government created ‘Fair Pay Agreements’ to drive up standards in low-paying occupations. These came into effect in 2022, but were then promptly scrapped a year later by the incoming Government. Slower implementation may be a price worth paying for reforms that last.

On the other hand, two years is not long in the context of a body of employment policy which hasn’t seen reforms of this scale for decades. And the outcome of these changes should be a genuine improvement in the working lives of millions of Britons – especially low-paid (majority female) workers, who are the most likely to face involuntary job loss, to face the stresses of life on a zero-hours contract, or to lack any sick pay protection. The minimum wage has transformed pay for these workers; the Government’s reforms offer the tantalising promise of a similar transformation in job quality and security.