On 7 July, further changes to the Employment Rights Bill were published for consideration by the House of Lords at Report Stage later this month, including a number of amendments by Baroness Jones of Whitchurch on behalf of the government. We understand that it is only these changes that are likely to make it into the final version of the Bill and we set out below the key changes to note.
We have also updated our “key changes table” with these latest developments so you have everything in one place.
Dismissal and reengagement (or “Fire and Rehire”) – This refers to the process whereby if employees are unwilling to accept proposed changes to their terms and conditions of employment, the employer serves notice to dismiss them in accordance with their existing terms and conditions and offers to reengage them at the expiry of their notice periods on their new terms and conditions. Dismissing employees in these circumstances is currently a potentially fair reason for dismissal, provided the employer can show a good business reason for making the changes, and it follows a fair procedure.
Much to the dismay of many employers, the government had proposed to outlaw dismissal and reengagement except in very limited circumstances, namely where the employer could demonstrate financial difficulties such that the need to make the change in contractual terms was therefore unavoidable.
On a positive note, the government is now taking a step back from its original proposals and will be giving employers (a bit!) more flexibility to make changes to terms and conditions via this route. The proposed new wording in the Bill would mean that for private sector employers (there is slightly different wording for public sector employers), if an employee was dismissed for refusing to agree to a “restricted variation” to their terms and conditions of employment (which is defined in the Bill and would include reductions in pay, changes to pensions or pension schemes, changes to hours of work, among other things), such a dismissal would be automatically unfair, unless the employer could demonstrate financial difficulties such that the need to make the change in contractual terms was therefore unavoidable. There is also an anti-avoidance type provision that would prevent employers from including a clause in a contract allowing them to make a restricted variation without an employee’s agreement.
A different test of fairness for unfair dismissal purposes would apply if the employer was seeking to make other changes (i.e. not “restricted variations”) to an employee’s terms and conditions of employment in this manner. An Employment Tribunal would be required to consider factors such as the reason for the change, any consultation carried out by the employer with employees or their representatives, anything offered to employees in return for agreeing to the change and any other matters set out in regulations.
The Bill also now includes a new provision which means that an employee’s dismissal would be automatically unfair if the reason for dismissal was to enable the employer to replace the employee, on a broadly like-for-like basis, with someone who is not employed (e.g. an agency worker or a self-employed contractor) except in limited circumstances. This is intended to close a potential loophole in the Bill that would have given employers the ability to replace employees with, for example, (cheaper) agency workers – more “fire and replace” rather than “fire and rehire”.
While the above changes are to be welcomed - they are not (quite!) as draconian as the original proposals, but they still represent a significant change in the law and will still place strict limitations on the ability of employers to change terms and conditions of employment in this manner.
Nondisclosure agreements – There will be changes to the Employment Rights Act 1996 that will make any provision in an agreement between an employer and a worker void insofar as it purports to preclude a worker from making an allegation or disclosing information relating to work-related harassment (including sexual harassment) or discrimination. This would include how an employer responds to such harassment, discrimination, allegations or disclosures. There appears, however, to be a potential carve-out for provisions in “excepted agreements” (presumably settlement agreements and COT3 agreements), provided they do not cease to preclude a worker from making an allegation or disclosure to a “specified” description of person, for a “specified” purpose, in “specified” circumstances – details to follow on what “specified” means for these purposes! We are wondering if we might end up with wording along the lines of what is currently contained in the SRA’s Warning Notice on Non-Disclosure Agreements, i.e. an employer cannot preclude a worker from reporting an offence to the police, a relevant regulator, making a protected disclosure, etc. This would be in line with the previous government’s proposals to place limits on confidentiality agreements and contracts of employment. The government has issued a press release on these changes – although interestingly, it does not mention the potential carve-out contained in the Bill. We will have to wait and see.
Statutory bereavement leave – The government will give eligible employees who experience pregnancy loss before 24 weeks an entitlement to take statutory bereavement leave. Statutory parental bereavement leave is currently available to parents who lose a child under 18 or experience a stillbirth after 24 weeks of pregnancy. The government has also issued a press release on these changes.
