Eight amendments to the Employment Rights Bill

The Government has published its amendments to the Employment Rights Bill, following various consultations with stakeholders. The Government believes that the Bill will increase productivity and create the right conditions for growth by putting more money in working people’s pockets and making wages fairer and more secure.

With employers already gearing up for the increase in labour costs from rising National Insurance Contributions (NIC) and National Minimum Wage (NMW) rates in April, there are concerns that these amendments will add to those woes. 

1. Right to guaranteed hours of work and reasonable notice for the cancellation and curtailment of shifts expands to agency workers

All zero hours workers and those with minimum hour contracts already have the right to ask for guaranteed hours. However, this amendment aims to close a loophole that might have allowed employers to circumvent the rules by sourcing temporary workers from agencies instead.

Other anti-avoidance provisions have been included to prevent employers from deliberately reducing the number of guaranteed hours of work they must offer or from having to do so at all. While proving non-compliance may be difficult, these amendments increase the litigation risk for employers.

Moreover, these amendments mean employers may need to cover the cost of paying for work that isn’t required if in the preceding 12 weeks, casual workers have worked unusually high levels of hours and accepted the offer of guaranteed hours of work.

2. Umbrella companies to come under regulatory enforcement

The current compliance requirements for employment agencies will be extended to include umbrella companies (and possibly employers of record too). This means that for the first time, umbrella companies will come under the remit of the Employment Agency Standards (EAS). Alongside this, the Treasury has announced its intention to bring forward legislation to make the agency that supplies the worker accountable for PAYE, or the end user if there is no agency.

3. 200% penalties for underpaying SSP or holiday pay.

The Fair Work Agency will have the power to issue notices of underpayment of holiday pay and statutory sick pay in much the same way that HMRC currently does for underpayments of the NMW.

4. Fair Work Agency to have the power to bring Employment Tribunal claims on behalf of workers

In a strange development, the Fair Work Agency (FWA) will have the power to make an employment tribunal claim on behalf of a worker and to provide legal assistance to parties involved in a claim. There is not yet a clear limitation on what claims this will apply to.

In our previous article "Amendments to Employment Rights Bill could add to employers’ woes", we commented on the potential impact of this measure and the challenges the government might face. 

5. Fines for failing to maintain holiday pay records for six years

All employers will have to maintain records that show compliance with holiday entitlement and pay obligations for a period of six years or be liable to a fine.

6. Harsher sanctions for failing to consult

The penalties for failing to collectively consult will be more severe, with the maximum award increased from 90 days’ gross pay to 180 days’ gross pay for each affected employee.

The original draft of the Bill also extended the collective consultation obligations across the entire business (rather than single establishments) and placed restrictions on the ability to vary terms of employment with the prohibition on fire and rehire practices unless the business is effectively in administration.

To avoid considerable financial penalties, organisations will have to take more care when undertaking any form of workforce restructuring or reorganisation that may trigger the collective consultation obligations.

7. Statutory sick pay rate to increase

The weekly rate of SSP will increase to be the lower of £118.75 or 80% of an employee’s normal earnings from 6 April 2025. This is on top of the day one right to SSP introduced in the first draft of the Bill.

While many employers may choose to pay enhanced sick pay from the first day of sickness absence, this amendment will increase costs for those that only pay SSP from the fourth consecutive day of sickness absence.

Some employers will remain sceptical about whether the change will do anything to address the issue of an increasing number of employees taking leave of absence due to sickness. However, the Government’s view is that allowing employees to take time off to recover will encourage them to stay in work rather than risk dropping out altogether.

8. Broadening trade union access

Trade unions will gain broader access rights that will now include the right to communicate by any means. For example, employers may need to provide information to their workers on behalf of officials of a union within an all-staff email.

These amendments will be debated at the reporting stage on 11 March, but it’s likely they will be passed given that they have been tabled by the Government. While most changes won’t take effect until 2026, businesses should begin to prepare for their implementation.

Our experts are on hand to help advise and guide your business through these changes. Get in touch today with Charlie Barnes and find out how we can help you.