The new Employment Rights Bill (‘The Bill’), published on 10th October 2024, was introduced as part of the Government’s effort to improve workers’ rights and tackle inequality in the labour market. The Bill contains measures that will transform the employment rights of employees working in the care sector.
Fair Pay Agreement for social care
A Fair Pay Agreement for care workers was a Labour manifesto promise. The Bill seeks to implement this through the creation of a central body with responsibility for setting remuneration, terms and conditions, and ‘any other specified matters’ relating to the employment of social care workers. This reform aims to address the pervasive issue of low wages for the demanding and critical work care workers do, which has led to workforce shortages and high turnover rates.
The central body will be made up of trade unions and care provider representatives who will be tasked with agreeing and recommending a Fair Pay Agreement for care workers. The Secretary of State may then either accept the recommendation or refer it back to the central body for reconsideration, based on factors such as funding.
The expectation is that this will create a new minimum rate above the National Minimum/Living Wage for care providers. Trade Unions have already indicated they want a minimum pay rate of £15 per hour. Privately funded providers will likely need to pass the additional costs on to clients, but for local authority funded providers it is essential that any Fair Pay Agreement is properly funded as there are not sufficient margins within current fee rates for providers to absorb the additional costs.
Statutory Sick Pay
Further increasing the costs borne by providers are proposed changes to Statutory Sick Pay (SSP), which will be available from the first day of sickness rather than the fourth. The lower earnings limit of £123 a week will also be removed but a lower rate of SSP will be available for those on lower weekly earnings.
Restrictions on zero-hours contracts
Zero-hours contracts have long been used in the care sector due to the fluctuating demand for homecare services and typically as cover, in the form of casual bank staff, in residential care. These contracts provide flexibility but leave care workers without guaranteed income or stable working hours, which is of concern to the Government.
The Deputy Prime Minister, Angela Rayner, has been reported in The Times as saying, ‘This is personal to me. I started my working life as a carer on causal terms, not knowing if there’d be a pay cheque next month. That fear stuck with me.’
Whilst the Bill falls significantly short of banning the use of zero-hours contracts, it does seek to re-balance the rights of workers and employers.
The Bill proposes:
- Guaranteed minimum hours after working for what is expected to be 12 weeks on a zero-hours contract.
- Prescribed notice of shifts, expected to be double the length of the shift (e.g. two days’ notice for a one-day shift).
- Compensation if shifts are cancelled at short notice.
Our experience is that zero-hours workers in residential care work on this basis out of choice, enjoying the flexibility it offers, and are reluctant to move to guaranteed hours contracts. In homecare, zero-hours contracts are more commonly a requirement by providers to meet fluctuating demand and poor commissioning practices by local authorities, so we may see greater demand for guaranteed hours in this part of the sector.
The requirement to give notice could be problematic where bank workers are engaged to cover absences at short notice, but hopefully this will be considered as part of the consultation process. A distinction between zero-hours employees (who are entitled to the new rights) and zero-hours casual workers (who are not) would make more practical sense in the care sector.
Unfair dismissal from day one
The Bill proposes that employees will have unfair dismissal rights from day one of employment, rather than after two years’ service. The Government plans (subject to further consultation) to introduce a statutory nine-month probationary period during which employers will be required to follow a lighter touch dismissal process or face the risk of an unfair dismissal claim. After the probationary period, the usual unfair dismissal rules, and required processes, will apply. This will increase the need for more robust HR processes and introduces greater legal risks for providers.
Flexible working
Currently employees only have the right to request flexible working. The Bill proposes creating a right to flexible working. Employers will only be able to refuse a request if one of the existing specified grounds for refusal applies and it is reasonable to refuse the request on those grounds. The new requirement for the employer’s decision to be reasonable is new and creates a higher bar to reject flexible working requests.
Expanded family-friendly policies
The Bill makes paternity leave and unpaid parental leave day-one rights. Unpaid bereavement leave will also become a day-one right and the right to leave will be widened to cover a broader group of people.
The Bill also extends protections for employees returning from maternity leave to the first six months after returning to work so that they can only be dismissed in limited circumstances.
Duty to prevent sexual harassment
From 26th October 2024, employers are subject to a new duty to take reasonable steps to prevent sexual harassment in the workplace. The Bill changes the duty to a requirement to take ‘all’ reasonable steps to prevent sexual harassment thereby increasing the compliance threshold. The duty also covers sexual harassment by third parties such as clients, visitors or contractors.
Failing to comply with the duty could lead to enforcement action by the European Human Rights Commission and a 25% uplift in compensation awarded by an Employment Tribunal in a sexual harassment claim.
Providers must take proactive steps to prevent sexual harassment including, assessing the risks of sexual harassment in their organisation, implementing an action plan to reduce identified risks, surveying employees to get feedback, training managers and employees and implementing policies on preventing and report sexual harassment.
New liability for third-party harassment
Employers are not currently liable for harassment of their workers by third parties (such as clients, visitors or contractors) related to a protected characteristic. However, the Bill proposes an amendment to the Equality Act to make employers liable for such harassment unless they have taken all reasonable steps to prevent it.
Increased rights for trade unions
Unsurprisingly the Government envisages a greater role for trade unions in the workplace and the Bill proposes:
- A new requirement for providers to give workers a written statement informing them of the right to join a trade union.
- Increased rights for trade unions to access the workplace and for union representatives to access facilities.
- Lowering the thresholds for unions to gain formal recognition.
- New rights for employees who participate in strike action.
Currently union recognition is not widespread in the care sector and tends to be limited to the largest national care providers or smaller charity or not-for-profit providers. In light of these reforms and the unions’ role in negotiating sector pay agreements, it is likely the unions will be seeking to increase membership and secure recognition from a wider section of the sector. Providers need to start developing a strategy for how they will implement these reforms, engage with their workforce and manage requests for union recognition.
Fire and re-hire
The Government’s manifesto promised to abolish fire and re-hire practices, which involves the dismissal of employees who will not agree to less favourable contract terms and offering new contracts on the less favourable terms. The Bill falls well short of this but does higher the legal bar for firing and re-hiring.
Instead of the current requirement that the employer has a sound business reason for firing and re-hiring, the Bill provides that employers mitigate the financial reasons for the change to terms and conditions and show that in all the circumstances it could not reasonably have avoided the need to make the changes. Whether a dismissal is fair will require consideration of a number of factors, including the degree of consultation with employees and representatives.
What next?
The Government now plans to consult on the proposed changes in the Bill and it is worth providers engaging in the consultation process to ensure the Government understands the nuances of the care sector. The majority of the changes will not be introduced until 2026, so there is time for providers to prepare and plan for their implementation.
What was your response to the Employment Rights Bill and how do you plan to implement it in your setting? Leave a comment on this feature or join the conversation to share your thoughts.
James Sage is a HR and Employment Partner and Head of the Health and Social Care team at RWK Goodman.
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