The Employment Rights Bill: what does it mean for the Tech Sector?

The intention behind the Bill is to create inclusive and diverse working environments, by enhancing existing legislation, creating new protections, and imposing stronger responsibilities on employers.   In this article, we flag the top 5 reforms which are likely to have a significant impact in the Tech sector:

The Bill proposes that employees will have unfair dismissal rights from day one of employment, rather than after 2 years’ service.  The Government plans to introduce a statutory nine month ‘initial employment’ period (aka probationary period), during which employers will be required to follow a lighter touch dismissal process or face the risk of unfair dismissal claim. After this period, the usual unfair dismissal rules and required processes will apply.

Given the costs of recruitment, and quick based decisions on hiring and firing due to the need for flexibility in the workforce, Tech employers will need to rethink their recruitment processes and strategies.  This could include expanded interview stages with possible skills tests to ensure that the right talent is found first time around.

Even with the proposed ‘initial employment’ (probation) periods, it is not necessarily going to protect Tech employers from all dismissals.

This is going to impact Tech and those who are in the unfortunate position of having to make larger scale redundancies and/or amendments to mass staff contracts.  Collective consultation is triggered where an employer is proposing to dismiss 20 or more employees in a single ‘establishment’ (e.g. an office, lab etc) over a 90 day or less period.  So, staff can be made redundant in one location and the rest of the business is not necessarily affected.  The proposal is to remove the ‘establishment’ aspect, meaning employers will need to take into account the numbers of employees affected across an entire business.

Location based redundancies will therefore be a thing of the past, with higher administration costs and resource need with planning strategic and organisational changes.  Tech employers will need to

take a wider view of their restructure plans, and the question of selection from a broader pool of employees will likely raise more debate over who should be included from other locations.

If collective consultation is not followed, individuals can claim a ‘Protective Award’ of up to 90 days’ pay to each affected employee.  There is also a proposed reform to either double to the award to 180 days’ pay, or to remove the cap entirely.  This could add a costly additional risk to employers who are looking to shortcut legal processes.

Presently if a contract variation is not accepted by an employee (following consultation), an employer can serve notice to terminate on the existing terms, offering to re-engage (rehire) the employee on the amended terms.  This is usually where there is a sound business reason such as addressing harmonisation or economic changes.  The proposed reform means that this practice will no longer be available and if an employee is dismissed for refusing to agree a contract variation, it will be an automatic unfair dismissal.  There are some limited exceptions for significant financial reasons, such as to prevent insolvency, and 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.

The Tech industry relies on flexibility with their workforce, particularly due to the changing pace in the need for staff, and therefore, this will have a significant bearing on employers.

If these reforms are retained, it will place a burden on businesses being able to vary staff contracts without their consent and with the use of a consultation process, or at least without a well drafted contract variation clauses to make amendments.

Furthermore, given the litigation risk, Tech employers may need to plan ahead and assess the timescales needed to address matters of contract variations if there are business changes on the horizon. Last minute, urgent changes are going to be very difficult to deal with even if they fall into the category of financial difficulties affecting the viability of the business.

Zero-hour contracts are common in the Tech industry due to the fluctuating demand for project and shift based staff. These contracts provide flexibility but also mean workers are 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”.

The Bill proposes:

• Guaranteed minimum hours after working for what is expected to be 12 weeks on a zero hour contract;
• Prescribed notice of shifts, expected to be double the length of the shift (e.g. 2 days’ notice for a one-day shift); and
• Compensation if shifts are cancelled at short notice.

Given the high use of short term contracts in the Tech sector, the restrictions proposed are going to have a significant impact on Tech employers.  It will mean planning and ensuring the right contracts are in place from the start.

The requirement to give notice could be problematic where bank workers are engaged to cover projects or shifts 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 don’t) would make more practical sense in the Tech sector.

From 26 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 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.

Employers, regardless of their size, must take proactive steps to prevent sexual harassment including, assessing the risks of sexual harassment in their organisation, including implementing an action plan to reduce identified risks, and implementing policies on preventing and report sexual harassment.

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.

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 and amendment to the Equality Act make employers liable for such harassment unless they have taken all reasonable steps to prevent it.

Given the sharing of work spaces in the Tech industry, use of consultants and contractors in the workforce, Tech employers will need to carry out further risk assessments to those already being considered.

As with any proposed legislation, the Bill is not the final version. As the Bill progresses through both Houses of Parliament, it will be subject to various amendments, which will hopefully add further clarity as to how these protections will work in practice. In addition, it is likely we can expect secondary legislation and Codes of Practice to be forthcoming.

With much of these changes not anticipated until 2026, there is little from a practical standpoint that Tech employers can do to prepare, aside from keeping up to date on the changes as and when they arise.

On Thursday 28 November 2024, we will be hosting a webinar to discuss the implications of the Bill and how employers can begin to prepare for the upcoming changes. Click the button below to sign up to the webinar.