Agenda item 2: Employment Rights Bill

SPC Members are asked to note:

i.    The contents of this paper and the Welsh Government’s stance on the Employment Rights Bill.

ii.    The ongoing dialogue the Welsh Government is having with the UK Government at both a Ministerial and official level.

iii.    The progress of the Employment Rights Bill through its parliamentary stages to date and next steps leading to Report Stage in January 2025.  

1. This paper provides an update to the Social Partnership Council (SPC) on the UK Government’s Employment Rights Bill, which aims to modernise and strengthen employment protections and their enforcement.  

2. Whilst in opposition, the Labour Party published a policy document entitled the “Plan to Make Work Pay”. The Plan is a comprehensive strategy aimed at improving wages, job security, and working conditions.  
    
3. Implementing the plan became a manifesto commitment ahead of the General Election, alongside a pledge to introduce legislation within the first 100 days of a Labour Government. 

4. The Employment Rights Bill was a centrepiece of the King’s Speech setting out the UK Government’s legislative programme. The commitment to introduce legislation within the first 100 days was fulfilled with the publication of the Employment Rights Bill on 10 October 2024.  
    
5. The breadth and scope of the Employment Rights Bill (hereafter referred to as ‘the Bill’) is considerable. At 149 pages, the Bill contains 28 measures across 119 clauses, six parts and seven schedules. Its scope is illustrated by its long title quoted below:  

to make provision to amend the law relating to employment rights; to make provision about procedure for handling redundancies; to make provision about the treatment of workers involved in the supply of services under certain public contracts; to provide for duties to be imposed on employers in relation to equality; to provide for the establishment of the School Support Staff Negotiating Body and the Adult Social Care Negotiating Body; to make provision about trade unions, industrial action, employers’ associations and the functions of the Certification Officer; to make provision about the enforcement of legislation relating to the labour market; and for connected purposes.

6. The scope of the Bill is such that it is not possible to present the detail of all its measures in this paper.  However, a headline summary of key provisions is summarised below:  

• A new right to guaranteed hours based on hours worked during a reference period (length of which will be determined in secondary legislation), reasonable notice of shifts, and compensation for short-notice cancellation of shifts. (NB:  this does not amount to an absolute ban on Zero Hours Contracts (ZHC) – but instead ends one-sized flexibility and empowers workers with a choice between guaranteed hours and ZHC).  
   
• Limit ‘fire and rehire’ and ‘fire and replace’ practices by considering any dismissals for failing to agree to a change in contract as automatically unfair, except where businesses genuinely have no alternative.  (NB: the Bill proposes a retrospective remedy through an Employment Tribunal and it’s important to note the Bill will place significant limitations on fire and rehire, it will not prohibit it entirely.)
   
• Day one right to protection from unfair dismissal while allowing statutory probation periods in which a lighter-touch dismissal process applies (to be determined in guidance / secondary legislation).  
   
• Strengthened collective redundancy rights by ensuring employer obligations to consult on and notify 20 or more redundancies applies across a workforce and not just at a single establishment.  
   
• Strengthened employers’ duty to prevent sexual harassment of their employees by requiring employers to take all reasonable preventative steps, specifying those steps in guidance, and introducing an obligation on employers to not permit harassment of their employees by third parties.
   
• Strengthened gender pay gap reporting to reflect outsourced workers and requiring large employers (250 or more employees) to produce Equality Action Plans, setting out steps to address gender pay gap issues and support employees going through the menopause.  
   
• Improve access to Statutory Sick Pay (SSP) by removing the Lower Earnings Limit (LEL) and removing the waiting period. (NB:  LEL is currently £123 per week and the waiting period is 3 days, meaning that SSP is not currently payable for the first 3 qualifying days of sickness absence).  
   
• Re-instate the School Support Staff Negotiating Body to improve terms and conditions for school support staff (England only on introduction).
   
• Establish a Fair Pay Agreements (FPA) process in the adult social care sector (NB:  aim is to establish sectoral collective bargaining in adult social care – whilst this is England only on introduction, we are in discussions with UK Government about potential for a Government amendment to extend the FPA process to Wales).  
   
• Strengthen existing tipping law to ensure workers receive their tips in full, by requiring employers to consult with workers when developing or revising their tipping policies.
   
• Re-introduce the two-tier code on procurement ensuring that employees working on outsourced contracts will be offered terms and conditions broadly equivalent to those transferred from the public sector.  (NB:  We are in discussions on how this dovetails with our own two-tier code.  Specifically, we are seeking an amendment to give equivalent powers to Welsh Ministers to make provisions in regulations, and publish a code of practice, to apply to those organisations defined as devolved Welsh authorities in the Procurement Act 2023 but not listed in Schedule 1 to the Social Partnership and Public Procurement Act).
   
• Modernise trade union legislation to give trade unions greater freedom to organise, represent and negotiate on behalf of their workers.
   
• Repeal the Strikes (Minimum Service Levels) Act 2023 and repeal the Trade Union Act 2016.
   
• Strengthen trade unions’ right of access and simplify the trade union recognition process.
   
• New rights and protections for trade unions representatives and a duty for employers to inform workers of their right to join a trade union.
   
• Improve enforcement of employment rights through establishing the Fair Work Agency to bring together existing state enforcement functions including:
  o    regulations for employment agencies and employment businesses;
  o    the unpaid employment tribunal award penalty scheme;
  o    enforcement of the National Minimum Wage and Statutory Sick Pay;
  o    the licensing regime for businesses operating as ‘gangmasters’ in certain sectors.  

7. The Bill had its first reading on 10 October. The second reading took place on 21 October. The Bill has now been sent to a Public Bill Committee, which will scrutinise the Bill line by line.  
    
8. Committee is expected to report to the House of Commons by 21 January 2025. The Bill will then enter Report stage, prior to its 3rd Reading. Following 3rd reading, and subject to it being approved by the Commons, the Bill will then be passed to the Lords. 

9. The Welsh Government strongly supports the Bill and the broader Plan to Make Work Pay. We believe this will significantly transform the delivery of legally enforceable rights and duties in many areas. These are areas we have been striving to promote and encourage as part of our fair work agenda, despite our more limited devolved powers.
    
10. Prior to and following the introduction of the Bill, there has been and continues to be constructive and regular engagement with the UK Government at both a Ministerial and official level. 

11. A Legislative Consent Memorandum is a document prepared when the UK Parliament proposes legislation that affects areas devolved to Wales. This ensures that the Senedd has a say in laws affecting Wales, even when they originate from the UK Parliament. The process is governed by Senedd Standing Order 29.  
     
12. Our initial analysis is that the Bill makes relevant provision for the purposes of Standing Order 29 and will therefore require a Legislative Consent Memorandum to be laid. We are working through the policy and legal detail required.  
     
13. Whilst the Legislative Consent Memorandum will be laid as soon as possible, due to the scale and complexity of the Bill, this will be outside the normal two-week Standing Order 29 deadline. The Llywydd (Senedd Presiding Officer) has been notified.  

14. The approach taken in the Bill is to provide a framework and enable Ministers with powers to make regulations on the substantive detail. This approach provides scope for further consultations with interested parties in advance of the making of regulations.  
     
15. Consultations in relation to strengthening Statutory Sick Pay; Collective Redundancy and Fire and Rehire; a Modern Framework for Industrial Relations; and the application of the Zero Hours Contracts Measures to Agency Workers have already been launched.     
     
16. The 28 measures in the Employment Rights Bill are only a fraction of the more than 70 measures in the Plan to Make Work Pay. The UK Government has published a ‘Next Steps’ document on the Plan to Make Work Pay.