Key updates to the legislation, spearheaded by Deputy Prime Minister Angela Rayner and Business Secretary Jonathan Reynolds, include expanding the zero-hour contract ban to agency workers and strengthening statutory sick pay.
“We are turning the tide – with the biggest upgrade to workers’ rights in a generation, boosting living standards and bringing with it an upgrade to our growth prospects and the reforms our economy so desperately needs.”
According to an impact assessment by the Department for Business and Trade (DBT), the measures included in the bill are expected to cost the UK’s estimated 5.6 million businesses billions.
If you average the costs across all businesses, they come to around £3,000 per company in the UK.
Benefit to workers: The Employment Rights Bill includes measures allowing workers to claim sick pay from their first day of absence, as well as removing the £123 a week lower-earning minimum.
These changes will be included in amendments to the legislation when it returns to the Commons in the coming weeks.
Under current rules, this employee would not be entitled to statutory sick pay. However, following the planned reforms, they would be entitled to receive £97.68 a week from their employer for the duration of their sickness.
If a full-time employee earning £488.40 a week was off sick for two weeks, they would only be entitled to £166.25 from April 2025. Once the waiting period is removed, however, they will be entitled to £237.50 for that 10-day period, an increase of £71.25.
On average, across all employees, this would be the equivalent of £38 each year for every worker, an increase of £15 compared to the current rules.
However, the impact assessment did acknowledge that allowing employees to take sick leave sooner would likely help employees recover quicker, which could boost a business’s overall output.
Right to flexible working
Benefit to workers: Workers already have a right to request flexible working, but their employer can reject it for many reasons ranging from excess cost to an inability to reorganise staff.
Impact on businesses: The Government estimates that businesses will likely have to spend around £7.8m to adjust their systems to reflect the new rules and incur additional admin costs of about £600,000 a year.
In other words, small businesses may have a good reason to reject a request if it is excessively costly to their operations.
Benefit to workers: The Government is eliminating zero-hour contracts to provide workers with more job security and financial stability, and ministers have also confirmed this ban will include agency workers.
This change particularly benefits low-paid workers in retail, hospitality, and social care, where such contracts have been widely used.
Impact on businesses: The DBT estimated last year that banning zero-hour contracts could cost £160m to implement and that the loss of flexibility among the workforce could have a further impact that was “likely to be up to hundreds of millions of pounds”.
DBT estimates that, overall, businesses will be around £2.3m a year worse off as a result of the change due to increased admin costs.
The Recruitment and Employment Confederation (REC), which represents the sector, has also warned that the change could not “undermine” the flexibility that zero-hour contracts offer some workers.
Day one protection from unfair dismissal
Workers will no longer need to complete a two-year period before gaining protection, allowing them to challenge dismissals they believe to be unfair. This change could particularly benefit vulnerable employees who may otherwise be hesitant to assert their rights.
Though there will be mitigations protecting employers who fire an employee during their probation period, the change will make it easier for any employee to claim unfair dismissal regardless of whether it has occurred.
It also notes that this change could be particularly onerous on small businesses, as they “might be less able to withstand additional costs and might be more impacted by unproductive employee-job matches.”
The DBT’s official impact assessment states: “The policy is expected to have a positive well-being impact on households with employee parents for those with under one-year tenure.
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Read MoreThe Government is also expanding bereavement leave to cover more family members and provides greater emotional and financial support to those experiencing loss, ensuring they do not have to choose between work and grieving their loved ones.
It is estimated that this could benefit around 250,000 expectant mothers in the UK who suffer a miscarriage every year.
Small and medium businesses will also be adversely impacted. The impact assessment notes that these companies will likely bear around 35 per cent of the costs despite employing around 29 per cent of employees.
The costs of introducing a right to bereavement leave depend on whether it includes only immediate family or applies to extended family such as grandparents, but they could be anywhere between £21m and £64.2m a year.
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